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U.K. tobacco case in ashes?
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February 16, 1999: 9:25 a.m. ET
Litigation against cigarette makers could be close to collapse
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LONDON (CNNfn) - Shares in tobacco firms Imperial Tobacco Group and Gallaher Group jumped Tuesday after a court case brought by cancer victims was adjourned.
The U.K. Court of Appeal granted the adjournment after both companies, which are defendants in the case, agreed to the plaintiffs' request to postpone the hearing, due to start Tuesday.
The court was due to hear technical arguments to decide the allocation of costs among what until last week totaled 52 plaintiffs.
But the so-called Leigh Day group suffered a setback Feb. 9, when the judge, Justice Michael Wright, ruled that 8 of the plaintiffs had to drop out because they had brought their case more than three years after being diagnosed with cancer. This ruling is likely to affect a further 28 cancer sufferers.
"Today's hearing was about how cost should be allocated among plaintiffs, but as a number had dropped out it would have been pointless to have had the hearing," said Nick Bunker, tobacco analyst at HSBC Securities in London.
Bunker concurs with speculation that the move could spell the collapse of the case. "The judge's ruling last week raises some doubts over the viability of the litigation. His comments were very unsympathetic towards the plaintiffs," Bunker said.
Bunker believes that if there is an out-of-court settlement it will involve only the two sides agreeing about who would pay the "substantial" costs. Neither company would comment.
Imperial's (IMT) shares shot up 5.8 percent to 753 pence and Gallaher's (GLH) surged 5.2 percent to 445 pence in early afternoon trading in London.
The shares also were boosted by a separate statement from the U.K. government on Monday that said possible legal action by the National Health Service (NHS) against the tobacco industry for the cost of treating smoking-related illnesses is illegal.
Bunker dismissed this issue as a "red herring", pointing out that the government was forced to respond to the rehashing of an old story. Any NHS litigation would depend on the Leigh Day plaintiffs winning their case first, he added.
The rally in the shares should really have happened after the judge's ruling last week, Bunker said. But negative sentiment, caused by a shock damages award against Philip Morris in the U.S. Feb. 11, held the shares back. 
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