Liggett Group announced Wednesday that it would pay $110 million to settle thousands of Florida lawsuits accusing the tobacco company of concealing the dangers of smoking cigarettes.
The out-of-court settlement will resolve nearly 4,900 of the 5,300 lawsuits pending in Florida against Liggett and its parent company, Vector Group Ltd , according to the company's statement. The agreement is expected to be finalized within 90 days, and will entail a lump-sum payment of $61 million, with the remaining $49 million being paid in installments over 15 years to the plaintiffs, the statement said.
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Liggett and Vector are the first defendants to reach a broad agreement to end smoker lawsuits in Florida brought by former plaintiffs in a class action filed in 1994 against major tobacco companies. The class action group consisted of all Florida residents who said they or family members had been killed or injured as a result of tobacco-related medical conditions by 1996. In 2000, a jury awarded the plaintiffs $145 billion in damages.
The Florida Supreme Court in 2006 overturned the $145 billion award and ruled that plaintiffs had too many individual issues to proceed as a class. However, the court said that plaintiffs could bring individual lawsuits based on findings from earlier in the litigation that nicotine is addictive and that tobacco use can cause a variety of diseases, including cancer.
That ruling prompted thousands of individual lawsuits from smokers and their family members in Florida's state and federal courts against major tobacco companies, including Liggett, which manufactured the Chesterfield brand of cigarettes.
"The Engle progeny has been the biggest litigation overhang on our company in the last decade, and this settlement substantially reduces the ongoing litigation risks, as well as related legal fees and expenses, of these cases," Bennett LeBow, Vector Group's chairman, said in a statement.
The lawsuits filed after the class was decertified are known as the Engle progeny, after the name of the original lawsuit, Engle v. Liggett.
The company said it expects to take an after-tax charge of $53 million in the third quarter of 2013 related to the settlement.
"We're pleased that this settlement will provide some compensation to thousands of victims of the tobacco industry's conduct, but the fight with the remaining cigarette companies is far from over," said a lawyer for the plaintiffs, Neal Roth of Grossman Roth.
(Reporting by Jessica Dye in New York; Editing by Phil Berlowitz)