Judge to Consider Case Against Philip Morris

Philip Morris USA will try to persuade an Illinois judge to reject a claim that the tobacco company deceived customers by advertising “light” cigarettes as less dangerous than its regular product.

Closing arguments in the first class-action trial over light cigarettes are scheduled to begin today, where smokers claim Philip Morris, a unit of Altria Group Inc., lied about the products’ health risks and should pay more than $7 billion in damages.

Analysts have been pessimistic about the tobacco company’s chances before Judge Nicholas Byron, who will decide the verdict, and worry that it would be difficult for the company to post a bond of billions of dollars.

“There is a decent probability that the judge rules against Philip Morris in this case and the damages could be in the tens of billions of dollars,” wrote Salomon Smith Barney analyst Bonnie Herzog in a report.

Philip Morris shares, which have fallen 34% in the last year, fell $1.46 to $35.82 on Friday on the New York Stock Exchange.

Philip Morris said that it never claimed that the light brands were safer than full-flavored brands and the smokers had been warned about the health risks.

Attorney Stephen Tillery told the judge that the company participated in “calculated misinformation” so customers would continue to use the product.

The suit, which seeks punitive damages and refunds for light cigarette buyers, is part of a new wave of product-liability litigation against the tobacco industry over the health effects of light cigarettes. R.J. Reynolds Tobacco Holdings Inc. and British American Tobacco’s Brown & Williamson unit face similar suits elsewhere.

From Bloomberg News