The Georgia Supreme Court has ruled that the 1998 nationwide tobacco settlements precludes individual state residents from suing the tobacco industry for punitive damages related to tobacco use, the Dow Jones News Service reported March 15.

The ruling could help the tobacco industry fend off sick-smokers lawsuits in other states, some observers say. The Georgia decision "increases the prospect that other states will reach a similar conclusion, which would obviously reduce legal risk elsewhere," said Morgan Stanley analyst David Adelman.

The Georgia high court ruled that the state had represented the public interest served by punitive damages awards by participating in the Master Settlement Agreement (MSA), and denied the family of the late Clara Gault Freeman the right to seek punitive damages from Brown & Williamson Tobacco Corp. for her tobacco-related death.

The Gault case was sent back to federal district court to determine possible compensatory damages.

Christopher Growe, a tobacco analyst with A.G. Edwards, told investors that the Georgia ruling could influence the Florida Supreme Court, which is currently reviewing an appeals-court decision to throw out a $145-billion punitive-damages award against tobacco companies in the so-called Engle case.

"This recent ruling by the Georgia Supreme Court seems to further strengthen the Florida Appellate Court's stance and augurs well for at least this item being upheld in the Engle trial," Growe said. He added that tobacco firms can now be expected to use the MSA as a defense in other punitive-damages cases nationally.