$10 Billion Tobacco Judgment Overturned by Illinois Supreme Court

$10 Billion Tobacco Judgment Overturned by Illinois Supreme Court

03/11/2011

In what can be considered as a big victory for America’s tobacco industry, and a defeat for the plaintiffs of Madison County, the Supreme Court of Illinois on Thursday reversed a $10.1 billion ruling against Phillip Morris USA.

The Illinois Supreme Court stated in its ruling that the marketing and selling of “light” cigarettes does not constitute consumer fraud.

Despite the complicated issues involved in the case, the decision eventually depended on one simple aspect, and that is, that the Federal Trade Commission allowed tobacco industry to utilize the words “low-tar” and “light” in its marketing.

Based on this, the court decided that companies cannot be held accountable for whatever implications consumers may infer from those words. Pro-business groups praised the ruling and said that the actual message was targeted at the allegedly pro-plaintiff courts in Metro East area.

In a statement, Illinois Civil Justice League, a tort-reform business group, said “It seemed clear from the outset that this was a flawed case that would not have progressed in a venue other than Madison County.”

A dissenting justice in the case also indicated that ruling is another blow by the high court at the courts in Southern Illinois, as well as to consumer-protection cases in general.

In his dissent, Justice Charles Freeman wrote, “A majority of this court has become increasingly desensitized to the interests of the average Illinois consumer. There is little doubt in my mind that these decisions will send a chill wind over consumer protection”

On Wall Street, the stock of the parent company of Philip Morris, Altria Group, Inc, surged by over 5% within 30 minutes of the announcement of the ruling. By late afternoon the same day, the stocks settled at $76.62, or an increase of nearly $3 over the previous day.

WRITTEN BY:

blakeh@wellsdrew.com