Philip Morris-inspired legislation could resurface in veto session

Bethany Krajelis Jun. 8, 2012, 9:17am


Although it failed to survive the spring legislative session, a bill that would cap appeals bonds in civil litigation could get revived in the General Assembly's fall veto session.

Senate Bill 1355 passed the House on May 25 with a vote of 70-4 with one lawmaker voting present, but didn't make it to a vote in the Senate before the legislature adjourned late last month.

Rep. Dwight Kay, R-Glen Carbon, said the bill he co-sponsored remains a priority and hopes the Senate will support it during veto session, which is scheduled to begin Nov. 27.

Opposed by the state's trial lawyer group, House Amendment 3 to SB1355 would create a $250 million cap on the amount of money defendants in civil litigation have to post as bond in order to appeal a ruling.

While much of the House debate on the measure focused on the Madison County case of Price v. Philip Morris, Kay said the primary motivation behind the bill stems from a desire to create fairness in the court system.

"Because there is no cap in Illinois, many defendants feel intimidated knowing that indeed the sky is the limit when it comes to an appeal bond," Kay said.

"We want to make sure we give justice to everyone. If we impose large bonds on defendants then we are sending the signal to defendants that you really don't want to do this or shouldn't because it's so much money."

In 2003, then-Circuit Judge Nicholas Byron imposed a $10.1 billion verdict against Philip Morris, ruling that consumers were defrauded when the cigarette manufacturer used the terms "light" and "lowered tar and nicotine" in its advertising. Byron set a $12 million bond for the company to appeal the class-action lawsuit, but later reduced it to about $6 million after Philip Morris claimed the original bond amount could force it into bankruptcy.

Chicago attorney Jerry Latherow, who served as president of the Illinois Trial Lawyers Association this past year, said his group opposes the now-dead bill because among other reasons, it singles out tobacco companies. As written, the measure would apply to civil litigation involving signatories to the master settlement agreement in the Philip Morris case.

"Of all of the people and institutions who need a break and maybe deserve one, tobacco companies are not one of them. I see no reason why they, of all institutions, should get special treatment," he said.

"Their right to appeal is just like everybody else's. The bond is based on the amount of judgment and they should abide by that."

James R. Covington III, director of legislative affairs for the Illinois State Bar Association, said his group also opposes the measure.

"We don't have an opinion on the merits of what this bond should be," he said. "Our objection was Supreme Court Rule 305 seems to vest exclusive jurisdiction in the Supreme Court on this issue."

Rather than propose legislation, Covington said proponents of the measure should petition the state high court to amend Rule 305, which governs stay of judgments pending appeal. He said the court amended this rule shortly after the Philip Morris case.

The court in 2004 changed the rule to give judges discretion to set a bond lower the judgment amount. Citing Price v. Philip Morris, the commentary to the rule amendment noted that "in limited instances, the appeal bond requirement may be so onerous that it creates a barrier to appeal, forcing a party to settle a case or declare bankruptcy."

Putting the Philip Morris case aside, Kay said he believes legislation like SB 1355 needs to be approved in order to create a level playing field for businesses.

He said 44 other states impose caps on appeal bonds at amounts less than the $250 million cap proposed in Illinois.

Kay said Kansas and Michigan have a $25 million limit on appeals bonds while Missouri has a $50 million cap and Wisconsin's is set at $100 million.

"You look at our neighboring states and they all get it. Why is it we don't?" he said.

"I think ultimately if we want to have a reputation of being fair and balanced when it comes to how we handle appeals bonds in the state, this is something that has to pass and become law."

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