| An Illinois judge Friday found Philip Morris USA deceived smokers into thinking "light" cigarettes were safer than regular cigarettes and ordered the largest U.S. tobacco company to pay $10.1 billion in damages.
Philip Morris USA, part of Altria Group Inc. (MO), was the sole defendant in the class action case, known as Miles v. Philip Morris, in which it was sued under Illinois consumer fraud laws. The company said it will seek an immediate review of the decision.
The case was the first class-action to reach trial regarding use of the word "light" to promote cigarettes, and lawyers for Philip Morris had argued that a ruling against the company could trigger similar cases in other states.
The plaintiffs argued they bought the cigarettes thinking they posed fewer health risks than regular, or full-flavored, cigarettes. Unlike other smoking cases, the plaintiffs did not seek payment for medical monitoring or other health-related claims, but instead wanted repayment of the money they spent on light cigarettes.
Similar cases are pending, but no other trials have begun. A case pending in Illinois against R.J. Reynolds is set for trial on Oct. 21, a plaintiffs' lawyer said.
Illinois Circuit Court Judge Nicholas Byron called for Philip Morris USA to pay $7.1 billion in compensatory damages to smokers and $3.0 billion in punitive damages to the state of Illinois, according to the ruling.
Lawyers for the plaintiffs sought compensatory damages of more than $7.1 billion, plus punitive damages at twice that amount, for roughly 30 years' worth of refunds for Illinois smokers who bought and smoked the cigarette maker's Marlboro Light and Cambridge Light brands.
The judge also ordered that 25 percent of the $7.1 billion in compensatory damages go to the attorneys for the plaintiffs, almost a $1.8 billion payday.
"I'm gratified that the judge did the right thing based on the evidence in the case," said plaintiffs' lawyer Stephen Tillery.
Byron granted Philip Morris USA's request that the order be stayed for 30 days before the company would have to post bond of $12 billion to file an appeal.
Tobacco companies are lobbying for a cap on appeal bonds, which many say could bankrupt them and endanger the states' 25-year, multibillion-dollar settlement with the industry reached in 1998.
The Campaign for Tobacco-Free Kids said Illinois should resist efforts by Philip Morris to pass legislation that would limit the amount of bond money the company has to post in the case.
Philip Morris USA asserted that there were flaws in the case and said it would appeal the decision as well as the class-certification order that preceded it.
"Judge Byron has awarded an outrageous amount of money to a group of smokers who claim no injury, smoked cigarettes that were always labeled with government health warnings and continue to purchase Marlboro Lights despite the claims in the case," said William Ohlemeyer, associate general counsel for Philip Morris USA.
Two plaintiffs in the case, Michael Fruth and Sharon Price, were awarded $17.8 million and $11 million, respectively, in compensatory damages. Both of them are still smokers, according to a spokeswoman for plaintiffs' lawyer Tillery.
"It's a feeling of relief, I feel vindicated for everything we testified for," said Fruth. "I didn't expect anything less from Judge Byron."
Byron also ruled that any unclaimed funds from the $7.1 billion in damages should be divided up among the American Cancer Society, several law schools, domestic violence, drug court and legal aid programs in Illinois, and the Illinois Bar Foundation.
Altria shares fell to $33 on Instinet Friday afternoon, after closing at $35.04 Friday on the New York Stock Exchange. The shares hit a 52-week low of $31.77 earlier this week amid renewed talk of a Justice Department case against the industry and in anticipation of the Miles verdict.
Source: Reuters | |
