Tobacco

"Light" Smokers Seek Billions

Judge questions damage determination

NEW YORK -- U.S. smokers spent as much as $200 billion over more than three decades buying "light" cigarettes under the false belief they were safer than regular smokes, an attorney in a potential class-action lawsuit argued on Wednesday, according to Reuters.

The argument was made in a hearing in a federal lawsuit that accuses tobacco companies of violating racketeering laws and defrauded customers into thinking "light" cigarettes were safer than regular smokes from 1971 to 2004, when the lawsuit was filed.

The plaintiffs are [image-nocss] asking U.S. Senior District Judge Jack Weinstein to declare the case a class action, which would mean smokers could sue in one large group that, if successful, could receive billions of dollars in damages.

Michael Hausfeld, attorney for the plaintiffs, said the industry tried to shift smokers to "light" cigarettes years ago as concerns about the dangers of smoking mounted and sales declined. "By engaging in the deception, defendants dramatically increased their sales of 'low-tar/light' cigarettes, assuaged the fears of smokers about the health risks of smoking and sustained corporate revenues in the face of mounting evidence about the health dangers of smoking," he said.

Plaintiffs argued that if smokers knew that "light" cigarettes were not safer, they would have had to be priced at a steep discount, adding that tobacco companies reaped between $120 billion to $200 billion in extra sales due to the deception. But Weinstein raised questions about whether there was a valid way to determine damages for such a large and varied group of smokers over such a long period of time if he certified the case, known for its lead plaintiff Barbara Schwab, as a class action.

"The damages issue continues to be troubling, because it is unsophisticated," said Weinstein.

He noted that smokers had different amounts of information about the attributes of "light" cigarettes at various times. "The question of how we deal with human variations over long periods, variations of knowledge and information, continues to concern me," Weinstein said.

Tobacco companies were set to present their arguments to Weinstein at presstime.

Defendants in the Schwab case include Altria Group Inc.'s Philip Morris USA unit; Reynolds American Inc.'s R.J. Reynolds tobacco Co.; Loews Corp.'s Lorillard Tobacco unit; Vector Group Ltd.'s Liggett Group; and British American Tobacco Plc's British American Tobacco Ltd.

So-called "light" cigarette cases have been brought in individual states, with PM USA being the primary target. The company has won important decisions in some of the cases, including one late last year by the Illinois Supreme Court that threw out a $10.1 billion verdict against the company.

Some analysts have pointed to the Schwab case as a potential hurdle to Altria's plan to spin off its Kraft Foods Inc. unit, although the case is seen as less likely to stop a spinoff than three other cases could have. Those three big cases, which included the Illinois "lights" case, have been decided in the company's favor in the past year. Altria management has said it wants to see improvement in the U.S. litigation environment before spinning off Kraft.

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