Tobacco Cos. Post $100M Bond Appeal
MIAMI (AP) - Industry-leading Philip Morris Inc. posted a $100 million appeal bond Tuesday to contest a record $145 billion award won by Florida smokers against the nation's leading cigarette makers.
The bond underwritten by Kemper Insurance Cos. was filed less than a day after Miami-Dade Circuit Judge Robert Kaye resisted industry attempts to undermine the punitive damage award by signing a final order in the case.
R.J. Reynolds Tobacco Co. followed with a bond in the same amount posted through Travelers Casualty & Surety Co., and both bonds were accompanied by one-page notices of appeal.
Evelyn Guedes, who supervises the court's appeal bonds, said the other defendants were expected file their bonds soon as well.
The bond amount was set by a state law passed during the two-year trial specifically for the class-action case to replace a standard requirement equal to 120 percent of the award. Otherwise, bonds worth a total of $174 billion would have been needed.
Smokers' attorney Stanley Rosenblatt calls the law unconstitutional, but said he was still considering whether to contest it.
``We have to evaluate the total picture as to whether we're going to challenge that,'' he said.
The law capped the bonds at $100 million or 10 percent of a company's net worth, whichever is less. Liggett Group, the smallest of the defendants with 1 percent of the U.S. cigarette market, said during trial that the bond requirement alone could cause financial trouble.
Philip Morris filed a six-page document saying Lumbermens Mutual Casualty Co., Kemper's lead company, wrote the bond. ``This is as good as cash,'' Guedes said with the papers in hand.
A standard bond premium is 10 percent, but the premium and collateral requirements for bonds of this size depend on a company's commercial relationship with the underwriter.
With $60 billion in assets, including $4.2 billion in cash, Philip Morris' parent had no trouble covering the bond.
The other defendants are: Brown & Williamson, Lorillard and the industry's defunct Council for Tobacco Research and Tobacco Institute.