MOUNT VERNON, Ill. (Legal Newsline) - An Illinois appellate court has reinstated a $10.1 billion 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, 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 attorneys almost $2 billion in fees.
The three-judge panel of the Fifth District Appellate Court reinstated the 2003 verdict Tuesday, concluding that the trial court exceeded the scope of section 2-1401 review when it "attempted to predict how the supreme court would rule on the question of damages," according to the opinion.
Contrary to the defendant's assertion, the trial court's discussion of what the state Supreme Court would have decided had it addressed the 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," the judges stated in their opinion.
Philip Morris, which is owned by Altria Company, said it would seek immediate review by the Illinois Supreme Court of the appellate court's decision. 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."
The three-judge panel that issued the ruling consisted of justices Melissa A. Chapman, Bruce D. Stewart and S. Gene Schwarm.
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 by attorney Stephen Tillery, 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 said 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 decision counted as new evidence and could be applied to reinstate his case and the Fifth District agreed.
The class action lawsuit claimed 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 in the ordinary course, 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.
Appellate Court of Illinois Fifth District case number: 5-13-0017
From Legal Newsline: Kyla Asbury can be reached at email@example.com.