Illinois top court to review Altria $10.1 billion cigarette verdict

Reuters News
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Posted: Sep 24, 2014 4:07 PM

By Jonathan Stempel

(Reuters) - The Illinois Supreme Court on Wednesday agreed to hear Philip Morris USA's appeal of a $10.1 billion verdict accusing the Altria Group Inc unit of misleading consumers about the risks of smoking "light" cigarettes.

Philip Morris, which makes Marlboro cigarettes, is seeking to overturn an intermediate state appeals court's April 30 reinstatement of the award, which had been imposed by a trial judge in 2003 and overturned two years later.

The award has been on hold during the current appeal. A decision is not expected for at least several months.

Altria is based in Richmond, Virginia, and controls roughly half of the U.S. cigarette market. Its shares hit a record high on Wednesday, and were up 83 cents at $45.65 in late afternoon trading.

The class-action case was brought in 2000 on behalf of 1.4 million Illinois smokers, and was the first to go to trial over the use of the word "light" to promote cigarettes.

Philip Morris was accused of deceiving consumers into believing that "light" or "low tar" cigarettes were safer than regular cigarettes.

Unlike in many smoking cases, the plaintiffs sought to recoup sums they claimed to spend on light cigarettes, not money for health-related claims. They revived their case after the Federal Trade Commission in 2008 changed its policy on how cigarette makers could describe tar and nicotine levels in advertising and packaging.

A state court judge dismissed the case again in December 2012. But the appeals court said that judge lacked authority to decide how the policy change affected damages, and reinstated the original verdict.

"We feel very confident that the trial record below will be sustained, and look forward to rearguing the merits in court," said George Zelcs, a partner at Korein Tillery in Chicago who represents the plaintiffs, in a phone interview.

Murray Garnick, an associate general counsel at Altria, in a statement said there are "compelling reasons" for the Illinois Supreme Court to again rule for Philip Morris USA.

U.S. regulators have since June 2010 banned companies from using "light," "low" and "mild" in tobacco labeling.

The case is Philip Morris Inc v. Price et al, Illinois Supreme Court, No. 117687.

(Reporting by Jonathan Stempel in New York; Editing by Tom Brown)