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30
TOBACCO OUTLET BUSINESS
MAY/JUNE 2012
TMA REPORT
In Court:
…The class action trial
JTI-Macdonald Corp
.,
Imperial Tobacco Canada Ltd and Rothmans,
Benson & Hedges Inc., in which about two million
Quebecers are claiming C$ 27 million (US$ 27.3
million) in damages for their alleged smoking-
related illnesses, will start in Quebec Superior
Court on March 12th, with plaintiffs’ evidence alone
expected to take a year to present, and the cigarette
makers likely to give their evidence beginning next
February.
…A jury in Miami, Florida on March 7 ordered
Lorillard
to pay $25 million in punitive damages
to Dorothy Alexander, widow of deceased smoker
Coleman Alexander, in an Engle progeny case
in which the jury last week also awarded her $16
million in compensatory damages.
…Ruling in the first
Federal Engle progeny trial,
a jury in U.S. District Court for the Middle District of
Florida on February 16 deliberated for less than an
hour and returned a verdict in favor of RJ Reynolds
Tobacco Co. and Philip Morris USA in a suit filed
by Virginia Gollihue, who claimed that her husband
Manuel Gollihue died from lung cancer at the age of
53 after smoking at least two packs per day of the
companies’ cigarettes for almost 38 years.
…Saying the amount was “constitutionally
excessive,” a Florida 1st District Court of Appeal
panel on February 14 ruled 2-1 to reverse a punitive
damage award of $40.8 million in an
Engle progeny
case
against RJ Reynolds Tobacco Co that was won
in April 2010 by Lyantie Townsend, the widow of
Frank Townsend, who started smoking at age 13
or 14 and died from lung cancer in 1995. Morgan
Stanley analysts said the appellate court indicated
comfort with a $25 million-plus punitive award and
otherwise affirmed the verdict, adding that they
remain concerned with the Engle litigation, which,
while not posing an “acute, catastrophic threat” to
the industry, is “evolving into a bit of a quagmire,”
as every Florida state court of appeals ruling to date
has rejected the industry’s core arguments and a
U.S. federal judge recently ruled in Waggoner v. RJ
Reynolds that the Engle trial structure incorporating
the preclusive effect of Phase I findings does not
violate due process laws.
…On February 13 cancer patient SebastianMoore
of Roxbury, Massachusetts filed a Federal suit
against
Lorillard
claiming that he began smoking
Newport cigarettes when he attended “giveaway”
events in 1979 and that Lorillardmarketed cigarettes
to minors in the black community. Commenting
on the suit, Deutsche Bank writes that the case
alleges breach of warranty, negligence and violation
of the state’s consumer protection act like in the
earlier Evans suit, noting that the youth sampling
cases look less like a one-off, adding however that
any monetary losses for Lorillard would “likely be
several years down the road,” and are “containable”,
while questions remain on the reliability of Moore’s
evidence of long-ago sampling and ability to link it
to his specific illness.
…In a re-trial over punitive damages, a 12-person
jury in Portland, Oregon on February 16 ordered
Philip Morris USA
to pay $25 million to the family
of Michelle Schwarz, who claimed that Schwarz, a
smoker for 35 years who died of lung cancer in 1999
at age53, switched fromPMUSA’sBenson&Hedges
cigarettes to its low-tar Merit brand in 1976 because
the company allegedly fraudulently marketed the
brand as “safer” than regular cigarettes. In 2002,
the original jury awarded $150 million in punitive
damages.
TOB
TMA to Hold 2012 Conference
The Tobacco Merchants Association will be hosting its 97th Annual Meeting and Conference May 20 - 22, 2012 at the
Kingsmill Resort and Spa in Williamsburg, Virginia. Conference sessions will cover the regulatory state of the industry, as
well as news on modified risk and non-combustible tobacco products and other issues affecting the industry.