Justices reinstate $10 billion Price verdict

The Fifth District Appellate Court has reinstated a $10.1 billion Madison County bench verdict in a class action lawsuit against Philip Morris USA that alleges the company misled consumers about “light” and “low tar” cigarettes.

The class action lawsuit, which was filed in 2000 by attorney Stephen Tillery, alleged Philip Morris deceptively marketed light cigarettes. The lawsuit was the nation’s first to accuse a tobacco company of consumer fraud, and the original verdict awarded Tillery's team almost $2 billion in fees.

Reaching its decision to reinstate the 2003 verdict, the panel concluded that Madison County Circuit Judge Dennis Ruth exceeded the scope of his Section 2-1401 review when he “attempted to predict how the supreme court would rule on the question of damages."

Contrary to the tobacco giant's assertion, the appeals panel determined that Ruth's discussion of what the Illinois Supreme Court would have decided had it addressed certain issues is “inherently speculative in a way its discussion of the impact of the new information on the issue it actually did decide is not.”

“For these reasons, the order denying the petition for relief from judgment must be reversed,” Justice Melissa Chapman wrote for the panel.

Justices Bruce Stewart and S. Gene Schwarm, who took over for Justice James Wexstten on the panel following his retirement in December, concurred in the 30-page ruling. 

Philip Morris, which is owned by Altria Company, said it would seek immediate review by the Illinois Supreme Court. While the review is pending, the appellate court’s decision is stayed automatically.

“Almost 10 years ago, the Illinois Supreme Court reversed the Price judgment as contrary to Illinois law,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel. “The Fifth District Court of Appeals’ decision…conflicts with that ruling and essentially overrules a decision of a higher court.”

In 2005, the Illinois Supreme Court overturned the judgment against Philip Morris, which was imposed by former Madison Circuit Judge Nicholas G. Byron, sitting without a jury.

The original case, which was filed on behalf of Sharon A. Price alleged that Illinois smokers were deceived in purchasing Marlboro “Lights” and Cambridge “Lights” cigarettes and were entitled to a refund.

The Illinois Supreme Court later threw out the verdict, saying the Federal Trade Commission allowed companies to characterize or label their cigarettes as “light” and “low tar.”

The state Supreme Court ruled that Philip Morris could not be held liable under state law even if the terms were misleading or false.

The U.S. Supreme Court let that ruling stand in 2006, and Byron dismissed the case the next month.

However, in a 5-4 decision in 2008, the nation’s high court ruled in favor of three Maine residents who said smokers should be able to use state consumer protection laws to sue cigarette makers for promoting “light” and “low tar” brands.

Tillery said that that decision counted as new evidence and could be applied to reinstate his case, and the Fifth District on Tuesday agreed.

The class action lawsuit claims that Philip Morris knew when it introduced light cigarettes in 1971 that they were no healthier than regular cigarettes and that the light version actually contained a more toxic form of tar.

The suit claimed that the tobacco company deceptively promoted health benefits of light and lowered tar and nicotine cigarettes.

The defendant argued during the appeals process that while the trial court can grant relief from its own order dismissing the petition, it cannot grant relief from the Supreme Court’s order reversing the judgment.

“The flaw in this argument is that the only ruling the supreme court actually reversed was the trial court’s ruling on the defendant’s section 10b(1) defense,” the opinion states.

“Although it is true that the court may well have reversed the judgment on other grounds, it would not have done so without considering the merits of those issues. We find that granting relief from judgment has the effect of reinstating the proceedings with the verdict intact.”

Garnick said the law does not allow the Fifth District to reopen a decision by the Illinois Supreme Court based on speculation about the possible impact of subsequent events on the higher court’s ruling.

“In addition, the Fifth District erred in ordering reinstatement despite the fact that the Illinois Supreme Court previously raised other problems with the judgment, including whether the case was properly certified as a class action,” Garnick said in a press release.

Tillery said in a statement: “We are pleased with the Fifth District’s well-reasoned decision and are happy that Philip Morris will finally be held accountable for deceiving Illinois consumers.”

Garnick said that if the Illinois Supreme Court declines to review the case at this point, Philip Morris will pursue an appeal, to which a $250 million bond cap would apply.

The U.S. Food and Drug Administration now prohibits the use of “Lights” and other descriptors unless a manufacturer receives authorization to use the terms.

The FDA began regulating tobacco products in 2009 with the passage of the Family Smoking Prevention and Tobacco Control Act.

The $10.1 billion verdict included $1.8 billion in attorneys fees.