Light Cigarette Suit Could Exact a Heavy Price on Tobacco Companies

Excerpt from our One-Page WSJ Summary:

Tobacco Firms Exposed To New $200 Billion Claim

Summary: Contrary to what tobacco companies had hoped for, U.S. District Judge Jack B. Weinstein in Brooklyn, N.Y. made a pre-trial ruling yesterday allowing as many as 50 million light cigarette smokers to claim class-action status in a lawsuit against the country's major tobacco companies. Also included in this ruling in a 2004 lawsuit was an allegation that Philip Morris USA [now Altria] (MO), Reynolds American Inc.'s (RAI) R.J. Reynolds Tobacco Co., and Loews Corp.'s (LTR) Lorillard Tobacco unit lied to consumers by advertising "light" cigarettes as being healthier than the regular high-tar version. The plaintiffs are seeking between $120 billion and $200 billion in damages, the approximate amount that the tobacco companies gained through their alleged deception. As a result, Altria announced it would delay its planned breakup and spinoff of its 88%-owned Kraft division. Altria's stock went down $5.26, or 6.4%, to $77.06. Reynolds shares fell $2.27, or 3.7%, to $59.75. Tobacco companies are appealing the ruing in the Second U.S. Circuit Court of Appeals in New York.
Related links: Full WSJ article • Altria's Opportunity to Unlock Shareholder Value • Yahoo News: R.J. Reynolds Tobacco Company to Appeal, Ask for Stay in "Lights" Case • Background: Altria Stock Jumps on Judge's Ruling Against Smokers
Potentially impacted stocks and ETFs: Stocks: British American Tobacco (BTI), Imperial Tobacco Group (ITY), Gallaher Group Plc (GLH), Vector Group Ltd. (VGR) • ETFs: iShares Dow Jones US Consumer Goods ETF (IYK), Vanguard Consumer Staples ETF (VDC), and Consumer Staples Select Sector SPDR (XLP) all have tobacco producers as a major holding.

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Comments

[E-Cigarette...:]

It is amazing that Big Tobacco is still able to be such a force in the USA, even after killing so many people. It appears that money really can buy anything in this country, even the lives of millions.

Aug 11 03:35 PM

[E-Cigarette...:]

The FDA is owned by Big Tobacco. Phillip Morris has more than enough money to keep the FDA in their place. Electronic cigarettes are a much safer alternative to smoking tobacco cigarettes, yet the FDA wants to ban them. Theres no Tar, no Second Hand Smoke, no Yellow Teeth, Fingers Or Walls, no Risk Of Fire Accidents, no Cigarette Butts Or Ashes, blah blah blah. The list just goes on...Yet the FDA wants to ban them and keet tobacco cigarettes legal?? WTF, The FDA is Big Tobacco's pet..

Johnny Blaze
www.halocigs.com

Aug 13 10:35 AM

[jillhandley:]

Agree with you on this one Johnny Blaze.

Oct 24 02:17 PM