Illinois Judge Reinstates $12 Billion Bond for Philip Morris Appeal

Madison County, Ill., Circuit Court Judge Nicholas Byron on Aug. 15 reinstated the $12 billion bond that Philip Morris USA must pay to prevent seizure of its assets while it appeals a $10.1 billion verdict in a class-action suit, the Los Angeles Times reports (Levin, Los Angeles Times, 8/16). In the suit, Byron ruled 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 class-action suit, but Illinois law requires the company to pay a $12 billion bond to file an appeal. Philip Morris officials said that the bond requirement would force the company to file for bankruptcy. In April, Byron reduced by half the $12 billion bond; he ordered Philip Morris to place $6 billion into an escrow account, deposit the interest each year and make four $200 million payments to the court. In May, Byron awarded the plaintiffs exclusive rights to the $6.8 billion and ordered Philip Morris to provide the plaintiffs with a guaranteed $100 million payment in the event that the company files for Chapter 11 bankruptcy protection. However, in July, the Illinois Fifth District Court of Appeals ruled that Byron must adhere to an Illinois Supreme Court rule that requires appeal bonds to meet the verdict total plus the amount of interest estimated for the time of the appeal, about three years. The court ordered Byron to reconsider his decision to reduce the bond requirement and issued a 30-day stay of enforcement of the March verdict to allow Byron time to reconsider his decision (Kaiser Daily Health Policy Report, 7/15).

Bond Ruling
Byron stayed his order 60 days to give Philip Morris time to raise financing for the bond and appeal the decision to the Illinois Supreme Court, the Richmond Times-Dispatch reports (Richmond Times-Dispatch, 8/16). "This is an issue we want the [Illinois] Supreme Court to consider," John Mulderig, an attorney for Altria Group, the parent company of Philip Morris, said (Meier, New York Times, 8/16). "The bottom line is, a party shouldn't be forced into bankruptcy and deprived of the right to appeal," Mulderig said, adding that "courts can set a reduced bond if it is just" (Richmond Times-Dispatch, 8/16). However, plaintiffs' attorney Stephen Tillery said that it is possible that the state Supreme Court will decide to do nothing, meaning Philip Morris would have to pay the $12 billion appeal bond if they choose to continue with the appeal (Luke, AP/Dallas Morning News, 8/15).