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FOR IMMEDIATE RELEASE Thursday , April 6, 2000 $300 BILLION PUNITIVE DAMAGES AWARD FIGURE IS A TOBACCO INDUSTRY RUSE DESIGNED TO SCARE STATES INTO ENACTING SPECIAL LEGAL PROTECTIONS. FLORIDA LEGISLATURE CAN EASILY PROTECT SETTLEMENT FUNDS WITHOUT SHIELDING BIG TOBACCO, SAYS TPLP. April 6, 2000 Contact: Richard Daynard or Mark Gottlieb (617) 373-2026 Boston - For several weeks, a furor has been building in Florida and beyond over the possibility of a Miami jury awarding lump sum punitive damages of $300 billion in the class action trial known as "Engle." This fantastic figure comes from one source: Big Tobacco's top Florida attorney Dan Webb. In arguing against the lump sum punitive damages trial plan to the Third District Court of Appeals last October 20th, Webb said that a $300 billion award, "would destroy any industry." The appeals court and the Florida Supreme Court rejected that appeal and let the lump sum punitive damages trial plan stand. "Webb, a top attorney for an industry chock full of legal talent, must have known that Florida law prohibits punitive damages that exceed the industry's net worth of about $100 billion," said Northeastern University Law Professor Richard Daynard, who is Chair of the Tobacco Products Liability Project. In any case where it has come up, Florida courts have ruled that punitive damages "may properly punish each wrongdoer by exacting from his pocketbook a sum of money which, according to his financial ability, will hurt, but not bankrupt." (e.g., Bould v. Touchette, 349 So.2d 1181 (Fla. 1977)). Webb's dubious contention is the industry's equivalent of shouting "FIRE" in a crowded theater. Panic has ensued and the rights of sick smokers and their survivors are being trampled. Florida attorney General Bob Butterworth issued an opinion to the Legislature last week urging action on a bill to delay any punitive damages award in the Engle case until after each claim of an estimated half million sick Florida smokers has been separately adjudicated over the next 10-20 years or more. The action is needed, purportedly, to protect tobacco industry settlement payments to the state of Florida should the companies seek bankruptcy protection. There are 2 problems with this logic: 1) under Florida law, punitive damages cannot bankrupt a defendant, and 2) As suggested recently by Credit Lyonnais Securities, Florida could easily protect and maintain settlement revenues by passing a contingent cigarette excise tax that would take effect only if the industry's payments to the state were interrupted. Importantly, excise taxes are not affected by bankruptcy protection. Florida could also securitize its settlement as a bond issue, thereby breaking the state's ties to Big Tobacco's future. Daynard notes that, "it appears this is simply an attempt by the tobacco companies to scare state governments into granting them special legal protections. Instead of falling for this trick, Florida should let the jury that has been hearing this case for more than a year and a half finish its work and let justice take its course."
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