NCPA - National Center for Policy Analysis


December 16, 2005

The Illinois Supreme Court yesterday reversed a $10 billion verdict against Philip Morris and ordered a lower court to dismiss the case. This tort-law victory is about a lot more than cigarettes, says the Wall Street Journal.

Philip Morris was accused of defrauding customers in its marketing of "light" and "low tar" cigarettes. The Federal Trade Commission had specifically allowed tobacco companies to use those labels to characterize their products. Illinois law also says a company can't be punished for conduct permitted by a regulatory body. Hence, the court held (4-2), that Philip Morris didn't "mislead" customers about the health impact of its products and isn't liable for consumer fraud.

According to the Journal:

  • The suit was less about smoking than about lawyers testing whether consumer fraud laws can be interpreted to permit recovery even when the claimants haven't suffered any actual damages.
  • The people who sued Philip Morris weren't claiming they got lung cancer from smoking; they claimed they were defrauded by the words "light" and "low tar" and wanted billions in compensation.
  • Had the plaintiffs prevailed, the impact would have been felt by computer makers, fast-food outlets, drug companies, etc.

Congress has taken some modest steps to address these problems. The Class Action Fairness Act, which passed in February, limits the ability of plaintiffs' lawyers to forum shop for friendly state courts. But ultimately we'll need more rulings like the one yesterday before the tort bar stops its marauding, says the Journal.

Source: Editorial, Wall Street Journal, December 16, 2005.

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