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Florida bills would shield tobacco companies from posting huge bonds in lawsuits

TALLAHASSEE — More than 8,000 sick smokers in Florida have sued the tobacco industry for misleading claims but on Tuesday two legislative committees pushed through bills that will cap how much the industry is required to set aside in the event it loses those cases.

The House Finance and Tax Council and the Senate Judiciary Committee passed similar bills that would shield Philip Morris, R.J. Reynolds Tobacco and Lorillard from having to post hefty bonds as they face an avalanche of lawsuits from smokers.

The measures would allow the three companies to set aside a total of no more than $100 million in bond money in order to appeal the verdicts. Under state law, when a company loses a lawsuit and wants to appeal, it must post a bond for the entire amount of the judgement.

Trial lawyers complained the measures will remove the financial incentive for the tobacco giants to pay their judgements or settle their cases. Instead, they said, it will encourage the companies to pursue endless appeals and delays designed to financially break plaintiffs or wait until they die.

Promoters of the bills — House Finance and Tax Council chairwoman Ellyn Bogdanoff and Melbourne Republican Sen. Mike Haridopolos — said the measure is needed to give the industry financial certainty, and to protect the state's annual $205 million payment by the tobacco companies as part of the landmark 1997 settlement with the industry.

"As far as I'm concerned, the plaintiffs are going to be paid," said Bogdanoff, R-Fort Lauderdale.

But of the nearly 3,000 cases pending since the court closed the door to individual cases last year, only four have come to trial — including the case of Elaine Hess of Fort Lauderdale, the widow of 40-year smoker Stuart Hess, who died of lung cancer at age 55 in 1997.

Keith Teel, a lawyer representing the three tobacco giants, said that with the average lawsuit yielding a $19 million jury award, the industry faces posting bonds worth $45 billion — unless the Legislature passes the bills.

"That's just not tenable to continue to make the payments to the state as a matter of cash flow," he said.

Hess, however, won $8 million in damages.

Teel noted that the bill also punishes tobacco companies if they fail to pay a judgement; they would no longer be protected by the cap and would have to post b onds for the total amount of pending judgements against them.

Robert Hanrech, a Miami lawyer representing some tobacco plaintiffs, said that in a Feb. 26 Goldman Sachs statement to shareholders, one tobacco company said the 8,000 claimants stemming from the class action lawsuit "fails to pose a significant threat."

"This would be a bailout for tobacco," he said. "They would be getting an unfair advantage when they don't need it.

Steve Barnes, a Tampa attorney who also represents tobacco plaintiffs, told lawmakers Tuesday that the bill was not needed. "Current law gives the tobacco companies the relief that they want," he said.

If a cigarette company believes it can't post an adequate bond based on the cases before it, it can go to a court and ask a judge to reduce or eliminate it, Barnes said.

Barnes said U.S. tobacco companies made $81.8 billion last year from their domestic and international businesses.

He described how delaying tactics have resulted in many sick smokers dying before their cases reach court.

If their spouse dies as well, "the claim goes away," he said.

He said the cases have a name in the industry: a dead-dead case.

Mary Ellen Klas can be reached at meklas@MiamiHerald.com.

Florida bills would shield tobacco companies from posting huge bonds in lawsuits 04/21/09 [Last modified: Tuesday, April 21, 2009 8:05pm]
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