Lawyers in a class-action case against tobacco manufacturer Philip Morris USA will ask a Madison County judge on Monday to assess at least $21 billion in compensatory and punitive damages a figure that would set a record for the St. Louis area even if the judge approved only a tenth of the request.
The class-action suit, the first of its kind in the nation to go to trial, claims that Philip Morris falsely marketed Marlboro Light and Cambridge Light cigarettes as lower in tar and nicotine, even though it knew that smokers would inhale more deeply or smoke more cigarettes to compensate for the lower nicotine levels.
Philip Morris officials deny the charges and say that the case never should have been certified as a class action because fraud claims inherently involve individual knowledge and perception.
Madison County Circuit Judge Nicholas Byron, who has overseen the bench trial, told lawyers for both sides Friday that his verdict would be delayed for at least 30 days while he takes post-trial motions.
But earlier in the week, news that he might rule after closing arguments Monday surprised Wall Street, causing the stock price for Philip Morris’ parent company to drop $1.71 on Thursday and $1.46 on Friday, closing at $35.82.
Some Illinois legislators have also followed the trial’s progress, proposing a law that would cap at $100 million the amount of money that a tobacco company would have to post to appeal a billion-dollar verdict. The bill has passed the Illinois House and is pending in the Senate.
Several states have crafted similar appeal-bond laws in hopes of protecting the 1998 Master Settlement Agreement, in which tobacco companies agreed to pay 46 states a total of $206 billion.
But several people contacted for this article said that a verdict in favor of the plaintiffs in this case would probably have no effect on the states’ settlement, or even the company’s financial condition.
Said one industry analyst who asked to remain unidentified: “You’re looking at a bad headline that makes the stock go down in the short term. But in the long term, it doesn’t have an impact on the valuation of these companies.”
A groundbreaking case
In many respects, the case has already broken ground for tobacco litigation nationwide and for the circuit court in Madison County.
Unlike other suits against tobacco companies that claim personal injuries from smoking, this case is based on the idea that consumers suffered economic damage by buying a product they believed was safer than regular cigarettes.
Regardless of the outcome, the trial “will provide a good road map” for both plaintiffs’ and defense lawyers in similar cases pending in other states, said Edward L. Sweda Jr., a senior lawyer with the Tobacco Products Liability Project at Northeastern University School of Law in Boston.
“Lawyers will learn from the mistakes and the good points on both sides, and they will take those lessons to heart when they go to trial,” Sweda said.
The case also has the distinction of being the first class-action suit in Madison County to make it to trial. Until now, all of the class-action cases in Madison County that have resulted in monetary awards have been resolved by settlements.
Lawyers made their opening arguments Jan. 21 to a courtroom crowded with representatives from both sides and curious onlookers, a few of them lawyers involved in other tobacco litigation.
For the next six weeks, lawyers wheeled boxes of evidence in and out of Byron’s third-floor courtroom. A group of 10 court reporters, some of them working around the clock, produced daily transcripts of the trial, at a cost of $4.20 a page.
“They pretty much have stayed up all night” to deliver the transcripts, said supervisor Kathy Harrison. “Some of them don’t go home.”
On Friday morning, several of the plaintiffs’ expert witnesses participated in a telephone media conference in which they reiterated their testimony that Philip Morris knew light cigarettes were only lighter according to government-mandated machine tests, but not when actually used by smokers.
“What these people were being offered was risk reduction,” said Dr. David Burns, editor of a recent National Cancer Institute study assessing the risks of smoking low-tar cigarettes. “That is not what they got.”
William Ohlemeyer, vice president and associate general counsel for Philip Morris USA, held a separate telephone conference Friday afternoon to dispute those claims.
The company’s lawyers have argued that the government not the tobacco industry worked to convince smokers that light cigarettes were lower in tar and nicotine, and thus safer, than regular cigarettes.
“This case involves a product sold with a federally mandated health warning that this product could cause cancer, and sold at the exact same price as regular cigarettes,” Ohlemeyer said. “Some of the class members (who testified) are still smoking Marlboro Lights, notwithstanding their claims that they were somehow defrauded.”
No end in sight
No jury verdict in the St. Louis area has approached $1 billion, according to available records. No verdict reported since 1996 has even passed the $500 million mark, according to Verdict Reporter Inc., which tracks and publishes civil case data.
In Illinois, the largest verdict to date almost $1.2 billion was handed down four years ago in a class-action case charging that State Farm Insurance had defrauded its customers by promoting questionable auto-body parts for repairs. That case is still in the appeals process.
If Byron rules in favor of the plaintiffs and hands down a record verdict, the case won’t be resolved for years.
Ohlemeyer said the company would appeal an adverse verdict, taking it to the U.S. Supreme Court if necessary.
Even those who haven’t followed the trial but know the judicial system well said that plaintiffs’ attorneys would have a slim chance of collecting on a huge award.
Said John Kirkton, editor of the Cook County (Ill.) Jury Verdict Reporter: “I would be very surprised if a multibillion-dollar verdict on something like this stood.”