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Last Updated: Thursday, 12 June, 2003, 19:13 GMT 20:13 UK
Legal setback for Philip Morris
Marlboro lights
Cigarette maker Philip Morris has failed in its initial attempt to have a $10.1bn (6.2bn) ruling against it overturned.

The Illinois Supreme Court on Wednesday said it would not hear Philip Morris' arguments against the ruling, forcing the company to take its case to the Illinois appeals court instead.

Rob Campagnino, an analyst at Prudential Securities, said the appeals court "is generally viewed as being unfavourable to corporate interests."

On Wall Street, shares in Altria, Philip Morris' parent company, fell 3.3% to $42.24 as investors digested the news.

Court battle

The supreme court's decision comes as a setback in Philip Morris' struggle to limit the financial fallout of a string of recent unfavourable court decisions.

Philip Morris was appealing against an earlier $10.1bn damages award in a lawsuit brought over the way the company marketed low-tar, or "light," cigarettes.

The plaintiffs argued that the company promoted light cigarettes in such a way as to give the impression that they were less harmful than full-strength cigarettes.

This is not the first time that Philip Morris' battle to have the ruling overturned has gone awry.

Financial burden

Earlier this year, a court ordered the company to pay a $12bn bond - intended to guarantee that it would be able to meet its financial obligations - as a condition of the appeal going ahead.

The company said it could not afford to make the payment, leading to concerns that the company could be forced into bankruptcy.

The bond was reduced to $6bn on appeal.

In a separate case, a Californian court last year ordered the company to pay an unprecedented $28bn in punitive damages to a cancer-stricken smoker, although the award was later cut to $28m.

Philip Morris is also required to make regular payments under a 1998 settlement worth $206bn between the tobacco industry and the US states.

But last month, Philip Morris and four other tobacco companies won a rare legal victory when a Florida appeals court quashed a landmark $145bn damages award dating back to July 2000.

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