Philip Morris Ordered To Pay $10.1 Bil. In Light Cigarette SuitMar 23, 2003 | AP
A judge Friday ordered cigarette maker Philip Morris USA to pay $10.1 billion for misleading smokers into believing its light cigarettes are less harmful than regular labels.
Lawyers for the plaintiffs said the ruling would pave the way for similar cases, but Philip Morris, now an operating unit of Altria Group Inc., said it would appeal Judge Nicholas Byron's decision.
"The decision ignores the law, ignores the facts and defies common sense," said William Ohlemeyer, vice president and associate general counsel of the cigarette maker, which is fighting off several similar lawsuits in other states. The federal government also said this week it would seek $289 billion from the tobacco industry, including Philip Morris, for what it says was a scheme to deceive and defraud the public.
Word of the settlement came after the end of regular trading on the stock market. In the extended session, shares of Altria fell $1.54, or 4.4 percent, to $33.50 on the New York Stock Exchange, reversing a 75 cent gain in the regular session.
Byron's ruling calls for the cigarette maker to pay $7.1 billion in compensatory damages, as well as $3 billion in punitive damages to the state of Illinois.
"Philip Morris intended to deceive consumers into believing that Marlboro Lights and Cambridge Lights were less harmful or safer than their regular counterpart," Byron wrote in his decision.
The lawsuit was filed on behalf of one million Illinois smokers who smoked those two brands. It was the first class-action lawsuit in the nation to come to trial alleging a tobacco company committed consumer fraud in its advertising of light cigarettes.
Unlike many other high-profile cigarette-related lawsuits, the plaintiffs didn't claim that smoking made them sick. They accused Philip Morris of wrongly leading customers to believe the "light" brands are less harmful than regular cigarettes.
They based their claims on evidence they said showed the tobacco maker concealed crucial research data revealing the detrimental effects of light cigarettes for more than 30 years.
Philip Morris had maintained that the light brands show less of the toxins when tested, although individual smokers tend to get more or less toxins depending on how they inhale. The company says it used the word "light" to refer to taste, not content.
The plaintiffs had sought more than $21 billion $7.1 billion in compensatory damages plus twice that amount in punitive damages based on what they paid for the light cigarettes over the years.
Friday's award, while significant, is not the largest ever against a tobacco maker. In October, a California jury awarded $28 billion in punitive damages to a former smoker who sued Philip Morris Inc. for fraud and negligence. A judge later reduced the award to what he called "a reasonable sum" of $28 million.
Plaintiffs in these high-award cases rarely receive the full amount. However, since Friday's award was issued by a judge, rather than jury, the chances of it being reduced may be less.
Madison County Circuit Court has drawn nationwide attention and criticism for the number of class-action cases filed there 60 in 2001 and 39 the year before.