Is judge hearing $10 billion appeal tainted by Altria’s campaign funds? by Roger Parloff @FortuneMagazine February 13, 2015, 5:30 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons On Monday, plaintiffs lawyers who won a famous $10.1 billion class-action verdict against Philip Morris in 2003, filed papers seeking to disqualify an Illinois supreme court justice from hearing an appeal of the case, on the grounds that the tobacco company’s parent spent $731,000 to support the justice’s reelection in November—more than 60%, they say, of all funds spent on his behalf. On the other hand, it’s important to bear in mind that the plaintiffs law firms on the same case–over the allegedly deceptive marketing of “light” cigarettes–reportedly donated more than twice that amount trying to defeat the judge. The motion, powerful at first glance, notes that Altria MO spent $500,000 in the final month before Justice Lloyd Karmeier’s retention election, at which, under Illinois law, he needed 60% of the votes to retain his seat. He squeaked by with 60.8%. Under these circumstances, argue plaintiffs lawyers led by Stephen Tillery of Tillery Korein, Justice Karmeier must now recuse himself from the case, known as Price v. Philip Morris, under standards established by a 2009 U.S. Supreme Court precedent. In that case, known as Caperton v. A.T. Massey Coal Co., the Court held that the “probability of actual bias on the part of a judge” becomes constitutionally “intolerable” when a party before him is “a person with a significant and disproportionate influence in placing the judge on the case, by raising funds or directing the judge’s election campaign when the case was pending or imminent.” The obvious countervailing factor here is that the election in question was awash with expenditures from people on both sides of the cases before Karmeier, with more than $2 million reportedly having been spent by four plaintiffs lawyers and three plaintiffs law firms on negative TV ads and robo-call campaigns against Karmeier. The plaintiffs law firms specifically involved in the Price case, or individual members of those firms, reportedly contributed at least $1.7 million of that sum. As in many class-action cases, the plaintiffs lawyers in the Price case have far more at stake than any individual class member—a fact that Karmeier himself alluded to in a post-election interview with the Southern Illinoisan. The day after the election, that paper reported—in a passage the plaintiffs now cite in their motion as still more evidence of bias and an independent grounds for disqualification—as follows: “The judge said the lawyers could stand to gain financially if he were ousted from the bench. One less judge to vote against a judgment in either case could net plaintiffs’ a substantial sum—$1.77 billion in legal fees for a $10 billion settlement. “‘It’s the size of these fees that is distorting the system,’ Karmeier said. ‘The money is so substantial.’” The plaintiffs say these candid remarks “reasonably suggest that he has already decided the case on its merits. Not only did Justice Karmeier suggest that removing him from the bench would increase the chance that the current appeal would be resolved in Appellee’s favor, but he specifically stated that the attorneys’ fees at issue were ‘distorting the system.’” Altria spokesperson Brian May says, in an interview, that the disqualification motion is “meritless” and that Philip Morris will be “responding with the court in due course.” Plaintiffs attorney Stephen Tillery declines comment on his motion. Here’s the remarkable backdrop. The Price case, filed in Madison County in 2000, is a state-wide consumer fraud class action alleging that Philip Morris’s Marlboro Lights were deceptively advertised as safer than regular cigarettes, when in fact they were, if anything, more dangerous. The plaintiffs won a $10.1 billion verdict that same year. (Madison County, in Southern Illinois, near St. Louis, Missouri, has a reputation as a pro-plaintiff venue for class actions.) In 2004 Justice Karmeier won election to the state supreme court in what was, at the time, the most expensive judicial election campaign ever waged. In 2005, the Illinois Supreme Court overturned the Price verdict, by a 4-2 margin, with the seventh justice not participating. The majority found the complaint to be barred by a provision in the state consumer protection law requiring deference to certain U.S. Federal Trade Commission determinations. Justice Karmeier, in a separate concurrence, wrote that the plaintiffs had also, in his view, failed to show any actual damages. (In consumer class actions, class members need not show any health injury; the injury is simply the fact that they didn’t receive what they thought they were buying. Both named plaintiffs in Price continued smoking after learning that “lights” were no safer than regular cigarettes. Accordingly, Karmeier concluded, they weren’t harmed by the alleged misrepresentations.) Despite the 4-2 margin by which the court overturned the Price verdict, Justice Karmeier’s vote was decisive because, under state law, four votes are necessary for victory at the supreme court level. Without his vote, the lower appellate court judgment—affirming the verdict—would have stood. In 2008, the plaintiffs revived the suit, claiming that an intervening U.S. Supreme Court ruling cast doubt on the state supreme court’s ruling. In April 2014 an intermediate appeals court accepted the plaintiffs’ argument, and restored the $10.1 billion verdict. The state supreme court then agreed to rehear the case, though it has not yet scheduled oral arguments. By that time, due to changes in the composition of the state supreme court, Karmeier was one of only two justices still on the court who voted to dismiss the Price case in 2005. Also by that time, Karmeier’s 10-year term was expiring, so he was facing an election. As it approached, the Price plaintiffs moved to disqualify him for the first time, citing the money Philip Morris spent in the 2004 election. Both Karmeier and the court rejected the motion, citing, in part, the fact that the moneys spent by Altria then were independent expenditures, not direct contributions to Karmeier’s campaign. But they also stressed the distinctive circumstances of the motion: With one justice having recused himself throughout the case and expected to do so again, and two others having voted to uphold the verdict in 2005 and likely to do that again, too, the plaintiffs would be virtually assured of victory if they could knock Karmeier off the case. That’s because only three justices would remain, and that would be insufficient to render a ruling under the state’s quorum rules, requiring a majority of at least four. After the election, with Karmeier’s thin victory allegedly aided by a last-minute flood of cash from Philip Morris parent Altria, the plaintiffs filed a second motion to disqualify—the one occasioning this article. But there’s one last, weird twist to this story. Altria claims it actually never donated money to support Karmeier—or at least never intended to. The plaintiffs lawyers argue, in turn, that Altria’s failure to own up to what it did just makes matters worse for both it and Karmeier. The $731,000 that are the focus of the new motion were given by Altria to the Republican State Leadership Committee in Washington, D.C., with $500,000 of it being donated last October 6 and October 8, less than a month before the November 4 election. On October 23, the national RSLC, in turn, gave $950,000 to the RSLC-IE, which is a group devoted to making “independent expenditures in the state of Illinois,” according to its tax filings. That same day, the RSLC-IE transferred $950,000 to Revolutionary Media Group for “advertising – television,” according to campaign finance filings. The motion asserts that those TV ads supported Justice Karmeier. In an interview with Fortune, Altria spokesperson May states: “We informed the [national] RSLC—both orally and in writing—that the company’s funds could not be used in any way for judicial elections.” He declines to comment on whether the RSLC disregarded Altria’s conditions, noting that Philip Morris would respond more fully to the disqualification motion in court. At the very least, the entire spectacle is a vivid demonstration of the corrosive impact that big-time financial contributions in judicial election campaigns have on the credibility of court rulings.