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Plaintiffs to Contest Philip Morris Deposit

May 05, 2003|From Bloomberg News

Philip Morris USA is being challenged in court over its agreement to put up $6.8 billion in notes and cash to appeal a $10.1-billion damage award for deceiving smokers about the risks of "light" cigarettes.

Illinois Judge Nicholas Byron will hear arguments in the matter Thursday.

In March, Byron ordered Philip Morris, a unit of Altria Group Inc., to deposit a $12-billion bond while appealing his verdict, which awarded $3 billion in punitive damages to the state of Illinois and $7.1 billion to compensate consumers.

But attorneys general from 37 U.S. states and territories joined the cigarette maker in successfully opposing the $12-billion bond after Philip Morris said posting that amount would force it into bankruptcy. State governments, including California, have come to rely on tobacco money from the 1998 settlement to finance health and education programs and plug budget deficits.

In April, the judge accepted the tobacco company's agreement to reduce the deposit to $6.8 billion. Illinois consumers who successfully sued the company say the lower figure is inadequate and Philip Morris can afford more.

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