Big Tobacco's Woes Continue

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Big Tobacco's Woes Continue

BURTON, Kan. -- A federal judge in Kansas levied $15 million in punitive damages against R.J. Reynolds Tobacco Holdings Inc., saying the company had engaged in "nefarious" behavior by denying the addictive nature of cigarettes, The Wall Street Journal reported.

Judge John W. Lungstrum of the U.S. District Court in Kansas City wrote in his decision that "Reynolds' conduct was highly blameworthy and deserving of significant punishment."

Lungstrum's ruling, handed down in the case of a man made ill by smoking, capped several weeks of legal setbacks for cigarette makers. The string of verdicts and rulings in different states has renewed questions about the magnitude of the threat that lawsuits filed by individual smokers pose for tobacco companies, the report said.

"The scale of damages that juries are awarding is increasing, and judges are going along," warned Martin Feldman, a tobacco analyst at Merrill Lynch in New York. "Individual claims may prove a much greater challenge to the industry than many have said."

The jury in the Kansas case found in February that RJR was negligent and had fraudulently concealed the health effects of smoking from the plaintiff, David Burton, who had both of his legs amputated as a result of peripheral vascular disease. The jury ordered the company to pay $196,416 to compensate him for medical expenses and lost wages.

The jury also authorized the court to impose punitive damages. Judge Lungstrum's award was three times as high as the $5 million in punitive damages requested by Burton's lawyers, and about 75 times as great as the compensatory damages levied by the jury. This is the first award of punitive damages against a tobacco company by a federal court, where strict rules of evidence tend to favor defendants more than in state courts, the report said.