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Illinois tobacco case may head to Supreme Court

Posted on: Friday, 5 May 2006, 11:54 CDT

By Jessica Wohl

CHICAGO (Reuters) - The Illinois Supreme Court declined on Friday to rehear a case in which it previously threw out a $10.1 billion verdict against Philip Morris USA and an attorney for the plaintiffs in the class action vowed to appeal to the U.S. Supreme Court.

"We thought at the very minimum that they would refer it to the Federal Trade Commission and we are stunned that they didn't," Stephen Tillery, an attorney for the plaintiffs, told Reuters.

"I would hope that the U.S. Supreme Court, when they read this opinion, would see how far off base it is," Tillery said.

The initial $10.1 billion judgment in the class action case, in which the Altria Group Inc. unit was accused of defrauding consumers into thinking "light" cigarettes were safer than regular smokes, was handed down against Philip Morris by a trial court judge in March 2003.

The Illinois Supreme Court first overturned the verdict in December and ordered a lower court to dismiss the case. A divided court ruled at that time that the U.S. Federal Trade Commission had authorized tobacco companies to characterize their products as "light" or "low tar nicotine."

The court said a section in the Illinois Consumer Fraud Act exempts a company from being punished for behavior allowed by a specific regulatory body.

The same court split again in its ruling not to rehear the case on Friday.

In his dissenting opinion, Justice Charles Freeman wrote he believes "that this court's judgment may have been erroneous."

"The court's denial of the petition for rehearing does not speak well of this court. It is disappointing and will ultimately prove to be embarrassing. History will be the judge," Freeman wrote.

Justice Thomas Kilbride joined in the dissent.

The "lights" case has been closely watched not just because of the size of the ruling, but because it is one of the legal hurdles management has said need to be cleared before it could spin off Altria's Kraft Foods Inc. business from its tobacco business.

"PM USA is pleased with the decision which reaffirms the Illinois Supreme Court's earlier ruling," said William Ohlemeyer, vice president and associate general counsel for Altria.

Analysts have said in the past it was unlikely the Illinois Supreme Court would rehear the case. But filing for a rehearing in state court is a standard step before trying to bring a case before the U.S. Supreme Court.

Altria shares were up 39 cents to $74.04 after rising to $74.39 in New York Stock Exchange trading after the court denied the petition for rehearing.

Source: REUTERS

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