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PUNITIVE DAMAGES ANALYSIS:
IT'S NOT JUST ABOUT NET WORTH

In cases involving corporate liability, a presentation of the overall health, wealth and economic status of the defendant enables the jury to make reasonable estimations leading to a punitive damage award. While many people think economic analysis of a company's status is simply a look at the net worth of a company, Robert W. Johnson & Associates knows there is much more to the process than that.

An economic analysis in a punitive damages case involves a careful, meticulous look at the overall health, wealth and economic status of the defendant. Robert W. Johnson & Associates evaluates the defendant's business, not just on the basis of balance sheets and cash flow, but by looking at details of the business activities being conducted.

Then, in presenting this information in a courtroom, Robert W. Johnson & Associates frames the details of the defendant's economic state in terms the jury can understand and can relate to - reasonable analogies in terms that are based on realistic situations in the jury members' own lives, using a critical, common sense perspective on corporate actions and activities. By doing so, Robert W. Johnson & Associates can help the jury to have the facts needed to reach a reasonable conclusion.

In the largest case the firm has handled to date, the retaining attorney said Robert W. Johnson & Associates's testimony was instrumental in a $28 billion award. In this case, the firm was retained to provide economic testimony quantifying Philip Morris, Inc.'s financial health, wealth and economic status regarding punitive damages. On October 4, 2002, the jury rendered a $28 Billion verdict, an unprecedented amount in the history of litigation.

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Location: Los Angeles, California

Case: Betty Bullock v. Philip Morris, Incorporated, et al.

Court: Superior Court of the State of California for the County of Los Angeles, No. BC249171

Plaintiff’s Attorney: Attorney Michael J. Piuze, Los Angeles, California.

Case Synopsis: The plaintiff, Betty Bullock, is a 63-year-old California woman who suffers from lung cancer. She started smoking in the 1950's at the age of 17 and was diagnosed with cancer on February 19, 2001. It has since spread to her liver. She smoked cigarettes manufactured by Philip Morris, the nation's largest cigarette manufacturer.

Ms. Bullock was awarded $850,000 in compensatory damages (income and future medical expenses).

Expert Consultation: In this case, Mr. Johnson testified not only to Philip Morris, Inc.'s current financial health, wealth and economic status, but also to cumulative financial data dating back to 1967. This cumulative financial data included sales of over $275 Billion and operating profits in excess of $75 Billion. When converted into 2002 dollars, the sales totaled over $360 Billion and the operating profits were in excess of $100 Billion. Mr. Johnson also testified that approximately 10% of all adult smokers in the U.S. reside in California.

Mr. Johnson was familiar in testifying in punitive damages cases against Philip Morris. Last year, Mr. Johnson testified for Attorney Michael J. Piuze in the Boeken v. Philip Morris, Inc. case in which the jury awarded $3 Billion.

Result: The jury, which had already awarded $850,000 in compensatory damages to Ms. Bullock, ordered $28 Billion in punitive damages against Philip Morris, Inc. The case draws extra interest because it follows a California Supreme Court ruling that grants cigarette makers a new window of immunity. The August 5th California Supreme Court decision said most statements and acts by the tobacco companies between 1988 and 1998 cannot be used as evidence against them because of a state law, which was later repealed. That window covers tobacco executives' testimony, given to Congress in 1994, that their product was not addictive.

Attorney's Comments: "Bob Johnson helped the jury understand Philip Morris' extreme wealth with his analysis of Philip Morris, Inc.'s financial statements and presentation of billions of dollars of their economic health and wealth. His use of analogies helped the jury appreciate the magnitude of Philip Morris, Inc.'s true economic and financial status. The defense never challenged the validity of any of his numbers."