Attorneys general ask judge to lower Philip Morris bond

Tuesday, April 8th 2003, 12:00 am
By: News On 6

The top lawyers for Oklahoma and 36 other states and U.S. territories have urged an Illinois court to reduce a $12 billion bond cigarette-maker Philip Morris USA has been ordered to pay, because it could cut off millions of dollars the company owes them in a 1998 national tobacco settlement.

The friend-of-the-court brief filed Monday in Madison County Circuit Court is intended to ensure ``the court is aware there are other parties that will be affected besides the parties at the table,'' said Oklahoma Attorney General Drew Edmondson, who also is president of the National Association of Attorneys General.

The world's biggest cigarette maker lost a class-action lawsuit last month in Madison County in southern Illinois. Judge Nicholas Byron ordered the company to pay $10.1 billion for tricking smokers into believing light cigarettes are less harmful than regular brands.

Philip Morris has said it will appeal, but first state law requires it to put up a bond. Byron gave the company until April 21 to post $12 billion to cover the verdict and court costs.

Philip Morris has said the bond would drive it to bankruptcy, and certainly does not leave room to pay 46 states its share of the $206 billion national tobacco settlement. Philip Morris owes a $2.6 billion payment to the states by April 15.

Oklahoma's Edmondson hopes the brief filed Monday will persuade the judge to reduce the bond to protect that money, much of which funds health-related programs.

The brief seeks to protect ``the interests of innocent third parties ... including young people, who are the beneficiaries of the state programs supported by the payments,'' according to the brief.

Edmondson said many states counted on that money when writing their budgets. Philip Morris owes Oklahoma $27 million in April, said Edmondson spokesman Charles Price.

Illinois was among 13 states whose attorney general did not sign the brief, a group that also includes California, Texas, New York and Florida, among other states.

Illinois Attorney General Lisa Madigan probably will not take a position until Philip Morris' financial situation becomes more apparent, said Madigan spokeswoman Melissa Merz. Financial documents the company submitted during last month's trial are still under seal, and for all she knows, Philip Morris can meet all of its obligations, Merz said.

Madigan's office also is fighting Philip Morris on another front.

In last month's lawsuit, Byron ordered the company to pay its entire punitive damage award, $3 billion, to the state of Illinois.

On Tuesday, a Cook County judge was scheduled to hear Philip Morris' motion to strike that order. Madison's lawyers will argue in favor of it, Merz said.

Philip Morris officials have said Illinois gave up its right to further damage awards when it signed onto the 1998 tobacco agreement.