A $200 billion US legal action filed by "light" cigarette smokers that gained class action status yesterday has hammered share values of US tobacco companies.
The suit accuses tobacco companies such as Altria Group of misleading consumers into thinking light cigarettes were safer than regular smokes.
Shares of Altria, which makes the top-selling Marlboro brand, slid 6.4 per cent - their largest single-day percentage loss in more than two years. The Dow Jones US Tobacco index fell more than 5 per cent.
The plaintiffs said the industry's marketing intended to shift buyers to light cigarettes because of growing health concerns about smoking.
Lawyers for the plaintiffs argued that tobacco companies reaped between $120 billion and $200 billion in extra sales through the light cigarettes deception. These cigarettes were introduced in the 1970s.
But the tobacco companies claim they intended "lights" to refer to a lighter-tasting cigarette and that many consumers understood this.
But US Senior District Judge Jack Weinstein has allowed the suit to go forward on behalf of all US smokers of light cigarettes.
The case was filed under federal racketeering law and if the companies are found to have violated that law, damages would be tripled.
Philip Morris USA and Reynolds American R.J. Reynolds Tobacco said they would appeal the ruling.