The litigation environment surrounding tobacco has not been this good in almost 20 years. Altria (MO) will take advantage of this to announce the PMI spin at the upcoming board meeting Aug. 29th.
The Illinois Supreme Court ordered a lower-court judge to stop pestering them for permission to reopen a failed lawsuit against Philip Morris USA over the company’s light cigarettes because he did not like the outcome. In a 4-2 ruling the court demanded Circuit Judge Nicholas Byron stop asking the state’s 5th District Appellate Court if he has authority to reopen the lawsuit apparently recognizing that the judge in the case ought not to try harder to get a favorable verdict for the plaintiffs than their lawyers.
In March 2003, Byron re-wrote current law and in a decision destined to be overturned issued a $10.1 billion judgment against Philip Morris USA, saying the company misled customers into believing they were buying a less harmful cigarette.
The Illinois Supreme Court then wisely overturned Byron’s ruling. Why? The Federal Trade Commission allowed companies to characterize or label their cigarettes as “light” and “low tar,” so Philip Morris could not be held liable under state law even if such terms could be found false or misleading.
In his typically understated style William Ohlemeyer, Philip Morris USA’s vice president and associate general counsel, issued a one-sentence statement: “Philip Morris USA believes the Illinois Supreme Court reached the right result.” Duh…
This is the very reason Altria is currently pushing for FDA regulation of tobacco. It effectively ends much of the potential litigation against tobacco companies in the future.
When the spin occurs I will hold shares in both companies and have no intention of selling either anytime soon.