Victory in Whiteley lawsuit against tobacco companies

Lawsuit filed in Kansas by smokers to recover funds from state tobacco settlement


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VICTORY, Whiteley case:
EXCERPTS from Reuters, March 27, 2000, writer Michael Kahn

  The 12-member San Francisco Superior Court panel ordered
 Philip Morris Cos. Inc.(NYSE:MO - news) and R.J. Reynolds
 Tobacco Holdings Inc.(NYSE:RJR - news) each to pay $10
 million to Leslie Whiteley, a California woman who developed
 lung cancer after smoking for 25 years.

 The same jury decided last week that the two companies should
 pay Whiteley, a 40-year-old mother of four, $1.7 million in
 compensatory damages after finding that the cigarette makers
 acted with malice, knew about the health hazards of smoking and
 deliberately misled the public about those dangers.

  Jury foreman Michael Criscola said the final vote on damages had
 gone 9-3, with the holdouts wanting a much bigger award. But he
 said that the panel was united in finding that the tobacco
 companies should pay a price for their behavior.

"Most damning was the fact they had known about this for 50
 years and didn't do anything about it,'' he said.

 But the case was nevertheless seen as yet another milestone in the
 legal battle over tobacco, and industry analysts said it could pave
 the way for similar cases in future.

 Importantly, it was the first time cigarette makers were held
 responsible for the health of people who took up smoking after
 the surgeon general required warning labels on all cigarette
 packages in 1965 -- demolishing a key tobacco industry defense
 against court action by former smokers.

EXCERPTS from The San Francisco Chronicle, writer Harriet Chiang, March 21, 2000; headlined:
        S.F. Jury Awards Smoker $1.4 Million in Tobacco Suit

San Francisco -- A San Francisco jury delivered a blow to the embattled tobacco industry yesterday, awarding $1.47 million to a woman who developed lung cancer after smoking for 25 years.

The award against Philip Morris Cos. and R.J. Reynolds Corp., which is expected to increase with punitive damages, is the first in favor of a smoker who took up the habit after 1965, when the surgeon general required warning labels on all cigarette packages.

It is also the latest in a handful of verdicts that have gone against the
reeling industry in recent years.

"This really reflects a total collapse of the industry's ability to defend
itself in court,'' said Richard Daynard, a professor at Northwestern
University and head of a research project on the tobacco industry. Until yesterday's verdict, he said, cigarette companies were considered unbeatable in cases brought by those who took up smoking after the warnings labels came out.

In yesterday's verdict, a jury of seven men and five women found that Philip Morris and R.J. Reynolds knew about the health hazards of smoking and deliberately misled the public about those dangers. After more than six days of deliberation, the jury awarded Leslie Whiteley, a 40-year-old mother of four from Ventura County, $1.47 million for medical costs and pain and suffering. The panel awarded her husband, Leonard, $250,000 for loss of companionship.

The jury also found that the two tobacco giants had committed fraud. The panel will go back to court to consider how much, if anything, the companies should pay in punitive damages. The award could far exceed the compensatory damages.

The Whiteley case has been overshadowed by a class-action lawsuit brought by smokers in Florida. Last year, the Miami jury found that the nation's biggest cigarette makers had concealed from the public the dangers of smoking. The industry is now facing what could be a record- setting punitive damage award.

The San Francisco jury returned the verdict after the close of trading on the New York Stock Exchange, where Philip Morris shares fell .125 to close at 19.94. Shares of R.J. Reynolds, based in Winston-Salem, N.C., fell .31 to 16.50.

EXCERPTS from Kansas, The Capital-Journal, April 12, 2000, writer Steve Fry; headlined:   Smokers challenge  tobacco pact - Suit seeks class-action status, share of state's $1.76 billion settlement.

 Three Kansans who have received Medicaid benefits for smoking-related illnesses filed suit Wednesday seeking what they say is their share of the $1.76 billion settlement tobacco companies are paying to the state.

 The case stems from the state's successful lawsuit against R.J.
 Reynolds Tobacco Co. That lawsuit was filed in Shawnee County District Court on Aug. 20, 1996, and on Nov. 23, 1998, the state and tobacco companies settled it.

Defendants in the latest case are:

   Attorney General Carla Stovall, who prosecuted and settled the original tobacco lawsuit.

   Janet Schalansky, secretary of the Kansas Department of Social and Rehabilitation Services, who handles policies for the recovery and paying of money paid through the Kansas Medicaid program.

   Citibank, N.A., the escrow agent, which receives, manages and
 distributes the funds paid to Kansas by the tobacco defendants.

 The case has been assigned to U.S. District Judge Sam Crow.
 Defendants in a federal lawsuit have 20 days to respond or to seek an extension to file an answer.

 Thomas Lemon and Harold Houck, attorneys with the Topeka law firm of Fisher, Cavanaugh, Smith and Lemon, which filed the lawsuit, didn't have a precise number of plaintiffs but estimated there could be tens of thousands if the case is declared a class action.

  The smokers say federal law requires Kansas to pay to individual Medicaid recipients all money recovered from "responsible third parties" in excess of money necessary to reimburse the state and federal Medicaid programs for medical payments made on behalf of those recipients, according to the lawsuit.

 The lawsuit says state officials contend the initial lawsuit against the tobacco companies wasn't a Medicaid recovery action compelled by the Medicaid Act, "and that the state is therefore not required to disburse the settlement proceeds according to the requirements of federal law. The state has taken no steps to disburse to the plaintiffs any portion of the settlement amount or to inform the plaintiffs of their rights to claim that portion of the settlement monies to which they are legally entitled."

 The lawsuit contends the state has violated federal law either by failing to bring an action for recovery of medical payments from the tobacco companies as required by the Medicaid Act or by refusing to pay a portion of the settlement money to the plaintiffs.

 Kansas is among 12 states in which Medicaid recipients have filed suit to recover part of the settlements.

 Plaintiffs are John Puleo, 51, of Topeka, a disabled worker who has a heart condition, a lung condition and pneumonia; Judith Clark, a Johnson County woman in her mid-40s who has a lung disorder; and Tammy Thomas, 51, a Johnson County woman with emphysema.

[Virginia GASP]   Updated  15 April  2000