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3Qs: Big tobacco firm faces big payout

daynard_150R.J. Reynolds, the second-largest tobacco company in the U.S., was recently ordered to pay $23.6 billion in punitive damages to widow Cynthia Robinson, whose husband died at the age of 36 after smoking for more than two decades. Though the verdict will likely stand, R.J. Reynolds is expected to appeal the payout—one of the largest in tobacco litigation in recent years. Here, we discuss the verdict and its implications with University Distinguished Professor of Law Richard Daynard, the chair of the School of Law’s Tobacco Products Liability Project and the president of the Public Health Advocacy Institute.

What effect will this case’s verdict have on future tobacco litigation?

It appears already to have had a galvanizing effect on public opinion. People had largely forgotten about tobacco litigation. Now many are recalling the outrageous misconduct of the tobacco industry, which had been much in the news a decade or two ago. More potential plaintiffs will contact lawyers, more lawyers will consider filing cases. I certainly expect cases to be filed here in Massachusetts over the next few months.

In response to this verdict, you were recently quoted as saying, “I think this is the first time in many years that tobacco companies are going to have to start thinking about really doing something different.” What should they be doing differently?

They could consider settling most of the so-called Engle cases, the several thousand cases filed in Florida following a class action there. The $23 billion verdict occurred in one of those cases, and they could almost certainly settle the whole batch for less. Another, more radical, action would be to voluntarily acknowledge their past misconduct, rather than admitting as little as possible while claiming they’ve fundamentally changed. Their continued stonewalling certainly had some effect on that punitive damage award.

In related news, R.J. Reynolds recently announced a $27 billion deal to buy out rival Lorilland. If the merger is approved, Reynolds and Altria, its chief competitor, would control 90 percent of the tobacco market. Would the market consolidation make it easier or more difficult for tobacco companies to deal with future litigation of this kind?

I don’t think it matters much. They have been using a “joint defense” as it is, freely sharing strategy and tactics with each other. But it’s certainly conceivable that the jury was influenced by the $27 billion buy-out deal in coming up with $23+ billion in punishment: They might well have thought that if Reynolds, the defendant, had this kind of money to burn, it should go to their victims rather than to make acquisitions that will further enrich their shareholders.