US Big Tobacco Settles Lawsuit for $100 Million

Three of the biggest US tobacco companies, RJ Reynolds Tobacco, Lorillard (LO: NYSE) and Altria (MO: NYSE) have agreed to pay $100 million to settle federal lawsuits over smoking.

This agreement covers 400 lawsuits filed in Florida Federal Court in Florida by smokers and their families. The settlement does not cover those cases yet to go to trial. It does no cover the thousands ready to go to trial in State courts either. If all participants agree, this outcome will be final.

Under terms of the agreement, RJ Reynolds and Phillip Morris (Altria) will each pay $42.5 million and Lorillard will pay $15 million. This brings a successful outcome after years of litigation. This agreement covers Engle cases which were brought to hold big tobacco responsible for medical deaths and injuries from smoking related medical conditions.

In 2006, Florida Supreme Court overturned a $145 billion reward in this class and ruled the plaintiffs had too many individual issues to work as a group. However the court said the plaintiffs could file individual lawsuits based on fact nicotine is addictive and harmful to the body, as it causes diseases.

After that ruling, thousands of cases had been filed in Florida on both the State and Federal levels. These three companies had already been hit with millions of dollars in damages from the Engle cases and dozens of trial were waiting in the wings. In 2013 the Liggett Group settled over $110 million in nearly 5,000 lawsuits.

This will give the companies a chance to put the multitude of lawsuits behind them. Altria, promised to vigorously defend those suits not settled. The other two companies were pleased with the settlement. After the ruling, shares of Lorillard were up 0.2 percent. Shares of Reynolds American and Altria were both up 0.3 percent after the settlement.