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US: Tobacco firms to face US class action over 'light' cigarettes

by Simon BowersThe Guardian (UK)
September 26th, 2006

Leading tobacco firms in the US, including British American Tobacco, are to face a class action lawsuit seeking punitive damages of up to $200bn (105bn) relating to the alleged fraudulent promotions suggesting "light" branded cigarettes are safer, or less addictive, than regular ones.

Judge Jack Weinstein, sitting in a New York district court, certified the claim as a class action yesterday. Philip Morris, Reynolds American and BAT were among the defendants to say they would immediately appeal. The judge's ruling means the industry can be sued by "light cigarette" smokers as a whole, rather than forcing each claimant separately to prove a case against the industry. The number of potential claimants could run into tens of millions.

Shares in Altria, Philip Morris's parent company, dropped more than 4% following the ruling as investors feared a protracted lawsuit could derail widely anticipated plans to demerge the tobacco business from Altria's interest in Kraft Foods.

A spokesman for BAT, which is involved in the case through its BAT (Investments) subsidiary, said an appeal would take about a year.

Judge Weinstein summarised the claim, which is known as the Schwab case after the lead claimant Barbara Schwab, by saying: "The claim is that the carcinogenic and other adverse effects smokers sought to avoid were not reduced by smoking 'light' rather than other cigarettes; that defendants knew this was the case; that they concealed this fact; that they urged plaintiffs - through advertising and other public statements - to smoke these 'lights' knowing smokers were being misled."

He said taxes and smoking bans were probably more effective anti-smoking measures but added: "Where a cigarette smoker can demonstrate that he or a group of smokers has been damaged by the cigarette industry, the help of the court in resolving the claim and defences is mandatory."

Arguing last week for the class certification, smokers' attorney Michael Hausfeld said experts had concluded that more than 90% of smokers in the potential class had purchased "lights" over the past three decades based on health concerns as opposed to taste or other factors.

Judge Weinstein's ruling comes a month after the US federal government won a ruling from federal judge Gladys Kessler. She found that America's largest tobacco firms had violated racketeering laws in a conspiracy stretching back to the 1950s, during which they had sought to maximise profits while deceiving smokers about the extent of their research into health risks associated with cigarettes.

The claim had started out seeking $290bn from the industry as recompense for government health costs incurred by treating smoking-related diseases.

Midway through the trial, however, the appeal court barred Judge Kessler from touching the tobacco industry's past profits and no financial penalty was imposed.





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