Philip Morris: Plaintiffs have not proven damages; High court takes Price case under advisement, again

SPRINGFIELD – “Big Jim” Thompson, an Illinois governor who did not go to prison, stood tall in the Illinois Supreme Court chamber on May 19.

Thompson, who governed for 14 years  from 1977-91 without a whiff of scandal, spoke as counsel for cigarette maker Philip Morris. In the Supreme Court chamber, at age 79, he opposed a team of plaintiff attorneys seeking to recover a class action bonanza they struck in Madison County in 2003, as well as attorneys who have spent large sums of money trying, but failing, to pick off Justice Lloyd Karmeier from the high court.

Attorney George Zelcs, of Barrington, who spent $600,000 against Karmeier’s retention last fall, observed the proceedings on behalf of plaintiff Sharon Price. Stephen Tillery, of St. Louis, who started the case, observed, but did not argue.

The Court decided the case known as Price vs. Philip Morris in favor of Philip Morris in 2005, reversing a $10 billion judgment, but Tillery revived it with a claim of new evidence. Last year, Fifth District appellate judges reinstated the judgment, ruling the Supreme Court would have affirmed the judgment, if the justices had seen Tillery’s new evidence.

Philip Morris petitioned the Supreme Court review, and the justices granted it.

For oral argument, Thompson arrived early and prepared silently. The justices entered, all but Robert Thomas, who has recused himself from all proceedings because one of Tillery’s lawyers is Joseph Power, who once represented Thomas.

Thompson approached the podium first.

“When this court entered judgment, it was correct,” Thompson began. “That judgment is correct today.”

He said plaintiffs didn’t file new evidence within two years of the Supreme Court decision, as statute requires. He said they claim it doesn’t matter because they filed it within two years of the trial court’s order dismissing the case.

That, he said, would exalt form over substance. He said the trial court’s order was a ministerial act.

“It spread on the record of the circuit court this court’s judgment,” Thompson said.

He said plaintiffs claim new evidence in two Federal Trade Commission documents.

“Neither of them was in existence at the time of the trial,” he said. “At no time during the trial did plaintiffs solicit the views of the FTC in this case, but surely that question was important.”

He said neither document challenged the Supreme Court’s opinion.

“Where does it all end?” Thompson said.

He said if Philip Morris loses, and the FTC commissioners change, Philip Morris could say the Supreme Court was correct.

“Do we then get to file a motion for newly discovered evidence?” he said. “Do we get our money back?

“This is not a game of musical chairs as to who sits in the chairs of the Federal Trade Commission at any given time.”

His colleague Lisa Blatt, of Washington, stepped up and said, “Newly discovered evidence must reveal a fact.”

“Newly discovered evidence has never included legal argument in Illinois or anywhere else,” she said. “It’s not like FTC revealed a previously secret position. It’s not like your decision was a mystery to FTC.”

Blatt said no court ever reversed itself based on an agency statement. She said plaintiffs argue all smokers thought “light” meant “safer.” She said the survey they conducted showed otherwise.

Smokers, she said, had reasons for their purchases other than health. She said plaintiffs didn’t prove actual damages.

“Actual means real,” she said. “Not imaginary. Not hypothetical.”

She said the market placed no value on light attributes.

Philip Morris’s 20 minutes expired without a single question from the justices.

Tillery sent to the podium David Frederick, of New York, who hadn’t argued at the Fifth District, nor even entered an appearance there. Frederick said the issue was whether the government authorized the most massive fraud in American history.

He attempted to discuss the trial, but Chief Justice Rita Garman stopped him, asking what authority he could find in statute, precedent or common law that would allow a lower court to set aside the judgment of a higher court.

“It’s not setting aside the judgment of the high court, your honor,” Frederick said.

He cited a case and said the court’s purpose is to achieve a right outcome. Garman asked what prevented them from presenting the new evidence to the Supreme Court. He said Philip Morris asked the trial court to enter final judgment.

“That is the final judgment,” he said. “It’s about correcting an erroneous judgment.”

He said class certification was proper because the light and low tar labels were false to all those in the class.

“No one received the safer cigarette that Philip Morris promised,” he said.

He said Philip Morris designed filters for drawing more deeply, noting tar from light cigarettes was more toxic than tar from regular ones.

On damages, he said, “The test is benefit of the bargain. It’s not fair market value. It’s not about out of pocket expenses.

“The damages were large but the fraud was large.”

Frederick said a witness for Philip Morris testified there was no damage. He said the trial court had a gap between zero and what plaintiff claimed. He asked the justices to affirm the Fifth District, “so that consumers can finally be compensated.”

Blatt stepped up and told Garman there was nothing that said they couldn’t bring new evidence to the Supreme Court. She said their view would create a perverse incentive to continue appeals.

She said she didn’t like the idea that Philip Morris would escape without consequences. She added that in 1998, Philip Morris agreed to pay the state $300 million, and the company made a payment last year and will make one this year.

Garman said the justices would take it under advisement.

Karmeier would have missed the argument, if Tillery had his way. Tillery moved to disqualify Karmeier last year, claiming Philip Morris secretly supported his campaign in 2004. Karmeier denied the motion after giving his colleagues a chance to make the call.

Tillery filed the instant litigation in 2000 in Madison County. Circuit Judge Nicholas Byron held a bench trial in 2003, after denying Philip Morris a jury trial. He ruled Philip Morris deceived millions of smokers for 30 years. He awarded $7 billion in compensation to the class and $3 billion in punitive damages to the state.