In the history of tobacco litigation, only one plaintiff had ever been awarded any damages, and those were compensatory rather than punitive. Save for one Florida jury, whenever juries have been asked whether the tobacco industry is liable for a smoker's health problems, they've decided that the plaintiff knew what the risks were and chose to ignore them. Given that, there's a real argument to be made that the tobacco companies should have just continued to litigate on a case-by-case basis. They were spending obscene amounts of money on litigation--as much as $750 million a year, by one account--and the strain of wondering if this case would be the one that broke the bank couldn't have made working at these companies much fun. But next to $500 billion, $750 million a year looks like a bargain. And as time went on, the case for tobacco's liability would have grown weaker, since public awareness of smoking's hazards has grown stronger.
It's possible, of course, that the cost of losing a major class action suit or one of these state Medicaid suits was just too enormous to chance. But what seems clear is that the desire to get a higher stock market valuation, combined with a history of refusing to defend itself honestly, pushed the tobacco industry to the negotiating table. And there--in no small part as a result of that history--it has found itself with very little leverage. For 35 years, Big Tobacco never gave an inch. It's not really surprising that when it finally did, its foes realized they could take a mile.
If you missed the discussion of tobacco executives' choice to smoke, click.
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