Federal Judge Dismisses Guatemala Case; Says Legal Theory Does Not Support Right to Sue; Philip Morris Says Ruling Follows Trend.

Business Editors & Legal Writers

WASHINGTON--(BUSINESS WIRE)--Dec. 30, 1999

A federal judge today dismissed a lawsuit filed by the Republic of Guatemala against Philip Morris U.S.A. and other major cigarette companies, ruling that the claimed injuries were too remote to allow the case to go forward. This is the first ruling from a United States court to decide the legality of claims brought by foreign governments.

"This opinion stands squarely for the proposition that these cases are based on a flawed legal theory and they have no place in our courts," said Steven B. Rissman, assistant general counsel for Philip Morris.

Today's ruling, by U.S. District Judge Paul Friedman, is consistent with the recent decisions by four federal appeals court panels, each of which unanimously rejected similar health care cost reimbursement claims brought by labor union trust funds and Blue Cross plans against the tobacco industry. The significance of the Guatemala decision is heightened because Judge Friedman has been assigned to decide the merits of all foreign government cost recovery cases in the federal courts.

Rissman said today's ruling was an important decision not only for the tobacco industry, but also for common sense and for anyone concerned that U.S. courts might become a dumping ground for foreign lawsuits of every stripe. "This decision should send a strong message to foreign governments looking to use the U.S. court system to generate cash windfalls for their government's treasuries," Rissman said.

The case was Republic of Guatemala vs. the Tobacco Institute Inc. et al. It was filed in U.S. District Court in Washington.