Philip Morris Must Pay $10.1BN In 'Lights' CaseMar 23, 2003 | FT.COM
Philip Morris was on Friday ordered to pay $10.1bn damages by a judge who ruled that the world's biggest cigarette maker had deceived smokers into thinking "light" cigarettes were safer than regular ones.
The case was the first class-action suit over light cigarettes to come to trial, and one of only a handful of class-action suits against big tobacco companies ever to succeed. It could trigger a series of copycat suits, and several similar cases are already pending in other states.
The ruling had been largely expected by analysts and investors but was a significant blow to Philip Morris USA, the US tobacco arm of the recently renamed Altria group.
Judge Nicholas Byron in the Third Circuit Court of Illinois ordered the tobacco giant to pay $7.1bn compensatory damages - as the plaintiffs had sought.
He awarded only $3bn in punitive damages, which penalise companies for wrongdoing, although the plaintiffs had asked for double the compensatory damages.
But, in a further setback for Philip Morris, Judge Byron ordered Philip Morris to post an appeal bond of $12bn.
Philip Morris immediately said it would appeal against the ruling.
"The decision ignores the law, facts and common sense," said William Ohlemeyer, Philip Morris's associate general counsel.
"Judge Byron has awarded an outrageous amount of money to a group of smokers who claim no injury."
It had argued that the case should never have been certified as a class action, since every smoker's personal history of smoking was different.
It also said every packet of its Marlboro and Cambridge Light cigarettes had carried a federally mandated health warning that was identical to that on regular cigarettes.
But the plaintiffs successfully argued that Philip Morris deceived the public by not expressly informing smokers that the light brands were as dangerous as regular, or full-flavour cigarettes.
The company, they added, was well aware that many smokers of light cigarettes believed they were safer than regular ones - and had a duty to inform these smokers under the Illinois consumer fraud and deceptive business practices legislation.
The plaintiffs came up with the $7bn damages figure by claiming that Philip Morris should return all amounts spent at retail in the state of Illinois between 1971 and early 2002 for Marlboro Lights and Cambridge Lights cigarettes.