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FOR IMMEDIATE RELEASE
April 07, 2003
States File Brief in Tobacco Case


OLYMPIA -- Washington Attorney General Christine Gregoire said today she and 36 other Attorneys General have asked an Illinois judge to consider the public health consequences around the nation when he sets the appeal bond in a local class action case.

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The request was made in an Amicus Brief filed Monday with the Madison County Circuit Court. The brief asks Judge Nicholas Byron to "set the bond in an amount that would avoid any adverse effect on payments to the states and require the posting of a bond sufficient to protect the interests of Illinois consumers at the time the appeal is concluded."

The National Conference of State Legislatures also joined in the brief.

Recently Byron awarded more than $10 billion in a class action by smokers who sued Philip Morris. The bond was set at $12 billion.

Philip Morris has warned it may not make payments under its tobacco settlement with the states if the company is forced to post the $12 billion appeal bond.

Under the 1998 settlement, tobacco companies agreed to make annual payments to the states in perpetuity. These payments are estimated to total approximately $206 billion through 2025. Currently, Philip Morris pays a little more than half of the annual payments.

The Attorneys General emphasized in the brief they are not seeking to protect the interest of Philip Morris, but "the interests of innocent third parties-the states themselves and their citizens, including their young people, who are the beneficiaries of the state programs supported by the payments that are threatened."

Gregoire said taxpayer-funded Medicare and Medicaid programs spend tens of billions of dollars for tobacco-related health problems.

"Tobacco payments to the states are being made to reimburse taxpayers for the billions that have been spent on the terrible health problems caused by smoking," Gregoire said. "My action today is not to bail out big tobacco, it is to make sure those public health costs don't fall once again on the backs of innocent taxpayers."

According to the brief, courts in the past have reduced appeal bonds to accommodate ongoing functions of government.

The Attorneys General argue that failure of Philip Morris to make a payment will result in "a substantial, immediate, and unexpected revenue shortfall" to the states and "imperil vital health and safety interests."

For Fiscal Year 2003, more than 50 percent of MSA revenues nationwide were allocated to public health programs. Failure of the states to receive such payments promptly would severely threaten public health and safety programs in numerous states and undermine the progress in reducing youth smoking, the brief contends.
Since the tobacco settlement, tobacco usage in the United States has declined substantially, and underage tobacco usage has declined by an even greater percentage.

Gregoire said the brief points out that Washington's tobacco prevention and control programs have help produce a sharp decline in teen smoking. It points out that smoking rates for 12th graders have declined 36 percent.

The brief also notes that in Washington, tobacco money is used for indigent health care, medical assistance for children, local public health programs, immunizations and tobacco prevention and control.

A $12 billion bond would be "self defeating," the brief contends, if it forces Philip Morris to seek bankruptcy protection before it makes its April 15 payment to the States. In that case, state interests would be severely damaged and plaintiffs in the case would lose the security they are seeking from the bond.

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