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Tobacco firms dealt heavy blow by US judge in `light` case

In a blow to the tobacco industry, a US judge ruled that a jury should decide whether tobacco companies must pay tens of millions of smokers up to US$200 billion for allegedly duping them into buying light cigarettes over the past three decades.

The cigarette makers said they would appeal but their shares sank on Wall Street as Monday's ruling granting class-action status to the case clouded what had appeared to be an improving legal environment for the industry.

Altria Group, the parent of the largest US cigarette maker, Philip Morris USA, said the ruling will delay its long-awaited restructuring plan, which includes a divestiture of its controlling stake in Kraft Foods.

In a conference call on Monday afternoon, a top Altria attorney, William Ohlemeyer, said that a prerequisite to pursuing the company's restructuring plan is clarity in the overall litigation environment.

"Today's decision is not a step toward clarity. It is a step back of sorts," he said.

Ohlemeyer's comments came only hours after US District Judge Jack Weinstein granted class-action status to a lawsuit against Marlboro maker Philip Morris USA, its biggest US rival R.J. Reynolds Tobacco Co and other cigarette manufacturers.

"The plaintiffs are entitled to the chance to prove their allegations," Weinstein said.

The judge set a trial date of Jan. 22 next year.

The tobacco companies prefer trying each case on its own, saying circumstances vary widely from one person to another.

Ohlemeyer, vice president and associate general counsel for Altria Group, had said manufacturers would "seek a stay of all trial court proceedings pending a decision by the appellate court."

The suit, filed in 2004, alleges that the tobacco firms responded to consumers' mounting health concerns with a advertising scheme to promote light cigarettes as a lower-risk alternative to regular cigarettes, even though their own internal documents showed they knew the risks were about the same.

Smokers' attorney Michael Hausfeld said the decision could clear the way for one of the largest class-action cases ever, both in number of plaintiffs and amount of damages. He estimated the class -- consisting of anyone who purchased cigarettes that were labeled "light" or "lights" after they were put on the market in the early 1970s -- could number up to 60 million.

"It's an extremely significant ruling," he said.

Last year, however, the US 2nd Circuit Court of Appeals threw out Weinstein's decision in a 2002 case in which he certified the first-ever, nationwide class-action against tobacco companies. The panel ruled he had stretched the boundaries of the law by allowing the plaintiffs to seek only punitive damages.

In Monday's lengthy ruling, Weinstein said the class certification was necessary because "no individual can afford to prosecute the case alone."
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