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Philip Morris Won't Pay State's Share In Tobacco Damages

Date: 05/19/99 4:31am Eastern
By The Associated Press

PORTLAND, Ore. (AP) -- Oregon could be gearing up for a show down with tobacco giant Philip Morris, which says it won't pay the state's share of $32 million in damages slapped against the company by an Oregon court.

At issue is the fate of $19.2 million, part of a $32-million punitive-damages award granted to the family of Jessie D. Williams, a Portland resident and longtime Marlboro smoker who died of lung cancer.

A Multnomah County Circuit Court jury awarded the family $79.5 million in punitive damages against Philip Morris on March 30, deciding that the cigarette-maker had lied for decades about the link between smoking and cancer.

On Thursday, Judge Anna J. Brown reduced the amount to $32 million, ruling that anything larger would violate constitutional guarantees against excessive punishment.

Under Oregon law, 60% of punitive damage awards goes to a state fund for crime victim compensation, meaning that Oregon would be a pull down $19.2 million, if the award withstands the tobacco company's planned appeal.

Now, the tobacco company is challenging the notion that it has to pay any punitive damages to the state. In a letter to Oregon Attorney General Hardy Myers, company attorneys wrote that a multistate settlement against tobacco companies excuses Philip Morris from paying the punitive damages to the state.

In November, Oregon joined a nationwide settlement orchestrated by state attorneys general in which the tobacco industry agreed to pay the costs of medical treatment for smokers whose health benefits are covered by the Medicaid system, health insurance for low-income people.

Under that agreement, Oregon is to receive $2.l billion during the first 25 years and then about $81 million a year in perpetuity.

Still, the state says it will stand tough against Philip Morris' refusal to pay in the Williams' lawsuit.

"We will be litigating that," said Kristen Grainger, executive assistant to Myers. "We could possibly use the same court and judge. We're now evaluating our options."

Neither Grainger nor Philip Morris attorney Gergory Little would comment in detail about the looming legal battle, but Little did say that the company was pleased that Brown reduced the award last week.

"We believe that the reduction was certainly a step in the right direction, and we're pleased that the punitive damages was dramatically reduced... and ultimately should be set aside in its entirety," he said.

The Williams family, on the other hand, hopes the entire judgment will be reinstated on appeal. In a statement written on behalf of the family, attorneys said they "emphatically disagree with the court's conclusion that the award was in any way excessive."

After the trial two jurors said they were angered by Philip Morris documents that showed the company knew about the disease-causing properties of cigarettes but continually denied the link between cancer and smoking.