The Illinois Supreme Court cut in half the size of a bond
Phillip Morris must post in order to appeal a $10 billion verdict against it in a false-advertising suit over "light" cigarettes. The news sent the shares up $4.05, or 10%, to $44.51 in Instinet premarket trading.
Instead of being required to post $12 billion, the company will only have to post a bit over $6 billion.
Altria -- which had previously warned of grievous financial consequences if it were forced to come up with $12 billion -- didn't say what, if any, liquidity issues this reduced bond might cause. But the stock is sharply higher in pre-market action. They had asked the bond to be reduced to $1.2 billion.
The bond requirement stems from a case in Madison County, Ill., in which plaintiffs argued that Philip Morris USA had defrauded smokers by suggesting to them Marlboro Lights were less hazardous than ordinary Marlboros. William S. Ohlemeyer, Philip Morris USA vice president and associate general counsel, said that "the company has made information about 'Lights' cigarettes available on its Web site and directly to customers through the use of package inserts."
In Illinois, defendants in civil litigation are usually required to escrow awarded damages before they may appeal. In the light-cigarettes case, Phillip Morris had been ordered to pay $10.1 billion in compensatory and punitive damages.
The company also convinced the court to speed the case along by allowing it to bypass further lower state court review and litigate the appeal directly to the State Supreme Court.