U.S.

Big Tobacco To Cough Up $710M

May 7, 2001 / 5:00 PM EDT / AP

Three tobacco companies ordered to pay a record $145 billion to sick Florida smokers agreed Monday to pay $710 million, no matter how their appeals turn out.

"That amount of money is guaranteed to the class win, lose or draw," said Lorillard general counsel Ronald Milstein. "We've decided this is the surest path to (making) the appeals process unencumbered and unhindered."

The guarantee is the industry's first major financial commitment directly to smokers in nearly four decades of litigation. The industry agreed in the late 1990s to pay $248 billion to settle state lawsuits.

"Even if we were to lose ultimately, which I hope and pray would not happen, the class would be guaranteed $700 million," said smokers' attorney Stanley Rosenblatt.

Philip Morris, Lorillard and Liggett opted for the agreement to keep smokers from challenging the constitutionality of a new Florida law that places a $500 million cap on appeal bonds.

Without the law, the companies would have been required to buy bonds worth more than the $145 billion verdict to be able to get higher court review — an impossibly high requirement, in the industry's view.

A six-member jury set a U.S. record with the punitive damages verdict last July. The same panel earlier decided that the industry makes a deadly, dangerous product and awarded $12.7 million in compensatory damages to three people representing between 300,000 to 700,000 sick Florida smokers or their families.

R.J. Reynolds and Brown & Williamson, the other two defendants, have two weeks to decide whether to sign on. If they do, the amount of the guarantee would increase.

If they don't, they take their chances if Rosenblatt appeals the bond cap.