![[ASH Logo]](/images/ash3.gif) |
ACTION ON SMOKING AND HEALTH (ASH)
A National Legal-Action Antismoking Organization 2013 H Street, NW / Washington, DC 20006 / (202) 659-4310 |
JOSEPH P. MAZUREK
Attorney General
CHRIS TWEETEN
Chief Deputy Attorney General
State of Montana
215 North Sanders
P.O. Box 201401
Helena, MT 59620-1401
(406) 444-2026
COUNSEL FOR PLAINTIFFS
MONTANA FIRST JUDICIAL COURT, LEWIS AND CLARK
COUNTY
STATE OF MONTANA ex rel.
JOSEPH P. MAZUREK,
Plaintiff,
v.
PHILIP MORRIS, INCORPORATED; R.J. REYNOLDS, TOBACCO CO.;
AMERICAN TOBACCO CORP.; BROWN & WILLIAMSON TOBACCO CORP.;
LIGGETT &
MYERS, INC.; LORILLARD TOBACCO CO., INC.; UNITED STATES TOBACCO
COMPANY;
B.A.T. INDUSTRIES, P.L.C.; BRITISH AMERICAN TOBACCO COMPANY, LTD; RJR
NABISCO
HOLDINGS CORP.; RJR NABISCO, INC.; HILL & KNOWLTON, INC.; THE
COUNCIL
FOR TOBACCO RESEARCH - U.S.A., INC., and TOBACCO INSTITUTE, INC.,
Defendants.
NO.
Jury Demand
COMPLAINT FOR INJUNCTIVE RELIEF, DAMAGES,
RESTITUTION, PENALTIES AND OTHER RELIEF
I. INTRODUCTION
1. The State of Montana, through Attorney General Joseph
Mazurek, brings this action for monetary damages, civil penalties, declaratory
and injunctive relief, restitution, and disgorgement of profits.
2. This case challenges a massive unlawful course of conduct
and conspiracy perpetrated by the defendants. The defendants' unlawful
conduct includes a host of unfair, deceptive, anticompetitive and illegal
acts, including without limitation the following:
Publicly undertaking a supposedly "paramount"
special duty to research and disclose to public health authorities and
the public at large--including the State of Montana--the full extent of
the health risks of cigarette smoking; but then suppressing and distorting
the state of their knowledge of those health risks;
Creating and/or funding fraudulent "front"
organizations--such as the Tobacco Industry Research Committee (later the
Council for Tobacco Research)--which were held out to the public as independent
research organizations, but were in fact secretly controlled by the industry's
lawyers and public relations firms and were used by the defendants as industry
fronts to prevent the public from learning what defendants knew about the
health risks of smoking and to falsely create a controversy about the health
risks of smoking;
Secretly destroying, concealing, and shipping overseas
incriminating evidence of industry testing and research on the health risks
of cigarette smoking and the addictive nature of nicotine, shutting down
laboratories overnight and making personal threats against scientists who
tried to publish research revealing what the industry knew, and asserting
improper claims of attorney-client privilege and work product to suppress
the results of adverse scientific research;
Conspiring in violation of state antitrust law to eliminate
and restrain competition based on the health effects of smoking and by
agreeing not to market "safer" cigarettes;
Conspiring to and concealing the addictive nature of
tobacco products and the tobacco companies' deliberate manipulation of
the nicotine levels in tobacco products; and
Engaging in unfair and deceptive trade practices by
undertaking a course of conduct designed to promote illegal sales of cigarettes
to minors.
As a direct, foreseeable result of these and other actions,
the State of Montana has suffered substantial damages, and minors continue
to be lured into illegal use of tobacco products. The Attorney General
seeks to recover those damages and enjoin the continuing deceptive and
unlawful practices described below.
A. The Defendants' Unlawful Conduct. The Defendants'
Unlawful Conduct
3. The Tobacco Industry in the United States is a highly
profitable oligopoly dominated by Brooke Group, Ltd., Liggett Group, Inc.
(Liggett and Myers Tobacco Co.), Philip Morris Companies, Inc. (Philip
Morris, Inc.), American Brands, Inc. (the American Tobacco Co.), UST, Inc.
(United States Tobacco), RJR Nabisco Holdings Corp., RJR Nabisco, Inc.,
R.J. Reynolds Tobacco Co., Batus, Inc. (Brown & Williamson Tobacco
Company), British American Tobacco Company (BATCO), and Lowes Corporation
(Lorillard Tobacco Co.) (collectively referred to as the "Tobacco
Companies," "Tobacco Industry" or the "Tobacco
Cartel").
For decades, these Tobacco Companies have sold tobacco products at huge
profit margins to millions of consumers. The Tobacco Companies have built
and sustained the market for their products in large part by concealing
and/or misrepresenting the addictive nature of tobacco products, by creating
confusion concerning the damage to human health caused by tobacco products,
by manipulating the levels of nicotine in tobacco products in order to
maintain and boost addiction, by agreeing not to compete for sale of a
"safer cigarette" and other innovative products, and by focusing
the brunt of their sales efforts on minors.
4. The Tobacco Companies, as well as their public relations
agents, lawyers, and industry "fronts," have known for more than
40 years that their tobacco products contain large amounts of nicotine--a
highly addictive substance--as well as numerous carcinogens and other harmful
elements.
5. Notwithstanding this knowledge, the Tobacco Companies
have repeatedly told the public that nicotine, an element in all tobacco
products, is not addictive. As recently as April 14, 1994, the CEOs of
seven tobacco companies testified under oath that nicotine is "not
addictive." These statements are false.
6. Nicotine is addictive. The Tobacco Industry is aware
of the addictive nature of nicotine as evidenced by just one of the many
internal industry documents addressing this subject:
Moreover, nicotine is addictive. We are, then in the business
of selling nicotine, an addictive drug . . . .
7. Tobacco products are not only addictive, they are abnormally
dangerous and unfit for human use. Tobacco products kill, maim and injure
virtually all who use them. The Tobacco Companies know this, but continue
to deny the existence of adverse health effects in their public statements.
8. The Tobacco Industry's unlawful conduct does not stop
with misrepresentations concerning the addictive nature of nicotine and
the adverse health effects of tobacco use. The industry has secretly gone
a step further by manipulating the level of nicotine in tobacco products
in order to increase addiction and sell more product. For example, manufacturers
of smokeless tobacco seek to "graduate" new users from milder
products to those with more "kick" in order to addict users.
Their campaign to addict new users has achieved great success, particularly
with the young.
9. To continue in its hugely profitable business, in 1953
the Tobacco Industry entered into a multifaceted unlawful conspiracy which
continues to this day. One essential element of the conspiracy was an agreement
to suppress harmful information concerning tobacco products which was
accomplished
as follows. First, the tobacco conspirators agreed to falsely represent
that there is no proof that smoking or tobacco use is harmful. Second,
they agreed to falsely represent that nicotine and tobacco use is not addictive.
And finally, the tobacco conspirators represented to the public and governmental
regulators that they would undertake a "special duty" and
"responsibility"
to determine and report the scientific truth about the health effects of
tobacco, both by conducting internal research and by funding
"independent"
external research.
10. Those representations were and continue to be false.
Despite the Tobacco Companies denials, there is no question that the Tobacco
Industry knew its products were addictive and harmful. Further, the industry's
publicly proclaimed special undertaking to pursue and report the truth
about smoking was false. The industrys purported undertaking was part
of a conspiracy to refute, undermine and neutralize information coming
from the objective scientific and medical community and, at the same time,
to confuse and mislead the public in an effort to avoid state or federal
regulation, to encourage existing smokers to continue smoking and to induce
new persons to start smoking.
11. An additional important element of the conspiracy
was an agreement by the Tobacco Companies to restrain competition for sales
of an innovative "safer" cigarette. The purpose and effect of
this aspect of the conspiracy was to suppress and restrain competition
based on claims of health because such competition would have exposed the
ill effects and addictive nature of smoking, thereby substantially increasing
the defendants liability exposure for the inevitable harm caused by cigarettes
and tobacco products, and thereby threatening their shares of the tobacco
market.
12. The conspiracy described above originated in response
to medical and scientific studies publicizing the adverse health impact
of smoking in the early 1950s. In response to what the industry internally
called the "health scare," in late 1953 and early 1954, the Tobacco
Companies and their public relations agent, Hill & Knowlton, jointly
created a purportedly independent entity initially known as the Tobacco
Industry Research Committee (the "TIRC"). As part of their unlawful
conspiracy, the Tobacco Companies publicly represented that the TIRC would
undertake, on behalf of the public and those responsible for the public
health, including the State of Montana, to objectively research and gather
data concerning the relationship between cigarette smoking and health and
truthfully publicize the results of this "independent" research.
>From 1954 forward the industry has been using the TIRC and its successor,
the CTR, to publish false reports regarding the relationship between smoking
and health.
13. Indeed, the Tobacco Companies, their lawyers, and
Hill & Knowlton controlled the TIRC and manipulated its affairs so
as to "[s]uppress any data demonstrating the addictive nature of cigarette
smoking or that cigarette smoking caused human disease" and to publicize
information, regardless of its merit, tending to obscure any relationship
between cigarette smoking and disease. This course of conduct was designed
to create the notion that there was a legitimate and good faith medical/scientific
controversy over whether smoking or tobacco is harmful to human health
or that nicotine is addictive. The tobacco cartel accomplished this hoax,
in part, by assigning all information indicating that cigarette smoking
or tobacco use is harmful to human health or that nicotine is addictive
to a so-called "Special Projects" division of the TIRC, where
the information was secreted from the public and concealed from discovery
in litigation against the Tobacco Companies by the improper assertion of
the attorney-client privilege.
14. In the words of U.S. District Court Judge H. Lee Sarokin,
a "jury could reasonably conclude that the creation of . . . [the
TIRC] was nothing but a hoax created for public relations purposes with
no intention of seeking the truth or publishing it."
15. Also in the 1950s, the Tobacco Companies began, and
continued thereafter, to tailor their cigarette advertisements, promotional
activities, and public statements to conceal and/or misrepresent the addictive
nature and the adverse health impact of cigarette smoking and tobacco use,
while at the same time presenting cigarette smoking in a glamorous, youthful,
exciting, relaxing posture by associating it with professional and economic
success, intelligence, athletic ability, and sexual attraction. This course
of conduct accomplished the purpose of suppressing or misstating the addictive
nature and the adverse health impact of smoking, so that new smokers, mainly
young teenagers, could be "hooked" and existing smokers would
continue smoking.
B. The Damages Caused by Defendants Unlawful
Conduct. The Damages Caused by Defendants Unlawful Conduct
16. The intended and foreseeable effects of the conspiracy
are several and far-reaching, including but not limited to increased medical
costs to the State of Montana and its agencies, the use of tobacco products
by minors in violation of state law and the failure of the industry to
develop and market "safer" innovative products.
1. Health care costs1. Health care costs.
One of the foreseeable and intended consequences of defendants' conduct
has been to unjustly enrich the defendants at the expense of Montana's
health care system, and ultimately, all Montana residents and taxpayers.
(a) Approximately 50 million residents of the United States
smoke cigarettes, and another six million use smokeless tobacco products.
Nationwide, tobacco-related deaths are a national tragedy: More than 400,000
deaths per year in the United States are tobacco related.
(b) In Montana, thousands of adults are smokers. Thousands
of Montana adults use smokeless tobacco.
(c) Health care costs in the United States are hundreds
of billions of dollars each year. Tobacco-related health care costs are
estimated to be more than seven percent of total health care costs, and
for 1993, tobacco-related health care costs were $50 billion.
(d) The defendants conduct has wrongfully shifted these
increased costs to the State of Montana in the form of charges directly
attributable to tobacco usage and exposure that should have been borne
by the defendants, including but not limited to, increased Medicaid payments
and increased health care insurance for public employees.
(e) Montana's excess health-care costs alone caused by
defendants' conduct is in the tens of millions of dollars. The State would
have avoided these costs if defendants had not engaged in the course of
conduct described in this Complaint, and those costs are among those the
State seeks as damages in this case.
2. Targeting minors in violation of state law.
A further effect of defendants' course of unlawful conduct and conspiracy
is the targeting and eventual addiction of minors and young people. Recognizing
the pernicious addictive nature of their products, the Tobacco Industry
seeks new customers among the youth of the nation. Because of the deaths
of so many of the industry's adult customers, the defendants must constantly
add new customers in order to maintain their profits.
(a) According to a 1994 U.S. Surgeon General's Report,
every day another 3,000 children become regular smokers. Eighty-two percent
of adults who have ever smoked had their first cigarette before age 18
and more than half of them had already become regular smokers by that age.
Reports published by the U.S. Center for Disease Control and Prevention
indicate that anyone who does not begin smoking in childhood is unlikely
to begin. For those 3,000 children who do become regular users of tobacco
products every day, projections of current trends indicate that 1,000 will
die prematurely as a result of their tobacco use.
(b) It is against the law of Montana for minors to use
tobacco and efforts to encourage them to do so contravene public policy.
Nonetheless, to lure minors into smoking, the Tobacco Companies have unfairly
and deceptively designed special marketing campaigns particularly appealing
to minors and young people. This targeting of minors is accomplished by
promotional materials designed to create the impression that smoking is
glamorous, sexy, fun and the "in" thing to do. An integral part
of this campaign is the use of images particularly appealing to minors
and the placement of promotional materials in locations likely to be accessed
primarily by minors.
(c) Further, knowing that products, such as smokeless
tobacco, with too much nicotine can be harsh and thus deter new users from
becoming new addicts, the Tobacco Companies seek to graduate new users,
often minors, from "milder" products to those with more
"kick"
in order to attract and addict more customers.
(d) As a result of defendants' unlawful acts, each day
minors use tobacco products in violation of state law. The Attorney General
seeks to halt this practice.
C. The Objectives of This Action. The Objectives
of This Action
17. In this action, the Attorney General seeks (i) to
secure for the people of the State of Montana a fair and open market, free
from unfair or deceptive acts or practices and illegal restraints in trade;
(ii) to return to the State the increased costs of health care caused by
defendants' wrongful conduct; (iii) to require fair and full disclosure
by defendants of the nature and effects of their products; (iv) to unequivocally
halt the marketing of tobacco products to minors; and (v) to disgorge
defendants'
profits from their sales of tobacco products accomplished through violations
of state law.
II. JURISDICTION AND VENUEII. JURISDICTION AND VENUE
18. This Complaint is filed and these proceedings are
instituted under Mont. Code Ann. § 2-15-501(1) and (6) and the common
law of the State of Montana.
19. Authority for the Attorney General to commence this
action for injunctions, mandatory injunctions, damages, restitution,
disgorgement,
civil penalties, attorneys' fees and such other relief as the Court deems
proper, is conferred by, inter alia, Mont. Code Ann. §§
2-15-501 et seq., 30-14-121 and 30-14-122.
20. The violations alleged herein have been and are being
committed in whole or in part, and affect commerce in, and defendants do
business in, Lewis and Clark County and elsewhere throughout the State
of Montana. The basis for jurisdiction over defendants is further set forth
in this Complaint.
III. THE PARTIESIII. THE PARTIES
PLAINTIFF
21. This action is brought for and on behalf of the State
of Montana through Joseph P. Mazurek, Attorney General of Montana.
DEFENDANTS
22. Defendant American Tobacco Company, Inc. ("American
Tobacco") is a Delaware corporation whose principal place of business
is Six Stamford Forum, Stamford, Connecticut 06904. American Tobacco,
sometimes
hereinafter referred to as "ATC," manufactured, advertised and
sold Lucky Strike, Pall Mall, Tareyton, American, Malibu, Montclair, Newport,
Misty, Iceberg, Silk Cut, Silva Thins, Sobrania, Bull Durham, and Carlton
cigarettes and other tobacco products throughout the United States. In
1994, American Tobacco was sold to British-American Tobacco Co., parent
of defendant Brown & Williamson.
23. Defendant Brown & Williamson Tobacco Corporation
("Brown & Williamson") is a Delaware corporation whose
principal
place of business is 1500 Brown & Williamson Tower, Louisville, Kentucky
40202. Brown & Williamson manufactures, advertises and sells Kool,
Raleigh, Barclay, BelAir, Capri, Richland, Laredo, Eli Cutter and Viceroy
cigarettes and other tobacco products throughout the United States.
24. Defendant Liggett & Meyers, Inc. ("Liggett")
is a Delaware corporation whose principal place of business is Main and
uller, Durham, North Carolina. Liggett manufactures, advertises and sells
Chesterfield, Decade, L&M, Pyramid, Dorado, Eve, Stride, Generic and
Lark cigarettes and other tobacco products throughout the United States.
25. Defendant Lorillard Tobacco Company, Inc. ("Lorillard"),
is a Delaware corporation whose principal place of business is 1 Park Avenue,
New York, New York 10016. Lorillard manufactures, advertises and sells
Old Gold, Kent, Triumph, Satin, Max, Spring, Newport and True cigarettes
and other tobacco products throughout the United States.
26. Defendant Philip Morris Inc. ("Philip Morris"),
is a Virginia corporation whose principal place of business is 120 Park
Avenue, New York, New York 10017. Philip Morris manufactures, advertises
and sells Philip Morris, Merit, Cambridge, Marlboro, Benson & Hedges,
Virginia Slims, Alpine, Dunhill, English Ovals, Galaxy, Players, Saratoga
and Parliament cigarettes and other tobacco products throughout the United
States.
27. Defendant R.J. Reynolds Tobacco Company ("Reynolds")
is a New Jersey corporation whose principal place of business is Fourth
& Main Street, Winston-Salem, North Carolina 27102. Reynolds
manufactures,
advertises and sells Camel, Vantage, Now, Doral, Winston, Sterling, Magna,
More, Century, Bright Rite and Salem cigarettes and other tobacco products
throughout the United States.
28. Defendant United States Tobacco Company ("U.S.
Tobacco"), is a Delaware corporation whose principal place of business
is 100 West Putnam Avenue, Greenwich, Connecticut. U.S. Tobacco
manufactures,
advertises and sells Sano cigarettes. U.S. Tobacco also manufactures, advertises
and sells approximately 88 percent of the smokeless tobacco (snuff and
chewing tobacco) sold in the United States, under various brand names including
Happy Days, Skoll and Copenhagen.
29. Each of the cigarette and tobacco manufacturers advertised,
sold and promoted their tobacco products in the State of Montana.
30. B.A.T. Industries P.L.C. ("B.A.T. Industries"
or "BAT II") is a British corporation whose principal place of
business is Windsor House, 50 Victoria St., London. Through a succession
of intermediary corporations and holding companies, B.A.T. Industries is
the sole shareholder of Brown & Williamson. Through Brown &
Williamson,
B.A.T. Industries has placed cigarettes into the stream of commerce with
the expectation that substantial sales of cigarettes would be made in the
United States and in the State of Montana. B.A.T. Industries has also conducted,
or through its agents, subsidiaries, associated companies and/or
co-conspirators,
significant research for Brown & Williamson on the topics of smoking,
disease and addiction. On information and belief, Brown & Williamson
also sent to England, research conducted in the United States on the topics
of smoking, disease and addiction, in order to remove sensitive and inculpatory
documents from United States jurisdiction, and such documents were subject
to B.A.T. Industries' control. B.A.T. Industries is a participant in the
conspiracy described herein and has caused harm and affected commerce in
the State of Montana.
31. British American Tobacco Company, Ltd. ("BATCO")
is a British Corporation whose registered office is Millbank, Knowle Green,
Staines, Middlesex, England TW18 1DY. British American Tobacco Company,
Ltd., is or was a related corporation of defendant Brown & Williamson
Tobacco Corporation. Both are owned by BAT Industries, PLC. BATCO also
advertises, promotes and sells its own tobacco products such as "555
Express" cigarettes throughout the State of Montana. At times pertinent
to the Complaint, BATCO, individually or through its affiliate, alter ego,
subsidiary and/or division, defendant Brown & Williamson Tobacco
Corporation,
designed, tested, manufactured, marketed and sold cigarettes for use in
the State of Montana. BATCO has also conducted, or through its associated
companies, agents, or subsidiaries, significant research for Brown &
Williamson on the topics of smoking, disease, and addiction. On information
and belief, Brown & Williamson also sent to England research conducted
in the United States on the topics of smoking, disease, and addiction,
in order to remove sensitive and inculpatory documents from United States
jurisdiction. BATCO is a participant in the conspiracy described herein
and has caused harm and affected commerce in the State of Montana.
32. Defendant RJR Nabisco Holdings Corp. ("RJR Nabisco
Holdings") is a Delaware Corporation whose principal place of business
is 1301 Avenue of the Americas, New York, New York. RJR Nabisco Holdings
is the parent company of wholly-owned subsidiary RJR Nabisco, Inc., which
in turn is the parent company of R.J. Reynolds Tobacco Company. According
to RJR Nabisco Holdings, its "worldwide tobacco operations are managed
in the United States by R.J. Reynolds Tobacco Co." Through R.J. Reynolds
Tobacco Company, RJR Nabisco Holdings manufactures, advertises and sells
Camel, Vantage, Now, Doral, Winston, Sterling, Magna, More, Century, Bright
Rite and Salem cigarettes and other tobacco products throughout the United
States. Through R.J. Reynolds Tobacco Company, RJR Nabisco Holdings
advertises,
promotes and sells its tobacco products throughout the State of Montana.
33. Defendant RJR Nabisco, Inc. ("RJR Nabisco")
is a Delaware Corporation whose principal place of business is 1301 Avenue
of the Americas, New York, New York. RJR Nabisco is the parent company
of wholly-owned subsidiary R.J. Reynolds Tobacco Company. According to
RJR Nabisco Holdings, its "worldwide tobacco operations are managed
in the United States by R.J. Reynolds Tobacco Co." Through R.J. Reynolds
Tobacco Company, RJR Nabisco manufactures, advertises, and sells Camel,
Vantage, Now, Doral, Winston, Sterling, Magna, More, Century, Bright Rite
and Salem cigarettes and other tobacco products throughout the United States.
Through R.J. Reynolds Tobacco Company, RJR Nabisco advertises, promotes
and sells its tobacco products throughout the State of Montana.
34. Defendant Hill & Knowlton, Inc. is an international
public relations firm with offices located in major United States cities
and whose principal place of business is 420 Lexington Avenue, New York,
New York. Defendant Hill & Knowlton played an active and knowing role
in the conspiracy complained of, aiding the circulation and/or publication
of many of the false statements of the tobacco industry attributable to
the TIRC and the Council for Tobacco Research (the "CTR"). Hill
& Knowlton has been the primary advertising agency responsible for
dissemination of the false and misleading information in question, in its
capacity as the advertising and public relations agency for The Tobacco
Institute, the CTR and several members of the tobacco industry, including
Liggett Group, Inc., Philip Morris, U.S.A., R.J. Reynolds Tobacco Co.,
the American Tobacco Company and Lorillard Tobacco Co. In the course of
such representation Hill & Knowlton aided these defendants in creating
and issuing false information and covering up the truth concerning the
tobacco industry, the link between smoking and cancer or other health hazards,
the addictive nature of smoking and the true nature of the activities of
the TIRC/CTR and its relationship to the industry. Hill & Knowlton
has been involved in the wrongful conduct and conspiracy since its creation.
The TIRC was actually formed at the recommendation and with the substantial
assistance of Hill & Knowlton in 1954, 11 days after Hill & Knowlton,
in December 1953, sent members of the tobacco industry "preliminary
recommendations" for dealing with "a serious problem with public
relations," suggesting the tobacco industry form the Tobacco Industry
Research Committee. Moreover, Hill & Knowlton shared office space with
the TIRC and provided staffing for it. Hill & Knowlton also played
a major role in the creation, development and dissemination of "selection
criteria" for a publication entitled, "Tobacco & Health
Research,"
which was used as a vehicle for the dissemination of the false and misleading
information generated by the tobacco industry. Hill & Knowlton knew
that the CTR and the tobacco industry were engaged in the fraudulent conspiracy
complained of, but failed to disclose the truth because the tobacco industry
and its agents had promised Hill & Knowlton enormous fees to help
publicize
and circulate the false information necessary to conceal the truth and
to continue the tobacco industry's fraud of issuing misleading statements
regarding the health risks of tobacco products.
35. The Council for Tobacco Research--U.S.A., Inc. (the
"CTR"), successor in interest to the Tobacco Industry Research
Committee (the "TIRC"), is a New York nonprofit corporation with
its principal place of business at 900 3rd Avenue, New York, New York 10022.
At all relevant times, the CTR and the TIRC operated as public relations
and lobbying arms of the Tobacco Companies and as agents and employees
of the Tobacco Companies. They also acted as facilitating agencies in
furtherance
of defendants' combination and conspiracy as described in this Complaint.
In doing the things alleged, the CTR and the TIRC acted within the course
and scope of their agency and employment, and acted with the consent,
permission,
and authorization of each of the Tobacco Companies. All actions of the
CTR and the TIRC alleged were ratified and approved by the officers or
managing agents of the Tobacco Companies. The CTR and the TIRC have been
involved continuously in the conspiracy described and the actions of the
CTR and the TIRC have affected commerce and caused harm in Montana.
36. Defendant Tobacco Institute, Inc. ("Tobacco Institute")
is a New York nonprofit corporation with its principal place of business
at 1875 I Street Northwest, Suite 800, Washington, D.C. 20006. At all relevant
times, Tobacco Institute operated as a public relations and lobbying arm
of the Tobacco Companies and was an agent and employee of the Tobacco
Companies.
It also acted as a facilitating agency in furtherance of the combination
and conspiracy of the defendants described in this Complaint. In doing
the things alleged, Tobacco Institute acted within the course and scope
of its agency and employment, and acted with the consent, permission and
authorization of each of the Tobacco Companies. All actions of the Tobacco
Institute alleged were ratified and approved by the officers or managing
agents of the Tobacco Companies. Tobacco Institute has been involved in
the conspiracy described in this Complaint and the actions of Tobacco Institute
have affected commerce and caused harm in Montana.
37. The above named defendants are sometimes herein collectively
referred to as "Defendants," "Tobacco Industry,"
"Tobacco
Companies" or "Tobacco Cartel."
IV. CONSPIRACY ALLEGATIONSIV. CONSPIRACY ALLEGATIONS
38. In committing the wrongful acts alleged, all of the
defendants and the other entities and persons identified, with the assistance
and knowledge of their counsel, have pursued a common course of conduct,
acted in concert with, aided and abetted and conspired with one another
and other conspirators not yet named or known, in furtherance of their
common plan and scheme outlined herein.
V. ADDITIONAL JURISDICTIONAL ALLEGATIONS
REGARDING BAT INDUSTRIES, P.L.C.V. ADDITIONAL JURISDICTIONAL
ALLEGATIONS
REGARDING BAT INDUSTRIES, P.L.C.
39. B.A.T. Industries p.l.c., or "BAT-II," describes
itself as "one of the U.K.'s leading business enterprises with interests
principally in tobacco and financial services." "[B.A.T. Industries]
is the world's most international cigarette manufacturer," with an
unrivaled range of both international and domestic brands. In 1995, the
"B.A.T. Industries Group" [ The defendant, B.A.T. Industries
p.l.c. (or "BAT - II") repeatedly refers to itself and its subsidiaries
as the "B.A.T. Industries Group," or "the BAT Group,"
"the Group" or simply "BAT" in publicly required filings
and promotional material. BAT - II and subsidiary annual reports are replete
with references to BAT - II as being in the business of selling cigarettes.
Of course, this is a clear indication of the close cooperation of the affiliated
BAT - II companies worldwide. The term "BAT - II" as used herein,
refers to the corporate defendant, B.A.T. Industries p.l.c.; the term "BAT
- I" refers to British American Tobacco Corporation Limited, an English
corporation that, from 1902 until 1976, was the ultimate parent company
for the BAT commercial enterprise. After 1976, BAT - I has functioned largely
as only one of many of the BAT Group's tobacco operating companies, and
since 1976 the defendant has typically referred to BAT - I simply as
"BATCo,"
a usage which is similarly adopted for the post-1976 period. The terms
"BAT," the "BAT Group," and "BAT Industries
Group"
shall be used to refer to BAT - II and its subsidiaries, a usage adopted
by BAT - II in its own documentation.] sold "more than 670 billion
cigarettes . . . achieving a 12.4% share of the world market [and] B.A.T.
Industries has the leading cigarette brand in over 30 markets." In
1995, BAT-II's total revenue amounted to about $38.8 billion, and pre-tax
profit reached a record $4.6 billion. (Id.)
40. For the past 20 years, BAT-II has played a significant
role in the BAT Group process that leads to the sale of tens of millions
of packs of cigarettes in Montana annually. The BAT-II board and senior
officers established and enforced coordinated cigarette research, tobacco
growing and other development policies for the BAT Group. BAT-II also
established
and enforced policies and guidelines for the design and manufacture of
addictive cigarettes in the United States. BAT-II also established, and
enforced, coordinated marketing and public relations policies for the BAT
Group in the United States. In sum, BAT-II is the ultimate decision maker
on all significant issues-- whether it be research, tobacco agriculture,
design, manufacture, marketing or administration--that affect the BAT Group's
sale of cigarettes in Montana.
41. BAT-II acted in complicity not only with the corporate
members of the BAT Group itself, but with the American tobacco industry
as a whole, in connection with the wrongdoing alleged in this case. The
promulgation and enforcement of deceptive smoking and health policies,
or of the manipulative nicotine design of cigarettes to addict smokers,
did not remain within the walls of BAT-II's Windsor House headquarters
-- they spread throughout the BAT Group and into BAT-II's American tobacco
business. And, by combining with the wider tobacco industry in the United
States, these policies were implemented on an industry-wide basis.
42. BAT-II has purposely availed itself of the American
economy, including the Montana cigarette and financial markets. BAT Group
tobacco reaps substantial revenues in Montana--sales ultimately directed
and controlled by BAT-II. Over time, BAT-II has reaped millions of dollars
of profits from Montana consumers, upstreaming those profits to diversify
its global commercial enterprise and pay dividends. Furthermore, BAT-II
has succeeded in its aggressive United States corporate acquisition plan,
a plan that has had significant effects upon the Montana economy. For example,
in 1994 BAT-II purchased the American Tobacco Company, then the fifth-largest
tobacco operation in the country, for approximately $1 billion.
43. Furthermore, BAT-II has directly and substantially
engaged in key decision making for the research, development, design,
manufacture
and marketing of millions of dollars worth of cigarettes sold in Montana.
Through secret programs such as "Project GHOST" or "Project
BATTALION" and through formal "delegation" of authority,
BAT-II directly participated in fundamental, strategic and implementive
decisions leading to the sale of cigarettes in the United States by the
BAT Group, and more particularly, its wholly owned subsidiary, Brown &
Williamson. The participation was detailed, and covered many important
aspects of the research, development, manufacture, design and marketing
of cigarettes, along with the political relations to accompany the business
generally, and the administrative infrastructure to carry on that work.
BAT-II's actions were intentional, and they were directed at the sale of
cigarettes in Montana (as well as other states). BAT-II is the hub of the
BAT Group industrial enterprise, which sells millions of dollars worth
of cigarettes in Montana. In short, BAT-II regularly does or solicits business
in Montana.
44. BAT-II is also subject to personal jurisdiction for
causing tortious injury by an act or omission in Montana. BAT-II has participated
in a fraud against Montana and the public; has assured that substantial
scientific and other knowledge not be disclosed to Montana and its citizens;
has directed the research and design of cigarettes sent into Montana for
sale and consumption, and has assured the complicity of B&W and the
other BAT-II operating companies in the United States tobacco industry
conspiracy alleged in the Complaint. As a result, BAT-II has directly,
or by an agent, caused tortious injury by an act or omission in this State.
45. BAT-II also has minimum contacts with Montana under
a stream-of-commerce analysis. In this case, BAT-II has played the
most significant and important role in the research, development, design,
and marketing of cigarettes for the BAT Group, including B&W. BAT-II
established and enforced the coordinated research and development policies
of the BAT Group for 20 years. BAT-II established and enforced policies
and programs for the design and manufacture of addictive cigarettes in
the United States for many years, such as Project AIRBUS, Project GREENDOT,
Project WHEAT and "Y-1" tobacco. BAT-II established and enforced
coordinated marketing and public relations policies of the BAT Group in
the United States and elsewhere for over 20 years. BAT-II has, quite simply,
been the ultimate decision maker for the BAT Group on the issues which
go to the heart of this case, including decisions on the research, design,
manufacture, distribution, marketing and public relations of cigarettes
in the United States for 20 years. It is, therefore, subject to personal
jurisdiction in Montana.
46. When it suits BAT-II's own purposes, BAT-II does not
hesitate to subject itself to jurisdiction in the United States. For example,
when it sought to consummate its $5.2 billion purchase of the Farmer's
Group, BAT-II subjected itself to jurisdiction in various states in undertaking
the insurance approval process for that transaction; when it sought to
purchase American Tobacco Company for $1 billion, it submitted to the
jurisdiction
of the Federal Trade Commission, and judicially admitted that it was involved
in "commerce" between the various states; when it sought to raise
hundreds of millions of dollars on the American financial markets through
the sale of promissory notes through a BAT-II United States subsidiary,
BAT-II submitted to the jurisdiction of New York courts and unconditionally
guaranteed payment on the notes.
47. The United States, including Montana, has been central
to BAT-II's global tobacco and financial businesses. There is nothing unfair,
indeed it is only just, to require BAT-II to defend this action in Montana.
VI. FACTUAL ALLEGATIONSVI. FACTUAL ALLEGATIONS
A. Background.
48. Today, 50 million Americans smoke and, according to
current trends, 22 percent of adult Americans will still be smokers in
the year 2000. In the latter half of the 20th century, some 10 million
Americans have been killed by cigarette disease. This year (and every year
into the foreseeable future), nearly half a million Americans will die
prematurely due to disease caused by cigarette smoking. Based upon current
smoking trends, of the American children alive today, more than 5 million
will be killed by cigarette disease during the 21st century.
49. Cigarette and smokeless tobacco diseases share a common
root cause: a highly addictive product that has been fraudulently and falsely
promoted by the corporations comprising the Tobacco Cartel. Smoking causes
lung cancer. It is also virtually the only cause of throat cancer and emphysema.
Smoking-caused heart disease actually results in more deaths than lung
cancer. Smoking is responsible for approximately one-fourth of all cancer
deaths as well as one-third of all heart disease deaths.
50. Several factors account for the persistence of cigarette
smoking and other tobacco use. First, largely as a result of the Tobacco
Industry's false and fraudulent advertising, smoking and other tobacco
use became socially acceptable before it was proven to be a cause of lung
cancer and other diseases. Second, the long latency period between the
initiation of tobacco use and disease contraction masked the causal relationship
for decades. Third, cigarettes and other tobacco products contain large
amounts of nicotine, an extraordinarily addictive substance, which makes
it difficult for a person to stop smoking. Fourth, the Tobacco Industry
has conspired not to compete on the basis of relative health risk, to restrict
output in safer and alternate products, and to create confusion as to whether
smoking or other tobacco use is really harmful and to make it appear that
there is a legitimate good faith scientific dispute over the health impact
of smoking and other tobacco use, while presenting cigarette smoking in
an attractive, youthful and positive way -- concealing all the while that
tobacco products are, in fact, highly addictive and unquestionably dangerous.
51a Despite their knowledge that nicotine is extremely
addictive, the Tobacco Companies to this day, pursuant to their conspiracy,
deny that smoking is the cause of disease or that nicotine is addictive.
Recently, and in furtherance of the conspiracy, each of the CEOs of the
defendant Tobacco Companies testified under oath before Congress that
smoking
was not addictive.
B. The Cartel's Pre-Conspiracy Advertising
and Promotional Activities: False Claims of Health and Safety.
52a The promotional activities and conduct of the Tobacco
Industry, after the conspiracy was agreed to and implemented (which is
described below), can only be understood in the context of the fraudulent
and false claims that they had engaged in pre-conspiracy regarding cigarette
smoking and health. Until the mid-1950s, explicit or implied health claims
and/or medical endorsement for smoking were major advertising campaign
themes for many cigarette brands and in the public statements issued by
the Tobacco Industry.
53a Cigarette smoking increased dramatically in the first
half of the 20th century. With the increase of cigarette smoking
came an increase in lung cancer. Dr. Alton Ochsner, a New Orleans surgeon
and regional medical director of the American Cancer Society, told an audience
at Duke University on October 23, 1945, that "there is a distinct
parallelism between the incidence of cancer of the lung and the sale of
cigarettes . . . . [T]he increase is due to the increased incidence of
smoking and . . . smoking is a factor because of the chronic irritation
it produces."
54a In 1946, Tobacco Company chemists themselves reported
concern for the health of smokers. A 1946 letter from a Lorillard chemist
to its manufacturing committee states that "[c]ertain scientists and
medical authorities have claimed for many years that the use of tobacco
contributes to cancer development in susceptible people. Just enough evidence
has been presented to justify the possibility of such a presumption."
55a Despite evidence showing their cigarettes caused lung
disease and cancer, the Tobacco Companies chose sales over public health
and safety. Starting in the 1930s and continuing until the mid-1950s, the
Tobacco Companies made express claims and warranties as to the healthiness
of their products with reckless disregard to the falsity of their claims
and the consequential adverse impact on consumers. Examples of these health
warranties include the following: Old Gold--"Not a cough in a
Carload";
Camel-- "Not a single case of throat irritation due to smoking
Camels";
Philip Morris-- "The Throat-tested cigarette."
56a One of the key themes used to promote cigarette smoking
during this period was a promise that individual cigarette brands were
either "less irritating" or that "harmful irritants"
had been removed. At one point or another during this period every major
cigarette brand made a false claim regarding health and/or irritation.
These pre-1954 advertisements and representations demonstrate defendants
understanding that consumers wanted safer products, and as a result, the
Tobacco Companies engaged in vigorous competition on the basis of claims
of health and safety as detailed above and elsewhere in this Complaint.
C. The 1953 "Big Scare" and Beginning of
the Industry Conspiracy to Suppress the Truth and Curtail Competition.
57a The defendants and their co-conspirators knew that
published information about health risks would (1) increase consumer demand
for safer tobacco products; (2) induce some competitors to promote their
own brands or denigrate competing brands on the basis of relative health
risk; (3) materially reduce their profits and market shares; and (4) increase
the likelihood of government regulation and decrease the likelihood that
they could shift to the public and public agencies the health costs caused
by use of tobacco products. Armed with this knowledge, and as set forth
below, defendants ultimately agreed to not compete in the market based
on health claims or in the market for "safer" or alternative
products and agreed to suppress adverse information concerning health risks
and addiction.
58a In the early 1950s, scientists published two significant
scientific studies warning of the health hazards of cigarettes. The first
was published in 1952 by Dr. Richard Doll, a British researcher, who found
that lung cancer was more common among people who smoked and that the risk
of lung cancer was directly proportional to the number of cigarettes smoked.
A second study was published in December 1953 by Dr. Ernest Wynder and
others of the Sloan-Kettering Institute, whose experiments with mice confirmed
the cancer-causing properties of cigarettes. The widespread reporting of
these studies caused what cigarette company officials called the "Big
Scare."
59a The cigarette industry responded quickly to the Big
Scare, that by late 1953 had caused a decrease in consumption of tobacco
products and in the stock prices of many tobacco companies. Thus, on
December
14, 1953, in the direct aftermath of the Wynder study and the public concern
over it, B&W President, Timothy V. Hartnett, circulated a memorandum
to his counterparts at other tobacco companies and set out his proposals
on how the industry should collectively deal with the "health
issue."
60a Hartnett proposed a two-prong collective response
to his competitors "to get the industry out of this hole": (a)
"unstinted assistance to scientific research," with the most
difficult part of this effort being the group deciding "how to handle
significantly negative research results if, as, and when they develop";
and (b) "the best obtainable" public relations counsel since
none "has ever been handed so real and yet so delicate a multimillion
dollar problem."
61a Hartnett's proposal was an invitation to his competitors
to agree to restrain independent economic best interest in favor of collusion.
62a The next day, December 15, 1953, accepting Hartnett's
offer to conspire, the presidents of the leading tobacco companies met
at an extraordinary gathering in the Plaza Hotel in New York City. Present
were the presidents of American Tobacco, Benson & Hedges, B&W,
Lorillard, Philip Morris, R.J. Reynolds and U.S. Tobacco. This gathering
was unprecedented: It was the first time the Tobacco Companies had met
together outside occasional dinners. Also in attendance was Hill &
Knowlton, who coordinated the meeting and was to play a major role in
formulating
and executing the industry's response.
63a According to a Hill & Knowlton memorandum summarizing
the meeting, the companies exchanged proprietary information and
"voluntarily
admitted" that "their own advertising and [past] competitive
practices have been a principal factor in creating a health problem,"
and acknowledged that they had "informally talked over the problem
and will try and do something about it." Emphasis added. The defendants
realized that the subject of doing something collectively about competitive
advertising practices "is one of the important public relations activities
that might very clearly fall within the purview of the antitrust act."
In order to conceal their intentions to collectively restrain competition,
they concluded, "it is doubtful that we will be able to make any
formal recommendation with regard to the advertising or selling practices
and claims." Emphasis added.
64a At the Plaza Hotel meeting, the defendants entered
into a contract, combination and conspiracy to cease to compete on the
basis of relative health risks, an agreement that violates Montana's prohibition
on unreasonable restraints of trade.
65a At the time of the December 15, 1953 meeting, the
cigarette industry did not have a trade association, and cigarette manufacturers
had never before met in a formal business meeting or discussed business,
because, according to the Hill & Knowlton memo, the Tobacco Companies
were prevented by a 1911 dissolution decree and criminal convictions for
price fixing in 1939 from carrying on many group activities.
66a Despite the dangers, the competitors met because they
viewed the current problem "as being extremely serious and worthy
of drastic action." An indication of the seriousness of the problem
was "that salesmen in the industry are frantically alarmed and that
the decline in tobacco stocks on the stock exchange market has caused grave
concern."
67a The agreement reached at the Plaza Hotel to conceal
adverse information and not compete on the basis of health, was to be a
permanent fixture of defendants' future relationship. According to the
Hill & Knowlton memorandum, "[e]ach of the company presidents
attending emphasized the fact that they consider the program to be a long-term
one," and the meeting participants were "emphatic in saying
that the entire activity is a long-term, continuing program,
since they feel the problem is one of promoting cigarettes and protecting
them from these and other attacks that may be expected in the future."
Emphasis added.
68a Thus, at the December 15, 1953 meeting the course
of conduct agreed to include, but was not limited to:
a. "The chief executive officers of all the leading
companies -- R.J. Reynolds, Philip Morris, Benson & Hedges, U.S. Tobacco
Company, Brown & Williamson--have agreed to go along with a public
relations program on the health issue."
b. "Because of the antitrust background, the companies
do not favor the incorporation of a formal association. Instead, they prefer
strongly the organization of an informal committee which will be specifically
charged with the public relations function and readily identified as such."
c. Hill & Knowlton, a public relations firm, was to
play a central role in the industry association. "The current plans
are for Hill & Knowlton to serve as the operating agency of the companies,
hiring all the staff and disbursing all funds."
d. All of the leading manufacturers, except Liggett, agreed
to join in the public relations strategy. Liggett decided not to participate
at that time "because that company feels that the proper procedure
is to ignore the whole controversy."
69a In furtherance of the conspiracy, nine days later,
Hill & Knowlton presented a detailed recommendation to the tobacco
companies and their co-conspirators. The recommendation recognized the
importance of gaining public trust, and avoiding the appearance of bias,
if the industry's "pro-cigarette" public relations strategy was
to succeed. According to the memorandum:
a. "[T]he grave nature of a number of recently highly
publicized research reports on the effects of cigarette smoking . . . have
confronted the industry with a serious problem of public relations."
b. "It is important that the industry do nothing
to appear in the light of being callous to considerations of health or
of belittling medical research which goes against cigarettes."
c. "The situation is one of extreme delicacy. There
is much at stake and the industry group, in moving into the field of public
relations, needs to exercise great care not to add fuel to the flames."
70a John Hill suggested that the word "research"
be included in the name of the Committee. The suggestion was apparently
taken, and thus, an organization designed to pursue a very delicate "public
relations function" was given the intentionally misleading name of
the "Tobacco Industry Research Committee" (the "TIRC").
71a Five of the Big Six cigarette manufacturers were original
members of the TIRC. Liggett did not join until 1964. In 1964, the TIRC
changed its name to the Council for Tobacco Research (the "CTR").
The industry formed equivalent organizations in other countries, as well,
including the Tobacco Advisory Committee, formerly Tobacco Research Council
in the United Kingdom, and Verbrand der Cigarettenindustrie in Germany.
The U.S. companies, either directly or through affiliates, are members
of the other organizations.
72a The agreement that the industry would not compete
based on claims of health was documented and communicated in a number of
ways. One example is a June 21, 1954 Hill & Knowlton memorandum:
Early in the life of the Tobacco Industry Research Committee,
it was accepted as a basic principle that every effort should be made
to avoid stimulating more adverse publicity and controversy on the subject
of tobacco and health.
The principle has been and will continue to be carefully
adhered to in the work carried on for the committee.
Emphasis added.
73a The "every effort" referred to the agreement
not to compete on the basis of health claims for fear of stirring up any
controversy regarding health and safety.
74a A July 31, 1954 Hill & Knowlton "Confidential
Memorandum" acknowledges that the formation of the TIRC was the result
of a decision that "joint action" was imperative.
75a The defendants were keenly aware that the agreement
creating the TIRC was a restraint on competition: "On the Continent
individual companies and monopolies have agreed to pool research on the
health question, thereby reducing it as a basis for competition."
Emphasis added.
76a British research conducted by the Tobacco Manufacturers'
Standing Committee [TMSC], an equivalent organization to the TIRC (and
including companies, such as British American Tobacco [BAT] who were
affiliated
with U.S. companies) had known competitive impacts. BAT's Chairman, Sir
Charles Ellis said, "The Board has decided that if this Company [BAT]
makes any significant scientific discovery clearly relevant to health it
will share its knowledge with its co-members of TMSC and not seek to
obtain competitive commercial advantage." Emphasis added.
77a In compliance with the conspiracy not to compete,
at least one of the companies, American Tobacco, did nothing on its own
to evaluate the risks of use of its products: "The Council for Tobacco
Research was the source of expertise on that."
78a To further the existing conspiracy, a second trade
group, the Tobacco Institute, was formed by cigarette manufacturers in
1958. It performs a variety of functions and provided opportunities for
the conspirators to exchange information, to police the agreement, and
otherwise to coordinate activities.
D. Representations and Special Undertakings
by the Industry.
79a The cigarette industry announced the formation of
the TIRC on January 4, 1954, with newspaper advertisements placed in virtually
every city with a population of 50,000 or more, reaching a circulation
of more than 43 million Americans. The advertisement was captioned "A
Frank Statement to Cigarette Smokers" and was run under the auspices
of the TIRC with, inter alia, five of the Big Six manufacturers
listed by name. The advertisement stated as follows:
"A Frank Statement to Cigarette Smokers"
RECENT REPORTS on experiments with mice have given wide
publicity to a theory that cigarette smoking is in some way linked with
lung cancer in human beings.
Although conducted by doctors of professional standing,
these experiments are not regarded as conclusive in the field of cancer
research. However, we do not believe that any serious medical research,
even though its results are inconclusive should be disregarded or lightly
dismissed.
At the same time, we feel it is in the public interest
to call attention to the fact that eminent doctors and research scientists
have publicly questioned the claimed significance of these experiments.
Distinguished authorities point out:
1. That medical research of recent years indicates many
possible causes of lung cancer.
2. That there is no agreement among the authorities regarding
what the cause is.
3. That there is no proof that cigarette smoking is one
of the causes.
4. That statistics purporting to link cigarette smoking
with the disease could apply with equal force to any one of many other
aspects of modern life. Indeed the validity of the statistics themselves
is questioned by numerous scientists.
We accept an interest in people's health as a basic
responsibility, paramount to every other consideration in our business.
We believe the products we make are not injurious to health.
We always have and always will cooperate closely
with those whose task it is to safeguard the public health.
For more than 300 years tobacco has given solace, relaxation
and enjoyment to mankind. At one time or another during these years critics
have held it responsible for practically every disease of the human body.
One by one of these charges have been abandoned for lack of evidence.
Regardless of the record of the past, the fact that cigarette
smoking today should even be suspected as a cause of a serious disease
is a matter of deep concern to us.
Many people have asked us what we are doing to meet the
public's concern aroused by the recent reports. Here is the answer:
1. We are pledging aid and assistance to the research
effort into all phases of tobacco use and health. This joint financial
aid will of course be in addition to what is already being contributed
by individual companies.
2. For this purpose we are establishing a joint industry
group consisting initially of the undersigned. This group will be known
as TOBACCO INDUSTRY RESEARCH COMMITTEE.
3. In charge of the research activities of the Committee
will be a scientist of unimpeachable integrity and national repute. In
addition there will be an Advisory Board of scientists disinterested
in the cigarette industry. A group of distinguished men from medicine,
science, and education will be invited to serve on this Board. These scientists
will advise the Committee on its research activities.
This statement is being issued because we believe the
people are entitled to know where we stand on this matter and what we intend
to do about it.
Emphasis added.
Listed as sponsors of this announcement were, inter
alia, the American Tobacco Company, Brown & Williamson Tobacco
Corporation, P. Lorillard Company, Philip Morris Co. Ltd., Inc., R.J. Reynolds
Tobacco Company, United States Tobacco Company.
80a By issuing this publication and others that followed,
the industry undertook a special and continuing duty to protect the public
health by representing that it would conduct and disclose unbiased and
authenticated research on the health risks of cigarette smoking. When they
made this representation, defendants intended that the public and government
regulators believe and rely upon it, and knew or should have known that
consumers would consider the representation material to their decisions
to purchase and smoke cigarettes and that government regulators would
consider
the representation material to their decisions to regulate cigarettes.
At that time, and continuing to the present, defendants intended and/or
knew or should have known that their failure to fulfill the duty they undertook
would directly increase the health care costs to the State of Montana.
The issuance of this statement and others that have followed was also intended
by defendants to assure public health officials that the industry would
respond to health issues in an honest manner so that no government regulation
was necessary. The issuance of this publication was an integral step in
the conspiracy to suppress and conceal information that might reduce the
cartel's sale of tobacco products.
E. Repeated False Promises to the Public
81a Despite increasing internal knowledge of the dangers
of cigarette smoking which they did not disclose, the defendants continued,
renewed and repeated the representations and undertakings of the 1954
"Frank
Statement to Cigarette Smokers." The cigarette industry continued
to pursue its two-prong strategy of falsely representing the objectivity
of industry research to the public in order to gain credence, and then
misrepresenting, distorting, and suppressing information in order to support
its pro-cigarette position.
82a Other public statements issued by the tobacco industry
through the TIRC/CTR or the TI, repeated several themes: (1) that the industry
was working to report the full and complete truth concerning tobacco and
health; (2) that these working on reporting the truth were
"independent"
scientists; and (3) that the results of this independent research cast
grave doubt on any study linking tobacco use with health problems. These
statements include, but are not limited to the following:
a On June 4, 1955, the TIRC issued a release entitled
"Anti-smoking Theories Not Based on Scientific Knowledge." The
release represented that according to the TIRC's associate scientific director,
"little is established scientifically about tobacco effects on the
heart"; tobacco has "even been reported as killing various harmful
bacteria." The release represented that the TIRC "is supporting
scientific investigation into many phases of tobacco use and human health
in order to get the facts." Emphasis added.
b On December 16, 1957, the TIRC issued a release representing
that "extensive scientific research now underway into tobacco use
does not substantiate generalized charges against smoking as a cause of
cancer." Reporting on the findings of Dr. Clarence Cook Little,
"Scientific
Director" of the TIRC, the release represented that "no substance
has been found in tobacco smoke known to cause cancer." According
to Dr. Little, the research program was designed "solely to obtain
new information and to advance human knowledge in every possible phase
of the tobacco and health relationship." Emphasis added.
c On or about December 27, 1958, the TIRC issued a release
representing that "during the past year many scientists of high professional
standing have produced additional evidence and opinions that challenge
the validity of broad charges made against tobacco use." According
to the TIRC, its research had developed several "essential facts,"
including the fact that "the cause or causes of lung cancer remain
undetermined" and that "compelling doubts have been raised about
statistics and their interpretations involving smoking and health."
The release concluded with the following promise:
At its formation in January 1954, the Tobacco Industry
Research Committee stated its fundamental position: 'We believe the products
we make are not injurious to health. We are providing aid and assistance
to research efforts into all phases of tobacco use and health.'
That statement and pledge are reaffirmed today by members
of the Tobacco Industry Research Committee.
d On March 28, 1960, the TIRC issued a release challenging
any link between smoking and lung cancer. In the release the TIRC repeated
that "we have frankly accepted a responsibility for financing independent
research into health problems, including lung cancer, in an effort to get
needed facts and evidence." Emphasis added.
e George Allen, President of the Tobacco Institute, issued
a report pledging that the TI, for the benefit of the "public interest"
would "encourage the kind of research that will provide the necessary
facts." Further, Allen promised that this type of research "is
what the industry has tried to do in the past" and "is what we
shall do in the future, until enough facts are known to provide solutions
to the health questions involved." Emphasis added.
f In 1962, the TIRC issued a release announcing it was
in its ninth year of supporting research by independent scientists relevant
to questions about tobacco and health. The release represented that "the
tobacco industry continues its support of the search for truth and
knowledge."
Emphasis added.
g On May 28, 1962, the TIRC, in a release, confirmed that
its purpose was to "make the facts known to the public."
h In 1964, the TIRC issued a "year end statement"
representing that its research "will intensify," that $7.25 million
had been apportioned to date involving 125 grants and that the TIRC "is
dedicated to support its program of research by independent scientists
until all the answers are known."
i In 1979, the TI issued a document entitled "Tobacco
Industry Research on Smoking and Health." In it, the TI represented
that "[t]here are still eminent scientists who question whether a
causal relationship has been proven between cigarette smoking and human
disease." The report went on to claim the industry had a great desire
to "learn the truth":
[A] major portion of this scientific inquiry has been
financed by the people who knew the most about cigarettes and have a great
desire to learn the truth--the tobacco industry.
The industry has committed itself to this task in the
most objective and scientific way possible.
The report describes how the industry spent $82 million
in research "into all phases of tobacco use and health." Further
the report proclaimed that "the findings are not secret" and
reaffirmed the commitment to the tobacco industry:
>From the beginning the tobacco industry has believed the
American people deserve objective, scientific answers.
With this credo in mind, the tobacco industry stands ready
today to make new commitments for additional valid scientific research
that may shed light on the question of smoking and health.
83a Additional representations were made by the tobacco
companies themselves repeating the promise that they would investigate
and report all facts relating to smoking and health. For example:
a On February 28, 1956, the President of American Tobacco
Company ("ATC") issued a release indicating that "many highly
respected medical scientists challenge the anti-tobacco claims."
b On November 14, 1957, ATC issued a release representing
that its own research produced "evidence directly contradicting the
theory that smoking causes lung cancer or heart disease."
c On April 9, 1962, ATC issued a release indicating that
research contradicting any statistical association between cigarettes and
higher death rates was "very difficult to refute."
d On June 4, 1963, ATC issued a release, quoting Dr. Robert
Heiman, Assistant to the President and prime author of studies refuting
any link between smoking and health. In the release, Heiman claimed that
workers for the company smoked twice as much as the average while having
a mortality rate of 29 percent below average.
e On October 3, 1963, ATC again issued a release, this
time citing Heiman for proof that the statistical association between smoking
and lung cancer is "fallacious" and leads to " absurd
consequences."
f In 1967, ATC issued a release describing a 46-page booklet
prepared by the tobacco industry which "refutes anticigarette
charges."
ATC called the evidence on smoking and health "an open one,"
refuted the studies linking smoking with cancer in mice, and claimed that
"no one does more" about smoking and health than "The
Tobacco
People":
No one does more. The tobacco industry supports more scientific
research into the problems than any other source.
The release went on to claim that: "The tobacco industry
continues to endure unfair and unjustified harassment from government and
private sources." ATC also claimed that "the cold hard fact remains
that no clinical or biological evidence has been produced which demonstrates
how cigarettes relate to cancer or any other disease in human beings."
84a Additional representations were made in 1970 when
the cigarette industry, through its lobbying group, the Tobacco Institute,
placed a number of announcements similar to the 1954 "Frank
Statement."
These announcements stated in part:
a "After millions of dollars and over 20 years of
research: The question about smoking and health is still a question."
b "[N]o particular ingredient, as it occurs in cigarette
smoke, has been demonstrated as the cause of any particular disease."
c "[A] major portion of this scientific inquiry has
been financed by the people who know the most about cigarettes and have
a great desire to learn the truth . . . the tobacco industry. And the industry
has committed itself to this task in the most objective and scientific
way possible."
d " A $35,000,000 program."
e "In the interest of absolute objectivity, the tobacco
industry has supported totally independent research efforts with completely
non-restrictive funding."
f "In 1954, the Industry established what is now
known as CTR, the Council for Tobacco Research--U.S.A., to provide financial
support for research by independent scientists into all phases of tobacco
use and health. Completely autonomous, CTR's research activity is directed
by a board of ten scientists and physicians who retain their affiliations
with their respective universities and institutions. This board has full
authority and responsibility for policy, development and direction of the
research effort."
g "The findings are not secret."
h "From the beginning, the tobacco industry has believed
that the American people deserve objective, scientific answers."
i "The tobacco industry stands ready today to make
new commitments for additional valid scientific research that offers to
shed light on new facets of smoking and health."
85a On March 24, 1965, the TI issued a release in which
it represented that regulations on advertising should not be implemented,
in part because the "industry is profoundly conscious of the questions
concerning smoking and health" and the industry is conducting scientific
research through the CTR. In the release, Bowman Gray of RJ, represented
that "it has not been established that smoking causes lung cancer
or any other disease."
86a Another industry publication in 1970 stated that the
industry believed the American public is "entitled to complete,
authenticated
information about cigarette smoking and health. The tobacco industry recognizes
and accepts a responsibility to promote the progress of independent scientific
research in the field of tobacco and health."
87a Yet another announcement co-sponsored by the TIRC
and the Tobacco Industry, called "A Statement about Tobacco and
Health,"
stated:
We recognize that we have a special responsibility
to the public, to help scientists determine the
facts about tobacco and health, and about certain diseases that have been
associated with tobacco use.
We accepted this responsibility in 1954 by establishing
the Tobacco Industry Research Committee, which
provides research grants to independent scientists. We pledge continued
support of this program of research until the facts are known.
. . . .
Scientific advisors inform us that until much more is
known about such diseases as lung cancer, medical science probably will
not be able to determine whether tobacco or any other single factor plays
a causative role, or whether such a role might be direct or indirect, incidental
or important.
We shall continue all possible efforts to bring the facts
to light. In that spirit we are cooperating with the Public Health Service
in its plan to have a special study group review all presently available
research. (Emphasis added.)
88a In 1972, Tobacco Institute President Horace Kornegay
testified before Congress:
Let me state at the outset that the cigarette industry
is as vitally concerned or more so than any other group in determining
whether cigarette smoking causes human disease, whether there is some
ingredient
as found in cigarette smoke that is shown to be responsible and if so what
it is.
That is why the entire tobacco industry . . . since 1954
has committed a total of $40 million for smoking and health research through
grants to independent scientists and institutions.
89a The industry repeated these statements to members
of the public, including citizens of the State of Montana.
90a RJR chairman Bowman Gray told Congress in 1964: "If
it is proven that cigarettes are harmful, we want to do something about
it regardless of what somebody else tells us to do. And we would do our
level best. It's only human."
91a In 1984, RJR placed an editorial style announcement
in the New York Times stating:
Studies which conclude that smoking causes disease have
regularly ignored significant evidence to the contrary. These scientific
findings come from research completely independent of the tobacco industry.
92a Each of the representations to the public that defendant
tobacco companies were sponsoring independent objective research, that
they were endeavoring to bring the truth to light, and that the public
could therefore rely upon the statements made, were false and deceptive.
These misrepresentations were designed to gain the trust of the public
and public health authorities in order to better distort and suppress substantive
information about smoking and health.
F. The True Nature of the TIRC: A Front for
the Tobacco Cartel.
93a The TIRC was an agent of the conspirators and operated,
among other things, to facilitate their implementation of the Plaza Hotel
agreement/conspiracy to suppress and/or misrepresent information and to
not compete in the development of a "safer" cigarette. Its acts
were the acts of defendants in furtherance of their covenant not to compete.
94a The TIRC was physically established in the Empire
State Building, one floor below the Hill & Knowlton offices. Internal
documents confirm that Hill & Knowlton, and not independent scientists
as represented, actually ran the TIRC.
95a In 1954, the TIRC's first year of operation, 35 staff
members of Hill & Knowlton worked full- or part-time for the TIRC.
In that year, the TIRC spent $477,955 on payments to Hill & Knowlton,
over 50 percent of the TIRC's entire budget.
96a The sham nature of the TIRC is revealed by a series
of Hill & Knowlton reports to the TIRC. Those reports reveal that the
true nature of the TIRC was to influence media and scientific reports so
as to cloud the issue of smoking and health and to suppress all harmful
information. These reports all reveal that Hill & Knowlton--not the
independent scientists--actually ran the Tobacco Industry Research Committee,
and "provided assistance in selecting" the Scientific Advisory
Board, "proposed" Dr. Little for the Scientific Director, and
"handled liaison, agendas, organizational plans, business affairs,
reports, and materials for meetings of the TIRC [and] the Scientific Advisory
Board, . . . in addition to developing operating procedures for the research
program." (Emphasis added.)
97a By the Spring of 1955, the unlawful strategy recommended
by Hill & Knowlton and implemented by the industry through the
"Frank
Statement" was largely successful. Hill & Knowlton reported to
the TIRC:
a. [P]rogress has been made . . . . The first _big scare_
continues on the wane.
b. The research program of the TIRC has won wide acceptance
in the scientific world as a sincere, valuable and scientific effort.
c. Positive stories are on the ascendancy.
98a In 1970, H. Wakeham, a Vice President of Philip Morris,
observed that the stated objective of the CTR was "to make available
to the public" information on tobacco use and health. He noted this
"broad statement" had been interpreted more narrowly by the CTR.
Wakeham also noted that the public statement of the purpose of CTR is "to
find out about smoking and health." In this regard, rather than be
independent as publicly represented, Wakeham wrote "we are interested
in evidence which we believe denies the allegation that cigaret [sic] smoking
causes disease." Wakeham then posited alternatives for the future
of the CTR, one of which was to use the CTR as a means for expert witnesses
in "legislative halls" and "in litigation." This option
was the true function of the CTR.
99a In 1977, Addison Yeaman, chairman and president of
CTR, stated during a published speech that "[CTR] has no propaganda
function of any kind or any degree." Internal documents demonstrate,
however, that the tobacco companies' joint efforts undertaken through TIRC,
and later, through CTR, were not disinterested or objective. Rather, they
were designed and used to promote favorable research, to suppress negative
research when possible, and to attack negative research where it could
not be suppressed, all in order to convince the public that the "case
against smoking is [not] closed."
100a A 1972 internal document from a Tobacco Institute
official to the group's president, described the importance of using joint
industry research to maintain public doubt about the link between smoking
and disease:
For nearly twenty years, this industry has employed a
single strategy to defend itself on three major fronts--litigation, politics,
and public opinion. While the strategy was brilliantly conceived and executed
over the years helping us win important battles, it is only fair to say
that it is not--nor was it ever intended to be--a vehicle for victory.
On the contrary, it has always been a holding strategy, consisting of
* creating doubt about the health charge without actually
denying it
* advocating the public's right to smoke, without actually
urging them to take up the practice
* encouraging objective scientific research as the only
way to resolve the question of the health hazard.
As an industry, therefore, we are committed to an ill-defined
middle ground which is articulated by variations on the theme that, 'the
case is not proved.'
In the cigarette controversy, the public--especially those
who are present and potential supporters (e.g. tobacco state congressmen
and heavy smoker)--must perceive, understand, and believe in evidence to
sustain their opinions that smoking may not be the causal factor. As things
stand, we supply them with too little in the way of ready-made credible
alternatives.
101a A 1974 report to the CEO of Lorillard from a research
executive described CTR's scientific projects as hav[ing] not been selected
against specific scientific goals, but rather for various purposes such
as public relations, political relations, position for litigation, etc.
Thus, it seems obvious that reviews of such programs for scientific relevance
and merit in the smoking and health field are not likely to produce high
ratings.
102a A 1978 memo addressed to the CTR file from a Philip
Morris official characterized CTR as "an industry 'shield.'"
The memorandum goes on to state: "the 'public relations' value of
CTR must be considered and continued . . . . It is extremely important
that the industry continue to spend their dollars on research to show that
we don't agree that the case against smoking is closed for 'PR' purposes
. . . ."
103a In 1993, a former 24-year employee of CTR confirmed
publicly that the joint industry research efforts were not objective: "When
CTR researchers found out that cigarettes were bad and it was better not
to smoke, we didn't publicize that. The CTR is just a lobbying thing. We
were lobbying for cigarettes."
104a This and other evidence demonstrates that the role
and purpose of TIRC and CTR in the tobacco companies' strategy was to seek
to use the public's trust to propagate "pro-tobacco" propaganda.
An industry official wrote in his personal notes describing a meeting that
included high level officials from various tobacco companies that: "CTR
is the best & cheapest insurance the tobacco industry can buy and without
it the Industry would have to invent CTR or would be dead."
105a Nonetheless, in its annual reports published between
1985 and 1992, CTR stated that its Scientific Advisory Board funded
peer-reviewed
research projects "judging them solely on the basis of scientific
merit and relevance." In 1994, Dr. James F. Glenn, CEO of CTR, submitted
testimony to the Waxman Subcommittee that:
a. The Council . . . sponsors research into questions
of tobacco use and health and makes the results available to the public.
b. [G]rantees are assured complete scientific freedom
in conducting these studies . . . [P]ublication [of research results] is
encouraged in every instance.
106a In fact, CTR-sponsored research projects were directed
away from research that might add to the evidence against the use of tobacco
products. When CTR-sponsored research did produce unfavorable results the
information was distorted or simply suppressed. For example, Dr. Freddy
Homburger, a researcher in Cambridge, Massachusetts, undertook a study
of smoke exposure on hamsters. According to Dr. Homburger, he received
a grant from CTR that was changed half-way through the study to a contract
"so they could control publication--they were quite open about that."
Dr. Homburger has testified that when the study was completed in 1974,
the scientific director of CTR and a CTR lawyer "didn't want us to
call anything cancer" and that they threatened Dr. Homburger with
"never get[ting] a penny more" if his paper was published without
deleting the word cancer.
107a An internal CTR document describes how Dr. Homburger
attempted to call a press conference about the incident and how CTR stopped
it:
He . . . was to tell the press that the tobacco industry
was attempting to suppress important scientific information about the harmful
effects of smoking. He was going to point specifically at CTR . . . . I
arranged later that evening for it to be canceled. Homburger was given
a cordial welcome and nicely hastened out the door. P.S. I doubt if you
or Tom will want to retain this note.
G. Role of the CTR as a "Front" for
Disseminating False Information.
108a In 1964, the year of the first Surgeon General's
report on smoking, the CTR formed a "Special Projects" division
to assist the industry in concealing unfavorable information. A series
of research grants designated as CTR "Special Projects" were
developed by defendants in a manner so as to appear to receive the protection
of the attorney-client or attorney work product privilege. The "Special
Projects" division was under the auspices of the CTR.
109a The true purpose of the "Special Projects"
division was to conduct research regarding the links between smoking and
disease in order to develop a number of expert witnesses for defense purposes
in tort suits against the tobacco industry. Consistent with this purpose,
the tobacco industrys counsel were substantially involved in strategic
and specific decision making within the "Special Projects" division,
to secrete dangerous evidence from the public. For example, the notes of
one CTR meeting, written in 1981, state, "When we started the CTR
Special Projects, the idea was that the scientific director of CTR would
review a project. If he liked it, it was a CTR special project. If he did
not like it, then it became a lawyers' special project." Another memorandum
from 1981 explained, "Difference between CTR and Special Four (lawyers'
projects). Director of CTR reviews special projects--if project was problem
for CTR, use Special Four."
110a The industry has been successful in using the CTR
Special Projects division to conceal harmful information. Research from
the Special Projects division remains shielded from public scrutiny. Individual
companies furthered the conspiracy by shielding company documents with
claims of attorney-client privilege and through tactics such as that undertaken
by Brown & Williamson, which over the years has transferred documents
described as "deadwood" to its British parent company, BAT
Industries,
so that they would not be discovered in legal proceedings in the United
States.
111a Other internal industry documents also shed
light on the true nature of the conspirators' associations, as the following
quotations demonstrate by way of example:
a. "CTR began as an organization called Tobacco Industry
Research Council (TIRC). It was set up as an industry _shield_ in 1954.
That was the year statistical accusations relating smoking to diseases
were leveled at the industry; litigation began; and the Wynder/Graham reports
were issued. CTR has helped our legal counsel by giving advice and technical
information, which was needed at court trials . . . . [T]he _public relations_
value of CTR must be considered and continued . . . . It is very important
that the industry continue to spend their dollars on research to show that
we don't agree that the case against smoking is closed."
b. "CTR is best & cheapest insurance the tobacco
industry can buy and without it the Industry would have to invent CTR or
would be dead."
c. "Historically, the joint industry funded smoking
and health research programs have not been selected against specific scientific
goals, but rather for various purposes such as public relations, political
relations, position for litigation, etc. . . . In general, these programs
have provided some buffer to public and political attack of the industry,
as well as background for litigious (sic) strategy."
d. "Historically, it would seem that the 1954 emergency
was handled effectively. From this experience there arose a realization
by the tobacco industry of a public relations problem that must be solved
for the self-preservation of the industry."
e. "To date, the TIRC program has carried its fair
share of the public relations load in providing materials to stamp out
brush fires as they arose. While effective in the past, this whole approach
requires both revision and expansion. The public relations program
. . . was like the early symptoms of diabetes--certain dietary controls
kept public opinion reasonably healthy. When some new symptom appeared,
a shot of insulin in the way of a news release . . . kept the patient going."
f. "When the products of an industry are accused
of causing harm to users, certainly it is the obligation of that industry
to endeavor to determine whether such accusations are true or false. Money
spent for such purpose should not be regarded as a charitable contribution
but as a business expense--an expense necessary to keep that industry alive.
In view of the billions of dollars of annual sales of our industry our
expenditures for health research has been of a minimal order."
g. "For nearly twenty years, this industry has employed
a single strategy to defend itself on three major fronts--litigation, politics,
and public opinion. While the strategy was brilliantly conceived and executed
over the years helping us win important battles, it is only fair to say
that it is not--nor was it intended to be--a vehicle for victory. On the
contrary, it has always been a holding strategy, consisting of creating
doubt about the health charge without actually denying it. . . . In the
cigarette controversy, the public--especially those who are present and
potential supporters (e.g. tobacco state congressmen and heavy smokers)--must
perceive, understand, and believe in evidence to sustain their opinions
that smoking may not be the causal factor."
h. A July 1963 industry report acknowledged that the TIRC
was not qualified to conduct research in reaction to the Surgeon General's
report because it "was conceived as a public relations gesture . .
. and it has functioned as a public relations gesture." The report
noted that the TIRC did not have breadth of research to adequately respond
to the Surgeon General.
112a Despite overwhelming scientific evidence, and the
confirmation of this evidence by their own internal research, the cigarette
manufacturers and their trade associations continue to deny uniformly that
there is a causal connection between cigarette smoking and adverse health
effects, or that nicotine is addictive. As one industry representative
testified: "[A company can't represent that] smoking doesn't cause
cancer. You can't say that. But you can say it is a risk factor, and scientifically
it hasn't been established. And that's what the research is for . .
. I don't agree [that nicotine is addictive]. Emphasis added. From what
I've read on nicotine is that it contributes to the flavor, the taste of
the product." These representations are intentionally misleading,
unfair and deceptive. They are moreover a result of the industry's ongoing
conspiracy and combination arising from the Plaza Hotel agreement, and
are done to maintain its market and profits from a deadly and addictive
product.
113. Special Projects was not the only instance where
the industry used lawyers to shield the truth. For example, in 1984, BAT
began internally plotting how to shield documents produced by scientists
from discovery. This plan included having BAT's "scientific literature
review publication . . . set up as a Law Department function." BAT
internally noted that "Direct lawyer involvement is needed in all
BAT activities pertaining to smoking and health from conception through
every step of the activity. This is a direct admission of BAT's efforts
to shield adverse scientific information from seeking the light of day.
This goal was being frustrated because "[t]he problem posed by
BAT scientists and frequently used consultants who believe cause is proven
is difficult."
114. The Kansas City law firm of Shook, Hardy & Bacon
and other lawyers played a critical role in furthering the conspiracy to
suppress and conceal information about the adverse health effects caused
by the use of tobacco products. The lawyers' strategy was to attempt to
protect damaging tobacco-related documents from disclosure under the
attorney-client
or work product privileges regardless of whether such documents were prepared
in anticipation of litigation or represented confidential communications
made between lawyer and client for the purpose of rendering legal advice.
Lawyers routinely provided a number of non-legal services to the defendants
such as deciding which CTR "special projects" should receive
funding, dispensing funding to the "scientists" involved in such
projects and designing the scope and approach of the special project. Shook,
Hardy & Bacon also undertook to coordinate the tobacco companies CTR
"special projects" subterfuge.
115. For example, in 1976, Donald K. Hoel of Shook, Hardy
& Bacon wrote to in-house lawyers at the various tobacco companies
that a study to measure environmental tobacco smoke should be modified
in such a way so that the study would yield more favorable results for
the tobacco companies' position. The study was subsequently modified to
deemphasize the role of second-hand tobacco smoke relating to indoor
environmental
quality.
116. In addition, a May 19, 1981 letter from Ernest Pepples,
vice president and general counsel of Brown & Williamson, to Patrick
Sirridge of Shook, Hardy & Bacon requests that Sirridge evaluate the
qualifications of various scientists seeking to conduct scientific studies
for Brown & Williamson. Shook, Hardy & Bacon responded by
providing
biographical sketches of potential consultants including whether they previously
had taken a scientific position favorable to the industry's position. Sirridge
also cooperated with Pepples' request in 1984 to transfer the funding of
some helpful research by a cooperative scientist from a CTR account to
a law firm project: "I do not think . . . that we should continue
burdening CTR with such programs, and instead suggest that they be handled
as law firm projects."
117. In 1972, William Shinn of Shook, Hardy & Bacon
wrote to tobacco company officials that a potentially favorable study should
be secretly funded by the tobacco companies as a "special project
(non-CTR)" in order to make the study appear independent of the industry
and thus heighten its perception as unbiased and reliable.
118. By becoming intimately involved in the funding and
design of these scientific studies, these lawyers attempted to further
the conspiracy and fraud of the tobacco companies and CTR by (1) clothing
such studies in the attorney-client or work product privilege in order
to protect them from disclosure if their results were unfavorable, and
(2) creating the perception that CTR and the tobacco companies were fairly
and appropriately fulfilling their obligations and promises to the public
that they would, in a vigorous and unbiased manner investigate and report
to the public the link between their products and human disease.
119. At least one tobacco company used similar tactics
in-house to suppress and avoid disclosure of its internal research on smoking
and disease. At a time when the company was resisting discovery in a number
of personal injury lawsuits, Brown & Williamson's general counsel,
J. Kendrick Wells, recommended in a memorandum dated January 17, 1985,
that most of the company's biological research be declared
"deadwood"
and shipped to England. He recommended that no notes, memos or lists be
made about these documents. Wells stated, "I had marked certain of
the document references with an X . . . which I suggested were deadwood
in the behavioral and biological studies area. I said that the "B"
series are "Janus" series studies and should also be considered
as deadwood." ("Janus" was a name of a project that attempted
to isolate and remove the harmful elements of tobacco.) Wells further
recommended
that the research, development and engineering department also should
undertake
"to remove the deadwood from the files."
120. Similarly, in a 1978 memo, B&W's Pepples wrote
that use of the CTR avoids the dilemma of a manufacturer that needs to
know the state of the art, but "on the other hand cannot afford the
risk of having the in-house work turn sour. . . . The point here is the
value of having CTR doing work on a nondirected and independent fashion
as contrasted with either in-house or under. B&W contract which, if
it goes wrong, can become the smoking pistol in a lawsuit!"
121. Thus, the tobacco companies and their lawyers have
misused claims of attorney/client privilege to insulate CTR-funded research
projects and internal documents from disclosure to the public and to government
officials. This conduct demonstrates the falsity of the tobacco companies'
representations that they would jointly fund objective research and report
the results of that research to the public.
H. Beyond 1953: The Continuing Conspiracy to
Restrain Trade.
1. The "Gentlemen's Agreement".
122. The industry's 1953 combination and conspiracy was
supplemented and aided by a commitment jointly to conduct research because
of "a general feeling that an industry approach as opposed to an individual
company approach was highly desirable." This approach was desirable
to prevent, among other things, competition on the basis of health risk
comparisons.
123. As part and in furtherance of the agreement not to
compete to develop a "safer" cigarette, there was a
"gentlemen's
agreement" among the manufacturers to suppress independent research
on the issue of smoking and health, for the purpose of and with the effect
of restricting output. Despite increasing market demand, the tobacco
manufacturers
agreed not to market any safer or alternative products. The means of effecting
this output reduction conspiracy included suppression of independent research
and policing violators, as described below. This agreement was referenced
in a 1968 internal Philip Morris draft memo, which stated, "We
have reason to believe that in spite of gentlemans (sic) agreement from
the tobacco industry in previous years that at least some of the major
companies have been increasing biological studies within their own
facilities."
This memo also acknowledged that cigarettes are inextricably intertwined
with the health field, stating, "Most Philip Morris products both
tobacco and non-tobacco are directly related to the health field."
124. As indicated by this memo, it was believed within
the industry that individual companies were performing certain research
on their own, in addition to the joint industry "research." Some
companies viewed the strengthening demand for safer and alternative products
as a potential future marketing opportunity. But the fundamental understanding
and agreement remained: That information and activities deemed harmful
to the unified, defensive posture of the industry or inconsistent with
the noncompetition conspiracy would be restrained, suppressed, and/or
concealed.
No company or industry trade organization stood behind the
"promise"
the defendants had made. As American Tobaccos CEO testified, "[If
the health studies are correct], consumers have the right to know whatever
is affecting their health. I think that's what, the public health agencies
and the government have that responsibility." Emphasis added.
125. The agreement not to compete was explicitly referenced
in an October 1964 memorandum entitled "Reports on Policy Aspects
of the Smoking and Health Situation in U.S.A.":
The informal agreement between TRC members not to make
health claims was explained to Philip Morris.
126. Defendants' activities in furtherance of the
output-restriction/non-competition
combination included restraining, suppressing, and concealing research
on the health effects of smoking, including the addictive properties of
tobacco products, and restraining, concealing, and suppressing the research
and marketing of safer cigarettes. Despite the ability to produce
"safer"
cigarettes, the defendants did not market such products, except in limited
test markets, because it was understood within the combination that no
company would characterize or promote a product as biologically
"safer."
127. Like all classic cartels, defendants policed their
conspiracy internally and externally. One member of the conspiracy, U.S.
Tobacco, went so far as to terminate an employee and apologize to the Big
6 cigarette companies when the employee was quoted in a New York Post
article referring to smokeless tobacco as less dangerous than smoking.
Ernest Pepples of Brown & Williamson reported this in a memo, where
he wrote that he had been called by UST's General Counsel, Jim Chapin.
Pepples stated, "Chapin says the statements quoted were unauthorized
and do not represent his company's views. He has asked me to extend
U.S. Tobacco's apology to each of the cigarette companies and advised me
that the individual quoted in the article is no longer employed at U.S.
Tobacco. Chapin says U.S. Tobacco has instituted smoking and health
seminars throughout the company." This action is totally contrary
to the self-interest of U.S. Tobacco, and is consistent with the conspiracy
among the defendants not to compete on the basis of safety and health.
2. Suppression of Liggett's "Safer" Cigarette.
128. In response to perceived growing demand, several
companies researched the possibility of marketing "safer" (less
harmful to humans) cigarettes. One of the ways in which the defendants
acted in concert to exclude the products from the market and further excluded
potential new entrants by patenting the processes for these less harmful
products, which they neither marketed nor licensed to any other actual
or potential competitor.
129. In response to demand, Liggett was one of the defendants
which was successful in researching and actually developing a less biologically
active cigarette. However, in response to retaliation and threats from
coconspirators, Liggett agreed not to market this product after an apparent
threat of retaliation by another manufacturer.
130. Liggett initiated its safer cigarette project, called
XA, in 1968. After a minimal expenditure of only $14 million, Liggett was
able, internally, to proclaim the project a success in 1979. By applying
an additive of palladium metal and magnesium nitrate to tobacco to act
as a catalyst in the burning process, Liggett found that "[c]igarette
tar has been neutralized" and that there was "[n]o evidence for
new or increased hazard . . . ."
131. Using this process, Liggett was able to produce cigarettes
"which are believed to be of commercial quality." These cigarettes,
however, were never marketed.
132. Liggett abandoned its XA project for the reason,
among others, that it faced retaliation from industry leader Philip Morris
if Liggett broke ranks. Another reason for abandoning the project was fear
that the marketing of a "safer" cigarette would be, in essence,
a confession that its, and the industry's other cigarettes, were not safe.
Thus, one Liggett executive wrote that, "Any domestic activity will
increase risk of cancer litigation on existing products."
133. James Mold, who was assistant director of research
at Liggett during the development of the safer cigarette, the XA project,
has provided testimony including the following overview of the XA project
and its abandonment:
a. Mold stated that the XA project produced a safer cigarette.
He stated, "We produced a cigarette which was, we felt, commercially
acceptable as established by some consumer tests, which eliminated
carcinogenic
activity . . . ." Emphasis added.
b. Mold testified that after 1975, all meetings on the
project were attended by lawyers, lawyers collected all notes after the
meetings, and all documents were directed to the law department to maintain
the attorney-client privilege. He stated, "Whenever any problem came
up on the project, the Legal Department would pounce upon that in an attempt
to kill the project, and this happened time and time again."
c. Mold testified that he was at a conference of scientists
in Buenos Aires prepared to present his research regarding a less harmful
cigarette when he received a "frantic call" from legal counsel
and was told not to present the paper or issue the press release. He was
instructed not to publish his results in the Journal of Preventative
Medicine.
d. Mold was asked why Liggett didn't market a safer cigarette.
He answered, "Well, I can't give you, you know, a positive statement
because I wasn't in the management circles that made the decision, but
I certainly had a pretty fair idea why. . . . [T]hey felt that such a cigarette,
if put on the market, would seriously indict them for having sold other
types of cigarettes that didn't contain this, for example. Also, there
was a meeting we held in . . . New Jersey at the Grand Met headquarters
. . . at which the various legal people involved and the management people
involved and myself were present. At one point Mr. Dey who at that time,
and I guess still is the president of Liggett Tobacco, made the statement
that he was told by someone in the Philip Morris company that if we tried
to market such a product that they would clobber us."
3. Brown & Williamson's Efforts to Develop a Safer
Cigarette
134. Brown & Williamson also developed "safer"
cigarettes, which it did not market despite promising test results, because,
among other reasons, such efforts would violate the output-restriction
conspiracy. Jeffrey Wigand, a former Vice President for Research and
Development
for Brown & Williamson, states that he was instructed by the President
of the company to abandon all efforts to develop a safer product. He has
testified that he was told, generally, "That there can be no research
on a safer cigarette. Any research on a safer cigarette would clearly expose
every other product as being unsafe and, therefore, present a liability
issue in terms of any type of litigation." Brown & Williamson's
Project "Ariel" used a heating, as opposed to burning system.
Its Project "Janus" was intended to identify hazardous components
of cigarette smoke so they could be removed.
135. Brown & Williamson also conducted research on
tobacco substitutes or analogues, as did a number of the other companies.
These substitutes were sought as a means to duplicate some of the effects
of nicotine without toxic or harmful effects. For example, Brown &
Williamson's parent BAT developed "Batflake," a tobacco substitute.
Laboratory tests showed that use of "Batflake" reduced a number
(though not all) of the harmful effects of smoking in direct proportion
to the amount used in a cigarette. So far as is known, none of the substitute
products was ever marketed in the United States. In 1980, BAT and Brown
& Williamson abandoned the "safer" product search:
"Dangerous
area [research into irritation and smoke inhalation]. Please do not publish
or circulate. No more work is needed on biological side." Emphasis
added.
136. Despite increasing market demand for their products,
such innovative products were not marketed because of the agreement not
to compete; i.e. to restrict output of alternative or safer products.
No other member of the conspiracy broke ranks by competitively marketing
products with improved biologic performance despite individual competitive
reasons for marketing such product: "Within B & W, we have rarely
attempted to develop new products specifically designed to deliver low
CO [carbon monoxide], except perhaps a prototype of FACT that was kept
ready on a turn-key basis in the event of a marketing need for such product.
This was done through a combination of filter ventilation, cigarette paper
permeability, and appropriate cigarette paper additive. Needless to
say, such need did not arise." Emphasis added.
4. Philip Morris: Avoiding an Industry War.
137. Philip Morris also explored research to develop a
safer cigarette, or, in the words of one memorandum to the board of directors,
cigarettes with "superior physiological performance." This
memorandum
noted competitive pressures to produce "less harmful" cigarettes.
However, the memorandum was careful to state that, "[o]ur philosophy
is not to start a war, but if war comes, we aim to fight well and to win."
Philip Morris never broadly marketed such a "safer" cigarette.
Its documents recognize the strong market demand and state that "after
much discussion we decided not to tell the physiological story which
might have appealed to a health conscious segment of the market. The
product as test marketed didn't have good _taste_ and consequently was
unacceptable to the public ignorant of its physiological superiority."
Subsequently, taste was improved and Philip Morris attempted to promote
the product. However, "The imposition of FTC rules and the industry
advertising code took the starch out of the program . . . ." Emphasis
added.
5. Reynolds' Safer Product.
138. Reynolds also developed an alternative product which
had reduced physiological consequences. Except for a brief test in several
cities, because of the output-restriction conspiracy Reynolds did not market
its safer product, "Premier."
139. The Federal Trade Commission Cigarette Advertising
Guides, adopted September 22, 1955 and modified March 25, 1966, did not
allow claims based on unsubstantiated health effects. However, it was clear
in the industry that the Guides could be modified if justification was
shown. Indeed, the 1966 modification of the Guides was based on development
of a method, albeit not without difficulties of its own, of measuring tar
and nicotine content. In the context of development of a potentially less
hazardous product, a Brown & Williamson document by Addison Yeaman
states, "I would submit that the FTC in the face of 1) the industry's
research effort, 2) the truth of our claims, and 3) the _public interest_
in our filter, cannot successfully deny us the right to inform the public."
In truth, the defendants used the FTC Guides as a shield behind which it
concealed its agreement not to compete. The voluntary agreement with the
FTC was characterized by the Consumers Union as being "to the industry's
advantage and to the public's disadvantage . . . ."
140. The Cigarette Advertising Code, adopted by the defendants,
was another mechanism used to enforce the illegal agreement not to compete
on the basis of safety or health characteristics of tobacco products. Among
other provisions, it prohibits health claims in industry advertisements
unless the "Code Administrator," to whom all cigarette
advertisements
are required to be submitted, approves of the advertisement. The Code,
a blatant restraint of trade, provided a mechanism to monitor and police
defendants' illegal agreement.
6. The Industry Position on "Safer" Cigarettes.
141. In furtherance of their illegal combination and conspiracy,
defendants collectively denied that a safer cigarette could be produced.
142. A memorandum authored by an attorney at the firm
of Shook, Hardy & Bacon, long-time lawyers for the cigarette industry,
confirmed that there was an industry-wide position regarding the issue
of a safer cigarette.
143. The 1987 memorandum was written in the context of
the marketing by R.J. Reynolds of a smokeless cigarette, Premier, which
heated rather than burned tobacco. The Shook, Hardy attorney wrote that
the smokeless cigarette could "have significant effects on the tobacco
industry's joint defense efforts" and that "[t]he industry position
has always been that there is no alternative design for a cigarette as
we know them." The attorney also noted that, "Unfortunately,
the Reynolds announcement . . . seriously undercuts this component of
industry's
defense." This fundamental position of the "industry" defense
had been identified much earlier. In 1970, David Hardy of the Shook, Hardy
firm wrote to DeBaun Bryant, General Counsel at Brown & Williamson,
expressing concerns about some of the industry research into alternative
products. In critiquing the minutes of a conference, he stated: "It
is our opinion that statements such as [references to research into safer
products, products which are less biologically active, and to _healthy
cigarettes_] constitute a real threat to the continued success in the defense
of smoking and health litigation. Of course, we would make every effort
to _explain_ such statements if we were confronted with them during a trial,
but I seriously doubt that the average juror would follow or accept the
subtle distinctions and explanations we would be forced to urge. . . .
[E]mployees in both companies [Brown and Williamson and British American
Tobacco] should be informed of the possible consequences of careless
statements
on this subject."
144. All defendants were keenly aware of the risk to the
industry if any of them sought a competitive advantage by developing
and marketing a safer product. The risk was avoided by agreeing to not
compete on that basis. As one industry representative testified: "[A]s
a company, we cannot position our products as being healthy. We've already
agreed that they are a risk factor [the _agreement_ referenced is the industry's
acceptance of the warning labels on cigarette packages]. . . . [W]e wouldn't
run any advertising that positions any of our products as being healthier
than others."
145. As part of the conspiracy, the companies agreed to
avoid research that might produce bad results for the industry. For example,
on March 31, 1980, Philip Morris scientist Robert Seligman wrote Lorillard
scientist Alex Spears, suggesting "subjects to be avoided." These
subjects included developing new tests for carcinogenicity, attempts to
relate human desires to smoking and tests which would show the
"addictive"
effect of smoking on carcinogenicity.
7. Suppression of the R.J. Reynolds "Mouse House"
Research.
146. For a period of time in the late 1960's, R.J. Reynolds
had a state-of-the-art laboratory in Winston-Salem, nicknamed "the
mouse house." Here, scientists conducted research with mice, rats
and rabbits and began to uncover promising avenues of investigation into
the mechanisms of smoking-related diseases. In 1970, this entire research
division was disbanded in one day, and all 26 scientists were fired without
notice. Company attorneys had collected dozens of research notebooks,
still undisclosed, from the biochemists several months before the firings.
8. Suppression of Philip Morris Research on Nicotine
Analogues.
147. In the early 1980s, researchers working at a Philip
Morris laboratory in Richmond, Virginia worked to develop a synthetic form
of nicotine that would avoid its cardiovascular complications. However,
in April 1984 the company abruptly shut the laboratory. The researchers
were fired and threatened with legal action if they published their work.
148. The research was conducted by Victor J. DeNoble and
his colleague Paul C. Mele, who remained silent about their work under
confidentiality agreements imposed by Philip Morris until testifying in
1994 before a congressional committee in Washington.
149. The research was so secretive that laboratory animals
were brought in at night under cover. The researchers discovered that nicotine
demonstrated addictive qualities and that the animals self-administered
the substance, pressing levers to obtain nicotine. The researchers also
discovered nicotine analogues, artificial versions of nicotine. These analogues
affected the brain much like nicotine. But the analogues did not seem to
produce the harmful cardiovascular effects of nicotine. Thus, rats using
the analogue behaved as if they had a nicotine "high" but did
not show signs of heart distress such as rapid heart beat.
150. By 1983, the research was becoming particularly problematic.
A number of personal injury cases had been filed against the industry,
with nicotine dependence a critical issue. In June 1983, DeNoble was called
to the Philip Morris headquarters in New York to brief top executives.
Following the meeting, company lawyers visited the lab and reviewed research
notebooks. There were discussions of shifting the research out of the company,
perhaps to DeNoble and Mele as outside contractors or to a lab in Switzerland,
to distance Philip Morris from the results.
151. Finally, in April 1984, the researchers were abruptly
told to halt their work, kill all the rats, and turn in their security
badges. The researchers also were forced to withdraw a paper on the addictive
qualities of nicotine, even after it had been accepted for publication
by a scientific journal.
I. History of Industry Knowledge that Smoking
is Harmful
152. Even before defendants represented in the Frank Statement
that "there is no proof that cigarette smoking is one of the causes"
of lung cancer, an industry researcher had reported the contrary.
153. As early as 1946, Lorillard chemist H.B. Parmele,
who later became Vice President of Research and a member of Lorillard's
Board of Directors, wrote to his company's manufacturing committee:
Certain scientists and medical authorities have claimed
for many years that the use of tobacco contributes to cancer development
in susceptible people. Just enough evidence has been presented to justify
the possibility of such a presumption.
154. As early as 1953, prior to the issuance of the Frank
Statement, RJR's Claude Teague created an internal survey of cancer research
and concluded that "studies of clinical data tend to confirm the relationship
between heavy and prolonged tobacco smoking and the incidence of lung
cancer."
Teague recommended that "management take cognizance of the problem
and its implications to our industry."
155. After the 1954 "Frank Statement," the tobacco
industry's breach of its assumed duty to report objective facts on smoking
and health was virtually immediate. As evidence mounted, both through industry
research and truly independent studies, that cigarette smoking causes cancer
and other diseases, the tobacco industry continued publicly to represent
that nothing was proven against smoking. Internal documents show that the
truth was very different. The tobacco companies knew and acknowledged among
themselves the veracity of scientific evidence of the health hazards of
smoking, and at the same time suppressed such evidence where they could,
and attacked it when it did appear.
156. Internal cigarette industry documents reveal, for
example:
a. A 1956 memorandum from the Vice President of Philip
Morris' Research and Development Department to top executives at the company
regarding the advantages of _ventilated cigarettes_ stated that: "Decreased
carbon monoxide and nicotine are related to decreased harm to the circulatory
system as a result of, smoking. . . . Decreased irritation is desirable
. . . as a partial elimination of a potential cancer hazard."
b. A 1958 memorandum from a Philip Morris researcher to
the company's Vice President of Research, who later became a member of
its Board of Directors, stated "the evidence . . . is building up
that heavy cigarette smoking contributes to lung cancer either alone or
in association with physical and physiological factors . . . ."
c. A 1961 document presented to the Philip Morris Research
and Development Committee by the company's Vice President of Research and
Development included a section entitled "Reduction of Carcinogens
in Smoke." The document states, in part:
To achieve this objective will require a major research
effort, because Carcinogens are found in practically every class of compounds
in smoke. This fact prohibits complete solution of the problem by eliminating
one or two classes of compounds.
The best we can hope for is to reduce a particularly bad
class, i.e., the polynuclear hydrocarbons, or phenols . . . .
Flavor substances and carcinogenic substances come from
the same classes, in many instances.
d. A 1963 memorandum to Philip Morris' President and CEO
from the company's Vice President of Research describes a number of classes
of compounds in cigarette smoke which are "known carcinogens."
The document goes on to describe the link between smoking and bronchitis
and emphysema:
Irritation problems are now receiving greater attention
because of the general medical belief that irritation leads to chronic
bronchitis and emphysema. These are serious diseases involving millions
of people. Emphysema is often fatal either directly or through other respiratory
complications. A number of experts have predicted that the cigarette industry
ultimately may be in greater trouble in this area than in the lung cancer
field.
e. A 1961 "Confidential" memorandum from the
consulting research firm hired by Liggett to do research for the company
states:
There are biologically active materials present in cigarette
tobacco. They are:
a) cancer causing
b) cancer promoting
c) poisonous
d) stimulating, pleasurable, and flavorful.
f. A 1963 memorandum from the Liggett consulting research
firm states:
Basically, we accept the inference of a causal relationship
between the chemical properties of ingested tobacco smoke and the
development
of carcinoma, which is suggested by the statistical association shown in
the studies of Doll and Hill, Horn, and Dorn with some reservations and
qualifications and even estimate by how much the incidence of cancer may
possible [sic] be reduced if the carcinogenic matter can be diminished,
by an appropriate filter, by a given percentage.
157. A 1965 report to the B&W Executive Committee
on research activities at BATCO's facility at Harrogate. The report acknowledged
that BATCO's research found that smoke is "weakly carcinogenic"
and noted that these "results may have more impact since they will
come from a tobacco supported facility." The report noted that release
of the contents of the Harrogate report "would have a significant
impact on the American tobacco industry." The results of this report
were not released by the industry.
158. These internal Liggett documents sharply contrast
with the information Liggett provided to the Surgeon General in 1963. Liggett
withheld from the Surgeon General the views of its researchers and consultants
that the evidence shows cigarette smoking causes human disease. A "Draft
of an Outline for a Background Paper on the Smoking Problem to be Used
in Connection with a Presentation of Arguments Before the Surgeon General's
Committee" states:
a. "All Types of Smoking are Associated with Increased
Mortality from all causes combined . . . ."
b. "For cigarette smokers who smoke regularly, excess
mortality increases with current number of cigarettes smoked . .
. ."
c. "Lung cancer extremely rare among nonsmokers
. . . ."
d. As "reported by Hammond . . . excess Mortality
[is] (1) higher for cigarette smokers than others and (2) increases
with daily cigarette consumption."
e. "For both sexes, all chronic respiratory diseases,
chronic bronchitis, irreversible obstructive lung diseases . . . increased
in prevalence with increasing current amount of smoking."
159. The report Liggett presented to the Surgeon General
did not contain any of these conclusions, and instead, focused on alternative
causes of disease, such as air pollution, coffee and alcohol consumption,
diet, lack of exercise and genetics. Liggett criticized the known statistical
association between smoking and mortality and various diseases as based
upon "unreliably conducted" studies and "inadequately
analyzed"
data. The Liggett report concluded that the association between smoking
and disease was inconclusive, and was in fact due to other factors coincidentally
associated with smoking.
160. Philip Morris also concealed from the public its
actual views of the research conducted outside the influence of the industry.
A 1971 memorandum written by Dr. H. Wakeham, then Vice President of
Research
and Development, discussed a recent study which found cigarette smoke
inhalation
caused lung cancer in beagles:
1970 might very properly be called the year of the beagle.
Early in the year, the American Cancer Society announced that they had
finally demonstrated the formation of lung cancer in beagles by smoke inhalation
in the now infamous Auerbach and Hammond study. I am sure all of you have
read extensively about this in the newspapers, how the industry asked to
have independent panel of pathologists review the histological sections
showing cancer, how the Society refused, how generally the ACS was put
on the defensive, how publication was refused by two medical journals and
how the story was changed somewhat by the time it was published . . . .
161. The memorandum goes on to describe how the industry
publicly dismissed the mice cancer studies, such as the 1953 Wynder research.
Dr. Wakeham explained that "mouse skin is not human lung tissue,"
"smoke condensate has different chemical composition from inhaled
smoke," and "painting is not the method of application practised
[sic] by human smokers."
162. In contrast to the mice studies, however, Dr. Wakeham
continued:
The logical extension of these objections is that an inhalation
test in which an animal breathed smoke like a human would be a better model
system. Presumably, in such a test, the formation of lung cancers in the
test animal would be strong evidence for the cigarette causation hypothesis.
That is why the beagle test was a critical one. . . . So the test was not
conclusive. But it was a lot closer than skin painting.
The strong opposition of the industry to the beagle test
is indicative of a new more aggressive stance on the part of the industry
in the smoking and health controversy. We have gone over from what I have
called the "vigorous denial" approach, the take it on the chin
and keep quiet attitude, to the strongly voiced opposition and criticism.
I personally think this counter-propaganda is a better stance than the
former one.
163. Taken together with the internal acknowledgments
of cigarette smoking as a cause of human disease, this memorandum from
a senior Philip Morris researcher demonstrates that the 1954 Frank Statement
representations were deceptions, and that the cigarette industry promptly
breached the duties it had undertaken. Far from "accept[ing] an interest
in people's health as a basic responsibility, paramount to every other
consideration in our business" and "cooperat[ing] closely with
those whose task it is to safeguard the public health," the cigarette
industry approach was to deny and attack with "counter-propaganda"
the mounting evidence that smoking caused human disease-- evidence that
the industry plainly viewed internally as accurate.
164. Recently, a series of Brown & Williamson documents
was publicly disclosed which set forth the far-ranging deceptions of that
company in particular, and of the industry in general with respect to the
harmful effects of smoking.
165. Brown & Williamson, like the other manufacturers,
was aware early on of the dangers of cigarettes. Indeed, a Brown &
Williamson review of published statistical research, including the 1952
report by Dr. Doll, noted that the studies offered "frightening testimony
from epidemiological studies."
166. By 1957, one of Brown & Williamson's British
affiliates, which conducted much of the health research for the U.S. company,
was using the code name "zephyr" for cancer. For example, in
a March 1957 report, the British affiliate stated, "As a result of
several statistical surveys, the idea has arisen that there is a causal
relation between zephyr and tobacco smoking, particularly cigarette
smoking."
167. In 1962, Brown & Williamson's London-based parent
company conducted a meeting of its worldwide subsidiaries in Southampton,
England. A transcript of the meeting reveals the following remarks:
a. One researcher stated that "smoking is a habit
of addiction" and that "[n]icotine is not only a, very fine drug,
but the technique of administration by smoking has considerable psychological
advantages." (Several years later, in 1967, the researcher admitted
that the company "is in the nicotine rather than the tobacco
industry.")
b. Another research executive "thought we should
adopt the attitude that the causal link between smoking and lung cancer
was proven because then at least we could not be any worse off."
c. Another researcher stated that "no industry was
going to accept that its product was toxic, or even believe it to be so,
and naturally when the health question was first raised, we had to start
denying it at the P.R. level. But by continuing that policy, we had got
ourselves into a corner and left no room to maneuver. In other words, if
we did get a breakthrough and were able to improve our product, we should
have to about-face, and this was practically impossible at the P.R. level."
d. The chairman of Brown & Williamson's British affiliate
stated that it "was very difficult when you were asked as chairman
of a tobacco company to discuss the health question on television. You
had not only your own business to consider but the employees throughout
the industry, retailers, consumers, farmers growing the leaf and so on.
And you were in much too responsible a position to get up and say, _I accept
that the product which we and all our competitors are putting on the market
gives you cancer,_ whatever you might think privately."
e. The chairman also stated that if the company manufactured
safer brands, "how to justify continuing the sale of other brands?
. . . It would be admitting that some of its products already on the market
might be harmful. This would create a very difficult public relations
situation."
168. The next year, 1963, Brown & Williamson engaged
in an internal debate over whether to disclose what it knew about the adverse
effects of smoking to the Surgeon General, who was preparing his first
official report on cigarettes. It was decided that its information would
not be disclosed. Some of the documents generated by Brown &
Williamson as part of this process were shared with its London-based parent
company, as well as other cigarette manufacturers and the TIRC/CTR. Addison
Yeaman, who was then general counsel at Brown & Williamson and who
authored some of the most critical memoranda from this time, subsequently
became a director of the CTR.
169. Yeaman wrote in a 1963 analysis that:
a. "[N]icotine is addictive."
b. "We are, then, in the business of selling nicotine,
an addictive
drug . . . ."
c. Cigarettes "cause, or predispose, lung cancer
. . . ."
d. "They contribute to certain cardiovascular disorders
. . . ."
e. "They may well be truly causative in emphysema,
etc."
170. Yeaman suggested that Brown & Williamson "accept
its responsibility" and disclose the hazards of cigarettes to the
Surgeon General. He noted that this would allow the company to openly research
and develop a safer cigarette.
171. Yeaman warned, however, that one danger of candid
disclosure was that jurors would learn that the cigarette companies knew
of the hazards of their products and had the means to make safer cigarettes--but
didn't. Yeaman noted that this might cause an "emotional reaction"
in jurors. Ultimately, Yeaman's suggestion for full disclosure was rejected.
172. Subsequently, Brown & Williamson continued to
conduct and conceal biological research. Some of these research projects
confirmed causation.
173. The more sensitive research was often undertaken
by Brown & Williamson's British affiliate, acting on behalf of both
companies. Much of the work was performed at a British laboratory called
Harrogate, which performed work for a number of cigarette manufacturers,
and some of this research was shared with these other companies and the
Tobacco Institute.
174. Brown & Williamson also attempted to develop
a safer cigarette or, in the words of an internal document, "a device
for the controlled administration of nicotine." There were at least
two safer cigarette projects, Project Ariel, which focused on heating rather
than burning tobacco, and Project Janus, which focused on isolating and
removing the harmful elements of tobacco. At least some of the work was
performed by Battelle Laboratories in Frankfurt. By the end of the 1970s,
however, in a pattern that was repeated throughout the industry, Brown
& Williamson closed its research labs and halted work on a safer cigarette.
J. Industry Knowledge of the Addictive Nature
of Nicotine
1. Industry Statements and Documents Reveal the Tobacco
Companies' Long-Standing Knowledge that Nicotine is a Powerful and Addictive
Drug
175. As alleged above, the defendants continue to deny
and conceal that tobacco products are addictive while secretly manipulating
levels of nicotine to increase or maintain addiction. The evidence is clear
that the tobacco industry has known and hidden for decades the addictive
nature of tobacco products.
176. Numerous Tobacco Company documents contain statements
by company researchers and executives acknowledging that nicotine is, in
fact, addictive. For example, more than 30 years ago, a report was completed
for BATCO that specifically addressed the mechanism of nicotine addiction
in smokers. The researchers concluded that chronic intake of nicotine,
such as that which occurs in regular smokers, creates a need for ever-increasing
levels of nicotine to maintain the desired action: "[u]nlike other
dopings, such as morphine, the rate of increasing demand for greater dose
levels is relatively slow for nicotine." The report continues:
A body left in this unbalanced state craves for renewed
drug intake in order to restore the physiological equilibrium. This unconscious
desire explains the addiction of the individual to nicotine.
177. Internal Tobacco Company documents reveal that all
of this research has convinced company researchers and executives that
nicotine in tobacco functions as a drug with powerful psychoactive effects.
For example, in 1962, even before much of this research had been completed,
Charles Ellis, of BATCO, expressed his view that nicotine in tobacco functions
as a drug much like stimulants and tranquilizers:
It is my conviction that nicotine is a very remarkable
beneficent drug that both helps the body to resist external stress and
also can as a result show a pronounced tranquilizing effect. You are
all aware of the very great increase in the use of artificial controls,
stimulants, tranquilizers, sleeping pills, and it is a fact that under
modern conditions of life people find that they cannot depend just on their
subconscious reactions to meet the various environmental strains with which
they are confronted: they must have drugs available which they can take
when they feel the need. Nicotine is not only a very fine drug, but
the techniques of administration by smoking has considerable psychological
advantages and a built-in control against excessive absorption.
Emphasis added.
178. In the decades that followed this statement, BATCO
and Brown and Williamson held many research conferences, some of which
were devoted entirely to discussing nicotine's pharmacological effects.
The records of these conferences demonstrate that, at almost every conference,
Tobacco Company officials from around the world discussed the results of
research on nicotine pharmacology and reached agreement that nicotine had
been shown to have pharmacological effects on tobacco users.
179. Researchers and executives from the other major Tobacco
Companies and associated with the CTR have also made statements revealing
their knowledge that nicotine is a psychoactive drug. For example, the
authors of a research paper funded by the CTR reporting on the
"beneficial"
pharmacological effects of nicotine in cigarettes said that "[n]icotine
is recognized as the primary psychoactive compound in cigarette smoke."
180. More than 30 years ago, in 1962 through 1963, BATCO
received the results of its Project HIPPO study (HIPPO I and HIPPO II),
the aim of which was to "understand some of the activities of
nicotine--those
activities that could explain why smokers are so fond of their habit."
A second purpose of the Project HIPPO study was to compare the effects
of nicotine with those of then-new tranquilizers, "which might supersede
tobacco habits in the near future." Thus, these researchers believed
that nicotine-containing tobacco and tranquilizers were used for the same
purposes by consumers.
181. The Project HIPPO reports were disseminated to officials
of Brown and Williamson ("B&W"). The exchange of information
between BATCO and B&W is important because it demonstrates B&W's
awareness of the results of studies such as Project HIPPO, which was just
one of a number of studies commissioned by BATCO to study the physiological
and pharmacological effects of nicotine. For example, a 1980 report addresses
the critical role of nicotine's drug effects:
Nicotine is an extremely biologically active compound
capable of eliciting a range of pharmacological, biochemical, and physiological
responses . . . . In some instances, the pharmacological response of smokers
to nicotine is believed to be responsible for an individual's smoking behavior,
providing the motivation for and the degree of satisfaction required by
the smoker.
182. The BATCO documents include not only some of the
research reports themselves, but also summaries or minutes of numerous
BATCO research and development ("R&D") meetings at which
nicotine's drug effects and importance to the industry were discussed.
These papers demonstrate both the consistency and the extent of the industry's
interest in and knowledge of nicotine as the primary pharmacological agent
in tobacco. For example, at a 1974 BATCO Group R&D Meeting, it was
noted that:
Nicotine (which has been assumed to be the main pharmacologically
active component in smoke) may act in a bi-phasic manner, either as a stimulant
(CNV increase) or depressant (CNV decrease).
183. Subsequent BATCO research conferences offer equally
revealing statements about the drug effects of nicotine. A BATCO Group
R&D Smoking Behavior-Marketing Conference held in 1984 focused almost
entirely on the role of nicotine pharmacology in smoking. Summaries of
the presentations at that conference include numerous references to the
pharmacological effects of nicotine and the importance of these effects
in maintaining tobacco use. For example, one presentation included the
following observation:
Smoking is then seen as a personal tool used by the smoker
to refine his behavior and reactions to the world at large.
It is apparent that nicotine largely underpins these
contributions through its role as a generator of central physiological
arousal effects which express themselves as changes in human performance
and psychological well-being. Emphasis added.
184. Another BATCO conference focusing on nicotine was
held in 1984. One of the presentations was characterized by a Brown and
Williamson official:
The presentation was concerned with summarizing and outlining
the central role of nicotine in the smoking process and our business
generally. . . . There are two areas of nicotine action that are of
primary importance: (i) to identify to what extent the pharmacological
properties or responses to nicotine are influenced by blood and tissue
levels of nicotine. (ii) what is the significance and role of nicotine
in eliciting the impact response and upper respiratory tract responses.
Emphasis added.
185. Philip Morris researchers conducted extensive research
on nicotine pharmacology from the late 1960s until at least the mid-1980s.
The nature and magnitude of the research, as well as statements made in
internal documents, show that the Philip Morris researchers strongly believed
that nicotine has potent psychoactive effects and that these effects provide
a primary motivation for smoking. In 1974, Philip Morris researchers began
a study designed to test their theory that hyperkinetic children take up
smoking in adolescence because nicotine may perform the same
pharmacological
function as prescription medications used to treat hyperkinesis:
It has been found that amphetamines, which are strong
stimulants, have the anomalous effect of quieting these children down .
. . . Many children are therefore regularly administered amphetamines throughout
grade school years. . . . We wonder whether such children may not eventually
become cigarette smokers in their teenage years as they discover the advantage
of self-stimulation via nicotine. We have already collaborated with
a local school system in identifying some such children in the third grade.
Emphasis added.
186. More than three decades ago, in 1961, a presentation
by Dr. Helmut Wakeham, a senior Philip Morris research scientist, to the
company's Research and Development Committee noted that:
Low nicotine doses stimulate, but high doses depress functions
. . . . It is also recognized that smoking produces pleasurable reactions
or tranquility, and that this is due at least in part to nicotine.
187. Dr. Wakeham also noted that "nicotine is believed
essential to cigarette acceptability," a view later restated by William
Dunn, Jr., another high-ranking Philip Morris official. In summarizing
a 1972 conference sponsored by the Council for Tobacco Research, Dr. Dunn
reported:
ost of the conferees would agree with this proposition:
The primary incentive to cigarette smoking is the immediate salutary
effect of inhaled smoke upon body function.
Emphasis added.
188. After describing "the physiological effect"
as "the primary incentive" for smoking, Dr. Dunn continued:
The majority of the conferees would go even further
and accept the proposition that nicotine is the
active constituent of cigarette smoke. Without nicotine, the argument
goes, there would be no smoking. Some strong evidence can be marshalled
to support this argument:
1) No one has ever become a cigarette smoker by smoking
cigarettes without nicotine.
2) Most of the physiological responses to inhaled smoke
have been shown to be nicotine-related.
3) Despite many low nicotine brand entries in the market
place, none of them have captured a substantial segment of the market .
. . .
Emphasis added.
189. A 1971 secret internal report distributed to Philip
Morris executives showed that tobacco executives knew the powerfully addictive
nature of nicotine in cigarettes. The report studied persons who had tried
to stop smoking and concluded that only 28 percent of those who tried to
quit were still nonsmokers eight months later:
Even after eight months quitters were apt to report having
neurotic symptoms, such as feeling depressed, being restless and tense,
being ill-tempered, having a loss of energy, being apt to doze off. They
were further troubled by constipation and weight gains which averaged about
five pounds per quitter . . . . This is not the happy picture painted by
the Cancer Society's anti-smoking commercial which shows an exuberant couple
leaping into the air and kicking their heels with joy because they've kicked
the habit. A more appropriate commercial would show a restless, nervous,
constipated husband bickering viciously with his bitchy wife who is nagging
him about his slothful behavior and growing waistline.
190. In a research paper funded by the CTR, reporting
on the "beneficial" pharmacological effects of nicotine in cigarettes,
the authors said:
Nicotine is recognized as the primary psychoactive compound
in cigarette smoke.
191. Many other industry documents refer to the central
role of nicotine's drug effects for smokers and, therefore, for the industry.
Nicotine is repeatedly identified as a primary reason consumers smoke or
use other nicotine-containing products. A "Proposal for Low Delivery
Project for B&W" prepared by a marketing firm by B&W in the
late 1970s contained the following statement that a sufficient dose
of nicotine is essential to sell cigarettes and, implicitly, to maintain
market share based on nicotine addiction:
Current market trends clearly indicate a major trend toward
low-tar brands although current "ultra" low "tar" brands
have had limited success because of their failure to delivery is that if
a satisfying, low-nicotine cigarette were to be developed, it could represent
an effective means of withdrawal . . . with severe implications for
long-term market growth.
Emphasis added.
192. In 1972, RJR's Claude Teague wrote that the tobacco
industry was really part of the pharmaceutical industry because it delivers
nicotine, "a potent drug." According to Teague, nicotine is known
to be habit forming and a smoker chooses his product according to his
"individual
nicotine requirements, . . . thus a tobacco product is, in essence, a vehicle
for delivery of nicotine." According to Teague, "our industry
is then based upon design, manufacture and sale of attractive dosage forms
of nicotine." Teague confirmed that the industry had concealed the
importance of nicotine, "we have deliberately played down the role
of nicotine, hence the non-smoker has little or no knowledge of what satisfaction
it offers him."
193. A 1976 BATCO Conference on Smoking Behavior further
underscores tobacco industry researchers' awareness of the fundamental
importance (to the huge majority of smokers) of nicotine's effects on the
brain:
Some insight into the likely benefits of smoking follows
from a consideration of the properties of nicotine, which is
considered to be the reinforcing factor in the smoking habit for at least
80% of smokers.
Emphasis added.
194. In 1988, during the case Cipollone v. Liggett,
Joseph Cullman III, former CEO of the Philip Morris Tobacco Company, testified
as follows:
Q: Let me ask you the question, then, Mr. Cullman. Is
nicotine a drug?
A: Well it's so described in every book on pharmacology.
Q: So then you agree that it's a drug?
A: I have no reason to disagree with books on pharmacology.
195. A memorandum from a Philip Morris official in 1980
confirms the company's view that nicotine's pharmacological effects on
the central nervous system are critical to the tobacco industry's success:
Nicotine is a powerful pharmacological agent with
multiple sites of action and may be the most important component of
cigarette smoke. Nicotine and an understanding of its properties are important
to the continued well being of our cigarette business since this alkaloid
has been cited often as _the reason for smoking_ and theories have been
advanced for _nicotine titration_ by the smoker. Nicotine is known to have
effects on the central and peripheral nervous system as well as influencing
memory, learning, pain perception, response to stress and level of arousal.
Emphasis added.
196. Despite the 1994 sworn testimony of tobacco CEOs
that nicotine is not addictive, it is clear that high-ranking tobacco company
officials have repeatedly acknowledged that nicotine is addictive and that
this is the reason why people use tobacco.
197. The smokeless tobacco industry also recognizes that
almost all consumers use tobacco products to obtain the pharmacological
effects of nicotine. The senior vice president for marketing of U.S. Tobacco
wrote in a 1981 letter on new product development:
Flavorwise we should try for innovation, taste and strength,
nicotine should be medium. . . . Virtually all tobacco usage is based
upon nicotine, "the kick," satisfaction.
198. In contrast, Thomas E. Sandefur, former CEO of Brown
& Williamson, testified before Congress that nicotine was not addictive
and that B&W scientists had concluded that none of B&W's research
indicated that nicotine was addictive. These statements were false. Sandefur
further testified that "nicotine is a very important constituent in
the cigarette smoke for taste." In fact, nicotine tastes bad, and
the industry has conducted hundreds of tests designed to increase nicotine
without injecting a bad taste. 199. In 1994, in testimony before the Waxman
Committee, Edward Horrigan, Chairman and CEO of RJR, testified that as
far as the industry had been concerned "no causal link has been
shown"
between smoking and heart diseases, lung disease and cancer. Further, Horrigan
testified that there is "no proof that cigarettes are addictive."
Sandefur and Horrigan, by issuing these statements, were continuing the
industry misrepresentation concerning nicotine.
2. Long-Standing Industry Awareness of the Difficulty
Smokers Have in Quitting Underscores the Tobacco Companies' Knowledge of
Addiction
200. The strongest evidence of the addictive power of
nicotine is the fact that a substantial majority of smokers (75 to 85 percent
in most surveys) say they would like to quit, and that they are concerned
for their health, yet a vast majority of those who attempt to quit are
unable to do so. The failure rate of people who attempt to stop or reduce
smoking is dramatic, even in the face of life-threatening tobacco related
illnesses. Thus, even after a heart attack or lung cancer surgery, approximately
one-half of survivors return to smoking within one year. A study of
drug use by high school seniors conducted annually by the University of
Michigan shows that of high school seniors who smoke, more than half have
tried unsuccessfully to quit. Follow-up surveys show that eight years later
three of four are still smoking, and those still smoking are smoking more
heavily. As a result of these characteristics and others, the FDA in 1995
found that "nicotine satisfies the classic criteria for an addictive
substance."
201. The Tobacco Companies are aware of the large number
of smokers who have tried to quit using tobacco, and of the very small
number who actually succeed. The evidence known to the Tobacco Companies
about smokers' unsuccessful attempts to quit shows that the Tobacco
Companies
know that a large percentage of their market consists of people who demonstrate
one of the characteristic features of addiction.
202. The great difficulty smokers experience when they
try to quit was conceded by Joseph F. Cullman, III, the former chief executive
officer of Philip Morris. Mr. Cullman was called as a witness in the Cipollone
lawsuit and gave the following answers in response to questions from one
of the plaintiff's attorneys:
Q. But it is difficult [to quit]?
A. That's what it says here and I'm not disagreeing with
it.
Q. They said it was very difficult. Do you agree with
that?
A. I would say it's difficult.
Q. And it's difficult for the vast majority of smokers,
you would agree with that, too, would you not?
A. That's a question of semantics. What's the vast majority?
A lot of smokers have a hard time quitting [sic].
Q. Let's see, most smokers have a tough time giving up
cigarettes?
A. Well, if they didn't, there would be many fewer
smokers than there are today.
Emphasis added.
203. A presenter responsible for summing up the results
of cessation studies at a 1984 BATCO conference agreed that, while a large
percentage of smokers do not want to smoke, most of those smokers feel
compelled to continue to smoke:
Although intentions and attempts to quit are relatively
high (30-40% of smokers [in a given year]), the actual success rate of
quitting is relatively low and stable.
It was thus well known to the participating companies
that a very large percentage of their customers were smoking not out of
choice but because they could not quit.
204. Other companies also understand that many of their
consumers would like to quit but are unable to do so. A Philip Morris researcher
who studied a "cold turkey" campaign in the small Iowa town of
Greenfield in 1969 reported that those who succeed in quitting smoking
over the long-term are a much smaller group than those who would like to
quit and who attempt to quit. The researcher cited the findings of Hunt
and Matarazzo in proposing that most attempts to quit smoking are not
long-lasting:
"[I]n summarizing many reports of long-term quitting using various
techniques, [the authors] show that the percentage of nonrecidivists [successful
quitters] decreases as a function of time . . . in a negatively accelerated
fashion." The Philip Morris researcher found that in Greenfield only
28 percent of those smokers who agreed to quit as part of the cold turkey
campaign were still not smoking after seven months. The researcher then
observed that the small number of Greenfield residents who managed to stay
off cigarettes for more than seven months was, based on other published
reports of success rates for quitting smoking, about average.
205. The researcher also described findings that revealed
in part why it is so hard for smokers to quit. He reported that smokers
who quit for more than seven months continued to suffer a variety of adverse
effects related to quitting, including weight gain, restlessness, depression,
ill-temper, constipation, nervous mannerisms and loss of energy. These
are some of the classic symptoms of nicotine withdrawal, described earlier.
206. Market research documents also show that the Tobacco
Companies have conducted research in quitting behavior and have documented
the reasons why people quit and why they fail to quit, despite a desire
to do so. A market research firm reporting on a survey of smokers' views
about the health implication of smoking observed that:
[a] minority expresses a resentment about the addictive
aspects of smoking. Being "out of control," unable to quit causes
them to feel somehow unworthy. . . . Nicotine is usually singled out as
the culprit here. However, even these smokers would be reluctant to give
up the satisfaction elements in smoking. So they are in a quandry [sic].
Another market research firm reported its findings about
the inability of young smokers to quit when they want to:
However intriguing smoking was at 11, 12 or 13, by the
age of 16 and 17 many regretted their use of cigarettes for health reasons
and because they feel unable to stop smoking when they want to.
207. The fact that many smokers smoke even though they
do not enjoy smoking is conceded in a candid marketing research document
prepared for Imperial Tobacco Ltd., which reported that it is particularly
difficult to sell cigarettes by "trading on the positives" because
the industry is "vexed by the unique problem that users of the category
do not necessarily like the product." Another document reports that
many smokers of ultra-low tar and nicotine cigarettes want to quit and
"refer to their behavior in terms of _satisfying a craving_ while
smokers of stronger cigarettes talk about taste and satisfaction."
208. In summary, the Tobacco Companies' data shows that
users find it extremely difficult to quit smoking and that many tobacco
users would quit if they could. Their data also shows that, of those smokers
who try to quit, only a small percentage succeed permanently. Consequently,
tobacco manufacturers are aware that the large percentage of their customers
who try to quit but fail continue to buy and use tobacco products, in large
part to satisfy their dependence on nicotine-containing tobacco. Despite
this overwhelming knowledge, the defendants have misrepresented and
suppressed
the truth regarding nicotine and addiction. Instead, they have falsely
claimed that this is simply a matter of individual choice.
K. Suppression and Concealment of Research on Nicotine
AddictionK. Suppression and Concealment of Research on Nicotine Addiction
209. Defendants, rather than fulfilling their promise
to the public to disclose material information about smoking and health,
chose a course of suppression, concealment, and disinformation about the
true properties of nicotine and the addictiveness of smoking.
210. For example, Philip Morris hired Victor DeNoble in
1980 to study nicotine's effects on the behavior of rats and to research
and test potential nicotine analogues. DeNoble, in turn, recruited Paul
C. Mele, a behavioral pharmacologist. DeNoble and Mele discovered that
nicotine met two of the hallmarks of potential addiction--self-administration
(rats would press levers to inject themselves with a nicotine solution)
and tolerance (a given dose of nicotine over time had a reduced effect).
211. However, Philip Morris instructed DeNoble and Mele
to keep their work secret, even from fellow Philip Morris scientists. Test
animals were delivered at dawn and brought from the loading dock to the
laboratory under cover.
212. DeNoble was later told by lawyers for the company
that the data he and Mele were generating could be dangerous. Philip Morris
executives began talking of killing the research or moving it outside of
the company so Philip Morris would have more freedom to disavow the results.
DeNoble recalled that Philip Morris discussed several possible scenarios,
including having DeNoble and Mele leaving the company payroll and continuing
as contractors, and shifting their work to a lab in Switzerland.
213. In August 1983, Philip Morris ordered DeNoble to
withdraw from publication a research paper on nicotine that had already
been accepted for publication after full peer review by the journal
Psychopharmacology.
According to DeNoble, the company changed its mind because it did not want
its own research showing nicotine was addictive or harmful to compromise
the company's defense in litigation recently filed against it. DeNoble
subsequently told Jack Heningfield, Ph.D., Chief of the Clinical Pharmacology
Branch of the National Institute on Drug Abuse's Addiction Research Center,
that Philip Morris officials had rightly interpreted the suppressed nicotine
studies as showing that, in terms of addictiveness, "nicotine looked
like heroin."
214. In April 1984, Philip Morris, apparently to ensure
that DeNoble and Mele's nicotine research remained suppressed and concealed,
told DeNoble and Mele that the lab was being closed. DeNoble and Mele were
forced abruptly to halt their studies, turn off their instruments and turn
in their security badges by morning. Philip Morris executives threatened
them with legal action if they published or talked about their nicotine
research. According to DeNoble, the lab literally vanished overnight. The
animals were killed, the equipment was removed and all traces of the former
lab were eliminated. DeNoble recalled, "The lab was gone, everything
was gone. The cages were gone, the animals were all gone, all the data
was gone. It was empty rooms."
215. DeNoble testified to the Waxman Subcommittee that
"senior research management in Richmond, Virginia, as well as top
officials at the Philip Morris Company in New York continually reviewed
our research and approved our research." DeNoble also stated that
these officials were specifically told about nicotine's addictiveness.
L. The Industry's Secret Manipulation of Nicotine
Levels
216. Not content to conceal the addictive nature of nicotine,
the industry has developed sophisticated technology to control the levels
of nicotine in order to maintain its market and guarantee that its customers
become and remain addicted. David A. Kessler, M.D., Commissioner of Food
and Drugs, recently testified before a congressional committee that cigarette
manufacturers can manipulate precisely nicotine levels in cigarettes, manipulate
precisely the rate at which the nicotine is delivered in cigarettes, and
add nicotine to any part of cigarettes.
217. Dr. Kessler testified that "the cigarette industry
has attempted to frame the debate on smoking as the right of each American
to choose. The question we must ask is whether smokers really have that
choice." Dr. Kessler stated:
a. "Accumulating evidence suggests that cigarette
manufacturers may intend this result--that they may be controlling smokers'
choice by controlling the levels of nicotine in their products in a manner
that creates and sustains an addiction in the vast majority of smokers."
b. "We have information strongly suggesting that
the amount of nicotine in a cigarette is there by design."
c. "The public thinks of cigarettes as simply blended
tobacco rolled in paper. But they are much more than that. Some of today's
cigarettes may, in fact, qualify as high technology nicotine delivery systems
that deliver nicotine in precisely calculated quantities--quantities that
are more than sufficient to create and to sustain addiction in the vast
majority of individuals who smoke regularly."
d. "The history of the tobacco industry is a story
of how a product that may at one time have been a simple agricultural
commodity
appears to have become a nicotine delivery system."
e. "[T]he cigarette industry has developed enormously
sophisticated methods for manipulating nicotine levels in cigarettes."
f. "In many cigarettes today, the amount of nicotine
present is a result of choice, not chance."
g. "[Since] the technology apparently exists to reduce
nicotine in cigarettes to insignificant levels, why, one is led to ask,
does the industry keep nicotine in cigarettes at all?"
218. The Tobacco Industry has used techniques such as
adding chemicals to increase nicotine potency. In general, by increasing
the alkalinity, or smoke pH, of tobacco blends, the industry can deliver
an enhanced "nicotine kick."
219. Particularly instructive on the issue of nicotine
manipulation was the following FDA finding published in the FDA's August
1995 report Nicotine In Cigarettes and Smokeless Tobacco Products:
The information in the preceding sections demonstrates
that cigarette manufacturers manipulate and control the delivery of nicotine
in marketed products. Cigarettes are designed to supply nicotine at consistent
levels despite the wide variations in the nicotine levels of the raw materials,
the immensely complicated combustion chemistry, and the complex chemical
flow properties of a modern cigarette.
Manufacturers use many techniques to control nicotine
deliveries. The application of these modifications in cigarette design
and their interactive nature pose complex problems in maintaining brand
uniformity and consistency regarding nicotine delivery. Yet, the nicotine
content and delivery of each brand of cigarettes is remarkably consistent
from batch-to-batch and year-to-year. This level of control is analogous
to that of the pharmaceutical industry in the production of prescription
drugs. In fact, to determine how well nicotine content is controlled in
cigarettes, FDA laboratories compared the content uniformity of drugs in
tablet or capsule form to the content uniformity of nicotine in cigarettes.
The results showed that nicotine content varies from cigarette to cigarette
no more than the content of active ingredients in marketed pharmaceuticals.
FDAs investigation has also disclosed that the tobacco
industry uses a number of methods to boost nicotine delivery in low-yield
cigarettes. The cigarette industry has successfully used these methods
to maintain adequate nicotine delivery from low-yield products. Without
the independent manipulation of nicotine, many of the techniques used to
reduce tar would also substantially reduce nicotine. Instead, regardless
of differences in labeled/advertised FTC nicotine yields and manufacturers
claims of low-nicotine delivery for certain brands, all cigarettes contain
approximately the same amount of nicotine in the rod, and deliver about
1 mg of nicotine, enough to produce pharmacological effects. Moreover,
studies by FDA and others have demonstrated that the lowest-yield cigarettes
have the highest concentrations of nicotine, demonstrating that nicotine
delivery has been independently manipulated.
The tobacco industrys control and manipulation of nicotine
delivery from cigarettes provides additional evidence of the industrys
intent to deliver pharmacologically satisfying levels of nicotine to smokers.
Emphasis added.
220. In particular, the FDA based its findings, in part,
on the following:
a. The first manufacturing step in nicotine control is
the development and selection of raw materials. The Tobacco Industry has,
through breeding and cultivation practices, developed high-nicotine tobacco
plants that provide higher-potency raw material, giving manufacturers greater
flexibility in blending and in providing uniform and sufficient nicotine
deliveries.
b. Even without the selective breeding and cultivation
of plants for nicotine content, careful tobacco leaf purchasing plants
permit the manufacturers to control nicotine content in their products.
For example, nicotine content varies among types of tobacco and from one
crop year to the next. Awareness of these basic differences and monitoring
of the nicotine levels in purchased tobacco allows the companies to produce
cigarettes with nicotine deliveries consistent to a tenth of 1 percent,
despite variations as high as 25 percent in the nicotine content of the
raw material originating in the same area, from year to year.
c. The primary control of nicotine delivery (the amount
received by the smoker), however, is in the design and careful, sophisticated
manufacture of the cigarette, to ensure that the smoker obtains the precise
amount of nicotine intended by the manufacturer. According to the FDAs
investigation, despite reductions in the amount of tar delivered by cigarettes
over the past several decades, nicotine delivery in low-yield cigarettes
has not fallen proportionately with the reductions in tar. Instead, nicotine
delivery has apparently risen over the last decade, a result that confirms
that nicotine delivery is being independently and carefully manipulated
by tobacco manufacturers. The FDA specifically found that "this newly
gathered information, together with the other evidence of the industrys
breeding, purchasing, blending, and manufacturing practices, reveals that
the tobacco manufacturers control the amount of nicotine that is delivered
to the consumer from cigarettes." Such manipulation is accomplished,
in part, as set forth below.
1. Tobacco Leaf Growing
d. The industry's control and manipulation of nicotine
in the production of cigarettes begins long before the cured tobacco leaf
reaches the manufacturing plant. The characteristics of leaf tobacco, including
nicotine content, are established by the genetic makeup of the plant, developed
during growing and fixed by post-harvest handling. Like other raw agricultural
commodities, the physical and chemical properties of tobacco, including
nicotine, can vary widely, depending on genetic differences, growing season
conditions and soil type. The tobacco industry uses these differences to
control and manipulate nicotine through careful genetic breeding and agronomic
practices.
e. Modern types of cultivated tobacco (Nicotiana tabacum
L) have been selected for a relatively high level of nicotine. Five major
types of tobacco make up nearly all tobacco products marketed in the United
States: Burley, flue-cured, Maryland, the Dark tobaccos and Oriental. These
tobaccos vary both in nicotine levels and in pH. The pH of a tobacco can
have a significant influence on the amount of, and rate at which, nicotine
is absorbed into the bloodstream of the tobacco user and delivered to the
brain.
f. American tobaccos of all types have undergone cumulative
increases in total nicotine levels since the 1950s. Nicotine levels in
the most widely grown American tobaccos increased almost 10 percent for
Burley and more than 50 percent for flue-cured between 1955 and 1980.
g. According to the FDA, two Tobacco Industry activities
over the last several decades appear to be responsible for this increase:
(1) the industrys active and controlling participation in the Minimum
Standards Program, which ensures that nicotine levels of U.S. grown and
marketed tobacco are maintained within specified ranges; and (2) the industry
maintains control over which varieties are suitable for growing in the
United States and thereby eligible for price support.
h. One key objective of the Tobacco Industry's involvement
in the Minimum Standards Program appears to be to ensure that nicotine
levels in marketed tobacco do not fall below specified levels. The program
was initiated in response to the emergence, in the 1950s, of several so-called
"discount" varieties of tobacco (e.g., "Coker 139,"
"Coker 187-Golden Wilt," "Coker 282," "Coker
140,"
"Coker 316," and "Reams 64") that failed to meet current
industry specifications established, among other things, to control the
amount of nicotine delivery when used in manufacturing filtered cigarettes.
To insure the elimination of "discount" or low-nicotine varieties
from the market, the industry obtained the necessary cooperation from USDA
to eliminate these varieties from the price-support program. In fact, to
be eligible under this program, growers must certify, even to this day,
that "discount" varieties are not being grown.
i. While the Minimum Standards Program ensured that nicotine
levels in marketed tobaccos did not fall, breeding and cultivation initiatives
undertaken by the industry caused nicotine levels to increase. In the 1960s
and 70s, the industry turned to tobacco breeders to develop tobacco varieties
that produced less tar. Breeders found that without intervention in the
breeding of these varieties, nicotine levels were reduced along with tar
levels. Thus, the industry has long been able to grow low-tar and low-nicotine
varieties of tobacco for use in manufacturing cigarettes.
j. By 1978, however, the industry had abandoned its interest
in the development of low-tar/low-nicotine varieties of tobacco for manufacturing
low-yield cigarettes, and instead turned to the development of higher nicotine
varieties.
k. In addition to breeding high-nicotine tobacco varieties,
the Tobacco Industry engages in a number of agronomic practices that increase
nicotine levels in tobacco. Heavy application of nitrogen fertilizers,
early topping, and tight "sucker" (i.e., bud growth at
the junction of stalk and leaves) control have all acted in concert to
push nicotine levels upward. In addition, tobacco varieties have been selected
for tolerance to brown spot, a leaf disease that makes early harvest necessary.
Leaves of disease-resistant varieties tend to remain in the field longer,
resulting in maximum nicotine accumulation. Since the introduction in 1965
of the acreage-poundage control system, farmers have reduced the number
of harvestable leaves per plant and have tended to increase plant spacing.
Both of these practices tend to increase nicotine content in the leaf.
Finally, tobacco growers are transplanting tobacco crops earlier, which,
coupled with the widespread use of pesticides in the soil, often results
in slow early season growth, and also tends to increase nicotine content
in the leaves.
l. The foregoing facts have led the FDA to conclude that:
These nicotine-raising agronomic practices have been adopted
by U.S. growers in recent years, even though over 50% of the U.S. cigarette
market is now characterized as low delivery. Thus, the tobacco industry
has developed a number of sophisticated methods for manipulating nicotine
levels through breeding and cultivation of tobacco plants and has used
these methods to maintain and increase concentrations of nicotine in tobacco
leaves. These methods enable the industry to use high-nicotine leaf in
low-tar cigarettes, so that, paradoxically, certain low-tar cigarettes
now contain more of the higher nicotine tobacco in their blend than cigarettes
with higher tar deliveries. The use of these methods demonstrates that
the industry manipulates nicotine independently of other tobacco components
to ensure that cigarettes contain sufficient nicotine to satisfy smokers.
2. Leaf Purchasing
m. Another method of manipulation occurs as follows: The
key factor related to nicotine in leaf purchasing is stalk position. The
concentration of nicotine is lowest at the bottom of the plant and highest
in the top leaves of flue-cured tobacco. Thus, the position of the leaf
on the stalk determines how much nicotine the leaf will contain. In fact,
"stalk position" is an industry euphemism for nicotine content.
The stalk position of a leaf can be determined by its appearance, shape,
color, and thickness, even after harvest. Therefore, an experienced buyer,
whose instructions are dictated by the manufacturers chemists, need only
be concerned with these physical characteristics in identifying leaves
of varying nicotine content.
n. Representatives of the Tobacco Industry described to
FDA investigators the significant role that nicotine plays in the purchase
of tobacco leaf. Brown and Williamson informed the FDA that stalk position
is the "first thing" they look for during leaf purchasing.
3. Leaf Blending
o. After purchase, tobacco leaves are blended to attain
target levels of nicotine and tar in the smoke. FDAs investigation noted
particular attention on the part of manufacturers to the nicotine content
of the leaf in the blending operation. As noted above, blending practices
by manufacturers are designed to: (1) control the naturally occurring variations
in nicotine and other components caused by genetics, growing season
conditions,
and soil type within a given type and grade; and (2) particularly for low-tar
cigarettes, to increase nicotine concentrations and thereby maintain an
acceptable nicotine level in the cigarettes.
p. The pH of cigarette smoke directly affects the delivery
of nicotine because it alters the amount of nicotine that is absorbed in
the mouth or lungs. PH is controlled by the manufacturer in the selection
of the type of tobacco used and blended. For example, smoke-condensate
pH is higher from certain tobacco varieties as well as from leaves at upper
stalk positions.
q. According to the FDA, blending techniques have been
used to finely control nicotine concentrations in marketed cigarettes.
r. The foregoing led the FDA to conclude that:
Significant evidence also demonstrates that tobacco
manufacturers have used blending techniques to increase nicotine
concentrations
in low-tar cigarettes and thereby maintain nicotine delivery while reducing
tar delivery. FDA has observed the industrys
use of proportionately greater amounts of higher nicotine-containing Burley
tobacco in the tobacco blends of the lowest-tar varieties of cigarettes.
In fact, Thomas Sandefur, the chief executive officer of Brown and Williamson,
admitted to Congress that nicotine levels can be adjusted "up or
down"
depending on the blend of tobaccos used in a particular cigarette. Industry
scientists have also acknowledged that tobacco manufacturers blend
high-nicotine
tobaccos to compensate for the reductions in nicotine caused by innovations
in cigarette design and manufacturing to reduce tar delivered. These
examples demonstrate that tobacco manufacturers deliberately increase the
proportion of high-nicotine delivery that would otherwise result in these
products.
Emphasis added.
4. Additional Evidence of Nicotine Manipulation
221. Reconstituted tobacco is made from stalks and stems
and other waste that cigarette companies used to discard and now use to
make cigarettes more cheaply. On information and belief, ordinarily, reconstituted
tobacco contains 25 percent or less of the nicotine in regular tobacco.
A former RJR manager who demanded anonymity told the ABC news program
"Day
One," that on the average, currently marketed brands contain about
22 percent reconstituted tobacco and that cut rate or generic brands typically
contain about double that amount.
222. A laboratory analysis commissioned by "Day One"
and conducted by the American Health Foundation confirmed the industry's
heavy use of reconstituted tobacco. One RJR brand had 25 percent and another
had about 33 percent reconstituted tobacco. Yet, tested samples of the
reconstituted tobacco implanted in RJR brands, Winston, Salem, Magna and
Now had up to 70 percent, rather than the expected 25 percent, of the nicotine
that would be found in regular tobacco, indicating that RJR had fortified
the reconstituted tobacco with additional nicotine.
223. On information and belief, reconstituted tobacco
has inferior taste and less nicotine, so the cigarette manufacturers or
their agents apply a powerful tobacco extract either alone or as part of
a solution of flavorings to the reconstituted tobacco. RJR and the other
cigarette manufacturers have the technology to add flavorings with or without
nicotine, so the addition of nicotine to reconstituted tobacco is purely
at the manufacturer's discretion.
224. The Kimberly-Clark tobacco reconstitution process
is believed to be used throughout the tobacco industry in a number of countries.
A Kimberly-Clark advertisement published in tobacco industry trade publications
states:
Nicotine levels are becoming a growing concern to the
designers of modern cigarettes, particularly those with lower "tar"
deliveries. The Kimberly-Clark tobacco reconstitution process used by LTR
INDUSTRIES permits adjustments of nicotine to your exact requirements.
These adjustments will not affect the other important properties of customised
reconstituted tobacco produced at LTR INDUSTRIES: low tar delivery, high
filling power, high yield and the flexibility to convey organoleptic modifications.
We can help you control your tobacco.
225. Furthermore, the tobacco industry's own trade literature
explains that the Kimberly-Clark process enables manufacturers to triple
or even quadruple the nicotine content of reconstituted tobacco, thereby
increasing the nicotine content of the final manufactured product.
226. Another enterprise quite explicitly specializes in
the manipulation of nicotine and its use as an additive. This company does
business under the name "The Tobacco Companies of the Contraf
Group."
An advertisement run by the Contraf Group in the international trade press
states: "Don't Do Everything Yourself! Let us do it More Efficiently!"
Calling itself "The Niche Market Specialists," Contraf lists
among its areas of specialization "Pure Nicotine and other special
additives."
227. The cigarette industry has also used a process called
"denaturing" to add nicotine to cigarettes. Nearly-pure nicotine
is combined with alcohol and then applied to tobacco during the manufacturing
process. Trucking records show that Philip Morris, for example, received
thousands of gallons of this nicotine/alcohol mixture during the 1980s.
228. Against this mounting body of evidence of the cigarette
industry's manipulation and control of nicotine levels in cigarettes, the
cigarette manufacturers continue to deny to the public, and recently denied
to Congress under oath, that they manipulate and control nicotine levels:
a. William I. Campbell, President and CEO of Philip Morris,
told Congress on April 14, 1994, that "Philip Morris does not manipulate
nor independently control the level of nicotine in our products. . . .
Cigarettes contain nicotine because it occurs naturally in tobacco."
b. James W. Johnston, President and CEO of RJR Nabisco,
told Congress that "We do not add or otherwise manipulate nicotine
to addict smokers."
c. Andrew J. Schindler, President and Chief Operating
Officer U.S.A., R.J. Reynolds Tobacco Company, told Congress that "We
do not restore any nicotine anywhere in our process. . . . We lose nicotine,
for example, in the reconstituted sheet process. . . . [N]owhere in that
process is any nicotine being incrementally added into the process."
Contradicting Johnston's and Schindler's statements, Dr. Robert Suber,
a toxicologist with RJR, admitted, however, that RJR controls the nicotine
in its products. He told CNN that "In order to deliver to the consumer
a product that he wants, a consistent level of nicotine, we have to blend
the tobaccos accordingly. So we do control it."
d. Andrew H. Tisch, Chairman and CEO of Lorillard, told
Congress that "Lorillard does not take any steps to assure a minimum
level of nicotine in our products. Lorillard does not add nicotine to cigarette
tobacco for the purpose of manipulating or spiking the amount of nicotine
received by the smoker."
e. Edward A. Horrigan, Jr., Chairman and CEO of Liggett
Group, Inc., told Congress that "In all my years in this business
worldwide, I have never known of a product-designed objective or goal that
included even the notion of spiking the amount of nicotine in a cigarette
to achieve a level that would hook or addict smokers." Horrigan, however,
former Chairman and CEO of RJR through the late 1980s, participated in
the development and marketing of Premier and other RJR cigarette brands
whose manufacturing process included the manipulation of nicotine content
and delivery.
f. Thomas E. Sandefur, Jr., CEO of Brown & Williamson,
in the face of overwhelming evidence to the contrary, denied secretly growing
Y-1 in sworn testimony before Congress on June 23, 1994, and stated that
his company was being "set up." He admitted that the company
controlled nicotine, but in a shop-worn and now familiar refrain, stated
that the company did so only for "taste."
g. T. F. Riehl, Vice President for Research and Development
at Brown & Williamson, denying that the company mixed the tobacco for
the Barclay cigarette to have a higher concentration of nicotine, told
Congress, "No, sir. We blend for taste, not nicotine." However,
internal documents from Brown & Williamson indicate that Riehl, himself,
has conducted research focusing on the adjustment of nicotine and tar levels
without regard to taste. In fact, at the 1984 Smoking Behavior-Marketing
Conference, Riehl gave a presentation on Project Aries, Brown &
Williamson's
safer cigarette project, which emphasized tar reduction and nicotine enrichment
in later puffs, but never addressed the issue of taste.
229. The cigarette industry's "taste" argument
is belied by the testimony of health policy expert, Clifford E. Douglas,
testifying before the FDA's Drug Abuse Advisory Committee, who asked
"why
so many smokers who have endured tracheostomies due to throat cancer find
it necessary to continue to smoke through the holes in their throats, where
they cannot taste a thing."
230. The newly discovered evidence of nicotine manipulation
by the cigarette industry and the recent disclosures about nicotine addiction
and manipulation made before Congress have not deterred the industry from
its campaign of concealment and disinformation. As recently as April 1994,
the cigarette industry placed advertisements across the country denying
that it "spikes" cigarettes with nicotine, denying that it believes
cigarette smoking is addictive, and misleading the public about whether
the cigarette companies deliberately control nicotine levels in their products.
231. An advertisement placed by Philip Morris in newspapers
across the country in April 1994, denied that Philip Morris manipulates
nicotine levels and stated that "nicotine level in the finished cigarette
is lower than the nicotine level of the original, natural tobacco leaf."
232. RJR placed a similar advertisement in newspapers
across the United States, including newspapers sold in Montana, in 1994
mischaracterizing the "recent controversy" as focusing on RJR's
various techniques that help us reduce the _tar_ (and consequently the
nicotine) yields of our products."
233. These advertisements deliberately create the false
impression that the "recent controversy" they refer to is about
whether reconstituted and reduced-tar tobacco have less nicotine than the
original tobacco leaf. The tobacco companies can legitimately claim that
their finished cigarettes have less nicotine. The real controversy, however,
which these advertisements so carefully avoid, stems from the discrepancy
between actual nicotine levels of the industry's tar-reduced and reconstituted
tobacco and the claimed "essentially perfect" correlation between
nicotine and tar levels. In fact, the nicotine levels have proven to be
consistently higher than what the correlation would predict. The inaccuracy
lies not in the correlation, but in the story the industry has told the
public about how it manufactures cigarettes. That story has carefully and
deliberately omitted the industry's addition of nicotine in the form of
an extract to these tobaccos to keep them at addictive levels.
M. Maintaining the Market Through Sales to
Minors.
1. The Increasing Addiction of Minors: A Predicate
to Continuing Industry Profits.
234. In addition to ensuring a captive market through
the addiction of its customers, the cigarette industry has maintained its
sales and replaced the hundreds of thousands of smokers who die each year
by intentionally targeting marketing and promotional efforts at children
and adolescents.
235. Every day, more than 1,200 cigarette smokers die
of disease caused by smoking. In order to prevent a precipitous decline
in cigarette sales, the big cigarette companies must attract new smokers.
Children and teenagers became the main target and as a result of the tobacco
companies' unfair and deceptive marketing programs and advertising, over
3,000 of them begin smoking everyday.
236. The use of tobacco by minors continues to rise. The
Centers for Disease Control and Prevention ("CDC") announced
on May 24, 1996, that a study of high school students showed a higher
prevalence
of tobacco use among high school students in 1995 than in 1993 and 1991,
up 35 percent from 1993 and 28 percent from 1991. The prevalence of cigarette
smoking in recent years among 8th and 10th grade students has risen
significantly
and provides cause for great concern. For example, among 8th grade students,
14.3 percent in 1991 and 18.6 percent in 1994 were current smokers; among
10th grade students, 20.8 percent in 1991 and 25.4 percent in 1994 were
current smokers.
237. The 1994 Surgeon General's Report reviewed several
different surveys and found that the estimated percentage of adolescents
who have ever smoked cigarettes ranged up to approximately 42 percent (as
reported by the 1991 Youth Risk Behavior Survey). The 1994 Surgeon General's
Report also found that 28 percent of high school seniors were current smokers.
Further, the 1994 Surgeon General's Report states that 7 to 13 percent
of adolescents were frequent or heavy smokers, consuming at least a one-half
pack daily or smoking 20 days or more of the 30 days in a survey period.
238. Approximately 3 million children under the age of
18 are daily smokers. One study found that children between the ages of
8 and 11 who are daily smokers consume an average of 4 cigarettes daily,
and those who are between the ages of 12 and 17 average nearly 14 cigarettes
daily. The study also estimated that adolescents consume an estimated 947
million packs of cigarettes and 26 million containers of smokeless tobacco
annually and account for annual tobacco sales of $1.26 billion. Another
study estimates that teenagers in 1991 smoked 516 million packs of cigarettes
and spent $962 million purchasing them. As stated previously, these figures
are especially significant given that virtually all states prohibit the
sale of tobacco to persons under the age of 18 (with some states prohibiting
sales to persons under the age of 19 and one state, Pennsylvania, prohibiting
cigarette sales to persons under the age of 21). Unfortunately, few states
can successfully enforce their laws restricting tobacco sales to minors
given the tobacco industry's intense effort to lure minors into smoking.
239. Studies have also suggested that the age one begins
smoking can greatly influence the amount of smoking one will engage in
as an adult and will ultimately influence the smoker's risk of tobacco
related morbidity and mortality. Those who started smoking by early adolescence
were more likely to be heavy smokers than those who began smoking as adults.
Another study found that high school students who smoked their first cigarette
during childhood smoked more often and in greater amount than those who
first tried smoking during adolescence.
240. The escalating use of smokeless tobacco products
by underage persons presents an additional and growing public health problem.
Smokeless tobacco products include chewing tobacco and snuff and are also
known as "spit tobacco" or "spitting tobacco." In 1970,
the prevalence of snuff use among males was lowest in those 17 to 19 years
of age and the highest use was by men aged 50 or more. By 1985, a dramatic
shift had occurred, and males between 16 and 19 were twice as likely to
use snuff as men aged 50 and over. An estimated 3 million users of smokeless
tobacco products were under the age of 21 in 1986, when Congress enacted
the Comprehensive Smokeless Tobacco Health Education Act (the
"Smokeless
Act") (15 U.S.C. 4401). The Smokeless Act required the Secretary of
Health and Human Services ("Secretary") to inform the public
of the health dangers associated with smokeless tobacco use, required warning
labels on packages, banned advertising on electronic media subject to the
Federal Communications Commission's jurisdiction (such as television and
radio), and encouraged States to make 18 years the minimum age for purchasing
smokeless tobacco products. Despite the Smokeless Act and State laws
prohibiting
sales to minors, a high percentage of persons under the age of 18 use smokeless
tobacco products. For example:
1991 school-based surveys estimated that 10.7 percent
of U.S. high school seniors and 19.2 percent of male 9th to 12th grade
students use smokeless tobacco.
A 1992 national household-based survey of U.S. children
found that 11.0 percent of males 12-17 years of age were using smokeless
tobacco.
Among high school seniors who had ever tried smokeless
tobacco, 73 percent did so by the ninth grade.
241. In some parts of the United States the rates are
especially high. According to the 1990-91 Youth Risk Behavior Survey, the
smokeless tobacco product use rates among males in grades 9 through 12
were as high as 34 percent in Tennessee, 33 percent in Montana, 32 percent
in Colorado, and 31 percent in Alabama and Wyoming.
242. The recent and very large increase in the use of
smokeless tobacco products by young people and the addictive nature of
these products has persuaded the Secretary that these products must be
included in any regulatory approach that is designed to help prevent future
generations of young people from becoming addicted to nicotine-containing
tobacco products.
243. Despite the best efforts of parents, educators, and
the medical profession, smoking among young people has increased since
the 1970s. This is because cigarette company advertising is used to create
a mental image associating smoking with healthy, glamorous and athletic
lifestyles, with sexual attractiveness and success. This increases demand
for cigarettes among young people. Within a short period of time, the young
smoker becomes physiologically and emotionally dependent, i.e.,
addicted to tobacco. Later, as the maturing smoker begins to wish he or
she could quit, advertising reinforces the practice and seeks to minimize
health concerns, creates doubt, confusion and mistake which are used by
smokers as an excuse to avoid the pain and discomfort of attempting to
break their addiction to nicotine. This is the vicious cycle created by
defendants.
244. The cigarette companies sell roughly 1 billion packs
of cigarettes per year to minors under the age of 18. In 1988, these sales
accounted for about $1.25 billion. Approximately 3 percent of the total
tobacco industry profits ($221 million in 1988) are derived directly from
the sale of cigarettes to children under the age of 18, an activity that
is illegal in 47 states. Marlboro and Camel cigarettes, produced by Philip
Morris and Reynolds, respectively, dominate the teenage smoking market.
245. Sales to minors are no accident--they are an intended
result of a carefully orchestrated scheme. For example, despite the fact
it is illegal to sell to minors in Montana, each of the tobacco companies
studies how to attract minors and engages in conduct to accomplish that
goal. Illustrative is RJR which repeatedly has conducted reports "relating
to teenage smokers," including an analysis of RJR's share of teenage
smokers, defined as "14-17." Indeed, as early as 1973, Claude
Teague of RJR was writing internal memos stating that RJR should recognize
that despite prohibitions on smoking, minors were smoking in increasing
numbers, thus, "if this is to be so, there is certainly nothing immoral
or unethical about our company attempting to attract smokers to our
products."
Teague went on to write that if RJR "is to survive and prosper . .
. we must get our share of the youth market." Teague's view prevailed
and RJR developed a scheme to attract minors that was highly successful.
This theme was repeated in a 1976 research department memorandum, labeled
"SECRET" which stated "Evidence is now available to indicate
that the 14 to 18 year old group is an increasing segment of the smoking
population. RJR must soon establish a successful new brand in this
market if our position in the industry is to be maintained over the long
term."
246. In fact, RJR routinely studied the smoking habits
of those as young as 14, and included the 14- to 17-year-old age group
in studies of smoking trends and habits. This analysis went so far as to
examine the percentage of smokers aged 14 to 17 who smoked Salem, Salem
Kings, Salem Super, Total Kool Filter, Kool King, and Kool 100. Of upmost
interest to RJR was competition between RJR's Winston brand and Phillip
Morris Marlboro.
2. The Use of Appealing Images.
247. Defendants have engaged in a course of conduct designed
to promote cigarette smoking among young people and to particularly appeal
to those with low self- esteem and emotional insecurity. Once the young
person has been predisposed toward smoking, a variety of factors can
precipitate
actual experimentation. For many young people, the precipitating factor
is being given a free pack of cigarettes by a tobacco company representative,
or purchasing cigarettes in order to obtain an attractive t-shirt, baseball
cap or other gimmick used to promote cigarette smoking.
248. One of the best examples of this was the transformation
of Marlboro Cigarettes from a red-tipped cigarette for women to the cigarette
for the macho cowboy. By changing imagery, Philip Morris was able to tap
into a wholly new and different market. In 1950, Reynolds was the king
of the cigarette business. It sold more cigarettes than any other company.
Philip Morris, though doing well on the basis of its fraudulent health-oriented
advertising, was still far behind. In 1981, Philip Morris passed Reynolds
in market share and each year has extended its lead by developing an effective
marketing campaign for recruiting young new smokers to its brands. The
wild spirit of the Marlboro man captured the adolescent imagination. Also,
Philip Morris representatives fanned out to colleges across the country,
giving free cigarettes to incoming freshmen to get them hooked. The children
and teenagers who started smoking Marlboro became tenaciously loyal
customers.
Soon, Marlboro became the gold standard of cigarettes among teenagers.
Up until 1988, nearly three-fourths of teenage smokers used Marlboro.
249. At about the time it lost market leadership to Philip
Morris, Reynolds dedicated itself to a ruthless campaign encouraging children
and teenagers to smoke. One of the key elements of the R.J. Reynolds strategy
for attracting children was to reposition many of its cigarette brands
to younger audiences.
250. Reynolds Vantage cigarettes entered the 1980s as
a brand targeted at the health conscious adult smoker. Advertisements were
intended to assuage fears of lung cancer and other diseases, and give concerned
smokers arguments for rationalizing their continuation of the addiction.
Through multiple transmogrifications, Vantage cigarettes have been
progressively
repositioned to ever-younger audiences. During the mid-1980s this campaign
featured young successful professionals (including architects, fashion
designers, lawyers, etc.) with the slogan "The taste of success."
These campaigns promoted the implication that smoking is helpful--if not
essential--to social success or prominence. This is an image designed to
appeal to underage smokers who dream of becoming successful professionals.
In the late 1980s the theme for Vantage cigarettes began to feature
professional-caliber
athletes like wind surfers, aerobic dancers, downhill ski-racers and auto-racers.
This theme depicts physical activity requiring strength or stamina beyond
those of everyday activity, clearly suggesting that smoking is not harmful.
251. During the 1980s, as intended by the manufacturer,
the theme for Salem cigarettes also became more youth-oriented. Whereas
the dominant theme for Salem cigarettes used to be clean fresh country
air, during the 80s, the theme conveyed through the use of Salem ads were
populated by muscular surfers and beach bunnies, fun-loving party animals
and other attractive adolescent role models. Another successful advertising
campaign targeted at young people is the Lorillard Tobacco Company campaign
promoting Newport cigarettes. The theme links Newport with men and women
in sexually suggestive positions, always having fun, using the slogan "Alive
with pleasure."
252. Another successful campaign has been the "Youve
come a long way baby" campaign promoting Virginia Slims cigarettes.
One of the most important psychological needs of most adolescent girls
is to become independent from their parents. By associating smoking with
womens liberation, Philip Morris hopes to create in the minds of these
teenage girls the vision of smoking as a symbol of autonomy and independence.
The theme created for Virginia Slims and other "feminine" cigarettes
prey upon the natural and almost universal insecurity and sense of inferiority
experienced by adolescents by portraying the cigarette as a crutch and
a symbol of superiority. Perhaps the most acute psychological need of
adolescence
is to fit in, to be accepted, to be popular.
253. A status symbol and secret desire of many teenage
boys is a powerful motorcycle. It is for this reason that so many cigarette
brands have used motorcycle imagery to encourage teenage boys to smoke.
To target young boys the industry uses images of high risk activities like
hang gliding, motorcycle racing, mountain climbing, etc. Cigarette makers
do this deliberately to undermine awareness that smoking is dangerous.
In its campaign to attract adolescent boys to become smokers, the R.J.
Reynolds cigarette company has made extensive use of risk-taking and danger.
By glorifying risk-taking, these ads have a more insidious purpose. How
a person estimates the magnitude and likelihood of a risk can be significantly
affected by what it is compared against. By portraying extremely dangerous
activities like hang-gliding, mountain climbing and stunt motorcycle riding,
Reynolds minimizes the dangers of smoking in adolescent minds.
254. The greatest success that Reynolds had in its effort
to gain on Philip Morris in the youth market is the "Joe Camel"
cartoon character. This campaign was inaugurated in the United States in
1987 to commemorate the 75th anniversary of Camel cigarettes.
In the first ads, the camel leered out over the pack saying, "75 years
and still smoking." The implication is obvious. It soon became evident
that "Joe Camel" would strike a responsive chord among children
and teenagers, and has been used by Reynolds to target young persons--even
children--to get them to start smoking at as early an age as possible.
Reynolds has more than tripled its expenditures for Camel cigarettes after
1988, utilizing themes like "Joe Camel" guaranteed to be attractive
to young people at high risk of becoming smokers.
3. Use of Youth Oriented Locations for Promotional
and Advertising Materials.
255. It is not just the themes within cigarette advertising
that betray the real target, it is also the location of those themes. During
the decade of the 1980s there was a steady migration of cigarette advertising
into youth-oriented publications. Magazines with sexually oriented themes,
and those concerning entertainment and sporting activities, had the highest
concentration of cigarette ads. For many of these magazines, teenagers
comprise a quarter or more of the total readership. Cigarette ads in these
youth-oriented magazines were frequently multi-page, pop-up ads. News
magazines
like Time and Newsweek, which have older audiences, had few
cigarette ads, and those tended to emphasize implicit health promises
concerning
tar and nicotine rather than glamorous images.
256. In tests all across the country, it has been demonstrated
that children as young as 12-years-old can buy cigarettes in three out
of four retail outlets. A study by the Inspector Generals Office of the
Department of Health and Human Services concluded that, while there are
laws prohibiting the sale of tobacco to minors, they are almost uniformly
unenforced. The risk of a merchant being punished for selling cigarettes
to minors is about one in 33 million. Cigarettes are available in unlimited
quantities to children through vending machines as well.
257. A particularly successful element of the industry's
campaign has been aimed at young girls. Nearly every issue of magazines
for young girls like Teen and Young Miss includes a statement
by Reynolds urging children not to smoke. But the reasons given for refraining
are designed to continue to conceal, i.e. the reasons are not that
smoking is addictive, that it can harm or kill the infants of pregnant
women, or that it causes cancer and other awful diseases. Rather, the reason
given is that it is an "adult custom."
258. This message, rather than discouraging children from
smoking, plants in impressionable young girls minds the notion that smoking
is something to do to show ones independence, to act grown up. This notion
is, of course, reinforced by the ubiquitous cigarette ads depicting glamorous
young adult women smoking as a way of demonstrating their independence.
4. Reynolds: "Old Joe Camel".
259. The most notorious recent example of the industry
targeting of minors is the "Joe Camel" advertising campaign
conducted
by Reynolds, in observance of the Camel brand's 75th anniversary. As part
of the initiation of the promotion, Reynolds included singing birthday
cards in Rolling Stone magazine, a publication particularly popular
with young people, and offered premiums such as T-shirts, party mugs and
wall posters. When Reynolds began this cartoon campaign in 1988, Camel's
share of the children's (under 18 years of age) market was only 0.5 percent.
In just a few years, Camel's share of this illegal market has increased
to 32.8 percent, representing sales estimated at $476 million per year.
Another indication of the phenomenal success of this marketing campaign
is the fact that in a recent survey of six-year-olds, 91 percent of the
children could correctly match "Old Joe" with a picture of a
cigarette, and both the silhouette of Mickey Mouse and the face of Old
Joe were nearly equally well recognized by almost all children.
260. All defendants are aware of the fact that tobacco
use begins primarily among youth who are not yet 18 years of age. Among
minors, the three most used brands of cigarettes are the most advertised.
Reynolds studied the attributes of an advertising campaign which would
most appeal to the group it carefully identified as "21 and under."
Those attributes directly coincide with the "Joe Camel" campaign.
Several years later, again addressing those attributes, this startling
statement was made: "Young people will continue to become smokers
at or above the present rates during the projection period. The brands
which these beginning smokers accept and use will become the dominant brands
in future years. Evidence is now available to indicate that the 14 to 18
year old group is an increasing segment of the smoking population. RJR
must soon establish a successful new brand in the market
if our position in the industry is to be maintained over the long term."
261. Reynolds continues to use the "Old Joe"
character in conjunction with other offers attractive to minors. Recently,
for example, it began an advertising campaign offering concert tickets
in return for redemption of a number of Camel coupons, again in Rolling
Stone magazine.
262. Reynolds has made other premiums available in exchange
for coupons included in packages of Camel cigarettes. These premiums are
deliberately designed to appeal primarily to minors.
263. Reynolds has expressly encouraged minors to circumvent
laws related to tobacco use by minors. For example, in one coupon offer
for a free package of Camels, "Joe Camel" advised individuals
that it would be a "smooth move" to have someone else redeem
the coupon, thus suggesting the means to overcome prohibitions of sales
to minors of tobacco products. Other Reynolds campaigns have targeted stores
and advertising locations close to high schools and other areas frequented
by minors, and Reynolds concentrates advertising in publications read by
large numbers of minors.
5. U.S. Tobacco: "Old Enough to Chew".
264. U.S. Tobacco has engaged in an ongoing campaign to
induce individuals to become users of smokeless tobacco, and its efforts
find particular success among minors, as intended by the company.
265. U.S. Tobacco designs its products to introduce the
"new user" to smokeless tobacco products, and as addiction grows,
"graduate" users to higher nicotine content products: "Skoal
Bandits [a mild, low-nicotine product, packaged in individual use _tea
bags_] is the introductory product, and then we look towards establishing
a normal graduation process [to higher nicotine content products]."
The introductory products are aimed at new users, mainly cigarette smokers,
between ages 15 and 35.
266. A U.S. Tobacco employee, Bill Falk, who was apparently
terminated for some other comments in the article [see discussion below]
told a New York Post reporter: "A lot of young people are getting
into it [smokeless tobacco use] . . . It's become a status thing. When
a kid gets a new pair of jeans, he puts the snuff can in the back pocket
and rubs it till the outline shows. It shows he's old enough to chew."
6. Philip Morris: Competing for the Minor Market.
267. All defendants promote and market their products
to minors. At least one company, Philip Morris, tracked hyperactive children
in grade school to research whether they would become smokers. Philip Morris
apparently conducted market research concerning minors who smoke or are
apt to smoke. In a 1969 presentation to the Board of Directors by the Philip
Morris Research Center, W. L. Dunn, Jr. and F. J. Ryan talked about the
future of the "psychology department," noting that more attention
was being paid to the reasons why people smoke; "there is general
agreement on the answer to [why people begin to smoke]. The 16 to 20 year
old begins smoking for psychosocial reasons. The act of smoking is symbolic;
it signifies adulthood, he smokes to enhance his image in the eyes of his
peers." Philip Morris, having apparently studied the minor market
for tobacco, has recently begun a program characterized as "Marlboro
Unlimited," which is a program offering premiums for coupons from
cigarette packages. This program is a direct response to Reynolds success
in the minor market, is designed to appeal to minors, and is an effort
by Philip Morris to maintain Marlboro's dominance of that illegal market.
268. Each tobacco company defendant engages in various
advertising and promotional activities in an effort to develop a
"minor"
market. These activities include pervasive sponsorship of various sporting
events, concerts and other events likely to attract extensive youth interest.
Another means of appealing to youth used by the companies is paying for
promotional appearances in movies which, because of the subject matter
or the actors in the films, are most likely to appeal to youth. For example,
Brown & Williamson agreed with the actor Sylvester Stallone that he
would use the former's products in at least five feature films, in exchange
for $500,000. Philip Morris paid for the promotion of Marlboro in "Superman
II," "Risky Business," and "Crocodile Dundee"
and for promotion of Lark in "License to Kill." It paid for or
otherwise provided promotional material for 56 films in 1987 to 1988. Liggett
paid for promotion of Eve [its brand designed especially to appeal to young
women] in "Supergirl." American Tobacco promoted Lucky Strike
in "Beverly Hills Cop." Reynolds paid for the promotion of Camel
in "Who Framed Roger Rabbit," "Desperately Seeking
Susan,"
and "Honey, I Shrunk the Kids."
7. Philip Morris Admission that it has Targeted Minors.
269. The Tobacco Cartel is currently under intense scrutiny
from state and federal officials. In a blatant attempt to stave off FDA
regulations, Philip Morris has proposed a series of changes to their marketing
practices. In a recent letter to the Attorneys General of many states,
Philip Morris informed the Attorneys General that it has announced a "blue
print which directly addresses the issue of youth smoking." Among
the proposals are the following:
Ban tobacco ads near schools and playgrounds and in
youth oriented publications;
Prohibit tobacco brand names, logos and characters on
promotional items like t-shirts and caps;
Ban cigarette vending machines;
Limit tobacco brand name sponsorship to events with
primarily adult audiences;
Ban tobacco advertising in video arcades and family
oriented centers.
270. These proposals constitute an admission that the
industry has attempted to attract minors, when it: (1) places tobacco ads
near schools, playgrounds and in youth oriented publications; (2) uses
logos and characters that are intended to appeal to minors; (3) sponsors
events that have primarily youth audiences; and (4) places ads in places
likely to reach minors such as video and family oriented centers. These
admissions are powerful evidence that the Tobacco Industry has knowingly
and intentionally targeted minors.
N. Smokeless Tobacco Products: Addiction Through
the "Graduation Process"
271. The Defendants Brown & Williamson and R.J. Reynolds
also manufacture and distribute loose tobacco used in the "roll your
own" process of cigarette-making.
272. Even though the medical evidence regarding the hazards
of cigarette smoking and addiction have been known to the defendants for
many years, the packages and containers of the "roll your own"
tobacco conceal and/or misrepresent the hazards of use of this product.
273. Despite their knowledge that the use of smokeless
tobacco is, as a result of nicotine, extremely addictive, the Tobacco Companies
to this day deny that smoking, "dipping," or "chewing"
tobacco is addictive. Through their individual advertising and public relations
campaigns, and collectively, through the Tobacco Institute, the Tobacco
Companies have successfully promoted and sold tobacco products by
concealing
and misrepresenting the highly addictive nature of cigarettes and smokeless
tobacco.
274. Defendant United States Tobacco Company makes approximately
90 percent of the oral snuff and chewing tobacco sold in the United States.
As alleged above, smokeless tobacco delivers a similar amount of nicotine
as cigarettes and is equally as addictive. Plaintiff is informed and believes
that smokeless tobacco manufacturers intend to cause nicotine dependence
among consumers through a strategy that involves promoting the user of
lower nicotine brands with the intent of moving users up to higher, more
addictive brands over time. The "graduation" strategy calls for
three different brands of low, medium and high nicotine content. The strategy
is based on the premise that new users of smokeless tobacco are most likely
to begin with products that are milder tasting, more flavored and lighter
in nicotine content. After a period of time, there is a natural progression
to products that are more full-bodied and have more concentrated tobacco
taste, with more nicotine, than the entry brand. This graduation strategy
is supported by the manufacturers' advertising practices which indicate
the manufacturers' intent to have consumers experiment with low-nicotine
brands and graduate to higher-nicotine brands over time. The FDA's 1995
investigation into nicotine and tobacco products found, that with respect
to smokeless products, "tobacco manufacturers control the delivery
of nicotine" so that products that deliver lower doses of nicotine
are provided to "new users" who are then encouraged by tobacco
marketing to "graduate" to products that deliver "higher
doses of nicotine."
O. The Human Toll of Cigarette Smoking.
1. Health Effects of Cigarette Smoking
275. Over 400,000 Americans die each year from smoking-related
illnesses. This equates to more than one of every five deaths in the United
States. If an adolescent's tobacco use continues for a lifetime, there
is a 50 percent chance that the person will die prematurely as a direct
result of smoking. Moreover, the earlier a young person's smoking habit
begins, the more likely he or she will become a heavy smoker and therefore
suffer a greater risk of smoking related diseases. Smoking is responsible
for about 90 percent of all lung cancer deaths; 87 percent of deaths from
chronic obstructive pulmonary diseases (COPD); 21 percent of deaths from
coronary heart disease; and 18 percent of deaths from stroke. Further,
a causal relationship exists between cigarette smoking and cancers of the
larynx, mouth, esophagus and bladder; and atherosclerotic peripheral vascular
disease, cerebrovascular disease (stroke) and low birth weight babies.
Cigarette smoking is also a probable cause of infertility and peptic ulcer
disease and contributes to, or is associated with, cancers of the pancreas,
kidney, cervix and stomach.
276. Epidemiologic studies provide overwhelming evidence
that smoking causes lung cancer. The risk of getting lung cancer may be
more than 20 times greater for heavy smokers than nonsmokers. The relationship
between smoking and lung cancer is due to the numerous carcinogens in
cigarette
smoke. Cigarette smoking caused an estimated 117,000 deaths from lung cancer
in 1990.
277. The risk of getting lung cancer increases with the
number of cigarettes smoked and the duration of smoking, and decreases
after cessation of smoking. Starting smoking at an earlier age increases
the potential years of smoking and increases the risk of lung cancer. Studies
have shown that lung cancer mortality is highest among adults who began
smoking before the age of 15.
278. Cigarette smoking also causes cancer of the larynx,
mouth and esophagus. According to current estimates, 82 percent of laryngeal
cancers are due to smoking and about 80 percent of the 10,200 deaths from
esophageal cancer in 1993 can be attributed to smoking. The risk of oral
cancer among current smokers ranges from 2.0 to 18.1 times the risk in
people who have never smoked and can be reduced more than 50 percent after
quitting. The risk of esophageal cancer among current smokers ranges from
1.7 to 6.4 times the risk in people who have never smoked and can also
be reduced by about 50 percent after quitting.
279. Epidemiological studies demonstrate that cigarette
smoking contributes to the development of pancreatic cancer. The reason
for this relationship is unclear, but may be due to carcinogens or metabolites
present in the bile or blood. In 1985, the proportion of pancreatic cancer
deaths in the United States attributable to smoking was estimated to be
29 percent in men and 34 percent in women.
280. Cigarette smoking accounts for an estimated 30 to
40 percent of all bladder cancers and is a contributing factor for kidney
cancer. The increased risk of kidney and bladder cancer may be related
to the number of cigarettes smoked per day, and the risk decreased following
smoking cessation.
281. Smoking is a contributing factor for cancer of the
cervix. The association between cigarette smoking and cervical cancer persists
after control is made for risk factors, such as age at first intercourse
and the number of sexual partners, that predispose a woman to developing
sexually-transmitted diseases. The inclusion of these risk factors, however,
may not completely rule out confounding by sexually-transmitted diseases.
The findings that components of tobacco smoke can be found in the cervical
mucus of smokers, and the mucus of smokers is mutagenic, and that former
smokers have a lower risk of getting cervical cancer than current smokers
are consistent with the hypothesis that smoking is a contributing cause
of cervical cancer.
282. The 1982 Surgeon General's Report concluded that
stomach cancer is associated with cigarette smoking.
283. Smoking is a leading cause of heart disease. The
1964 Surgeon General's Report noted that male cigarette smokers had higher
death rates from coronary heart disease than nonsmokers. Subsequent reports
have concluded that cigarette smoking contributes to the risk of heart
attacks, chest pain, and even sudden death. Overall, smokers have a 70
percent greater death rate from coronary heart disease than nonsmokers.
284. Ischemic heart disease resulting from cigarette smoking
claimed nearly 99,000 lives in 1990. One study estimates that smoking causes
30 to 40 percent of all deaths due to coronary heart disease. Smokers between
the ages of 40 and 64, who smoked more than one pack a day, were shown
to have a risk of coronary heart disease that is 3.2 times higher than
people who do not smoke.
285. Smoking also increases a person's risk of atherosclerotic
peripheral vascular disease, especially if the smoker is diabetic. Complications
of this disease include decreased blood delivery to the peripheral tissues,
gangrene and ultimately loss of the affected limb. Smoking cessation is
the most important intervention in the management of peripheral vascular
diseases.
286. Smoking is a cause of stroke. Stroke is the third
leading cause of death in the United States. The association of smoking
with stroke is believed to be mediated by the mechanisms responsible for
atherosclerosis (narrowing and hardening of the arteries), thrombosis and
decreased cerebral blood flow in smokers. Female smokers who use oral
contraceptives
are at an increased risk of having a stroke.
287. Cigarette smoking is the leading cause of chronic
obstructive pulmonary disease (COPD) in the United States. Approximately
84 percent of the COPD deaths in men and 79 percent of the COPD deaths
in women are attributable to cigarette smoking. The risk of death from
COPD may depend on how many cigarettes a person smokes daily, how deeply
the person inhales and the age when the person began smoking. The number
of cigarettes smoked per day is a strong indicator for the presence of
the principal symptoms of chronic respiratory illness, including chronic
cough, phlegm production, wheezing and shortness of breath.
288. Smoking's detrimental effect on lung structure and
function appear within a few years after cigarette smoking begins. Children
who smoke are more likely to suffer from respiratory illnesses than children
who do not smoke. Adolescents who smoke may experience inflammatory
changes
in the lung, reduced lung growth and may not achieve normal lung function
as an adult.
289. Cigarette smoking is a probable cause of peptic ulcer
disease. Peptic ulcer disease is more likely to occur in smokers than in
nonsmokers, and the disease is less likely to heal, and more likely to
cause death in smokers than nonsmokers. Quitting smoking reduces the chances
of getting peptic ulcer disease and is an important component of effective
peptic ulcer treatment.
290. Studies also show that women who smoke have reduced
fertility. One study showed that smokers were 3.4 times more likely than
nonsmokers to take more than one year to conceive.
291. Smoking's severe detrimental effects during pregnancy
are well documented. Women who smoke are twice as likely to have low birth
weight infants as women who do not smoke. Smoking also causes intrauterine
growth retardation of the fetus. Mothers who smoke also have increased
rates of premature delivery.
292. Smoking may lead to premature infant death. Babies
of mothers who smoke are more likely to die than babies born to nonsmoking
mothers. A recent meta-analysis reported that use of tobacco products by
pregnant women results in 19,000 to 141,000 miscarriages per year, and
3,100 to 7,000 infant deaths per year. In addition, the meta-analysis attributed
approximately two-thirds of deaths from sudden infant death syndrome to
maternal smoking during pregnancy. By another estimate, if all pregnant
women stopped smoking, there would be 4,000 fewer infant deaths per year
in the United States.
2. Health Effects of Smokeless Tobacco Products.
293. Smokeless tobacco use can cause oral cancer. The
risk of oral cancer increases with increased exposure to smokeless tobacco
products, particularly in those areas of the mouth where smokeless tobacco
products are used. The risk of cheek and gum cancers is nearly 50 times
greater in long-term snuff users than in nonusers. Snuff and chewing tobacco
contain potent carcinogens, including nitrosamines, polynuclear aromatic
hydrocarbons and radioactive polonium.
294. Smokeless tobacco use can cause oral leukoplakia,
a precancerous lesion of the soft tissue that consists of a white patch
or plaque that cannot be scraped off. One study of 117 high school students
who were smokeless tobacco users revealed that nearly 50 percent of these
students had oral tissue alterations. There is a 5 percent chance that
oral leukoplakias will transform into malignancies in 5 years. The leukoplakia
appears to decrease or resolve upon cessation of smokeless tobacco use.
295. Smokeless tobacco use causes oral cancer and oral
leukoplakia and may be associated with an increased risk of cancer of the
esophagus. Smokeless tobacco use has been implicated in cancers of the
gum, mouth, pharynx and larynx. Snuff use also causes gum recession and
is associated with discoloration of teeth and fillings, dental cavities
and abrasion of the teeth.
P. The Injury to the State of Montana as a Direct and
Foreseeable Consequence of Defendants' Unlawful Conduct.
296. In addition to the human toll, the economic cost
of tobacco use, and, in particular, health care expenditures from
tobacco-attributable
diseases, amount to an unacceptable burden on society and the State of
Montana.
297. The State spends millions of dollars each year to
provide or pay for health care and other necessary facilities and services
on behalf of state employees, the needy, indigents and other eligible residents.
Increased health care costs for those individuals are directly caused by
tobacco induced cardiovascular disease, lung cancer, emphysema, respiratory
and other diseases.
298. In fulfilling its statutory duties, the State of
Montana has expended and will expend substantial sums of money due to the
increased cost of providing health care services for treatment of tobacco-caused
diseases. These increased expenditures have been caused by the unlawful
actions of the Tobacco Industry.
299. Montana expends funds in several areas which include
significantly increased charges attributable to tobacco usage and exposure.
These include but are not limited to:
a. Medical payments: Pursuant to Mont. Code Ann. §
53-6-101 et seq., Montana makes payments for medical care services
provided to recipients of public assistance. The amount paid for Medicaid
is higher than it would be otherwise due to payment for tobacco-related
illnesses; and
b. Health care: Montana purchases health care insurance
for public employees and dependents. The premiums paid for all employees
and dependents are higher than they would be otherwise due to the potential
of payments for tobacco-related illnesses for some employees and dependents.
300. The Centers for Disease Control have developed information
on smoking-attributable deaths and diseases and the economic impact of
smoking. Their study demonstrates that there is a direct and substantial
cost to Montana State taxpayers of increased health care attributable to
use of tobacco. Nationwide, the CDC data shows that the estimated health
care costs for smoking-attributable diseases are $50 billion. These costs
have been increasing at a precipitous rate, more than doubling in the period
from 1987 to 1993. The present value of Montana's Medicaid expenses
attributable
to smoking for the period 1992 to 1994 by itself exceeds $15 million.
This figure does not include other damages suffered by the state, such
as increased health care insurance premiums.
Q. Fraudulent Concealment. Fraudulent Concealment
301. Plaintiff was without knowledge of defendants' combination
or conspiracy, or of any facts from which it might reasonably be concluded
that defendants were illegally conspiring, or which would have led to the
discovery thereof, until early 1994. Plaintiff could not have discovered
such facts or the alleged violations at an earlier time because defendants
fraudulently concealed their course of conduct.
302. Plaintiff is not aware of the methods used by defendants
to conceal their activities, but believes that the methods used by defendants
in furtherance of their combination and conspiracy were by nature
self-concealing
and not of a type which could have reasonably been apparent to plaintiff.
303. For example, in 1985 a Brown & Williamson attorney
recommended that much of its medical research be declared
"deadwood"
and shipped to England. The attorney stated that, "I have marked with
an X documents which I suggested were deadwood in the behavioral and
biological
studies area. I said that the B series are Janus series studies and should
also be considered deadwood." The attorney further suggested that
the research, development, and engineering department also "should
undertake to remove the deadwood from its files."
304. Brown & Williamson attempted to control other
documents such that it could later claim an attorney-client privilege or
work product protection for documents which its attorneys thought might
later cause difficulties in product liability actions. Such documents included
scientific reports which the company sought to protect from discovery:
"[Scientific] material should come to you [corporate counsel] under
a policy statement between you and Southampton [BAT] which describes the
purpose of developing the documents for B & W and sending them to you
as use for defense of potential litigation. It is possible that a system
can be devised which would exempt the engineering reports because it might
be difficult to maintain a privilege for covering such reports under the
potential litigation theory. [C]ontinued Law Department control is essential
for the best argument for privilege. At the same time, control should be
exercised with flexibility to allow access of the R & D staff to the
documents."
305. The Brown & Williamson assertions of privilege
are false and in bad faith. Other defendants have used similar tactics
to conceal the activities of the conspiracy. The joint actions of the conspiracy
through the CTR and Tobacco Institute have been similarly shielded from
scrutiny. Part of the document review undertaken by Brown & Williamson
was an effort to conceal documents showing the true nature of the associations:
"[In conducting document review] pay special attention to documents
suggesting that TI [Tobacco Institute] was used as a vehicle for the industry's
alleged conspiracy to promote cigarettes through the _open controversy_
PR program."
306. The CTR had a number of categories of research projects.
Of particular significance is the category "Special Projects."
Special Projects were reviewed and selected for funding by the general
counsel of the member companies. It may be reasonably inferred that lawyers
controlled this research so as to protect it from discovery and also to
further the ends of the conspiracy.
307. Plaintiff's claim of CTR manipulation through the
siphoning of relevant projects is further supported by the notes of the
September 10, 1981 Committee of General Counsel, transmitted via a September
18, 1981 letter from Webster & Sheffield, which states:
Stevens: "I need to know what the historical reasons
were for the difference between the criteria for lawyers special projects
and CTR special projects."
Jacob: "When we started the CTR Special Projects,
the idea was that the scientific director of CTR would review a project.
If he liked it, it was a CTR special project. If he did not like it, then
it became a lawyers special project."
Stevens: "He took offense re scientific embarrassment
to us, but not to CTR."
Jacob: "With Spielberger, we were afraid of discovery
for FTC and Aviado, we wanted to protect it under the lawyers. We did not
want it out in the open."
These minutes explicitly acknowledge that the supposedly
"independent" scientific director of CTR channeled research into
"Special Projects" for defendants litigation efforts. But even
more disturbing is defendants announced practice of using the "Special
Projects" division in order to shield damaging research results from
the public and the FTC. A document captioned "Notes from the
September 10, 1981 Meeting of Company Counsel and Ad Hoc Committee
Members"
is even more explicit. Page one of the "Notes" states as follows:
[S]keptical scientists. . . . The staff at CTR also needed
to be more tobacco oriented with a skeptical view.
This document pertains not only to the Special Projects
division but also to defendants intentional manipulation of the CTR as
a whole.
308. Defendants conspiracy is ongoing and continues to
this day. The defendants continue to deny that (1) nicotine is addictive;
(2) smoking causes cancer and other health problems; (3) that they are
illegally targeting minors; and (4) that they manipulate the level of nicotine
in tobacco products to increase addiction.
VII. CLAIMS FOR RELIEF
COUNT 1
UNLAWFUL MARKETING AND TARGETING MINORS
309. The State of Montana repeats and realleges paragraphs
1-308 as if set forth fully above.
310. The Montana State Legislature has declared that it
is the public policy of this State to prohibit minors access to tobacco
products. For example, pursuant to Mont. Code Ann. § 16-11-305, it
is unlawful to provide tobacco products to minors. Further, pursuant to
Mont. Code Ann. § 45-5-637, it is unlawful for a person under the
age of 18 to possess or consume tobacco products.
311. Defendants have acted, used, or employed deception,
deceptive acts and practices, fraud, false pretense, false promises,
misrepresentation,
or concealment, suppression or omission of a material fact with intent
that others rely upon such misrepresentation, concealment, suppression
or omission, in connection with the sale of tobacco products in an effort
to cause tobacco products to be provided to minors.
312. More specifically, and as set forth above, defendants
have caused their products to be sold to minors, in part, by (1) concealing
that their marketing is designed to encourage minors to smoke in violation
of State law; (2) concealing that their products are addictive and harmful
and suppressing information on these subjects while at the same time portraying
tobacco use as glamorous and in a fashion that is designed to minimize
the risks associated with tobacco use, (3) designing their marketing campaigns
with the intent that minors rely on the tobacco companies' advertisements,
and (4) engaging in conduct with the purpose of causing minors to smoke
in violation of state law. Defendants' conduct is made even more deceptive
by their public proclamations that they are against minors smoking while
secretly they have launched a course of conduct specifically designed to
encourage minors to smoke.
313. Tobacco sales to minors have increased in Montana
as a direct, foreseeable and intended result of the defendants' practices.
314. Defendants acted with the intent that others rely
upon the concealment, suppression and omissions of information set forth
above.
315. The targeting of minors as described in the Complaint
violates the expressed public policy of the State of Montana and, as such,
is a deceptive practice in violation of Mont. Code Ann. § 30-14-103.
316. Defendants knew or should have known that their conduct
in targeting minors is an unlawful and deceptive act.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged in this Count.
B. That the Court adjudge and decree that such conduct
is unlawful and in violation of Mont. Code Ann. § 30-14-103.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate, and publish all research previously conducted directly or
indirectly by themselves and their respective agents, affiliates, servants,
officers, directors, employees, and all persons acting in concert with
them, that relates to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
public education campaign relating to the issue of smoking and health,
to be administered and controlled by an independent third party.
F. That the Court order the defendants to take reasonable
and necessary steps to prevent the distribution and sale of cigarettes
to minors under the age of eighteen.
G. That the Court order defendants to fund clinical smoking
cessation programs in the State of Montana.
H. That the Court order defendants to disgorge all unjust
profits from tobacco sales to minors, and from all other tobacco sales
in the State of Montana which defendants should not be allowed to retain.
I. That, pursuant to Mont. Code Ann. § 30-14-142(2),
the Court assess civil penalties of $500 from each defendant for each violation
of Mont. Code Ann. § 30-14-103 complained of herein.
J. That the Court, pursuant to Mont. Code Ann. §
30-14-131, enter an order restoring to the State and to the citizens of
this State, all monies acquired by means of defendants' unlawful practices.
K. That the Court award the State its attorney fees and
costs.
L. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 2
UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION ACT
317. The State of Montana repeats and realleges paragraphs
1-308 as if set forth fully above.
318. In the regular course of business, defendants misrepresent
and/or omit material facts, including but not limited to:
a. That the defendants would lead an effort to discover
and disclose to the public the truth about the health effects of tobacco
products use;
b. That the use of tobacco products is not harmful and
has not been proven to cause and exacerbate diseases;
c. That nicotine contained in tobacco products is not
addictive;
d. That the defendants do not exploit or manipulate the
nicotine in tobacco products; and
e. That the defendants do not target, direct or seek to
focus their tobacco products marketing efforts on children and adolescents
and, in fact, actively discourage sale of those products to children and
adolescents.
319. The conduct described above and in this Complaint
constitutes unfair and deceptive acts or practices in violation of Mont.
Code Ann. § 30-14-103 in that:
a. The defendants have not been truthful to the public
in disclosing the information developed by or otherwise known to them
concerning
the health hazards of tobacco product use, including the addictive nature
of nicotine. They have systematically suppressed and concealed material
information developed by or otherwise known to them concerning the adverse
health effects of tobacco product use, including the addictive nature of
nicotine, and have engaged in a misinformation and disinformation campaign
to conceal the truth. The defendants have further systematically sought
falsely to discredit or cast doubt upon scientific studies and reports
which concluded that use of tobacco products caused adverse health effects,
including the addictive nature of nicotine;
b. Tobacco products are harmful when used for their intended
purpose. Tobacco product use causes a large variety of diseases, including
debilitating diseases and diseases that result in death. In furtherance
of their deceptive representations about the health effects of tobacco
product use, the defendants have suppressed the development and commercial
production of safer tobacco products;
c. The nicotine contained in tobacco products is addictive;
d. The tobacco companies rely upon the addictive nature
of nicotine in designing, marketing and selling tobacco products and manipulate
nicotine levels, availability and delivery in order to achieve their design,
marketing and sales strategies; and
e. The defendants market, distribute and sell tobacco
products in a manner that targets children and adolescents and intentionally
attracts them to begin or continue to use tobacco products.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is unlawful and in violation of Mont. Code Ann. § 30-14-103.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees and those in active concert or
participation with them from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate and publish all research previously conducted directly or indirectly
by themselves and their respective agents, affiliates, servants, officers,
directors, employees and all persons acting in concert with them that relates
to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
publiceducation campaign relating to the issue of smoking and health,
administered
and controlled by an independent third party.
F. That, pursuant to Mont. Code Ann. § 30-14-142(2),
the Court assess civil penalties of $500 from each defendant for each violation
of Mont. Code Ann. § 30-14-103 complained of herein.
G. That the Court, pursuant to Mont. Code Ann. §
30-14-131, enter an order restoring to the State and to the citizens of
this State, all monies acquired by means of defendants' unlawful practices.
H. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
I. That the Court award the State its attorney fees and
costs.
COUNT 3
UNLAWFUL AGREEMENT TO RESTRAIN TRADE
320. The State of Montana repeats and realleges paragraphs
1-308 as if set forth fully above.
321. As described above, beginning at least as early as
1953 and continuing until the present date, the defendants agreed and conspired
to eliminate, suppress and prevent competition in the market for
"safer"
tobacco products and in the distribution and sale of "safer"
tobacco products.
322. Pursuant to such agreement and conspiracy, the defendants
engaged in the following underlying activity, all as set forth in considerably
more detail above:
a. They restrained, suppressed and prevented competition
in the development and/or sale of "safe" tobacco products.
b. They restrained and suppressed the dissemination of
truthful information on the health consequences of smoking in Montana,
including information as to the addictive properties of nicotine.
c. They knowingly disseminated false information in Montana
about the health consequences of smoking and about their commitment to
make public scientific information regarding such consequences.
d. They restrained, controlled, limited and suppressed
research in, and the development, manufacture and marketing of, a
"safer"
cigarette and other tobacco products that would have resulted in reduced
harmful health costs for the State of Montana.
e. In general, they declined to compete in Montana in
any manner relating to the health claims of cigarettes.
f. Apart from maintaining the demand for their tobacco
products, the defendants knew that their conduct would cause smoking-related
diseases in Montana and would cause the State of Montana to incur substantial
health care costs in treating such diseases.
323. As part of the agreement, combination and conspiracy,
defendants, among other things, agreed to:
a. Restrain and suppress research on the health effects
of tobacco product use and the addictive nature of nicotine;
b. Restrain and suppress the dissemination of information
on the harmful effects of tobacco product use and the addictive nature
of nicotine;
c. Discredit and create doubt concerning the research
of others relating to the health effects of tobacco products and the addictive
nature of nicotine; and
d. Restrain the research, development, marketing and sale
of product innovations, including safer cigarettes, relating to the health
effects of tobacco product use.
324. The aforesaid agreement, combination or conspiracy
consisted of an agreement, understanding and concert of action among
defendants,
the substantial terms of which were:
a. Withholding of information within the possession and/or
knowledge of the defendants about harmful health effects of tobacco product
use and the addictive nature of nicotine;
b. Dissemination of the false information promoting tobacco
products as harmless and falsely discrediting reports by others to the
contrary;
c. Suppression of sponsorship of independent research
on the issues of tobacco product use and health;
d. Destruction or concealment of documents and information
relating to the health effects of tobacco product use and the addictive
nature of nicotine;
e. Intimidation of persons with information about the
health effects of tobacco product use and the addictive nature of nicotine
in order to prevent, hinder and limit the disclosure of such information;
f. Termination of research and development programs into
product innovations related to the health risks associated with tobacco
product use; and
g. Suppression of sales and marketing of product innovations
related to the health risks associated with tobacco product use.
325. In furtherance of their agreement, combination or
conspiracy, defendants did, without limitation, the following acts:
a. The defendant tobacco companies created the Tobacco
Industry Research Committee (later known as the Council for Tobacco Research)
and the Tobacco Institute, charged with the tasks of disseminating false
and misleading information regarding the health risks associated with the
use of tobacco products;
b. The defendants agreed to suppress independent research
regarding the health risks of tobacco product use and the addictive nature
of nicotine;
c. The defendant tobacco companies destroyed and concealed
research and information revealing the health risks of tobacco product
use and the addictive nature of nicotine or evidence thereof;
d. The defendants jointly sponsored deceptive mass media
articles and advertisements intended to deceive the public and public entities
about the health risks of tobacco product use and the addictive nature
of nicotine;
e. The defendant tobacco companies made false representations
concerning their commitment to sponsor and make public "objective"
scientific information regarding the relationship between health and tobacco
product use; and
f. The defendant tobacco companies agreed to halt, limit,
stifle, and arrest research, development, marketing and sales of product
innovations related to the health risks associated with tobacco product
use.
326. As a result of the foregoing, the public has been
misinformed and misled concerning the nature and health consequences of
use of tobacco products and has been deprived of the availability of safer
tobacco products, all of which has restrained competition and has had an
effect on the volume of tobacco products purchased by the public and the
prices charged by the defendants and has affected the allocation of resources
in the economy within the State of Montana.
327. In fact, as a direct result of the defendants' conduct,
the State of Montana and its citizens incurred substantial health care
costs arising from smoking-related diseases and injuries. The defendants'
conduct is thus inextricably intertwined with the State's increased health
care costs.
328. The defendants' conduct has had a direct and foreseeable
effect on the State's health care costs and those of the citizens of this
State. The defendants continue to reap enormous profits by virtue of their
wrongful conduct at the expense of the State and have effectively shifted
the health care costs of smoking-related diseases to third parties, including
the State of Montana.
329. The defendants' conduct constitutes an unreasonable
restraint of trade that has lessened and continues to lessen full and free
competition. The defendants have thus violated Mont. Code Ann. §
30-14-205,
which violations are continuing and likely to continue unless restrained.
330. By virtue of such violation, the State of Montana,
by the Attorney General, is authorized to bring suit and seek appropriate
equitable remedies under Mont. Code Ann. § 30-14-222.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is unlawful and in violation of Mont. Code Ann. §§ 30-14-205.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect, pursuant to Mont. Code
Ann. § 30-14-222(1).
D. That the Court order defendants to publicly disclose,
disseminate and publish all research previously conducted directly or indirectly
by themselves and their respective agents, affiliates, servants, officers,
directors, employees and all persons acting in concert with them that relates
to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
public education campaign relating to the issue of smoking and health,
administered and controlled by an independent third party.
F. That the Court order defendants to fund clinical smoking-cessation
programs in Montana.
G. That the Court award the State its damages incurred
as a result of the defendants wrongful conduct, trebled as provided in
Mont. Code Ann. § 30-14-222(2).
H. That the Court award the State its attorney fees and
costs.
I. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 4
INTENTIONAL/NEGLIGENT BREACH OF SPECIAL AND GENERAL DUTY
331. The State of Montana repeats and realleges paragraphs
1-308 as if set forth fully above.
332. Beginning as early as 1954 with the publication of
"A Frank Statement to Cigarette Smokers" and continuing to the
present date, the defendants assumed a special and general duty to protect
the public health and a duty to those who advance the public health, including
the State of Montana and its political subdivisions.
333. Defendants publicly represented that they were undertaking
to act on behalf of the public's health, to aid and assist the research
effort into all phases of tobacco use and health, to cooperate closely
with those who safeguard the public health, to continue research and all
possible efforts until all the facts were known, and to provide complete
and authenticated information about cigarette smoking and health (¶¶
79-91).
334. Defendants ostensibly undertook performance of their
assumed duty, and awarded highly-publicized grants to supposedly
"independent
researchers." Throughout the years and continuing to the present date,
defendants' spokespersons have repeatedly announced that research was
underway,
but the results are always "inconclusive" and the health questions
"unresolved." These actions are part of defendants' elaborate
disinformation campaign designed to obscure the overwhelming and conclusive
evidence that smoking causes lung cancer, heart disease and a host of other
health problems.
335. Defendants did not make these representations gratuitously.
Rather, they were made to combat emerging concerns about smoking, to protect
the Tobacco Cartels enormous profits and to avoid government regulation.
The "Frank Statement" and subsequent statements proclaiming the
industries' "responsibility" were intended to affect the State
of Montana: Defendants directly pledged to cooperate with "those
responsible
for public health." (¶ 79.)
336. Defendants further pledged to support research by
independent scientists and to share results (¶ 79).
337. Defendants also stated that public health was their
preeminent concern, of greater concern than their own profits (¶ 79).
338. Each of these undertakings was designed, among other
purposes, to cause Montana governmental officials, among others, to believe
that immediate action on their part to curb tobacco use was not needed.
As the evidence mounted as to the hazards of tobacco use, governmental
entities considered and/or began to legislate various controls on tobacco
use smoking and advertising. Defendants resisted these efforts and the
"Frank Statement" and its progeny were designed to lull the State
of Montana, among others, into avoiding the implementation and/or passage
of such regulations.
339. In making the commitments set forth above in paragraphs
79-91, defendants assumed duties to both the State and to the public. As
to the State, defendants specifically pledged to "cooperate closely
with those whose task it is to safeguard the public health and to report
fully and truthfully on tobacco and health." As to the public, defendants
specifically order a "special responsibility to the public and accept[ed]
an interest in people's health as paramount to every other consideration
in [their] business." In accepting these responsibilities, defendants
undertook three specific duties. First, by committing themselves to making
health their preeminent responsibility, the tobacco companies agreed that
they would not sell or continue to sell products which they knew to cause
death and disease when used as intended. The violation of this duty is
the direct cause of the costs incurred by the State in treating the illness
that resulted from defendants' sales of tobacco products.
340. Second, defendants pledged to cooperate with public
health and they did the opposite, thereby directly allowing continued and
unfettered tobacco sales, which in turn directly injured the State.
341. Third, having undertaken to tell the truth about
tobacco use and health, they were legally bound to speak the whole truth.
Defendants breached this duty and such breach also damaged the State of
Montana.
342. Defendants reasonably could have foreseen the risk
of harm to the State of Montana. Physical injury to tobacco users was not
only foreseeable, it was contemplated as the inevitable consequence of
defendants' undertakings. Defendants knew or should have known of the State's
obligation to care for indigent people or Medicaid recipients, who have
suffered the ill effects of smoking, physical injury due to tobacco use.
343. The defendants' breach of duty not only served to
forestall increased government regulation but contributed to the State's
increased health care costs because the breach caused smokers in the State
of Montana to take up or continue smoking. Had the defendants disclosed
what they knew, had they not suppressed information about addiction and
nicotine manipulation, had they not targeted minors, and had they, in fact,
reported the truth, the amount of tobacco use in the State of Montana would
have been far less, which in turn would have reduced the State's Medicaid
costs attributable to smoking related diseases. The very purpose of defendants'
assumption of a duty was to promote the use of tobacco products and thus
directly increase the risk of harm to the State of Montana.
344. Defendant's breach of duty also influenced the State's
course of conduct. Had defendants not breached their assumed and general
duty, they would have fully disclosed (1) that the companies' own studies
showed links between tobacco use and adverse health effects, (2) that nicotine
is highly addictive, (3) that the tobacco companies manipulate nicotine
levels in tobacco products in order to increase and maintain addiction,
and (4) that the tobacco companies were trying to induce minors to use
tobacco to increase their long-term profits by replacing tobacco users
who die. For years these facts have been concealed and many of the facts
still remain concealed. Had those facts been disclosed earlier, the State
would have taken action to restrain the companies' activities. Once the
State learned, through partial disclosures, of the true nature of defendants'
activities, this action was commenced.
345. As a direct, foreseeable, intended and proximate
cause of defendants' breach, plaintiff suffered and will continue to suffer
substantial injuries and damages.
346. The conduct described constitutes an intentional
and/or negligent breach of a voluntarily assumed special and/or general
duty for which defendants are liable.
347. Defendants' unlawful conduct will continue unless
the relief prayed for in this Complaint is granted.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is an unlawful breach of assumed duty.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate, and publish all research previously conducted directly or
indirectly by themselves and their respective agents, affiliates, servants,
officers, directors, employees, and all persons acting in concert with
them, that relates to the issue of smoking and health.
E. That the Court award damages to the State resulting
from the actions described above.
F. That the Court award the State its attorney fees and
costs.
G. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 5
PERFORMANCE OF ANOTHER'S DUTY TO THE PUBLIC
348. The State of Montana realleges and incorporates paragraphs
1-308 as if set forth fully above.
349. As a direct and proximate result of their wrongful
conduct alleged above, defendants have unreasonably injured and endangered
the comfort, repose, health and safety of the residents of the State of
Montana by selling tobacco products which are dangerous to human life and
health and cause injury, disease and sickness. Defendants' acts have caused
damage to the public, the public safety and the general welfare of citizens
of Montana.
350. Defendants' conduct has created a health cost which
has required the State of Montana to assume the financial burden of smoking
related medical costs, a burden which should have been borne by the tobacco
companies. The State has thus borne the defendants duty to the public,
which arises in part from defendants' assumed and general duty, and their
duty to not sell products through the use of the unlawful acts outlined
in Counts 1-6.
351. In assuming this burden belonging to defendants,
the State was responding to a clear need to relieve the distress of those
who were inflicted with smoking related illnesses and to prevent their
condition from worsening. Since the defendants have eschewed any intention
of accepting responsibility for their creation of this crisis, the State's
actions cannot be termed "officious." Nor did the State intend
to confer a gratuitous benefit upon defendants. Rather, the State's expenditures
were aimed at averting a public health crisis.
352. As a result of defendants' conduct, the State of
Montana has suffered and will continue to suffer substantial damages for
which it is entitled to both monetary and injunctive relief.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is unlawful and required defendants to perform the State's duty to the
public.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate, and publish all research previously conducted directly or
indirectly by themselves and their respective agents, affiliates, servants,
officers, directors, employees, and all persons acting in concert with
them, that relates to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
public education campaign relating to the issue of smoking and health,
administered and controlled by an independent third party.
F. That the Court order defendants to fund clinical smoking
cessation programs in the State of Montana.
G. That the Court order defendants to pay restitution
which would restore plaintiff to the financial position that it would be
in, absent the defendants' conduct.
H. That the Court award damages to the State resulting
from the actions described above.
I. That the Court award the State its attorney fees and
costs.
J. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 6
PUBLIC NUISANCE
353. The State of Montana realleges and incorporates paragraphs
1-308 as if set forth fully above.
354. As a direct and proximate result of their wrongful
conduct as alleged above, defendants have unreasonably injured and
endangered
the comfort, repose, health and safety of the residents of the State of
Montana by selling their tobacco products through unlawful conduct as outlined
in Counts 1-7 above. Defendants' acts have caused damage to the public,
the public safety and the general welfare of the residents of the State
of Montana, and constitute a public nuisance.
355. Defendants' conduct has wrongfully caused the State
of Montana to expend millions of dollars in support of the public health
and welfare.
356. As a result of defendants' conduct, the State of
Montana has suffered and will continue to suffer substantial injuries and
damages for which it is entitled to relief.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is an unlawful public nuisance.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate, and publish all research previously conducted directly or
indirectly by themselves and their respective agents, affiliates, servants,
officers, directors, employees, and all persons acting in concert with
them, that relates to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
public education campaign relating to the issue of smoking and health,
administered and controlled by an independent third party.
F. That the Court order defendants to fund clinical smoking
cessation programs in the State of Montana.
G. That the Court order defendants to pay restitution
which would restore plaintiff to the financial position that it would be
in, absent the defendants' conduct.
H. That the Court award damages to the State resulting
from the actions described above.
I. That the Court award the State its attorney fees and
costs.
J. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 7
CONSPIRACY
357. The State of Montana realleges and incorporates paragraphs
1-308 as if set forth fully above.
358. Defendants conspired to violate the statutes set
forth below in Counts 1-3 and the common law as set forth in Counts 4-8
and agreed as part of the conspiracy to:
a. Restrain and suppress research and information concerning
the adverse effects of tobacco product use and the addictive effect of
nicotine;
b. Create doubt about the scientific studies linking tobacco
product use to adverse health consequences and/or the addictive nature
of nicotine;
c. Affirmatively misrepresent the addictive effects of
nicotine and the harmful effects of tobacco product use;
d. Conceal their manipulation of the level of nicotine
in tobacco products;
e. Restrain the development, production, and marketing
of a safer cigarette;
f. Avoid competition based on health claims and safer
cigarettes;
g. Pass on health care costs associated with tobacco products
to others;
h. Prevent the assumption of those costs by the defendants;
i. Fail to discharge their duty of due care and their
duty to warn; and
j. Avoid being responsible for a defective and unreasonably
dangerous product.
359. Defendants knowingly and voluntarily participated
in a common scheme to commit these unlawful acts.
360. Defendants knowingly, willingly and wantonly agreed
and conspired among themselves for the purposes of deceiving government
regulators and the public about the carcinogenic, pathologic and addictive
properties of cigarettes and accomplishing the unlawful ends complained
of and/or for the purposes of unlawfully accomplishing the lawful ends
complained of, namely, the ability to legally continue to sell and profit
from cigarettes, in spite of the significant carcinogenic, pathologic and
addictive properties of cigarettes.
361. All defendants joined in the conspiracy at least
by 1954 through the formation of the TIRC or, in the case of defendant
Liggett, by its actual and/or tacit agreement with the other defendants
to withhold from government regulators and the public their knowledge about
the true carcinogenic, pathologic and addictive properties of their cigarettes.
362. Defendants' overt acts in furtherance of these purposes
include, without limitation:
a. forming and controlling the TIRC and later the CTR;
b. engaging in deceptive acts and practices in the course
of business in violation of the Montana law;
c. restraining and suppressing research and information
concerning the adverse effects of tobacco product use and the addictive
effect of nicotine;
d. creating doubt about the scientific studies linking
tobacco product use to adverse health consequences and/or the addictive
nature of nicotine;
e. affirmatively misrepresenting the addictive effects
of nicotine and the harmful effects of tobacco product use;
f. concealing their manipulation of the level of nicotine
in tobacco products;
g. fraudulently misrepresenting and omitting material
information regarding the human health dangers of smoking;
h. designing, testing, manufacturing, marketing, supplying
and selling defective cigarettes;
i. targeting minors for the marketing, supply, sale and
use of their cigarettes; and
j. suppressing the design, test, manufacture, marketing
and/or sale of non- or less-addictive, carcinogenic and pathologic cigarettes.
363. The effect of this conspiracy was to violate Montana
law as set forth above. The conspiracy is ongoing and will not stop unless
injunctive relief is granted.
364. The defendant coconspirators performed tortious acts
in furtherance of the conspiracy, thereby proximately causing injury to
the State of Montana.
365. As a direct, actual and proximate result of defendants'
conduct, the State of Montana has suffered and will continue to suffer
substantial injuries and damages for which the State of Montana is entitled
to relief.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court adjudge and decree that such conduct
is an unlawful conspiracy.
C. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
D. That the Court order defendants to publicly disclose,
disseminate and publish all research previously conducted directly or indirectly
by themselves and their respective agents, affiliates, servants, officers,
directors, employees and all persons acting in concert with them that relates
to the issue of smoking and health.
E. That the Court order defendants to fund a corrective
public-education campaign relating to the issue of smoking and health,
administered and controlled by an independent third party.
F. That the Court order defendants to fund clinical smoking
cessation programs in Montana.
G. That the Court order defendants to pay restitution
that would restore plaintiff to the financial position that it would be
in, absent the defendants' conduct.
H. That the Court award damages to the State of Montana
resulting from the actions described above.
I. That the Court award the State its attorney fees and
costs.
J. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
COUNT 8
UNJUST ENRICHMENT/RESTITUTION
366. In the alternative to the above claims, if the Court
finds that the State has no remedy at law, the State alleges as follows:
367. The State of Montana realleges and incorporates paragraphs
1-364 as if set forth fully above.
368. Use of defendants' cigarettes as intended causes
disease.
369. Many of the State of Montana's residents who are
afflicted with tobacco-related diseases are poor, uneducated, and unable
to provide for their own medical care. These residents rely upon the State
of Montana to provide their medical care, and the State is legally obligated
to provide and pay for such medical services, pursuant to Mont. Code Ann.
§ 53-6-101 et seq. and the provisions of 42 U.S.C. § 1396,
et seq. The provision of and payment for such medical care results
in an extreme burden on the taxpayers and the financial resources of this
State. The State of Montana has expended millions of dollars in caring
for residents who have and are suffering from lung cancer, cardiovascular
disease, emphysema, chronic obstructive pulmonary disease and a variety
of other cancers and diseases that were and are caused by defendants'
cigarettes.
The State of Montana has also expended millions in providing health care
for its employees the cost of which has been increased as a result of defendants'
conduct.
370. Defendants have knowledge of the benefit conferred
on them by the State's payment of health care costs for diseases resulting
from the use of tobacco products sold in the State of Montana by the defendants,
which payments were foreseeable, given the defendants' knowledge of the
health risks of their cigarettes.
371. Defendants had a duty to the State and to the residents
of the state: (1) to disclose all material facts about their products,
(2) to refrain from any agreement that would restrain the development of
a safer product, and (3) to refrain from targeting minors in order to induce
their use of tobacco products in violation of State law. As set forth above,
defendants intentionally breached these duties. As a result of this breach
of duty and the suppression of evidence, defendants have successfully avoided
the medical costs associated with use of their products and have passed
those costs off to the State of Montana.
372. Defendants have knowledge of the benefit conferred
on them by the State's payment of health care costs for diseases resulting
from use of tobacco products sold in the State of Montana, which payments
were foreseeable, given the defendants' knowledge of the health risks of
their tobacco products.
373. While the State of Montana pays the health care costs
that result from the use of tobacco products as intended, defendants continue
to reap billions of dollars in profits from the sale of their cigarettes
and other tobacco products.
374. Defendants have avoided regulations and the costs
of disease, injuries and deaths resulting from the normal use of their
products. Defendants have been and are able legally to promote the sale
of cigarettes to the residents of the State of Montana by continuing to
misinform the federal and state authorities about the true carcinogenic,
pathologic and addictive qualities of their cigarettes and other tobacco
products.
375. In direct contradiction to and in spite of the State
of Montana's specific statutory prohibitions, defendants have spent millions
of dollars on programs designed to encourage minors to purchase and use
their cigarettes and other tobacco products.
376. In equity and fairness, the defendants and their
agents, aiders and abettors and coconspirators, not the State of Montana,
should bear the costs of tobacco-related diseases. By avoiding their own
duties to stand financially responsible for the harm done by their cigarettes,
defendants wrongfully have forced the State of Montana to perform such
duties and to pay the health care costs of tobacco-related disease. As
a result, defendants have been unjustly enriched to the extent that taxpayers
of the State of Montana have had to pay these costs, which rightfully should
be borne by defendants.
377. As a result of defendants' conduct, the State of
Montana has suffered and will continue to suffer substantial injuries and
damages for which it is entitled to relief.
WHEREFORE, the State of Montana prays as follows:
A. That the Court adjudge and decree that defendants have
engaged in the conduct alleged herein.
B. That the Court enjoin and restrain defendants and their
officers, agents, servants and employees, and those in active concert or
participation with them, from continuing or engaging in such conduct or
other conduct having similar purpose or effect.
C. That the Court order defendants to publicly disclose,
disseminate, and publish all research previously conducted directly or
indirectly by themselves and their respective agents, affiliates, servants,
officers, directors, employees, and all persons acting in concert with
them, that relates to the issue of smoking and health.
D. That the Court order defendants to fund a corrective
public education campaign relating to the issue of smoking and health,
administered and controlled by an independent third party.
E. That the Court order defendants to fund clinical smoking
cessation programs in the State of Montana.
F. That the Court order defendants to pay restitution
which would restore plaintiff to the financial position that it would be
in, absent the defendants' conduct.
G. That the Court order defendants to disgorge all unjust
profits from tobacco sales to minors, and from all other tobacco sales
in the State of Montana which defendants should not be allowed to retain.
H. That the Court award the State its attorney fees and
costs.
I. That the Court order such other and further relief
as the Court deems just, necessary and appropriate.
JURY DEMAND
The plaintiff requests jury trial as to all issues so
triable.
Dated this _____ day of May.
JOSEPH P. MAZUREK
Attorney General of Montana
CHRIS D. TWEETEN
Chief Deputy Attorney General
Justice Building
215 North Sanders
P.O. Box 201401
Helena, MT 56920-1402
HAGENS & BERMAN
Steve W. Berman
James P. Solimano
George W. Sampson
Sean R. Matt
Jeniphr A.E. Breckenridge
Andrew M. Volk
1301 Fifth Avenue, Suite 2929
Seattle, WA 98101
(206) 623-7292
NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE,
P.A.
Ronald L. Motley
P.O. Box 1137
Charleston, SC 29402
SCRUGGS, MILLETTE, LAWSON, BOZEMAN & DENT
Richards F. Scurggs
734 Delmas Avenue
Post Office Drawer 1425
Pascagoula, MS 39568
NORTON & FRICKEY AND ASSOCIATES
Robert B. Carey
2301 East Pikes Peak
Colorado Springs, CO 80909
Special Assistant Montana Attorneys General
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ACTION ON SMOKING AND HEALTH (ASH)
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