Illinois Supreme Court Lowers Philip Morris USA Appeal Bond

The Illinois Supreme Court yesterday ruled that Philip Morris USA must post $6.8 billion rather than $12 billion to appeal a verdict against it in a class-action case in which plaintiffs alleged the company misled consumers about health risks of "light" cigarettes, the Washington Post reports (Washington Post, 9/17). The court also said it would hear the appeal of the March decision, in which Madison County, Ill., Circuit Court Judge Nicholas Byron awarded plaintiffs $10.1 billion, the AP/Chicago Tribune reports (AP/Chicago Tribune, 9/16). Philip Morris officials planned to appeal the class-action suit, but Illinois law required the company to pay a $12 billion bond to file an appeal. After Philip Morris officials contended that the bond requirement would force the company to file for bankruptcy, Byron in April reduced the bond by half. 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. In August, Byron reinstated the $12 billion appeal bond amount (California Healthline, 8/18). Yesterday's bond reduction saves Philip Morris from a "potential cash crunch" and also allows the company to "safeguard billions of dollars in payments it owes U.S. states" as part of the national tobacco settlement, Reuters/Los Angeles Times reports. William Ohlemeyer, vice president and associate general counsel for Philip Morris, said the court's ruling "is in the best interest of all parties involved because it expedites" the legal proceedings. Stephen Tillery, an attorney for the plaintiffs, has said a reduced bond is "insufficient to protect the interests" of the plaintiffs, Reuters/Times reports (Dorfman/Bailey, Reuters/Los Angeles Times, 9/17).