Philip Morris case continues; Attorneys file additional documents

Bethany Krajelis Sep. 6, 2012, 7:53am



The decade-old class action suit over cigarette labeling continues to smolder as attorneys on both sides of the fight file documents that Madison County Circuit Judge Dennis Ruth requested at last month's hearing.

Following the lengthy Aug. 21 hearing over a motion seeking relief from the nearly seven-year-old order dismissing the $10.1 billion verdict, Ruth asked the legal teams for the plaintiffs and Philip Morris to pass along any additional information that may be of use in helping him reach a decision.

Attorneys for Philip Morris, which was accused of misleading customers through its use of "light" and "low tar" cigarette labeling back in 2000, filed a proposed answer to the petition on Aug. 23.

St. Louis attorney Stephen Tillery, who represents the plaintiffs, argued at last month's hearing that Philip Morris admitted to the facts alleged in his 2008 petition seeking relief by not filing a formal answer.

The discrepancy over the issue led Ruth to grant Philip Morris' oral motion for leave to file a proposed answer. He said at the hearing that just because he was going to let the tobacco company submit a petition to file proposed answer did not mean he would grant it.

On Aug. 31, Tillery filed a letter to Ruth and Philip Morris filed a post-hearing submission of additional record citations, according to documents provided by Philip Morris. Attorneys for Philip Morris also filed a letter to Ruth this week.

The recent filings focus on the standards that apply to Section 10b(1) of the Illinois Consumer Fraud Act and federal conflict preemption.

The plaintiffs' 2000 class action lawsuit against Philip Morris was believed to be the nation's first consumer fraud lawsuit against a tobacco company.

In the 2005 decision that went on to overturn the $10.1 billion verdict that now-retired Judge Nicholas Byron awarded the plaintiffs in 2003, the majority of the Illinois Supreme Court determined that Philip Morris could not be held liable under the state's Consumer Fraud Act for using "light" and "low tar" labels because the Federal Trade Commission permitted them.

The motion seeking relief from the dismissal of the verdict, however, contends that the majority of the high court relied on "factually inaccurate" information to reach its ruling.

Tillery claims that statements made by the FTC following the state high court's ruling in Price v. Philip Morris, as well as a 2008 U.S. Supreme Court opinion in Good v. Altria Group, constitute "newly-discovered evidence" that warrants relief.

The FTC came out in 2008 to say that it did not have a formal policy allowing "light" and "low tar" labeling, statements that Tillery contends contradicts testimony from a witness in the 2003 trial that it did.

In his Aug. 31 letter to Ruth, Tillery wrote that Philip Morris "argues strenuously" that the standards that apply to the state Consumer Fraud Act and the federal preemption issue relied upon in the 2008 U.S. Supreme Court ruling in Good are different and as such, render the facts pled by the plaintiffs irrelevant.

George Lombardi, a Chicago attorney who made arguments on behalf of Philip Morris last month, told Ruth during the hearing that the Good ruling Tillery brought up in his 2008 petition does not constitute newly-discovered evidence and would not have affected the outcome of the case.

He told Ruth that the court in Good used the same factual information regarding FTC history that the Illinois Supreme Court used in Price v. Philip Morris. The difference, Lombardi claimed, is that the two courts applied different legal standards to reach their decisions.

Lombardi said the Good court focused on the issue of federal preemption in the context of cigarette advertising whereas the Price court looked at the labeling issue under the Illinois Consumer Fraud Act and therefore, is not applicable.

Because the Supreme Court reached its ruling under the state Consumer Fraud Act, it did not address the federal preemption issue.

Tillery told Ruth in his letter that Philip Morris recently argued that the standard for invoking federal conflict preemption is more stringent than the standards under the state Consumer Fraud Act and that "Section 10b(1) is met through 'informal expressions of agency policy.'"

During arguments before the Supreme Court, however, Tillery claims that Philip Morris "did not have the same view of conflict preemption-in fact, back then, it could be met by informal rulemaking and expressions of policy."

While he claims that Philip Morris "considered the section 10b(1) and conflict preemption inquiries to be same" in its briefs to the Supreme court, Tillery said the company now argues otherwise.

"There was no change in law that would explain this shift on Philip Morris' part," Tillery wrote.

Tillery wrote in his letter to Ruth that is clear that Philip Morris' "sudden recognition of the vast differences" between section 10b(1) and conflict preemption "was arrived at for tactical reasons."

He added that, "at no point earlier in the litigation did Philip Morris address these differences and there is nothing new in the law to suggest the standards or relevant facts are materially different in any way."

In a Sept. 5 letter to Ruth on behalf of Philip Morris, Edwardsville attorney Larry Hepler wrote that the tobacco company never took the position that the legal tests for exemption under Section 10b(1) and federal preemption were the same.

"That said," Hepler wrote, it is true that Philip Morris's "current view of the legal test for implied preemption differs from the arguments it previously made in Price."

The difference, however, is not attributable to a strategic change of positions, but rather due to the fact that the U.S. Supreme Court has since rejected its view and adopted a more stringent legal standard than Philip Morris sought in Good, Hepler wrote.

A spokesman for Altria Client Services said Thursday he was unaware of any hearing dates being set in the case.

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