finally, a ray of light...
Tuesday October 26, 11:01 pm Eastern Time
New York court dismisses tobacco class action
cases
By Edward Tobin
NEW YORK, Oct 26 (Reuters) - New York state's highest court on Tuesday upheld a lower court's decision to dismiss five class action suits brought against U.S. tobacco companies, in a ruling industry analysts said highlights a trend in pending tobacco cases.
A spokesman for the Office of Court Administration in New York told Reuters that the New York State court reaffirmed the lower appellate division's July 1998 decision to dismiss the cases.
The 7-0 decision marks a reprieve for U.S. Tobacco companies that have watched their stocks plummet last week after a Florida state court ruling that could expose them to billions of dollars in punitive damages in connection with sweeping class action verdicts against them.
``We are pleased to see that the New York Court of Appeals based its ruling on the law that governs class-action cases and reached what is inevitably the correct legal result,' said John Mulderig, associate general counsel for Philip Morris Cos. Inc. (NYSE:MO - news), the world's biggest tobacco company.
``We have long maintained that litigation relating to smoking and health cannot, and should not, be handled as a
class-action case because the circumstances relating to each smoker are unique, and those individual issues must be examined separately at trial for each smoker,' he added.
R.J. Reynolds Tobacco Co., maker of Camel cigarettes and the nation's second largest tobacco company, said in a release that the court's ``affirmation that individual issues would predominate throughout the classes,' and that ``the proposed class actions would be unmanageable' because of these individual issues, is in keeping with the unanimous
rulings of nine federal courts that class actions are not appropriate to handle tobacco litigation."
Tobacco analysts said the decision highlights the fact that the Florida Engle case, along with certified class actions in Maryland and Louisiana, are the exception when it comes to hearing tobacco cases on a class action basis.
And instead of allowing large groups to sue tobacco companies, most courts have ruled that only individuals with less financial resources can bring such suits against the industry.
``This is just the latest in a long string of state and federal rulings that have gone in this direction,' William Pecoriello of Sanford C. Bernstein, said. ``Florida is just an aberration along with Louisiana and Maryland,' adding that once the Florida Engle case gets to state Supreme court, it will be decertified and will strike down all tobacco class actions.
The lawsuits originally were filed on behalf of all ``nicotine-dependent' persons in New York State and sought to recover the cost of cigarette purchases. The cases alleged that members of the class had been deceived about the addictive nature of cigarettes, the companies said.
``In light of last week's decision in Florida, the New York ruling is something that all observers ought to take a step
back and contemplate,' Marc Cohen of Goldman Sachs said. "It suggests that the mountain of opinion continues to
build that both in federal and state courts, tobacco cases do not lend themselves to treatment in a class action format.
``There is no doubt that there are minority courts that take exception to that view,' Cohen added, referring to the
certified class actions in Florida, Maryland and Louisiana. ``But the majority have not. And one can take some confidence that as this issue works its way up through court systems, and eventually to the Supreme Court level, that
majority view will hold.'
In addition to Philip Morris and R.J. Reynolds Tobacco, Lorillard Tobacco Company Inc., a unit of Loews Corp.
(NYSE:LTR - news), and British American Tobacco Co. (quote from Yahoo! UK & Ireland: BATS.L) and Brown and
Williamson Tobacco Co. were also named as defendants in the cases. |
