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Illinois Supreme Court Will Rule Today in Philip Morris Case

Posted on: Thursday, 15 December 2005, 00:00 CST

By Kevin McDermott, St. Louis Post-Dispatch

Dec. 15--SPRINGFIELD, ILL. -- The Illinois Supreme Court will rule today on a $10 billion Madison County lawsuit judgment against Philip Morris -- a decision that could break America's largest tobacco company and ripple through dozens of states that rely on payments from the tobacco industry.

But Wall Street, seeing signs that Illinois' high court has lost patience with the Madison County Circuit Court, is betting that the justices instead will side with the cigarette maker. The company saw a modest jump in stock prices this week for its parent company, Altria Group Inc., in anticipation of today's decision.

"The Street expects a win here" for Philip Morris, said Christopher Growe, analyst at A.G. Edwards & Sons in St. Louis.

Plaintiffs in the case allege the tobacco company defrauded Illinois consumers by falsely implying that its "light" cigarettes are less dangerous than regular ones. Madison County Judge Nicholas Byron agreed and in 2003 ordered the company to pay $10.1 billion. The state Supreme Court's written ruling on the company's appeal is expected this morning.

The record-setting award spotlighted Southern Illinois' reputation for plaintiff-friendly rulings. Business groups and other critics say downstate civil courts, especially in Madison County, are too generous with verdicts against deep-pocket defendants.

Altria's stock rose by about 2 percent to just over $74 a share on Monday. The price had dropped back to $73.73 by the close of business Wednesday but still was holding well above the $60 it was going for at this time last year.

That performance is "pretty much on the expectation that the rulings from some of the big cases" pending against the tobacco giant will go its way, especially the Illinois case, said Patrick Schumann, senior analyst for Edward Jones in St. Louis.

"We believe the likelihood is relatively high that the Illinois Supreme Court will ... dismiss the verdict," Schumann said. He said the prediction was based on recent rulings by the Illinois Supreme Court in other cases.

In August, the court overturned a $1 billion Williamson County judgment against State Farm Insurance for using allegedly inferior automobile replacement parts. The justices ruled that the lower court had improperly applied Illinois' consumer laws to policyholders in other states.

In November, the court again ruled in favor of State Farm, in a different Madison County suit involving allegedly doctored automobile titles. The court ruled that the Louisiana lead plaintiff had no legitimate reason to file the case in Edwardsville.

State governments all over the United States will be watching the Philip Morris verdict, with an eye on their own budgets. Forty-six states, including Illinois and Missouri, entered into a 1998 settlement under which the tobacco industry agreed to pay $206 billion over 25 years to cover the states' smoking-related health costs. Most states have come to rely on the annual payments.

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Copyright (c) 2005, St. Louis Post-Dispatch

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MO, AGE,

Source: St. Louis Post-Dispatch

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