Recent Court Decision Leaves Tobacco Millions in Limbo

The $709 million put in escrow when the Florida Court slammed tobacco companies with $145 billion in punitive damages now has an uncertain future after a decision by the Florida Supreme Court to repeal the fine, MarketWatch reported.

Anthony Sebok, a Brooklyn Law School professor, told MarketWatch that because the original $145 billion was repealed by the Florida Supreme Court, the money set aside and the agreement might be "null and void." He said the agreement's unusual nature makes it hard to predict which way a judge will rule.

Under increasing legal tensions against the industry, the plaintiffs and the tobacco companies sued in the 2001 trial formed a side agreement whereby the tobacco companies involved -- Philip Morris, Lorillard Tobacco and Liggett Tobacco -- put the millions in an escrow account to benefit the class named in the case whether they won or lost, the report stated.

In addition, the plaintiffs' attorney, Stanley Rosenblatt, agreed not to challenge a bond cap added to the state's books that allowed the tobacco companies to pursue their appeal of the $145 billion judgment without securing it fully.

In the original agreement, the money could have been used to pay attorney fees for the plaintiffs; start a smoking-cessation program or another public health fund; or be distributed to the plaintiffs. Philip Morris put the most in the escrow account, totaling $500 million. Next was Lorillard with $200 million and Liggett with $9 million.

As a result of the repeal, the individuals concerned can bring their cases to the courts on a case-by-case basis. By breaking up the class, Philip Morris and the other companies involved are expected to claim that the money cannot go to a class that doesn't exist, and request that it be given back, the MarketWatch report stated.

However, the judge who decides on the escrow account could choose to hold the money for claims that are a result of the class break-up. The report stated that it could amount to hundreds of thousands of individuals that file a suit against the tobacco companies. If that is decided, the report stated that the money would be locked in escrow for years.