Judge asked to lower tobacco bond in Illinois lawsuit

CHICAGO -- Attorneys general from 37 states and U.S. territories on Monday asked an Illinois judge to reduce the $12 billion bond Philip Morris must pay before appealing a lawsuit, saying it could jeopardize their payments under a national settlement with tobacco companies.

The world's biggest cigarette maker lost an Illinois class-action lawsuit last month in which the judge 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 put up a bond. The judge gave the company until April 20 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 reached in 1998. Philip Morris owes a $2.6 billion payment by April 15.

"We're asking the court to ... be cognizant of the fiscal problems of sister states that may be affected" if Philip Morris must pay a large bond, said Oklahoma Attorney General Drew Edmondson, who is also president of the National Association of Attorneys General.

Edmondson hopes to persuade the judge to reduce the bond to protect the settlement money, much of which funds health-related programs, saying many states have already written the money into their budgets. Philip Morris owes Oklahoma alone $27 million in April, said Edmondson's spokesman Charles Price.

Illinois was among 13 states not represented in the brief. Others refusing to sign included California, Texas, New York and Florida.

Illinois Attorney General Lisa Madigan is unlikely to take a position until Philip Morris' financial situation becomes more apparent, said Madigan's spokeswoman, Melissa Merz.

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

On Tuesday, another judge was scheduled to hear Philip Morris' request to strike that order. Philip Morris officials have said Illinois gave up its right to further damage awards when it signed onto the national agreement.

Madigan's lawyers will argue in favor of the order, Merz said.