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Tobacco Firms Forfeit $709M To Appeal Florida Court Ruling

By Myron Levin

In a surprise deal with anti-tobacco lawyers, three tobacco companies Monday agreed to forfeit $709 million even if they succeed in reversing an astronomical damage award in a class-action case in Florida.

The agreement is essentially an insurance policy, guaranteeing the right of the three cigarette makers -- Philip Morris, Lorillard and Liggett Group -- to appeal last year’s $144.8 billion verdict in the Engle case, even if a controversial cap on the size of appeal bonds is ruled invalid.

R.J. Reynolds Tobacco Co. and Brown & Williamson Tobacco Corp. said Monday they are evaluating the agreement. The price could rise significantly if they decide to sign on.

Tobacco foes applauded news of the deal, noting that it involves the industry’s largest payment in smoking and health litigation, apart from the companies’ multibillion dollar settlements with the states.

Though other liability pressures appear to have eased recently, the agreement reflects the continuing threat to Big Tobacco from the Engle verdict, by far the largest in U.S. history.

In the ruling last July, jurors in Miami-Dade Circuit Court ordered the five top cigarette makers to pay punitive damages to an immense class of sick Florida smokers -- with awards ranging from $74 billion for industry leader Philip Morris to a low of $790 million for Liggett.

Typically, losers in a court case must post bonds for the full amount of damages, plus interest, in order to appeal. But last spring, with the industry approaching a day of reckoning in the Engle case, Florida Gov. Jeb Bush signed legislation capping appeal bonds at $100 million, or 10 percent of the damage award, whichever is less. Similar protective laws have been adopted in several other states, including last month by West Virginia.