Philip Morris, the world's largest tobacco company, vowed to appeal a US$100 million punitive damages award on Friday after a US judge reduced it from a record-breaking US$3 billion.
The US$100 million figure -- announced by Judge Charles McCoy in the early hours of yesterday morning -- is four times higher than the largest individual punitive damages award ever upheld in the US.
But it is a sharp reduction for plaintiff Richard Boeken, a sick smoker who was awarded US$3 billion in punitive damages and US$5.4 million in compensatory damages by a Los Angeles jury in June. Judge McCoy gave Boeken and his lawyers two weeks to agree to the reduced figure before ordering a retrial.
Philip Morris had called for a complete retrial. On Friday, William Ohlemeyer, Philip Morris vice president and associate general counsel, said its appeal would be based "on multiple grounds, not the least of which was the passion and prejudice the jury displayed in reaching its verdict".
In his statement, Judge McCoy issued a dire warning to the company, which has suffered four significant legal losses on America's west coast.
"Given the evidence presented at trial here, and the fact that Philip Morris refused to accept even a scintilla of responsibility for the harm it has done," he wrote, "the court does not doubt that Philip Morris will continue to incur large punitive damages in California and elsewhere."
He described the company's behavior as "reprehensible in every sense of the word, both legal and moral."
Boeken, who started smoking as a teenager and argued that tobacco companies failed to warn him of the risks until after he was addicted, has lung and brain cancer.
While the judge termed a US$100 million punitive award "reasonable," Philip Morris called it "grossly excessive ... unprecedented and unconstitutional."
Shares in the company were essentially flat yesterday at US$44.38 as Wall Street had already factored in a reduction in the US$3 billion award, the largest ever brought by an individual against the tobacco industry.
In a note to investors, Martin Feldman, analyst at Salomon Smith Barney, wrote: "While this reduced amount clearly brings the award closer towards a traditional ratio of punitive to compensatory damages, it is still very high.
"The market is likely to remain concerned by litigation in California until such time as the industry demonstrates that it can win such cases."
Boeken's lawyer, Michael Piuze, said his client had not yet decided to accept the reduced award. He described US$100 million as "not enough money to punish Philip Morris."
Tom Harrison, publisher of Lawyers Weekly USA, said the ruling was a blow to the company.
"It's easy to criticize a runaway jury. It's harder to criticize a runaway judge."
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