US: The Illinois Supreme Court yesterday reversed a $10.1 billion (€8.4 billion) verdict against Philip Morris USA, ordering a lower court to dismiss the case in which the company was accused of defrauding customers into thinking "light" cigarettes were safer than regular ones.
The much-anticipated ruling sent shares of Philip Morris parent Altria Group Inc up more than 4 per cent to an all-time high and could help clear the way for Altria to spin-off its Kraft Foods Inc unit from its tobacco units.
In a 4-to-2 opinion, the court found that US Federal Trade Commission rulings specifically authorised tobacco companies to characterise their products as "light" or "low tar and nicotine".
Writing for the majority, Justice Rita Garman said the ruling was specifically based on a section in the Illinois Consumer Fraud Act that exempts a company from being punished for behaviour allowed by a specific regulatory body.
But those seeking to change the conduct of tobacco companies will need to appeal to the Illinois legislature for changes in the Consumer Fraud Act, she said.
Some Altria shareholders hope the ruling could presage how courts in other US states will treat similar lawsuits. The Illinois case helped spawn the filing of "lights" lawsuits in other states. One being particularly watched is in New York, where US District Judge Jack Weinstein is expected to decide early next year whether to certify a similar lawsuit as a class action.