WASHINGTON - Big tobacco companies have been delivered a major blow after a court in New York gave permission for a US$200 billion ($295.68 billion) class action lawsuit to proceed against the manufacturers of "light" cigarettes who marketed them as a less harmful alternative.
Unless overturned on appeal, the decision
means some of the world's largest tobacco companies, such as Philip Morris, RJ Reynolds Tobacco and Lorillard Tobacco, will have to defend claims they reaped between US$120 billion and US$200 billion in extra sales by marketing the light cigarettes, even though they knew their health risks were the same as normal brands.
"They understood that they were selling death," the smokers' lawyer, Michael Hausfeld, argued last week. "[The question was] how to disguise it ... They put on 'lights'."
The decision hammered shares of US tobacco companies. The suit, which accuses tobacco companies such as Altria Group of misleading consumers into thinking light cigarettes were safer than regular smokes, also will delay Altria's plan to spin off its Kraft Foods unit.
Shares of Altria, which makes the top-selling Marlboro brand, slid 6.4 per cent - their largest single-day percentage loss in more than two years. The Dow Jones US Tobacco index fell more than 5 per cent.
The decision by US District Senior Judge Jack Weinstein means the action covers anyone who bought cigarettes labelled as "light" or "lights" which were introduced in the early 1970s.
Hausfeld told the judge an analysis by expert witnesses had concluded more than 90 per cent of the smokers in the potential class had bought light cigarettes based on health concerns as opposed to taste, or other factors.
In his 500-page written ruling, Judge Weinstein wrote that cigarettes were "the basis for a pandemic, causing premature deaths of tens of millions of Americans".
A class action was necessary because: "No other method of aggregation of tens of millions of smokers' claims is practicable."
A trial date of January 22, next year has been set.
- INDEPENDENT
