Tobacco stocks burned by $23.6 billion judgment
NEW YORK (CNNMoney) — Shares of Reynolds American dropped in premarket trading Monday after a Florida jury awarded a smoker’s widow $23.6 billion in punitive damages.
The stock price for Reynolds American, parent company of R.J. Reynolds Tobacco Co., fell 3% before the bell, following the jury award on Friday.
Investors dropped other tobacco stocks, too, though the declines were not as steep as Reynolds’. Shares of Altria Group slipped about 2%. Philip Morris fell about 1% and Lorillard dropped nearly 3%.
The multi-billion dollar award goes to Cynthia Robinson, whose husband Michael Johnson died in 1996 from lung cancer at the age of 36. Robinson sued R.J. Reynolds in 2008, claiming the company was negligent in not telling him that smoking was addictive and could cause lung cancer.
R.J. Reynolds general counsel J. Jeffrey Raborn said his company would fight the award, which he called “grossly excessive and impermissible under state and constitutional law.”
R.J. Reynolds Tobacco Co. said that it manufactures about one of every three cigarettes sold in the U.S. The company’s brands are Camel, Pall Mall, Winston, Doral and Kool.
Reynolds American and Lorillard have done well overall this year, with shares surging on takeover speculation.
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