JUDGE REINSTATES $12 BILLION APPEAL BOND AGAINST PHILIP MORRIS.

Madison County Judge Nicholas Byron Aug. 15 reinstated the $12 billion bond he had ordered Philip Morris to post if it was to appeal his $10.1 billion judgment in a class action lawsuit brought by smokers who claimed the company had misled them over how it marketed light cigarettes as less harmful than regular brands.

After ordering the bond in March, Byron had cut the bond in half in April after the company said it would be forced into bankruptcy if it had to pay the full amount. But last month the Illinois Fifth District Court of Appeals ordered Byron to reconsider his decision.

Philip Morris has appealed the Fifth District's ruling in Sharon Price and Michael Fruth et al. v. Philip Morris to the Illinois Supreme Court, arguing Byron had authority to reduce the bond.

The plaintiffs' attorney, Stephen Tillery, who is with the Illinois firm of Carr Korein Tillery, had appealed Byron's decision to cut the bond in half, saying Illinois court rules require defendants who want to appeal to post a bond equal to the size of the judgment plus costs and interest.

Byron had ordered Philip Morris to pay $7.1 billion in compensatory damages to smokers who had bought Marlboro Light or Cambridge Light cigarettes between 1971 and February 2001 and $3 billion in punitive damages to the state.

Byron agreed to reduce the bond after Philip Morris argued paying the bond would force it to default on its payment to the states as required under the nationwide $206 billion tobacco settlement and attorneys general from 37 states and territories urged him to reduce it before the company's next payment to the states became due on April 15.

When he decided to reduce the bond, he agreed Philip Morris should pay an initial $6 billion on the appeal bond, an additional $800 million in 2004 and $420 million for each year the appeal takes.

In addition to its appeal to the Supreme Court, Philip Morris tried to get the state legislature to change the law making it easier to get an appeal bond lowered, but those efforts have proven unsuccessful so far.

Byron is the first judge to hear a class action suit about the dangers of smoking light cigarettes.

In his decision, he wrote, "The Court finds that based upon Philip Morris' course of conduct with respect to the representations of "Lowered Tar and Nicotine" and "Lights" that Philip Morris' practices offend public policy, are immoral, unethical, oppressive and unscrupulous and that this course of conduct caused a substantial injury to the Class members of this case.

"Therefore, the Court finds that Philip Morris has violated the Illinois Consumer Fraud Act and the Uniform Deceptive Trade Practices Act...The course of conduct by Philip Morris related to its fraud in this case is outrageous, both because Philip Morris' motive was evil and the acts showed a reckless disregard for the consumers' rights."

Tillery has filed a similar class action against R.J. Reynolds, which is scheduled to go to trial Oct. 21.