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Last Updated: Thursday, 15 December 2005, 16:30 GMT
Court throws out tobacco ruling
Image of a smoke-filled bar
The firm had been accused of misleading customers
The Illinois Supreme Court has reversed a $10.1bn (5.7bn) damages ruling against tobacco firm Philip Morris.

The court issued instructions to dismiss a class action suit, which had been brought against the US cigarette giant in 2003.

The case centred around accusations that the firm had defrauded customers into thinking "light" cigarettes were safer than regular cigarettes.

Shares in the firm's owner Altria Group rose 5% on the news to a fresh high.

"Even though this was a well-anticipated reversal... the market still has reacted positively to the ruling in pushing up tobacco stocks, because this removes yet another legal impediment to the survival of the industry," said Tim Ghriskey, chief investment officer for Solaris Asset Management.

Divided court

According to the court's findings, tobacco companies had been specifically authorised by the US Federal Trade Commission (FTC) to describe their "light" cigarettes as low in tar and nicotine.

Writing for the majority, Justice Rita Garman said the FTC had "specifically authorized the use of the terms".

"PM USA [Philip Morris] may not be held liable under the Consumer Fraud Act, even if the terms might be deemed false, deceptive or misleading," she wrote.

However, the court was deeply divided over the decision.

One of the dissenting judges, Justice Charles Freeman, said the "court's action today is predicated upon an erroneous and irresponsible interpretation of our Consumer Fraud Act".

The law suit had been brought by smokers, who argued that Philip Morris had hidden the fact that light cigarettes were not healthier than normal cigarettes.

The tar contained in the smoke of light cigarettes, for example, was actually more toxic than that of regular cigarettes, the plaintiffs said.

In March 2003, an Illinois county judge had ruled that Philip Morris advertising had misled customers and ordered the firm to pay a total of $10.1bn in damages.

During its appeal the company had insisted that it never suggested light cigarettes were less hazardous than other cigarettes.

The company could not be blamed for smokers taking deeper puffs or smoking more cigarettes to make up for lower nicotine levels, its lawyer contended.

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