Court Affirms Tossing $10B Philip Morris Verdict

The Illinois Supreme Court will not reconsider its decision to throw out a $10 billion verdict against cigarette manufacturer Philip Morris USA, issuing an order Friday that denied a request for rehearing the case.

The court ruled 4-2 in December that the verdict handed down by a Madison County court was invalid and ordered that lower court to dismiss the case. The state high court said the Federal Trade Commission allowed companies to characterize their cigarettes as "light" and "low tar," so Philip Morris did not improperly mislead customers about the health impacts of its cigarettes.

The court did not comment on why it refused to reconsider the case, but two justices strongly disagreed.

Justices Charles Freeman and Thomas Kilbride said the rest of the court overlooked or misunderstood significant questions raised by plaintiffs seeking reconsideration.

They said the court seemed more concerned with ending the case than making the most informed decision.

"The court's denial of the petition for rehearing does not speak well of the court," Freeman wrote in a 14-page dissent. "It is disappointing, and will ultimately prove to be embarrassing. History will be the judge."

The tobacco company, a unit of Altria Group Inc. (MO), argues the case should never have been declared a class-action on behalf of some 1.1 million people who bought light cigarettes in Illinois.

The smokers did not accuse the company of harming their health. They claimed Philip Morris knew when it introduced light cigarettes in 1971 that they were no healthier than regular cigarettes, but it hid that information and the fact that light cigarettes actually had a more toxic form of tar.

Madison County Judge Nicholas Byron agreed that Philip Morris misled customers into believing they were buying a less harmful cigarette. In March 2003, he ordered the company to pay $10.1 billion — $5 billion in compensatory damages, $3 billion in punitive damages and $2.1 billion in interest.

Philip Morris appealed directly to the state Supreme Court two years ago, arguing the trial court's decision was flawed in several ways.

It insisted its cigarettes performed as advertised. Those advertisements met federal guidelines and never promised light cigarettes were less hazardous than other cigarettes, the company said.

Altria shares rose 28 cents to $73.93 in afternoon trading on the New York Stock Exchange. They have traded in a 52-week range of $63.60 to $78.68.