Tobacco stocks fall after $23bn Reynolds ruling
Big tobacco stocks stumbled yesterday as investors expressed caution in the aftermath of the $23.6bn (£13.8bn) damages award levelled against Reynolds American by a US judge on Saturday.
The US’s second-biggest tobacco company was told that it must pay the sum to Cynthia Robinson from Florida for the death of her husband Michael Johnson, alongside $16.8m in compensatory damages.
Yesterday Reynolds shares fell 1.14 per cent, knocking UK stocks including British American Tobacco, which fell 0.9 per cent, and Imperial Tobacco, which fell 1.5 per cent.
The award is the largest verdict for a claimant in US history and sends a strong message that could open the floodgates for further claims against big tobacco firms.
Lawyers for Robinson argued during the four week trial that Reynolds had concealed the dangers of smoking tobacco and that this had led to Johnson contracting lung cancer and dying 18 years ago.
“We hope that this verdict will send a message to Reynolds and other big tobacco companies that will force them to stop putting the lives of innocent people in jeopardy,” Robinson’s lawyer Willie Gary said in a statement.
Reynolds said on Sunday it believes the verdict is unfair and plans to fight the decision as soon as possible.
“The damages awarded in this case are grossly excessive and impermissible under state and constitutional law,” Reynolds vice president and assistant general counsel J. Jeffery Raborn told CityAM in a statement via email.
“This verdict goes far beyond the realm of reasonableness and fairness, and is completely inconsistent with the evidence presented.
“We plan to file post-trial motions with the trial court promptly, and are confident that the court will follow the law and not allow this runaway verdict to stand.”
The third-largest US tobacco firm Lorillard saw its share price fall 1.1 per cent during trading yesterday.
THE AFTERMATH OF THE LANDMARK RULING
The damages awarded in this case are grossly excessive. This verdict goes far beyond the realm of reasonableness and fairness and is completely inconsistent with the evidence presented. We plan to file post-trial motions with the trial court promptly and are confident that the court will follow the law and not allow this runaway verdict to stand.
REYNOLDS’ ASSISTANT GENERAL COUNSEL JEFFERY RABORN
We hope this verdict will send a message to RJ Reynolds and other tobacco companies that will force them to stop putting the lives of innocent people in jeopardy.
ROBINSON’S LAWYER WILLIE GARY
The jury wanted to send a statement that tobacco cannot continue to lie about the addictiveness of the deadly chemicals
ROBINSON’S ATTORNEY CHRISTOPHER CHESTNUT