Tobacco Doesn't Have To Turn Over A New Leaf

Source from:  Tom Van Riper, forbes.com 12.16.05, 3:26 PM ET  12/19/2005

It's time for plaintiffs' lawyers to start looking around for the "next big thing" with which to line their pockets from big business. That's because any more strolls down tobacco road are likely to lead to a dead end. A decision by the Illinois Supreme Court to overturn a decision against tobacco giant and Altria unit Philip Morris (nyse: MO - news - people ) U.S.A., coming on the heels of a favorable federal court ruling in August, should prove to be a force for the industry to turn a corner against a wave of litigation, Prudential Equity Group analyst Robert Campagnino says. In its decision, the Illinois Supreme Court said Philip Morris didn't violate a state statute in its cigarette marketing because the statute specifically exempts conduct that is authorized by the Federal Trade Commission. That means there's a good chance that federal law, which is generally favorable to corporate defendants that most state laws, will have more will have the largest overriding voice on the issue. "We see these developments as tremendously useful in defeating the remaining lights class actions scattered around the country," Campagnino said in a research report of the expected difficulties plaintiff lawyers may have in cherry picking litigation-friendly states for lawsuits. Analysts also say the favorable ruling should set Altria on a faster pace to spin off its Kraft Foods (nyse: KFT - news - people ) unit from the tobacco business. Previously, an Illinois jury had returned a $10 billion verdict against Philip Morris, a unit of Altrai, for the allegedly misleading marketing practice of touting "light" and "low tar" cigarettes, even though the labels were within FTC guidelines. Also hurting the plaintiff's case, according to Campagnino and others, was the lack of similar damages across the population of light cigarette purchasers, making class action status difficult. Enditem