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Legislature Approves Bill Capping Bond in Tobacco Class-Action Lawsuit

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RALEIGH — Cigarette makers in North Carolina will get protection from massive lawsuits now that a bill to help them stay solvent while they fight is now law.

Less than an hour after lawmakers adjourned a four-hour special session to cap punitive damage bonds at $25 million, Gov. Jim Hunt signed the bill into law with no public ceremony.

In one of the few statehouses that still allows smoking, the bill shielding the tobacco industry passed almost unanimously.

The bill aims to protect North Carolina jobs and tax revenues, as well as the billions of dollars the state won in a settlement with Big Tobacco last year.

"Tobacco has taken so many licks, so many hard licks, that this one little victory is good news for us down east," says Rep. Carolyn Russell, R-Wayne County.

Big Tobacco may get hit with damages of $300 billion in a class-action lawsuit in Florida.

Under Florida law, the companies must post a bond equal to the damages levied while appealing. That could bankrupt an industry that means billions to North Carolina's economy.

The bill protecting Big Tobacco had just three opponents.

"I think it doesn't go far enough to provide protection, equal treatment and equal protection, to some of the smaller companies," says Sen. Fountain Odom , D-Mecklenburg County.

Last year North Carolina joined other states in a lawsuit against the tobacco industry. That irony was not lost on lawmakers.

"They beat the stuff to death, a legal product, and I don't know whether some people feel a little bit guilty now," says Russell.

Virginia, Kentucky and Georgia have also approved laws limiting the bond cigarette companies would have to post. Virginia and Georgia approved a $25 million limit; Kentucky set it at $100 million.

Since 1997, tobacco companies have agreed to pay nearly a half-trillion dollars in damages to cover the medical cost of treating sick smokers.

In February, tobacco farmers filed a $69 billion suit of their own to recover damages caused by the national tobacco settlement. From staff and wire reports