The Illinois Supreme Court has reversed a $10.1 billion verdict against cigarette maker Philip Morris USA, with instructions to dismiss the class action against the company.
The ruling in the case, in which Philip Morris was accused of defrauding customers into thinking 'light' cigarettes were safer than regular smokes, sent shares in its parent company Altria up more than 5%.
The case has been closely watched not just because of the size of the ruling, but because it is one of the legal hurdles management has said need to be cleared before it executes plans to spin its Kraft Foods division from its tobacco businesses.
The initial $10.1 billion judgment in the class-action case was handed down against Philip Morris by a trial court judge in March 2003. The Supreme Court took the unusual step of by-passing the appeals court and hearing the case on appeal directly from the trial court.
Oral arguments were heard by the Supreme Court in November 2004. Philip Morris had argued that the case should never have been certified as a class but should have required each individual smoker to prove their case separately.
