The U.S. Supreme Court on Monday let stand a ruling that dismissed a $10.1 billion verdict against Philip Morris USA, ending a case that became a windfall for the county where it originated but helped feed its reputation as a “judicial hellhole.”
In its order Monday, the nation’s high court upheld without comment last year’s Illinois Supreme Court ruling throwing out the massive fraud judgment against Philip Morris USA, a unit of New York-based Altria Group Inc., in a class-action lawsuit involving “light” cigarettes.
“This closes a chapter on one of the sorry situations that came out of Madison County,” said Ed Murnane, the Illinois Civil Justice League’s president. “The book is back on the shelf, almost like (the lawsuit) never happened.”
The southwest Illinois county, just east of St. Louis has become known as a place where lawyers from across the country file cases hoping for big payouts in cases involving everything from asbestos exposure to medical malpractice. Some plaintiffs have been awarded tens of millions of dollars.
But Murnane said he hopes the decision in the Philip Morris case discourages other attorneys from filing such class-action lawsuits here.
The lawsuit, involving 1.1 million people who bought “light” cigarettes in Illinois, claimed Philip Morris knew when it introduced such cigarettes in 1971 that they were no healthier than regular cigarettes. But the company hid that information and the fact that light cigarettes actually had a more toxic form of tar, the suit claimed.
A Madison County judge ruled in favor of the smokers in March 2003, saying the company misled customers into believing they were buying a less harmful cigarette.
But the state high court overturned that ruling, saying that, because the Federal Trade Commission allowed companies to characterize their cigarettes as “light” and “low tar,” Philip Morris could not be held liable under state law even if the terms it used could be found false or misleading.
Plaintiffs attorney Stephen Tillery said Monday he was disappointed the nation’s high court didn’t hear the case or at least put it on hold until it decided a separate case, involving $79.5 million in punitive damages awarded to the widow of a longtime smoker from Oregon.
“We’re satisfied that the Illinois Supreme Court got it wrong,” Tillery said.
William Ohlemeyer, Philip Morris USA’s vice president and associate general counsel, said in a statement the U.S. Supreme Court’s decision “brings an end to the appeals process in this case.”
Ohlemeyer said Philip Morris would take steps to recover the $6 billion bond it put up to secure the judgment while the company appealed the ruling.
In June, all sides in the legal matter agreed that Philip Morris should be reimbursed $2.15 billion in cash and partial interest it already had paid toward the bond. A promissory note for the original $6 billion was to be returned to the company if the U.S. Supreme Court declined to hear the appeal.
Madison County was allowed to keep $17.6 million it got in interest generated from the bond.
The county used the money to pay off its administration building, buy and renovate a criminal courts building, offer early retirement to employees and getting a new radio system for the sheriff’s department and became nearly debt-free, said Alan Dunstan, the county’s board chairman.
“It was just a fluke that we were able to receive this,” Dunstan said. “None of it went to waste.”
Business groups and lawmakers in recent years have tried to rehabilitate public perception of Illinois’ legal system, often described by critics as a plaintiffs’ paradise in big-money lawsuits. Detractors, including the American Tort Reform Association, have pointed to Madison County in particular as a “judicial hellhole.”
President Bush visited Madison County in January 2005 as a backdrop for pressuring Congress to pass legislation limiting jury awards for medical malpractice. And in August of last year, Gov. Rod Blagojevich signed a law seeking to hold down steep medical malpractice costs for doctors by limiting the amount of money people can collect in lawsuits against hospitals and physicians.
Murnane credits recent moves by Madison County judges to make it tougher for plaintiffs — particularly from out of state — to file cases here and for moving some cases to arbitrators.
“In fairness to the court system, it’s too early to say whether any of those moves was a big flop or political spin,” Murnane said.
The Illinois case is Price, et al, v. Philip Morris, 06-465.