$12B Bond Could Affect Philip Morris Settlement Payments
A recent Illinois court decision against Philip Morris USA may affect the company's scheduled $2.6 billion tobacco settlement payment to 46 states next month, Washington Attorney General Christine Gregoire (D) said on March 28, the Los Angeles Times reports (Los Angeles Times). In a March 27 letter to the state attorneys general, Denis Keane, Philip Morris general counsel, wrote that "it is presently uncertain" that the company would be able to pay the settlement funds (Los Angeles Times, 3/29). Illinois Circuit Court Judge Nicholas Byron earlier this month ruled in a class-action case that Philip Morris misled consumers about the health risks of "light" cigarettes and ordered the company to pay $10.1 billion in damages. The lawsuit, filed in Madison County Circuit Court on behalf of about one million Illinois smokers, alleged that Philip Morris fraudulently advertised that the company's light cigarettes contained lower doses of tar and nicotine. Philip Morris officials plan to appeal the case, but state law requires the company to post a $12 billion bond to file an appeal (Wills, AP/Nando Times, 3/25). Philip Morris officials last week asked Illinois lawmakers to pass a bill (HB 276) that would limit the amount of the bond, the AP/St. Louis Post-Dispatch reports (Guilar, AP/St. Louis Post-Dispatch, 3/25). However, some Illinois lawmakers "might balk at enacting such a law in the immediate wake of such a high-profile verdict against the company," the Journal reports (O'Connell, Wall Street Journal, 3/31). Gregoire, who helped negotiate the tobacco settlement, said that she and other state attorneys general would file motions in Illinois court to reduce the amount of the bond in the event that Illinois lawmakers do not pass such a bill (Los Angeles Times, 3/29).
Criticism From Anti-Tobacco Advocates
Matthew Myers, president of the Campaign for Tobacco-Free Kids, said, "It is highly inappropriate for Philip Morris to use the denial of payments to the states as a blackmail threat" to convince Illinois lawmakers to pass a bill to limit the bond amount in the case (Campaign for Tobacco-Free Kids release, 3/28). Richard Daynard, a professor at Northeastern University and an anti-tobacco advocate, added, "It's clear Philip Morris can pay its debts, but now it's trying to activate the attorneys general to try to persuade the lawmakers to enact a bonding cap" (Wall Street Journal, 3/31)