SHARES in the British based tobacco and insurance group, BAT Industries, have hit their lowest level for the year despite a declaration that it planned to fight a $750,000 damages award by a Florida court.
On Friday, a Florida jury ruled in favour of Mr Grady Carter, a smoker for 44 years who has lung cancer, saying American Tobacco, part of BAT's Brown & Williamson subsidiary, had been negligent and produced a dangerous and defective product.
The decision hit Wall Street later that day and BAT shares reacted in London yesterday by setting a new low for the year. The shares closed down 46p on 463p, the lowest level this year and a fall of almost to per cent on the day.
"We would expect to be in the state appeal court in about a year," a spokesman for BAT said.
"It's a rogue judgement. The more we look at it, the more we believe there are good grounds for success at the appeal stage", he added.
Some industry analysts said the shares might fall further as the market assessed the threat of a torrent of litigation facing the tobacco industry.
"Nobody knows whether the flood gates might open," said Mr Simon Willis, analyst at Charterhouse Tilney. But many industry analysts say the main wave of litigation over tobacco has already surfaced.
"Talk of this case initiating a wave of litigation is nonsense," said analysts Mr Tom Bennett and Mr Derek Elias of investment bank, Paribas, in a report.
The tobacco industry is under attack on a number of legal fronts in the United States. These include state class action suits individual cases brought to establish a principle that can be applied to others - and lawsuits filed by state attorney generals seeking reimbursement of the costs of dealing with tobacco related illness.
Tobacco companies have won more than a dozen suits in recent years losing once in 1988 but that was overturned on appeal.
However, market jitters over tobacco stocks grew this year after a groundbreaking case in March in which Liggett, a subsidiary of Brooke Group, agreed to settle litigation with some US states.
BAT's shares have tumbled since then when they traded around 570 pence - although the firm, whose brands include Benson & Hedges, Lucky Strike and Kent cigarettes, plays down the threat of litigation.
BAT points to victories in recent months, such as a Federal Appeal Court decision in the Castano case which ruled that it could not be a class action as a plaintiffs individual circumstances predominated.
Meanwhile, tobacco companies, hurt by claims of damaging smokers' health and litigation, are toning down some advertising in the West, while seeking new markets in Eastern Europe and Asia.
No spokesman for either the Rothmans owned Carroll Tobacco or the Imperial owned John Player were available to comment on any implications for their
Irish tobacco manufacturing operations.
