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Price v. Philip Morris

July 14, 2003


Appeal from the Circuit Court of Madison County. No. 00-L-112 Honorable Nicholas G. Byron, Judge, presiding.

Justices: Honorable Gordon E. Maag, J., Honorable James K. Donovan, J., Honorable Richard P. Goldenhersh, J. Concur

The opinion of the court was delivered by: Justice Maag



This case involves the appeal of a money judgment entered by the circuit court of Madison County on March 21, 2003. The judgment was entered in favor of the plaintiffs, Sharon Price, Michael Fruth, and a certified class of persons and against the defendant, Philip Morris, Inc. (Philip Morris), in the amount of $10.1 billion. The appeal of the underlying judgment has not yet been briefed and argued. We presently have before us two related matters. The plaintiffs have filed a "Motion for Change of the Amount, Terms and Security of Appeal Bond." Philip Morris has filed a motion "For Interim Stay Pending Further Review." Extensive legal memoranda have been filed by all the parties, in support of and in opposition to these motions. We, sua sponte, set this case for oral argument limited to the issue of the interpretation of Supreme Court Rule 305 (155 Ill. 2d R. 305). The parties presented valuable arguments for us to consider.

We will discuss the detailed positions of the parties later in this opinion. Generally, however, the plaintiffs contend that Illinois Supreme Court Rule 305(a) (155 Ill. 2d R. 305(a)) mandates that in cases where the judgment is for money only, the enforcement of the judgment is stayed only if the bond is "in an amount sufficient to cover the amount of the judgment, interest and costs." The plaintiffs claim that the bond approved by the circuit court in this case fails to comply with the mandates of that rule.

Philip Morris acknowledges that the bond approved by the circuit court does not satisfy the requirements of Rule 305(a). Philip Morris contends, however, that Rule 305(b) (155 Ill. 2d R. 305(b)) and other provisions of Rule 305 vest the circuit court and this court with the discretion to stay the enforcement on other terms so long as such terms are "just." Philip Morris represented to the circuit court and to this court that it is unable to post a bond that conforms to Rule 305(a) and that if required to comply it, will be forced into bankruptcy.

Philip Morris's motion "For Interim Stay Pending Further Review" only requires consideration if the issues concerning the bond are decided adversely to Philip Morris. In that event Philip Morris requests a stay of enforcement to allow it to seek review by the Illinois Supreme Court. The plaintiffs oppose such a stay.


In order to resolve the motions before us we need only discuss briefly the underlying facts in this case. The plaintiffs filed this case in the circuit court of Madison County, Illinois, against Philip Morris. It was alleged that Philip Morris violated the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2000)) by engaging in certain marketing practices that the plaintiffs contended were false and fraudulent. The plaintiffs further alleged that they had been damaged by these practices. Philip Morris denied these claims in the trial court and continues to deny them on appeal.

During the course of the litigation, class action status was granted and a state-wide class was certified. Following a bench trial, the circuit court found in favor of the plaintiffs and awarded $10.1 billion. The award was allocated as follows:

Compensatory damages (including prejudgment interest)$7.1 billion Punitive damages $3 billion The punitive damages award was apportioned to the State of Illinois pursuant to section 2-1207 of the Code of Civil Procedure (735 ILCS 5/ 2-1207 (West 2000)).

As a part of the judgment, the circuit court set the amount of the Rule 305 appeal bond at $12 billion. Subsequently, Philip Morris filed a motion to reduce the bond, citing an inability to post the bond that had been ordered. Philip Morris also claimed that if it were compelled to post a $12 billion bond, it would be forced into bankruptcy and that other settlement obligations it owed to many states under its 1998 "Master Settlement Agreement" would be jeopardized.

Following several hearings, the circuit court modified the bond requirements. A recitation of the precise terms is unnecessary. For purposes of our decision it only matters that the "bond" approved by the circuit court is substantially less than the amount needed to cover the judgment, interest, and costs during appeal. Stated differently, if the judgment is affirmed, the amount of security pledged would not be enough to satisfy what would be owed.


A. General ...

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