Ohio verdict favors tobacco
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March 18, 1999: 7:14 p.m. ET
Ruling lifts Philip Morris shares, helping power Dow above 10K mark again
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NEW YORK (CNNfn) - In a major victory for tobacco makers, an Ohio jury on Thursday rejected a class-action suit by labor union health insurance funds who sought to recover money spent treating sick smokers.
After two days of deliberations, the U.S. District Court jury in Akron rejected the $665 million claim against Philip Morris Cos. Inc., R.J. Reynolds Tobacco Co., the U.S. tobacco unit of RJR Nabisco Holdings Corp., and British American Tobacco Plc., which owns Brown & Williamson Tobacco Co. in the United States.
The lawsuit was the first case to go to trial involving labor union health and welfare insurance funds.
"The jury has sent a clear message reaffirming that health risks of smoking have been well known for decades and that cigarette companies have not withheld material information regarding those health effects from the public," said Robert C. Weber, the lead attorney for the tobacco companies.
"Most federal courts have thrown these cases out before trial on purely legal grounds," he said. "Now an Ohio jury, having seen and heard the best evidence plaintiffs' lawyers can offer, concluded these cases have no merit."
The lawsuit, led by the Iron Workers Local Union No. 17, alleged that tobacco companies hid the dangers of smoking from the public. The plaintiffs also contended that the tobacco companies manipulated nicotine levels in cigarettes to keep smokers hooked and conspired to keep less addictive alternatives off the market.
"The Ohio union case found the tobacco industry not liable, that's how I would read it," Timothy Swanson, a tobacco analyst with A.G. Edwards in St. Louis, said.
The ruling follows a San Francisco jury's record $51.5 million verdict against Philip Morris on Feb. 11. The California jury ordered Philip Morris to pay punitive damages to a former smoker with inoperable cancer. The company has said it will appeal.
Shares of some of the nation's top tobacco companies rose on news of the verdict. Dow member Philip Morris (MO) closed at 42, up 3-3/4, helping to push the index briefly above the 10,000 mark and close in record territory.
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