Philip Morris Still Working To Reduce $12B Bond To Appeal Lawsuit
Philip Morris USA on April 4 "scrambled" to avoid paying a $12 billion bond needed to appeal a recent Illinois court decision, the Washington Post reports. The company asked Madison County, Ill., Judge Nicholas Byron to lower the bond; continued to press the Illinois legislature to enact a law to limit the bond amount required for companies to appeal a court decision; and filed a suit in Cook County, Ill., to stop collection of the $3 billion in punitive damages from the case (Mayer, Washington Post, 4/5). Last month, Byron 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. Philip Morris officials plan to appeal the case, but state law requires the company to post a $12 billion bond before it can file an appeal. On Thursday, the Illinois Senate's executive committee voted 7-3 to reject a proposed resolution that would cap the cost of appeals bonds at 10% of any damage award above $1 billion, thus lowering Philip Morris' bond payment to just over $1 billion (Kaiser Daily Health Policy Report, 4/4). Officials for Philip Morris said that unless the $12 billion bond was lowered to no more than $1.5 billion, it would force the company into bankruptcy, the Post reports. William Ohlemeyer, Philip Morris USA vice president and associate general counsel, said that the company seeks "the opportunity guaranteed by the United States and Illinois constitutions to have our appeal heard without being forced to post a bankrupting bond" (Washington Post, 4/5).
Other Options?
Former Illinois Governor James Thompson (R), now working as a lobbyist for Philip Morris, said he and Illinois Senate President Emil Jones (D) are working on the outlines of a bill similar to the one rejected by the Senate executive committee that could be introduced as early as Tuesday, the New York Times reports (Meier, New York Times, 4/5). According to the Wall Street Journal, the chances of passing a bill to reduce bond payments appear to be low (O'Connell, Wall Street Journal, 4/7). Meanwhile, in its suit to prevent the collection of $3 billion in punitive damages, Philip Morris asserts that Illinois gave up any claims to punitive damages by joining other states in settling the $246 billion national tobacco suit in 1998, the Post reports. Plaintiff's attorney Stephen Tillery said the company filed the collection suit in Cook County, not Madison, to "get a hearing in front of a judge who hadn't heard seven weeks of testimony about the terrible things they've done over 30 years" (Washington Post, 4/5).
States Join Debate
State attorneys general have said they plan as early as today to file a friend-of-the-court brief arguing that the $12 billion bond is excessive, Oklahoma Attorney General Drew Edmondson (D) said, the Richmond Times-Dispatch reports (Richmond Times-Dispatch, 4/5). The state attorneys general are filing the brief because the bond threatens Philip Morris' $2.6 billion tobacco settlement payment due to the states on April 15, the Post reports. The state attorneys general also told Philip Morris Friday that they would sue the company if it missed the payment (Washington Post, 4/5). If the bond payment is not reduced through legislation or a court ruling, Philip Morris might have to strike a deal similar to the one it reached in 2001 with plaintiffs' lawyer in Florida, the Journal reports. Under that deal, Philip Morris forfeited the $500 million bond needed to appeal the $144.8 billion verdict against tobacco companies in exchange for bonding for the full amount of damages. However, Ohlemeyer said, "All these people who say this is so simple and we need to cut these guys a check are missing something important: You shouldn't have to pay people extra money for the right to pursue an appeal" (Wall Street Journal, 4/7).
