Home » Crime and Fraud • News Stories • Spotlight » The most expensive class action lawsuit of all time: The 1998 Tobacco Master Settlement Agreement
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America is not unfamiliar with massive lawsuits against huge companies, which result in billions of dollars being paid out.
But one, in particular, stands out as the biggest ever and led to significant changes in the tobacco industry still seen today.
The case involved all the leading tobacco businesses in over 40 U.S. states and ended up costing a colossal $365.5 billion.
Despite being held in 1998, it remains the biggest lawsuit in U.S. history.
The first person to make a claim was Mississippi's state attorney general, Mike Moore, in 1994.
Most lawsuits created by families and smokers weren't successful most of the time, as the courts would argue they had chosen to smoke.
However, Moore claimed the state he lived in shouldn't be charged for smoking-related diseases.
His was one of a number of lawsuits launched against the industry, saying the tobacco industry was a major contributor to health issues around the population, which led to high costs to the public health system.
Mr. Moore laid it out in simple terms, saying: "[The] lawsuit is premised on a simple notion: you caused the health crisis; you pay for it.'"
The states claimed the companies used a wide range of deceptive practices over decades of sales of cigarettes and tobacco.
The lawsuits sought recovery for Medicaid and other public health expenses which for the treatment of smoking-related diseases.
The collective action meant that the defense of "personal responsibility" used successfully by the companies in smaller lawsuits would no longer apply.
The tobacco companies faced multiple actions around the U.S.
Their solution was to propose a national legislative settlement.
Attorneys led by Mr. Moore eventually announced a payment by the various companies of a staggering $365.5 billion.
They also agreed to stronger warning labels on tobacco products and a limit on advertising.
The tobacco companies also agreed to pay for a $1.5 billion anti-smoking campaign and to reveal previously secret industry documents.
It was also agreed to disband industry trade groups that Attorneys General said conspired to conceal damaging research from the public.
Legal action is still being taken today over the individual payments to the states as a result of the agreement 24 years ago, with Iowa involved in a case over $110 million it says it is owed.
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