Feature Article

On December 15, the Illinois Supreme Court reversed a $10.1 billion dollar judgment against Philip Morris in Price v. Philip Morris, Inc. The judgment had been awarded in a class action lawsuit brought by consumers who had purchased Cambridge Lights and Marlboro Lights in the State of Illinois. The lawsuit alleged that Philip Morris had committed fraud in violation of the Consumer Fraud and Deceptive Business Practices Act by labeling the cigarettes as light, when in reality they contained levels of tar and nicotine that made them no safer than regular cigarettes. While the cigarettes could technically be considered as having lower levels of tar and nicotine under FTC guidelines, the tests used to determine the levels of tar and nicotine are misleading because they do not take into account the smoking habits of an actual consumer. These habits, such as covering the filter of the cigarette with fingers or inhaling deeply, cannot be reproduced in the FTC tests, which use machines to smoke the cigarettes. Philip Morris argued that it had complied with federal guidelines, that its cigarettes performed as advertised, and that the advertisements did not promise that the light cigarettes would be less harmful than regular cigarettes. It also argued that class action status should not have been granted to the plaintiffs, because the plaintiffs varied in their reasons for selecting brands of cigarettes.

The Circuit Court that decided the case held that Philip Morris had indeed engaged in fraudulent practices and misled consumers into believing that the light cigarettes were less harmful than regular cigarettes. The Circuit Court granted the plaintiff class $5 billion in compensatory damages, $3 billion in punitive damages, and $2.1 billion in interest, for a total of $10.1 billion in damages.

The Illinois Supreme Court reversed the verdict, holding that Philip Morris could not be held liable because the FTC had authorized the use of the terms "light" and "low tar" in consent orders. The Court recognized that the terms may be deemed misleading, but held that as long as the FTC authorizes their use, Philip Morris is within its legal rights to utilize the terms.

There has been some controversy over the 4 to 2 decision, as one of the judges that decided the case was recently elected to the bench with the help of contributions from supporters of Philip Morris, including the law firms that represented Philip Morris. Several of the contributors filed amicus briefs in support of Philip Morris in the lawsuit.

After the Court's decision came down, the shares of Altria Group Inc., the parent company of Philip Morris, went up 3.9 percent, reaching a new all-time high. The decision in Altria's favor may help the company to expedite its planned spin-off from Kraft Foods Inc., of which it owns 86.5 percent.

This decision comes as over 40 similar cases are pending against tobacco manufacturers in 22 states around the country, including Ohio. The Ohio case, Marrone v. Philip Morris, was argued before the Ohio Supreme Court in October. No opinion has been issued yet.

In Illinois, the plaintiffs' lawyers are considering either asking that the case be reheard in Illinois or appealing to the U.S. Supreme Court.

For the full text of the Illinois Supreme Court decision, click here.