Reynolds American Inc.’s share price up, to pay 23 billion dollars in punitive damages

A Florida jury ordered one of the units of the second-biggest tobacco company in the U.S. – Reynolds American Inc. – to pay punitive damages that amount to 23 billion dollars to a woman for her 36-year-old husbands death caused by lung cancer. The verdict represents the latest in a series of blows that the tobacco industry in the region suffered from.

The lawyer of Ms. Robinson – Mr. Willie Gary also said in a telephone interview that he expects the company to appeal the verdict. As reported by Bloomberg, Mr. Gary also added: “I don’t know what the judges are going to do. I hope and suspect that we will keep the verdict. The jury sent a message.”

The case against Reynolds American Inc. was filed by Cynthia Robinson in 2008 – 12 years after the death of her husband, who died after being a smoker for more than 20 years. The Florida jury also awarded Ms. Robinson a compensation that amounts to 16 million dollars after the U.S. company was found negligent about informing its customers of the tobacco risks.

The case has been considered as part of a class action started in 1994, which resulted in a judgement of 145 billion dollars against tobacco companies that was announced in 2000. Six years later – in 2006 – the Florida Supreme Court ruled that the claims of the plaintiffs are supposed to be pursued individually.

Still, the tobacco industry has been put under a series of blows since then, especially considering the fact that tobacco companies have lost about 70% of the individual lawsuits against them. One of the law professors, who work at Northeastern University – Mr. Richard Daynard commented the situation for the Wall Street Journal: “There are real risks for the industry here. Theres presumably nothing about this case that is so special that it couldnt be replicated in many cases in the future.”

Reynolds American Inc. was 1.56% up to close at 58.65 dollars per share yesterday, marking a one-year change of +11.37%. According to the information published on CNN Money, the 6 analysts offering 12-month price forecasts for Reynolds American Inc. have a median target of 63.50, with a high estimate of 72.00 and a low estimate of 52.00. The median estimate represents a +8.27% increase from the last price of 58.65.