CARSON CITY -- The Nevada Supreme Court on Friday tossed out a $25 million punitive damage award against the Reno Hilton in connection with a 1996 Norwalk-type virus outbreak after concluding that a successor owner of the hotel-casino was improperly added to the lawsuit.

The court stressed in its unanimous ruling that a jury finding for punitive damages remains intact. It is only the amount of the damages that must be re-evaluated based on the removal of Park Place Entertainment Corp. from the litigation.

The virus outbreak sickened about 1,000 people.

The case was brought by Hilton guests sickened in the outbreak.

In the first phase of the trial in 2002, a jury found that the policy of unpaid sick leave for its employees was a cause of the outbreak of the virus in May and June 1996. This jury found for punitive damages in the amount of $25 million.

The second phase of the trial, which has yet to take place, will consist of individual hearings for each member of the class-action lawsuit to assess compensatory damages against the hotel.

But the court ruling means the punitive damage award will now have to be reassessed.

In arguments before the court in September, an attorney for some of the people sickened in the outbreak said Park Place, which merged with Harrah's Entertainment in 2004, should be liable for the punitive damage verdict despite having acquired the Reno Hilton after the outbreak.

Attorney John Echeverria said the same people were running the hotel-casino after Park Place's acquisition, and to eliminate the company would allow corporate entities to evade responsibility.

The finding by Washoe District Judge Steven Elliott that Park Place be included was the right decision and should be upheld, he said.

But Las Vegas attorney David Frederick, representing Park Place, said the issue of whether the successor company should have been held liable for the damage award should not have been decided by Elliott unilaterally without evidence and testimony.

The court said in its order granting a portion of the petition that Park Place "was improperly and involuntarily substituted as a party-defendant during a jury trial for punitive damages in a class-action suit."

The court said Park Place was added without being given the opportunity to argue its potential liability for punitive damages.

The punitive damage award will have to be reassessed based on the remaining parties in the action, the Reno Hilton Resort Corp. and FHR Inc.

The court said that if, following proper notice to Park Place, a determination is made that the company is a successor and should be held liable for damages, then the company's financial status could be considered by a jury in a future punitive damages determination.

Echeverria said Friday he is optimistic that Park Place Entertainment ultimately will be brought back into the litigation. The downside of the ruling is that the case will now take longer to resolve, he said.

"Some of these folks are in their 70s and 80s," Echeverria said. "A number of them have died while the litigation has been pending."