About That $300 Million Tobacco Verdict...

http://www.futureofcapitalism.com/2009/11/about-that-300-million-tobacco-verdict

The Am Law Litigation Daily has an interview with the lawyer who won a $300 million verdict against Philip Morris USA on behalf of an emphysema victim. The story indicates that the pivotal factor in the size of the verdict was less how much the smoker had suffered and more how much money Philip Morris makes:

The company, he said, claimed that it was worth only $1.7 billion. But he presented witnesses who said that in just the first three quarters of 2009, Philip Morris paid $3.1 billion in dividends to Altria, its parent company. "We broke it down and it was about $10 million a day," he said. "The jury was impressed by the numbers."

Think for a minute about this theory of justice. Imagine applying it to, say, car accidents. By this logic, if a billionaire in a Rolls Royce crashed into Mr. Smith's car and caused $3,000 worth of damage, and if a middle-class driver in a Buick crashed into Mr. Jones's car and caused $3,000 worth of damage, the key variable in deciding how much money Mr. Smith or Mr. Jones should be compensated isn't how much damage was done to their vehicles, but how much money the driver who crashed into them has in the bank. One can argue that the tobacco case is different because the tobacco company is making its money by selling a dangerous product, while the billionaire in the Rolls Royce may have made his fortune by selling airbags or bran flakes. Still, part of the concept of rule of law is that justice is impartial and treats everyone equally, hence the blindfold over the eyes of the classic statue of justice. As we said before, damages will probably be reduced on appeal, and we are non-smokers here at FutureOfCapitalism.com. Still, there's something about this line of reasoning that makes us uncomfortable -- the idea that, in the American legal system, a business would be punished more severely because it is an economic success. When they start suing the sugary drink manufacturers, it may not be pretty for Warren Buffett.

by Editor  |  Nov 23, 2009 at 8:33 am Related Topics:  Health Care, Warren Buffett receive the latest by email: subscribe to the free futureofcapitalism.com mailing list