Illinois Senate Rejects Proposal To Cap Philip Morris’ Appeals Bond Payment
The Illinois Senate's executive committee yesterday voted 7-3 to reject a proposed resolution that would cap the cost of appeals bonds, a bill that was advocated by tobacco company Philip Morris USA after it was ordered to pay $12 billion to appeal a recent court decision, the Los Angeles Times reports (Levin, Los Angeles Times, 4/4). Last month, an Illinois Circuit Court judge 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 (California Healthline, 3/31). Philip Morris has said it could face bankruptcy if it has to pay the bond and warned that it might not be able to make a $2.5 billion national tobacco settlement payment to 46 states by April 15 because of the bond order; the company is responsible for about 50% of the annual settlement payment to the states that won a $246 billion lawsuit against the tobacco industry in 1998 (California Healthline, 4/2). The Illinois bill would have capped appeals bonds at 10% of any damage award above $1 billion, thus lowering Philip Morris' bond payment to just over $1 billion; the tobacco company had lobbied for a cap of no more than $100 million (Los Angeles Times, 4/4). Brendan McCormick, a spokesperson for Philip Morris, said the company will continue to push for "more favorable" legislation, the AP/Nando Times reports (AP/Nando Times, 4/3).
The following are summaries of newspaper editorials responding to the Illinois Senate committee's rejection of the bond resolution and to the Illinois Circuit Court's bond payment decision.
New York Times: The Illinois Circuit Court "acted wrongly" when it required Philip Morris to post a $12 billion bond to file an appeal, according to a Times editorial. Tobacco companies are "high on the list of disliked defendants" in civil lawsuits, the Times states, and that fact "makes it even more important that judges be vigilant in making sure that cigarette makers, like other unpopular parties, are given the full protection of constitutional due process." However, the Times states that the bond may be forgiven for another reason: Philip Morris has "powerful allies" in the states because a bankruptcy filing would "imperil the ability of states to continue plugging their budget gaps with settlement revenues." The editorial concludes, "[T]he terms of the appeal bond should not be struck down to ameliorate states' fiscal crises, but rather to uphold principles of due process" (New York Times, 4/4).
- Wall Street Journal: Many states "began to panic" after learning of the Illinois Senate's rejection of the bond proposal because the bond payment may force Philip Morris to file bankruptcy, and states have "long ago factored all this settlement money into their budgets," according to a Journal editorial. Although the CDC mandates that at least 20% to 25% of state tobacco settlement money go toward tobacco prevention and cessation programs, only 19 states are funding these programs at "even half" the CDC recommendations, the editorial states. The Journal concludes, "[T]he tobacco suits -- like asbestos suits and breast implants suits -- have always been about a fresh, dependable source of revenue to fill state coffers and line lawyers' pockets" (Wall Street Journal, 4/4).