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FOR IMMEDIATE RELEASE
April 07, 2003
Gregoire Threatens to Sue Philip Morris


OLYMPIA -- Washington Attorney General Christine Gregoire said today she will file a lawsuit against Philip Morris USA if it fails to make a $53 million payment to the state on April 15.

Gregoire and 50 other Attorneys General sent a letter Friday threatening the lawsuit if the state payments, which will total $2.6 billion, are missed.

Last week Philip Morris said it is "presently uncertain" whether it will make the tobacco settlement payments next month to state governments.

In their letter to Denise Keane, Senior Vice President and General Counsel for Philip Morris USA, the Attorneys General said, "failure to make payment in a timely manner will directly impact important state programs," and that they will bring legal actions to enforce the payment obligation.

The Attorneys General said the payments were an essential part of the tobacco settlement and any missed payment will accrue interest at the rate of the prime rate plus three percent.

"If Philip Morris misses a payment on April 15, I plan to be in court on April 16 or as soon thereafter as possible," Gregoire said.

Last week Keane said Philip Morris may not make the state payments if the company is forced to post a $12 billion appeal bond as a result of a judgment in Illinois.
Recently in a class action lawsuit, a Madison County Illinois Circuit Judge awarded more than $10 billion in a class action by smokers who sued Philip Morris. The bond was set at $12 billion.

Under a settlement in 1998, 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.

Attorneys General signing the letter represent all 46 states that signed the tobacco settlement and Attorneys General from the District of Columbia, Puerto Rico, Virgin Islands, Guam, and the Northern Mariana Islands.


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