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Big Tobacco hit with $25 billion damages bill

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An American tobacco company has been ordered to pay the widower of a chain smoker $US 25 billion in punitive damages in the second-largest such judgement in American legal history.

In a stunning end to a wrongful death lawsuit brought against RJ Reynolds Tobacco Company, a Florida jury awarded Cynthia Robinson $US17 million in compensatory damages and $US23.6 billion in punitive damages over the death of her husband Michael Johnson from lung cancer in 1996.

The judgement came at the end of a four-week trial that heard Mr Johnson, a dock worker and bus driver, contracted lung cancer after smoking between one and three packets of cigarettes a day for more than 20 years. He died when he was 36 years old.

In the case, launched in 2008, Ms Robinson and her lawyers claimed that RJ Reynolds – whose brands include Camel, Kool and Pall Mall – conspired to conceal the health dangers and addictive nature of its products.

In arguing the case, plaintiff lawyer Chris Chestnut presented evidence of the company’s aggressive marketing campaigns and promotions, particularly those directed at young people.

“They [RJ Reynolds] lied to Congress, they lied to smokers and tried to blame the smoker,” Mr Chestnut said, adding that size of the damages awarded by the jury showed that it had “got it”.

“This wasn’t a runaway jury, it was a courageous one,” he said. “The jury was outraged with the concealment and the conspiracy to conceal that smoking was not only addictive, but that there were deadly chemicals in cigarettes.”

The company condemned the judgement as “grossly excessive” and said it would appeal.

“This verdict goes far beyond the realm of reasonableness and fairness and is completely inconsistent with the evidence presented,” RJ Reynolds Vice-President Jeffrey Raborn was reported by The Age as saying. “The damages awarded are grossly excessive and impermissible under state and constitutional law.”

History suggests the company is likely to win a substantial discount on the damages award with its appeal – a $US28 billion punitive damages bill awarded by a Los Angeles jury against Philip Morris in 2011 was slashed to $US28 million on appeal.

But the case has once again highlighted to investors the big litigation risk they are exposed to if they hold tobacco company shares.

Adrian Rollins