TOBACCO GIANTS FACE RECORD CLASS ACTION

Florida Case Allows 500,000 Smokers To Claim Damages Against Cigarette
Industry

A Miami jury ordered the tobacco industry to pay $12.7 million last
week to three former smokers in an unprecedented class-action lawsuit,
a decision that leaves cigarette makers vulnerable to a potentially
devastating multibillion-dollar judgment.

Circuit Judge Robert Kaye said he would call the six-member jury back
within several weeks to begin a hearing to assess punitive damages for
an estimated 500,000 Florida smokers who the same panel previously
ruled had been harmed by the industry.

The case is the first successful class action by smokers against the
tobacco industry, and company attorneys have said the jury's punitive
damages could reach a ruinous $300 billion -pushing the companies into
bankruptcy.

The verdict had been widely anticipated. If the jury had ruled against
compensatory damages, the case would not have been able to proceed to
the punitive stage. Although many legal challenges remain, and it is
impossible to predict how the jury will rule next, last week's verdict
could signal that jurors are inclined to levy a heavy penalty against
the industry.

Tobacco industry officials said that they are disappointed by the
decision but that they are confident the jury's decision will be
overturned on appeal.

In last week's verdict, the jury awarded damages only to compensate
for medical costs, lost earnings, and pain and suffering for three
representatives of the class.

"Everyone should be happy with what happened," plaintiff Mary Farnan,
a 44-year-old nurse with lung and brain cancer who was awarded $2.85
million, told the Associated Press. "I'm smiling, I'm smiling, I'm
smiling," said clockmaker Frank Amodeo, 60, even though the jury
blocked his award. The jurors said he had filed his claim too late,
but they granted him $5.8 million should the judge decide otherwise.

The third plaintiff, Angie Della Vecchia, died last year at age 53.
Her estate was awarded $4 million.

All three started smoking as teens, smoked for decades, and claimed to
have tried unsuccessfully to quit.

If punitive damages are awarded, the remainder of the smokers in the
case would be eligible for mini-trials to collect compensatory damages.

With tobacco companies fighting the punitive damages in court and in
key state legislatures, it was unclear whether the judge's timetable
for a punitive phase would hold. State attorneys general also have
voiced concern that a large punitive award in Florida could jeopardize
the $246 billion settlement reached in 1998 between the tobacco
companies and their states. William S. Ohlemeyer, associate general
counsel of Philip Morris Cos., said his company will ask Kaye to allow
an immediate appeal on whether the punitive phase should be delayed.
Leaders of the Florida legislature have been discussing a similar
delay, and even the state's attorney general - long-time tobacco foe
Robert Butterworth - has drafted a bill that would put the punitive
phase on hold.

As did the tobacco companies, Butterworth concluded that Florida law
requires that compensatory damages be assessed individually for each
Floridian harmed by smoking before any punitive damages can be
considered for the class. That could delay the punitive phase for
years. Stanley and Susan Rosenblatt, attorneys for the Florida
smokers, have successfully argued the opposite.

Ohlemeyer said last week's decision supports the industry's argument
that smokers should not have been certified as a class.

"We're disappointed with the result, but think it demonstrates
precisely why these cases aren't tried appropriately as class
actions," he said. "The jury found different percentages of fault with
each individual, and that tells us these should be considered case by
case." Further complicating the picture is a Florida law that requires
the loser in a lawsuit to post a bond worth 115 percent of the
judgment before filing an appeal. That provision has led some to argue
that the industry could be bankrupted by the bond, and thus would be
denied its right of appeal. Legislatures in four tobacco-producing
states - North Carolina, Virginia, Georgia and Kentucky - have passed
legislation in recent weeks to shield company assets in their states
from any bonding requirements.

The Rosenblatts have not told the jury what they consider to be an
appropriate punitive award, but Florida law forbids judgments that
would result in bankruptcy.