"The evasions, lies, and transfer of documents overseas by the tobacco industry to prevent any Government agency or cigarette-injured patient from finding them has distorted U.S. Government policy for 30 years.

...

"Had the administration and the Congress known [in 1965] what the tobacco industry knew, the warnings in the public health program of the U.S. Government would have been much stronger.

...

"Had we known what the tobacco companies knew and had we been privy to their research on the addictive nature of nicotine and their ability to manipulate the amount of nicotine in cigarettes, the 1979 Surgeon General's report would have found cigarettes addictive and we would have moved to regulate them. Unfortunately, the President of the United States, the Secretary of Health, Education, and Welfare, and the Surgeon General of the United States were all victims of the concealment and disinformation campaign of the tobacco companies."

From testimony of Joseph A. Califano, Jr., former U.S. Secretary of Health, Education, and Welfare, before the House Energy and Commerce Committee's Subcommittee on Health, May 17, 1994

Should the U.S. Department of Justice sue the U.S. tobacco industry to recoup the costs incurred by the federal government for the medical treatment of individuals made ill by the use of tobacco products? Members of Congress, senior White House officials and leaders in the public health community have urged the U.S. Department of Justice to take such action for two primary reasons: 1) to recover tobacco-related health care costs borne by the government; and 2) to hold the tobacco industry accountable for decades of conspiratorial and fraudulent conduct that has cost the health and lives of millions of Americans.³ As discussed in the following pages, it is a well-settled legal principle that the United States can sue to recover monetary losses from those whose tortious acts caused such losses.

The need for such action has become more acute in the aftermath of the industry's successful campaign to defeat landmark federal tobacco control legislation last June⁴ and the tobacco industry's settlement with the state attorneys general in November 1998.⁵

The settlement of the state attorneys general came in response to the demise of the so-called McCain bill, which was defeated in part by a tobacco industry advertising campaign that had cost $40 million by the time the bill died⁶ and millions more in the subsequent months leading up to the November election. Its death was also presaged by the fact that, from 1987 to 1996, the tobacco industry "showered more than $30.4 million on Capitol Hill lawmakers and their national party committees,"⁷ and because tobacco interests made political contributions of more than $4 million in 1997 alone.⁸ It was also derailed because influential former lawmakers, including three former Senate Majority Leaders -- Republicans Robert Dole and Howard Baker, Jr., and Democrat George Mitchell - lobbied on behalf of the tobacco industry.⁹ As put succinctly by Charles Lewis, executive director of the non-profit Center for Public Integrity, "[d]espite the media spotlight on the industry since the seven tobacco executives stood before Congress in April 1994,¹⁰ despite the litigation, despite revelations about the industry's decades of lying to the American people, Congress's addiction to money continues."¹¹

What, specifically, can the Justice Department do? There are several legal approaches that it could take in a cost recovery lawsuit. In addition to asserting common law theories, action could be taken under one or more of the following federal statutes, each of which is discussed in this analysis: 

· The Federal Medical Care Recovery Act, 42 U.S.C. §2651-53

· The Sherman Act, 15 U.S.C. §1

· The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1962

In the event that the Justice Department decides to proceed, how much should it seek to recover? Several sources offer some guidance:

· According to an analysis published recently by leading health economists and funded by the U.S. Centers for Disease Control and Prevention, it cost $72.7 billion in 1993 to treat smokers for medical problems caused by cigarettes, a figure that dwarfs the recent settlement with the state attorneys general. The 1993 figure translated into approximately 11.8 percent of total United States medical expenditures that year.¹²

· In an analysis presented in testimony before the Senate Agriculture Committee, M.I.T. economist Jeffrey E. Harris, M.D., Ph.D. conservatively estimated that, over the next 25 years, the present discounted value of smoking-attributable Medicare expenditures would reach $192.3 billion. He noted that this estimate "did not include the past costs to the Medicare program that resulted from smoking-related illness," adding that "[t]he illness and injury caused by tobacco use result not only in increased spending on medical care, but also in disability and lost productivity. Higher rates of disability mean higher rates of eligibility for Medicaid, Medicare, and other federal entitlement programs, including the compensation program administered by the Veterans Benefits Administration." Moreover, past smoking-attributable costs, since the inception of the Medicaid program in the 1960s, would total hundreds of billions of dollars, according to Dr. Harris.¹³

· The Treasury Department estimated the total annual cost of treating tobacco-related illness at $60 billion, of which about $21 billion is borne by the federal government.¹⁴

· Leading Wall Street tobacco analysts predicted that a Medicare recovery action could total $500 billion over 25 years.¹⁵

In short, the fiscal harm experienced by the United States government, and by extension the taxpayer, is immense. Fortunately, the recent disclosure of tobacco industry documents, the testimony of tobacco industry whistleblowers and the historic tobacco investigation conducted by the Food and Drug Administration have greatly improved the government's understanding of the intentional malfeasance of the tobacco industry and its proximate role in creating and perpetuating such costs. In the light of such disclosures, it would be unfortunate if the government failed even to attempt a thoughtfully crafted recovery action.

As noted by Harvard Law School Professor Laurence H. Tribe, "If you wanted only to bring suits that are guaranteed to succeed, you wouldn't say this is a slam dunk. But ... at a minimum, this would certainly be a serious and perfectly responsible suit for the federal government to bring."¹⁶

II. The Legal Bases for Federal Legal Action Against the Tobacco Industry

A. Background 

Tobacco use, fueled by widespread addiction to nicotine, is the root cause of the 20th Century epidemic of lung cancer, emphysema and numerous other fatal illnesses. Until this century, lung cancer was so rare that when Dr. Alton Ochsner, a well-known researcher of the health effects of tobacco use, was in medical school in 1919, his entire class was summoned one day to observe an autopsy. The dead subject had been felled by lung cancer, such a rare disease that the chief surgeon believed that his students would never have an opportunity to observe another case. By the 1930s, Dr. Ochsner, then a practicing surgeon, began to witness a growing stream of lung cancer cases.¹⁷ The cause was cigarette smoking.

Since that time, and particularly since the chief executives of the nation's major tobacco companies published their infamous advertisement, "A Frank Statement to Cigarette Smokers," in 1954 in more than 400 newspapers across the United States, the tobacco industry's most important strategic decisions and actions have been conducted in a covert manner. Unbeknownst to the government or the public, a product that was represented by its manufacturers to be a benign luxury was deliberately manipulated to addict its users. Cigarette makers engaged in such conduct knowing that the product would consequently kill a large percentage of those who became addicted to it.¹⁸ Indeed, the industry's long-term pattern of fraud and conspiracy provides the basis for the broad, ongoing criminal investigation of the tobacco industry by the Fraud Section of the Justice Department's Criminal Division.¹⁹

B. Statutory Right of Action

1. The Federal Medical Care Recovery Act
a. Background

Perhaps the most obvious statutory vehicle is the Medical Care Recovery Act ("the Recovery Act"), 42 U.S.C. §2651. The Recovery Act empowers the United States to seek reimbursement of medical costs that have been incurred by federal government agencies. A close analysis of the Recovery Act strongly supports the argument that the federal government can seek recovery of medical costs attributable to the use of tobacco products. The government could likely avail itself of the provisions of the Recovery Act to seek to recover from the tobacco industry hundreds of billions of dollars spent caring for millions of consumers who were duped by the conduct of the tobacco companies into a physically debilitating addiction to tobacco."²¹

The Recovery Act was enacted in 1962 in response to the Supreme Court's decision in United States v. Standard Oil, 332 U.S. 301, 67 S.Ct. 1604 (1947), which found that the federal government did not have an independent cause of action at common law. The statute was enacted following a report by the Comptroller General that described the substantial funds expended by the federal government for medical care to individuals injured by the acts of others - funds that the government could not recover under the Standard Oil decision.

In Standard Oil, the Supreme Court denied a claim brought by the United States for recovery of the value of medical care furnished to a serviceman injured in an automobile accident by the negligence of a third party. The Court found that the government's claim was for "tortious interference by a third person with the relation between the Government and the soldier." Declaring that tortious interference was not a recognized tort (which was true in 1947, though it is a recognized tort today), the Court held that the federal government could not recover its money by creating a new tort for which the driver would be liable. Rather, Congress would first have to create the new liability as a matter of fiscal policy. The court also rejected the government's attempt to claim a subrogation right of action, finding that the claim was a claim "for an independent liability" that did not depend on the rights of the injured individual. Id., 332 U.S. at 304, n. 5. See United States v. Merrigan, 389 F.2d 21, 22-23 (3d Cir. 1968). At the same time, the Court was careful to clarify that it was not necessary for Congress to create statutory remedies involving tortious conduct that was recognized under the common law. The government already had the power to seek redress in such circumstances. United States v. Standard Oil, 332 U.S. at 316, n. 22.

Concerns have been raised, certain to be echoed by the tobacco industry, that the holding in Standard Oil continues to bar the federal government, half a century later, from bringing a direct recovery action against the tobacco industry. Such a strained reading of the law ignores the fact that the holding in Standard Oil no longer has application to the power of the United States to prosecute such an action. It also ignores a fundamental difference between the facts considered in Standard Oil and those involved here: While the tortious act alleged by the plaintiff in Standard Oil was caused by the negligence of a third party, the extraordinary fiscal injury suffered by the government in this instance was caused by the intentional, and possibly criminal, conduct of the U.S. tobacco industry.

Congress made clear with the enactment of the Medical Care Recovery Act, which it subsequently amended twice, that tortfeasors can be held liable for the medical costs incurred by the federal government due to the industry's malfeasance. The Recovery Act states in relevant part:

§2651. Recovery by United States

(a) Conditions; exceptions; persons liable; amount of recovery; subrogation; assignment

In any case in which the United States is authorized or required by law to furnish or pay for hospital, medical, surgical, or dental care and treatment (including prostheses and medical appliances) to a person who is injured or suffers a disease, after the effective date of this Act, under circumstances creating a tort liability upon some third person ... to pay damages therefor, the United States shall have a right to recover (independent of the rights of the injured or diseased person) from said third person, or that person's insurer, the reasonable value of the care and treatment so furnished ...

(d) Enforcement procedure; intervention; joinder of parties; State or Federal court proceedings

The United States may, to enforce a right ... (1) intervene or join in any action or proceeding brought by the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors, against the third person who is liable for the injury or disease ... or; (2) if such action or proceeding is not commenced within six months after the first day in which care and treatment is furnished or paid for by the United States in connection with the injury or disease involved, institute and prosecute legal proceedings against the third person who is liable for the injury or disease ... in a State or Federal court, either alone (in its own name or in the name of the injured person, his guardian, personal representative, estate, dependents, or survivors) or in conjunction with the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors.

The statute's explicit reference to the government's right to recover "independent of the rights of the injured or diseased person" was added by amendment in 1996. No court has had occasion to interpret its meaning since its adoption. There is, moreover, no meaningful legislative history, as the provision was added among various technical amendments to an appropriations measure passed by Congress that year.²² Therefore, under traditional rules of statutory interpretation, the plain meaning of the language speaks for itself. The correctness of this construction is underscored in the following discussion by the Third Circuit Court of Appeals concerning the process of statutory construction in a case that did not involve the Medical Care Recovery Act:

"In determining whether Congress has directly spoken to the issue, the court may consider not only the plain meaning of the statute, but also any pertinent legislative history." Doyle v. Shalala, 62 F.3d 740, 745 (5th Cir. 1995) (citing Chevron, 467 U.S. at 845, 104 S.Ct. at 2783). The Supreme Court has made clear that the judiciary retains its right "to say `what the law is,' that is, to interpret statutes." Mississippi Poultry, 31 F.3d at 299 (quoting Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2781 n. 9).

Accordingly, our first task is to determine whether the statute is ambiguous. If we determine that Congress has spoken to the issue, then our job is done; we will "give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. If, however, we find that Congress has not clearly spoken to the issue and the statute is ambiguous on its face, we then will look to legislative history to clarify the purpose. If legislative history is ambiguous, we will defer to the agency's interpretation if it is "based on a permissible construction of the statute." Id. At 843, 104 S.Ct. at 2782.

person," were judged to be ambiguous and without clear legislative history, a court could be expected to defer to the federal government's reasonable interpretation of the statute.

If the intent of Congress in enacting and amending the Recovery Act ultimately is perceived as ambiguous, the courts have the freedom either to take into account traditional common law remedies or to craft new remedies designed to satisfy the intent manifested by Congress, which is to make the government fiscally whole. See United States v. Haynes, 445 F.2d 907, 908 (5th Cir. 1971) ("Reduced to fundamentals, the basic purpose of the ... Recovery Act is to allow the federal government to recover from third party wrongdoers the value of medical care which is provided to injured persons.")

That said, Congress appears, in fact, to have made clear its desire to compensate the federal government when third parties have engaged in tortious behavior resulting in otherwise avoidable health care costs that must be borne by the government. Cf. Bush v. Lucas, 462 U.S. 367, 378-80, 103 S.Ct. 2404 (1987) (noting that Court's power to grant relief not expressly authorized by statute should be exercised in the light of relevant policy determination made by Congress). At the outset, Congress enacted the Recovery Act to ensure that the holding in Standard Oil could not be applied to block future government efforts to seek redress. Later, Congress amended the statute to give the government a direct claim not based on subrogation, which was retained merely as a remedial remedy of which the government could avail itself. Congress amended it yet again to ensure that the United States would not be impeded by state no-fault laws and other such obstacles to recovery. In response, as discussed more fully below, the cases have consistently interpreted §2651 liberally, ruling repeatedly in favor of the government's recovery. See, e.g., United States v. Theriaque, 674 F.Supp. 395, 400 (D. Mass. 1987); United States v. Merrigan, 389 F.2d 21, 23-24 (3d Cir. 1968); Holbrook v. Andersen Corp., 996 F.2d 1339, 1341 (1st Cir. 1993), United States v. Housing Authority of Bremerton, 415 F.2d 239, 241 (9th Cir. 1969); Commercial Union Ins. Co. v. United States, 999 F.2d 581, 587 (D.C. Cir. 1993); Hedgebeth v. Medford, 74 N.J. 360, 378 A.2d 226, 228 (1977); and Texas v. The American Tobacco Co., __F.Supp.2d__, No. 5:96CV91, slip-op. 5 (E.D.Tex. Sept. 8, 1997).

b. The Medical Care Recovery Act Does Not Limit the United States to a Subrogation Remedy

In addition, if a court determined that the government was entitled to pursue an action on an aggregate, or statistical, basis (see, infra, Section II(B)(1)(d)), the effect of such a ruling obviously would be nullified if the court also were to find that the tobacco industry was entitled to assert affirmative defenses.

The industry's predictable interpretation of the Recovery Act is misplaced. Congress did a poor technical job of amending the statute when it imbedded the language providing for the government's independent right in the same sentence that refers to the subrogation of the government to the individual's right against the tortfeasor. Nonetheless, neither the plain language of the Recovery Act nor the consistent interpretations of the courts limit the federal government to subrogation, and the case law makes clear that Congress intended by its amendment to give the government an independent right of recovery.

One oft-cited opinion supporting this position is that of United States v. Theriaque, 674 F.Supp. 395, 400 (D. Mass. 1987). There the court found that "it may not be doubted that the [Recovery Act] created in the government a federal substantive right to recover medical expenditures where a tort-feasor is found to have caused the injuries requiring the treatment" (citing earlier federal appeals court cases). The court denied the defendant's use of affirmative defenses, holing that the government's independent right of action entitled it to full recovery even where the injured individual would be limited by his comparative negligence. The court added that, "under Massachusetts law, one party's contributory negligence is not imputed to another if the noncontributorily negligent party's claim is independent." Id.

The holding in Theriaque has since been cited as authoritative by various federal appellate and district courts.²³ For example, in Holbrook v. Andersen Corp., a case decided by the First Circuit Court of Appeals, the court, quoting an earlier decision rendered by the Ninth Circuit Court of Appeals, found that "[a]ll courts which have considered the question have agreed that [the Medical Care Recovery Act] gives the United States an independent right of recovery against the tortfeasor." Holbrook v. Andersen Corp., 996 F.2d 1339, 1341 (1st Cir. 1993), quoting United States v. Housing Authority of Bremerton, 415 F.2d 239, 241 (9th Cir. 1969) (emphasis added); see also Commercial Union Ins. Co. v. United States, 999 F.2d 581, 587 (D.C. Cir. 1993) (government right to sue not limited by judgment or settlement obtained by tort victim, a Secret Service employee).

One such case is United States v. Merrigan, 389 F.2d 21, 23-24 (3d Cir. 1968), in which the court held, in a case involving a military veteran, that "Subsection (a) of the Medical Care Recovery Act unmistakably confers on the government what the congressional reports describe as an `independent right of recovery' from the tortfeasor of the reasonable value of the care and treatment it furnishes to the injured person."²⁴ The court continued:

What is involved here is the construction of the Act's remedial or procedural provisions. These are not to be construed strictly against the government, but rather in aid of the substantive right which the statute has created. Congress did not intend to limit the primary right of recovery in specifying the right of subrogation in aid of it ... The [Act] was amended to confer on the government an independent right of action and to free its right of subrogation from the vagaries of state law. This was accomplished by adding immediately before the provision regarding subrogation in subsection (a) a new provision that the United States "shall have a right to recover from said third person the reasonable value of the care and treatment so furnished." The right of recovery was thus conferred on the government and subrogation was made one of the remedial consequences of the government's right, a subsidiary equitable remedy, which did not limit the primary right.

State courts, moreover, have referred to the Recovery Act in support of the proposition that state governments are not limited to a subrogation remedy. The Supreme Court of New Jersey, in a ruling on the effect of state Medicaid law in Hedgebeth v. Medford, 74 N.J. 360, 378 A.2d 226, 228 (1977), stated:

As we interpret the [State] act, the State has two avenues by which it may seek reimbursement for Medicaid payments: it may either institute an action directly against the tortfeasor who is liable for the medical expenses or seek recovery by way of the Medicaid recipient through a right of subrogation. This conclusion is in harmony with

365 (emphasis added).²⁶

The New Jersey court's ruling is also notable in that the court considered the federal Medical Care Recovery Act sufficiently clear in its grant of a direct right of recovery that it held the same in Hedgebeth, even though "the state statute contained no provision expressly referring to an independent right of recovery." Id. at 366. Since the state was required by federal law to seek reimbursement from the tortfeasor and the federal government had an independent right of recovery under the Medical Care Recovery Act, the court found that the state had the same right. The state's right of subrogation, like the parallel right of the federal government, was merely a "precautionary measure" enacted to ensure that two complementary methods of recovery would be available. Id. at 366.

Significantly, Hedgebeth's analysis of the state Medicaid statute and the federal Medical Care Recovery Act was adopted last year by a Texas court in denying defendants' motion to dismiss the Texas attorney general's reimbursement action against the tobacco industry. Relying on the Recovery Act, the court ruled that the state could pursue a direct and independent action against the tobacco industry that was not limited to subrogation. Texas v. The American Tobacco Co., __F.Supp.2d__, No. 5:96CV91, slip-op. 5 (E.D.Tex. Sept. 8, 1997).²⁷ The Texas litigation was settled prior to trial for "the largest judgment in the history of the nation," as tobacco defendants described it.²⁸

Confirming the independent nature of the government's right of action under the Recovery Act, courts have rejected attempts by defendants to assert against the United States affirmative defenses that might have been applicable to the injured party. In Theriaque, discussed above, the court found that since "[t]he government's right of action under the

[Recovery Act] in this case is independent of Theriaque's claim ... the Court concludes that the defendants may not raise the defense of comparative negligence in this case." 674 F.Supp. at 400.

A final note on §2651(c)(2)(C): This subsection states that "the United States shall be subrogated to any right or claim that the injured or diseased member or the member's guardian, personal representative, estate, dependents, or survivors have under a policy, contract, agreement, or arrangement referred to in paragraph (1) ..." Paragraph (1) concerns situations where state law provides for a system of compensation or reimbursement for health care costs specifically for members of the uniformed services whose health is impaired by the tortious conduct of a third party. In light of this language, it is possible that a court could interpret §2651(c)(2)(C) as carving out an exception to the federal government's otherwise clear independent right of action in cases involving individual members of the uniformed services. The practical effect of such an interpretation would be limited for two reasons. First, in the context of a federal cost recovery action that aggregates the cases of potentially millions of injured individuals in a single case against the tobacco industry, §2651(c)(2)(C) may be held not to apply. Second, since members of the uniformed services make up only a small fraction of the total population covered by federal health care programs, their exclusion from consideration in an aggregated action would have a minor effect on the total costs claimed.
c. The Recovery Act Does Not Restrict the United States' Right of Action to Only Certain Recipients of Federal Government-Funded Health Care

The view that the United States can bring a direct action under the Recovery Act in any case in which the government was legally obligated to pay for health care is supported by McCotter v. Smithfield Packing Co., 868 F.Supp. 160 (E.D.Va. 1994), where the court found that "the [Medical Care Recovery Act] itself does not limit its application to military personnel, but includes all who receive medical benefits from the federal government as a legal requirement." It notes further that "[t]he only exception in the Act is for the Veterans Administration. The Act is meant to prohibit victims from taking a double recovery: once from the United States, which funds the victim's medical care, and once from the tortfeasor." Id. at 162. See also Zinman v. Shalala, 835 F.Supp. 1163, 1171 (N.D.Cal. 1993) (applying §2651 in context of Medicare, stating that, "[s]imilarly ... the government may bring an action against any entity which is responsible to pay primary").

d. The Medical Care Recovery Act Does Not Bar Recovery by the United States on an Aggregate Basis 

The absence of such statutory language or court rulings should not bar such the government from pursuing a cost recovery action against the tobacco industry on an aggregate basis. Again, as discussed above, §2651(d) gives the government explicit authority to bring an independent action against a tortfeasor without joining or suing on behalf of the injured individual. There is no obvious procedural obstacle to the government's proceeding in the aggregate. Indeed, aggregation through the use of modern econometric methods was allowed in the Medicaid reimbursement actions brought by state attorneys general against the tobacco industry in Mississippi, Florida, Texas, and Minnesota - whose settlements with the tobacco industry totaled a combined $40 billion over 25 years.

More recently, the remaining 46 states settled for a total of more than $200 billion to be paid over 25 years, again based on aggregation of costs. Of the original four settling states, only Florida had a special statute that authorized the state to avail itself of the use of statistical proof. The courts hearing the cases in the other three states permitted the introduction of such statistical information based on ordinary rules of evidence. Minnesota, without a special statute, brought its case to trial and, just prior to verdict, settled with the industry defendants for an unprecedented payout and unprecedented advertising and marketing concessions.²⁹

i) Damages Can be Ascertained on a Statistical Basis

If the Justice Department pursues a cost recover action against the tobacco industry and succeeds in sustaining an aggregated action, it will then have to prove causation and damages by the use of statistical methods. As noted by Massey in a discussion of the reimbursement action brought by the state of Florida against the tobacco industry, "[i]t is especially reasonable to use statistical evidence in the tobacco context, where the State's injury is itself an aggregate one."³⁰ He continues:

Indeed, focusing on the population effects of smoking in the aggregate is a more sensible system that will prove fairer to defendants overall. Suppose, for example, that it is 75% likely that each victim of a particular disease contracted her illness from smoking and that there are one hundred such victims. If the State proceeds on an aggregate basis by statistical evidence, it will be able to recover the Medicaid costs of 75% of the cases involving that disease, or 75 out of each 100 hypothetical cases. But, if the State were to proceed on an individual-by-individual basis, it might well be able to meet the more-probable-than-not standard in every case (since 75% is greater than 50%), and the State would recover the Medicaid costs of all 100 individuals. Tobacco companies would be required to pay a greater sum of money to the state treasury.

Two of the available statistical methods for ascertaining smoking-attributable expenditures provide useful examples. Each was employed in connection with the state attorney general actions against the tobacco industry. They are the "Mortality Ratio Approach" and the "SAMMEC" approach. SAMMEC is an acronym for Smoking-Attributable Mortality, Morbidity, and Economic Cost, which is a database software package whose use by the states is overseen by the U.S. Centers for Disease Control and Prevention (CDC).³¹ Both are applied to data on smoking prevalence for all 50 states, which are obtained from the Behavioral Risk Factor Surveillance System, a sophisticated telephone survey that is conducted annually by the states in cooperation with the CDC.

The Mortality Ratio Approach uses the ratio of deaths attributable to smoking by disease category and applies that ratio to expenditures for that category. This method of analysis is based on the reasonable assumption that the proportion of costs attributable to smoking for a particular disease is the same as the proportion of deaths attributable to smoking for that disease. The Mortality Ratio Approach has been applied to the United States for more than 20 years.³² It was also applied in Florida.³³

The SAMMEC system calculates the so-called smoking-attributable fraction of expenditures based on smoking prevalence and the relative risk of the use of health care services for smokers and former smokers as compared to those who have never smoked. SAMMEC incorporates two measures of relative risk: 1) the relative risk of death from tobacco-caused diseases, which is taken from the rates reported in the 1989 Surgeon General's report;³⁴ and the relative risk of medical expenditures, which is derived from an analysis of the National Health Interview Survey comparing the number of hospital days and number of physician visits for smokers and former smokers versus those of never smokers. SAMMEC has been used widely to develop estimates of tobacco-related health care costs for the states.³⁵

It is also understood that both the Mortality Ratio Approach and the SAMMEC approach result in conservative estimates of the actual costs to government of tobacco-related health care. Neither approach takes into account, for example, the impact of environmental tobacco smoke exposure to medical expenditures, and SAMMEC does not take into account the costs of health care involving complications of pregnancy caused by the use of tobacco.

ii) The Liability of Each Defendant Can be Determined Based on Its Market Share

In a leading case, Hymowitz v. Eli Lilly and Co., 73 N.Y.2d 487, 539 N.E.2d 1069, 541 N.Y.S.2d 941 (NY 1989), cert. denied 110 S.Ct. 350 (1989), the New York Court of Appeals, the state's highest court, established causation on a market-share basis where plaintiffs could not specifically identify the manufacturer who caused the damage to each individual. The court noted that, although "extant common-law doctrines, unmodified, provide no relief for the DES plaintiff unable to identify the manufacturer of the drug that injured her ... the present circumstances call for recognition of a realistic avenue of relief for plaintiffs injured by DES ... in order `to achieve the ends of justice in a more modern context.'" Id. 73 N.Y.2d at 507, 539 N.E.2d at 1075, 541 N.Y.S.2d at 947 (citations omitted). While, in contrast, the use of aggregation has been questioned in some class action litigation, where some courts have determined that individual affirmative defenses would be available, this should not pose a problem here since any cost recovery action brought by the United States would be a direct, not a class action.

Nor should the caution expressed in Hymowitz -- "that the DES situation is a singular case, with manufacturers acting in a parallel manner to produce an identical, generically marketed product, which causes injury many years later, and which has evoked a legislative response reviving previously barred action" -- pose an obstacle in the context of the tobacco industry. Id. Cigarettes are not only singular in their own right but, in terms of their addictiveness and effects on health, essentially indistinguishable, an argument the industry cannot refute in light of its continued refusal to admit that cigarettes cause any health problems at all. And in the context of an aggregate action, it would be inappropriate to require the United States to identify the precise manufacturers of the cigarettes smoked by the millions of individuals receiving government-funded health care - not to mention impossible for the government to do so.

This point was underscored by Frolich in a discussion of Florida's enactment of the Medical Third-Party Liability Act, which was enacted in 1994 to explicitly permit the state to bring a direct action against tobacco industry defendants. The statute prohibits the assertion of affirmative defenses by defendants and permits aggregation of claims. According to Frolich:

The statute's elimination of the due diligence requirement is not contrary to the Florida Supreme Court's intent of "provid[ing] a remedy where there is an inherent inability to identify the manufacturer of the product that caused the injury." In a case where the state brings suit on behalf of many injured people, the state will always be a nonconsuming plaintiff with no first-hand knowledge of what particular product caused a Medicaid recipient's harm. In fact, Florida faces an inability to identify the actual product that caused its harm much as a daughter faces an inability to identify the particular brand of DES her mother ingested; in both cases, the party actually harmed was not the party who used, and who could possibly identify, the harmful product. The state could rationally have determined that the potentially enormous number of treated Medicaid recipients, as well as the state's position as a "nonconsuming plaintiff," render the state "inherently unable" to identify the exact degree to which each of many manufacturers caused its harm.

Making reference to the Medicaid reimbursement action undertaken by the state of Florida, another commentator explains that "market share liability is especially appropriate ... in light of the aggregate nature of the State's injury: because the harm to the State is independent of the individual identities of Medicaid smokers, it is unnecessary -- even if it were feasible -- to determine which brand of cigarettes was smoked by each Medicaid patient. The critical issue is each manufacturer's contribution to the total damage done to the State." He also observes that Florida courts had already upheld the use of the common law theory of market share liability before the state legislature had passed the special Florida Medical Third-Party Liability Act in 1994.³⁶ The only difference between the common law theory and the provisions of Florida's special statute is that the latter does not include the "due diligence" requirement of the common law. See Frolich, supra, at 457.

It may be argued by the tobacco industry that neither the language of the Recovery Act nor the legislative history suggest that Congress considered the possibility that an aggregate claim might be brought under the statute. Of course, just as previously secret documents and revelations detailing decades of tobacco industry duplicity, conspiracy, and manipulation of nicotine did not become known to the government or the public until quite recently, so too was Congress deceived until recently by the industry's misrepresentations. (Indeed, as noted earlier, the industry's chief executives continued, in testimony before Congress in 1998, to deny that cigarette smoking causes death or a physical addiction to nicotine.) Arguably, therefore, until very recently Congress could not have contemplated the use of the Recovery Act to seek recompense from the tobacco industry on an aggregate basis. Congress clearly gave the statute a broad and liberal application, however, which should enable the government to now bring such an action.

2. The Sherman Act
a. Background

· Philip Morris - 48 percent

· R.J. Reynolds - 25 percent

· Brown and Williamson - 17 percent

· Lorillard - 8 percent

· Liggett Group - 2 percent

In addition, the U.S. Tobacco Company manufactures nearly 90 percent of the "smokeless" tobacco products sold in this country.

Substantial barriers prevent entry into the tobacco market. The substantial capital needed for entry, the long-established and entrenched companies with stable market shares, the substantial economies of scale, production and regulatory barriers, and the existence of patents, among other factors, present essentially insurmountable barriers to the entry of newcomers. Moreover, the major tobacco companies' history of extraordinary profit margins provides further evidence of the impenetrability of the industry. Indeed, due partly to its concentration, and due partly to the fact that over 90 percent of its customers are physically addicted to its products, the tobacco companies' profit margins exceed 30, and sometimes 40, percent.

This tight-knit cartel of tobacco producers has a long history of collusion. As discussed elsewhere in this analysis, the industry's concentration and the insurmountable barriers to market entry have enabled the major U.S. tobacco companies and their trade and scientific associations to carry out a decades-long conspiracy not to compete in research, development, production and marketing of less-hazardous products. Moreover, because of their unique nature as superior vehicles for the delivery of nicotine that are not subject to government regulation for health and safety, tobacco products are not reasonably interchangeable with other consumer products or characterized by cross-elasticity of price with other consumer products. See, infra, Section III(B).

b. The Application of the Statute

The effects of the industry's anti-competitive activities on the health of millions of tobacco users in the United States, including those covered by federal government health care programs, have been direct, long-term and measurable by, inter alia, the statistical methods described earlier. Under the provisions of 15 U.S.C. §15, the federal government may be entitled to three times the actual damages that it has sustained in the form of tobacco-related health care expenditures. Such damages would not be duplicative of damages that are or could be asserted by other parties. Furthermore, the government may be entitled to injunctive relief pursuant to 15 U.S.C. §26. Such relief could include an order requiring the tobacco companies to cease and desist from conspiring to suppress the research, development and marketing of safer cigarettes, and directing the companies to take any additional steps that the court deemed necessary to reverse the anti-competitive effects of the conspiracy.

Specifically, the Justice Department could assert that the members of the tobacco cartel successfully conspired to:

· suppress innovation and competition in product quality by agreeing not to participate in the research, development, manufacture and marketing of less-hazardous tobacco products;

· suppress output in the marketplace by agreeing not to produce and sell on a mass-marketed basis less-hazardous tobacco products; and

· suppress competition by agreeing not to compete for each others' business by making claims regarding the relative safety of particular brands, whether or not such claims would have been truthful.

In short, in the absence of the tobacco industry's conspiracy, competition in the tobacco product marketplace would have been far more vigorous. 

Such conduct may be shown to be unreasonable per se under Section 1 of the Sherman Act. The industry cannot credibly relate its concerted actions to lawful business transactions, the promotion of efficiency, the advancement of the interests of consumers or the promotion of brand competition. One or more of the tobacco manufacturers almost certainly would have developed, sold and advertised commercially successful, less-hazardous tobacco products,³⁷ and such products would have been likely to garner substantial market share among health-concerned American consumers. Those consumers, including millions of beneficiaries of federal government health care insurance, would have experienced a greatly reduced burden of tobacco-caused disease. And the U.S. government would have incurred substantially lower health care expenditures resulting from the use of tobacco.

Finally, antitrust law protects competition over innovation and product quality, just as it does price competition. The tobacco companies could reasonably have foreseen that their anti-competitive activities would both harm consumers and cause those responsible for coverage of smokers' health care to incur increased costs for such services. Thus, in asserting antitrust claims under the Sherman Act, the Justice Department can argue that the direct and proximate harm to the federal treasury is precisely the type of harm that a conspiracy to suppress competition related to product safety would be likely to cause. And it is precisely the type of harm for which the tobacco industry should now be held accountable under law.

3. The Racketeer Influenced and Corrupt Organizations Act
a. Background

The Justice Department should be able to present a stronger RICO case against the tobacco industry than the National Organization for Women did against anti-abortion activists. In the event of a successful civil RICO action by the Attorney General, Section 1964(c) prescribes treble damages and costs, including reasonable attorney's fees. In addition, in light of the "general public importance" of the case, the government probably would succeed in expediting the action. Section 1966 states:

§1966. Expedition of actions

In any civil action instituted under this chapter by the United States in any district court

of the United States, the Attorney General may file with the clerk of such court of such

court a certificate stating that in his opinion the case is of general public importance. A copy of that certificate shall be furnished immediately by such clerk to the chief judge in his absence to the presiding district judge of the district in which such action is pending. Upon receipt of such copy, such judge shall designate immediately a judge of that district to hear and determine action.

b. The Statute

(c) It shall be unlawful for any person employed by or associated with any enterprise

engaged in, or the activities of which affect, interstate or foreign commerce, to conduct 

or participate, directly or indirectly, in the conduct of such enterprise's affairs through a

pattern of racketeering activity ...

(d) It shall be unlawful for any person to conspire to violate any of the provisions of

subsection ... (c) of this section.

The tobacco companies and their affiliated trade and scientific organizations are "persons" within the meaning of Section 1961(3), since each of them are "capable of holding a legal or beneficial interest in property."

Under Section 1961(4), the trade and scientific organizations, including the Tobacco Institute and the Council for Tobacco Research, are "enterprises" that together have served since the 1950's as a combined enterprise formed to further the tobacco industry's public relations activities. The enterprise was formed by the major tobacco manufacturers in order to orchestrate a public relations campaign to protect their market from the perceived threat posed by negative reports on the disease-causing properties of their products. From its inception, the enterprise has been funded, directed and managed by the major tobacco companies in apparent violation of Section 1962(c). The primary purpose of the enterprise was, and still is, to maximize the tobacco industry's profits, which it has done, among other things, by misleading federal government agencies and the public regarding the health hazards of tobacco products and by suppressing the truth about the addictiveness of nicotine and the tobacco companies' manipulation of the drug. (See Section III(B) of this analysis, infra.)

The facts that have been adduced from the disclosure of millions of documents, including internal documents prepared by tobacco industry lawyers that have been found to contain evidence of crime or fraud, demonstrate that the tobacco companies have committed multiple predicate acts of racketeering, including mail and wire fraud in violation of 18 U.S.C. §§1341 and 1343. The companies also have engaged in interstate commerce in aid of their racketeering activities in violation of 18 U.S.C. §1952.

In addition, there is evidence that at least one major tobacco company, Brown and Williamson, committed the predicate act of obstruction of justice in violation of 18 U.S.C. §§1512 and 1513 in actions that it either took or orchestrated against Jeffrey Wigand, the company's former director of research and development.³⁸ Section 1512 prohibits, among other things, the use of intimidation or threats with the intent to "influence, delay, or prevent the testimony of any person in an official proceeding," and prohibits the use of intentional harassment to hinder, delay, prevent or dissuade any person from testifying in an official proceeding.

The predicate acts noted above, among others, form a "pattern" of racketeering activity. They have been related in their common objectives of increasing profits, suppressing the truth and misleading the public, the federal government and others about the health hazards of tobacco use, soliciting minors as well as adults to purchase tobacco products through false and misleading advertising, manipulating nicotine delivery with the intent to addict consumers, etc. See 18 U.S.C. §1961(1) and (5).

The ultimate outcome as it relates to a government cost recovery is that the tobacco industry's violations of 18 U.S.C. §1962(c) and (d) proximately caused direct injury to the business and property of the federal government, which incurred significant, concrete financial costs attributable to the provision of health care for tobacco-caused illness. This injury is not a derivative injury of the harm caused to individual smokers themselves, but is a separate economic injury.

Finally, no other party has standing to bring an action for the recovery of damages for this injury caused by the actions of the tobacco industry.

C. Precedent for Action Under the Common Law

In addition tot he statutory rights of action discussed above, the tobacco companies' malfeasance also supports a common law action by the United States to seek reimbursement of medical costs incurred by federal government agencies. The fundamental right of the government to take such legal action has been described succinctly, as follows:

The United States has power to sue. The government's right to maintain an action is inherent in its sovereignty and it is not restricted to maintaining actions through the instrumentality of an agent authorized to act for it. Its right to resort to the courts is not restricted to any particular form of action and, in addition to its right to bring law actions, it may sue in equity ... It may bring a suit for injunction.

The United States' power to bring actions under the common law also was made clear by the Third Circuit Court of Appeals in United States v. Silliman, 167 F.2d 607, 610 (3d Cir. 1948), a case often cited as authoritative by other federal appeals courts. In language that suggests strong precedent for a federal government cost recovery action against the tobacco industry, the court stated:

The United States can sue those who commit tortious acts which result in pecuniary loss to the United States. Thus action may be brought for a trespass on Government owned land or an injury to chattels owned by the United States. We think this line of authorities clearly demonstrates the standing of the United States as plaintiff to recover pecuniary loss sustained through a tort recognized at common law. [Footnotes omitted.]

In light of the intentionally deceptive conduct of the tobacco industry toward consumers and the government alike, the United States should be able to maintain a cost recovery action against the industry based on traditional notions of tort liability. Theories that have been applied in the lawsuits brought by individual plaintiffs, state attorneys general, health insurers, unions and other plaintiffs would apply equally as strongly in the context of a federal cost recovery action. These include, among others, fraudulent misrepresentation, breach of special duty, breach of express and implied warranty, conspiracy and negligence - all of which can be shown to have been committed by the major tobacco companies on a continuing and widespread basis dating at least as far back as 1954.

In the State of Minnesota's cost recovery action against the cigarette industry, which the industry settled in May 1998 for a payment of $6.1 billion over 25 years and a ban on industry marketing tactics that appeal to children,³⁹ Judge Kenneth Fitzpatrick found that tobacco companies for decades had used their lawyers to conceal research into the health effects of tobacco, then engaged in "abuse and disregard for the judicial process." Following the review by a special master of thousands of internal industry documents for which company lawyers had claimed privilege in an attempt to keep them secret, the court ordered the companies to disclose 834 documents, finding that "[t]he court's own review of the documents reveals a conspiracy of silence and suppression of scientific research."⁴⁰ Later, following a more extensive investigation by the special master, the court ordered the cigarette companies to turn over an additional 39,000 confidential documents, a decision that ultimately was allowed to stand by the U.S. Supreme Court. The court found that the papers showed evidence of crime or fraud, confirming that the industry had engaged in a long-term and systematic effort to keep the public ignorant of the truth.⁴¹

The cigarette companies also conspired to falsely represent to the public and the government that the industry's scientific research arm, the Council for Tobacco Research (originally formed in 1954 as the Tobacco Industry Research Committee), would seek the truth about the health effects of tobacco use, and that such information would be disclosed to the public. The industry exploited the public's and the government's reliance on such misrepresentations by continuing to manufacture and market unreasonably dangerous products containing manipulated deliveries of nicotine. The major companies also secretly agreed not to conduct health-related research in the United States so that they could hide adverse results from federal health officials and the public.

Examples of the industry's intentional misrepresentation are legion. For years, the major cigarette makers engaged in advertising campaigns to persuade the public that cigarette smoking actually benefited one's health. The companies made express claims and warranties regarding the safety of their products, acting with reckless disregard as to the falsity of such claims and the debilitating effects on their customers. Brown and Williamson claimed that Kool cigarettes would protect smokers against colds. R.J. Reynolds enlisted doctors to support such claims as, "Not one single case of throat irritation due to smoking Camel." As recently as January 1998, the tobacco companies' chief executives gave misleading testimony before Congress. While stating that they did not personally believe that nicotine was addictive, they stated that under colloquial definitions it could be considered addictive. They did not admit that nicotine was a pharmacologically addictive drug.⁴²

In more recent times, tobacco manufacturers have made highly misleading implied health claims in advertisements for so-called low tar/low nicotine cigarettes. They have done so at the same time that they have known from their own secret internal research that many smokers get just as much of the addictive drug and the poisonous tar from smoking "low-yield" cigarettes as they do from smoking brands with higher tar and nicotine ratings. Indeed, government health officials have only recently come to understand that cigarette makers could have made simple cigarette design changes that would have done away with this problem, but failed to do so out of fear that they might lose customers. As of today, the major cigarette companies still have failed to make such design changes.⁴³

The industry's grand strategy was documented 26 years ago by a senior Tobacco Institute official in a confidential memorandum to the institute's president:

"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

-- 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 health hazard"44

It was this strategy that resulted in the industry's successful withholding of critical information from the government and public until the dam burst in 1994.

Finally, some observers have suggested that the government should also argue that it has been victimized not only by the tobacco industry, but by the combined intentional acts of the industry and the consumer. This argument is based on the theory that consumers are at least partly responsible for their tobacco-related injuries. Of course, most tobacco users were enticed by the industry's marketing ploys to begin smoking when they were children. They then became addicted, while still children, by the industry's successful efforts to thwart smokers' freedom of choice by manipulating nicotine. These facts make troubling any argument that consumers should be cited as responsible for the financial harm suffered by the government. The government could nonetheless call the industry's bluff by making this argument, observing that it merely echoes the one that the tobacco companies themselves make in every products liability case brought against them by individual smokers, which is that it was the consumer's own choice, freely made, to use tobacco. Ironically, the government could in this way borrow from the tobacco industry's own playbook and assert that it is indeed the ultimate victim of the combined intentional acts of the industry and the consumer.

III. The Tobacco Industry's Preemptive Strike Against Federal Action

The tobacco industry recognizes that, even with the defeat of the McCain bill and the settlement with the state attorneys general now behind it, it remains vulnerable to legal action by the federal government. The industry's sense of insecurity may explain why it has embarked on a preemptive campaign to dissuade the Justice Department from bringing a cost recovery action against the major tobacco companies. Tobacco industry spokespersons and sympathetic members of Congress have recently defended the industry against charges that it has engaged in decades of misconduct and claimed that the government cannot sue because it has so-called unclean hands. For example, one tobacco industry consultant said: "Federal officials have known the health effects of cigarette consumption and have required warning labels for many years. For them to come in now and say they want to recover damages, after that long involvement, would be a very difficult case to make."⁴⁵

A. The "Jones" Defense of the Tobacco Industry

a. The Justice Department has never before filed such a lawsuit because the federal government has no authority to "recover costs spent on patients who happen to smoke." Therefore, it should not do so now.

b. "Adults make the choice to use tobacco products knowing the potential health effects."

c. Such an action would skirt Congress's authority "to create effective tobacco policy."

d. A government suit would place the livelihood of tobacco farmers at risk, "result[ing] in devastating social and economic impacts on the state of North Carolina."

e. The government cannot sue industries "for making legal products," and "tobacco is a legal crop."

f. Tobacco companies are philanthropists who help people. They "have helped fund libraries, schools, churches, art exhibits and medical centers ..."

g. A government action would create a slippery slope leading to "a host of similar actions against other industries," including alcohol producers, auto makers and the food industry. This would create a "dangerous precedent that could be used to take massive funds away from any American industry," and would cast "a dark cloud over our entire business community."

h. Finally, everyone has known about "the risks associated with the use of tobacco products" for "decades." The federal government itself mandated the first warning label in 1966. Thus, the government cannot "claim that it was deceived by the tobacco industry about these risks."

First, the claim that the Justice Department has never before filed such a lawsuit because the federal government lacks authority to do so is, for the reasons identified throughout this analysis, without basis. Possibly one actual reason why the government did not seek recovery in previous years is that it lacked sufficient evidence of the industry's malfeasance, which it now has, to justify such an action. As detailed in the following section, since 1994:

· The Food and Drug Administration and investigative journalists uncovered previously secret information about the tobacco industry's use and manipulation of nicotine as a drug and cigarettes as drug delivery devices;

· Ten months of historic congressional hearings resulted in the discovery of additional previously secret information regarding industry knowledge, malfeasance and criminal conduct;

· Tens of millions of pages of (again) previously secret internal tobacco company documents, including thousands of purportedly privileged documents that were found to contain evidence of crime or fraud, were discovered in lawsuits filed by state attorneys general, classes of addicted and injured smokers and individual plaintiffs.

Second, the references made to "patients who happen to smoke" and adults who "make the choice to use tobacco products" demonstrate nothing more than the fact that the writer is in sympathy with the tobacco industry's position that nicotine is not an addictive drug, an argument that stems from political expedience, not medical fact. Indeed, the industry's secret long-time knowledge of the addictive effects of its products and its manipulation of cigarette design to ensure such addiction provide strong evidentiary support for federal government legal action. (This is addressed more fully below.)

Third, concern that a federal recovery action would skirt Congress's authority to create effective tobacco policy is negated by the fact that Congress has already manifested its strong desire to make the government whole whenever it is forced to cover medical costs caused by the tortious conduct of a third party. Regardless, a cost recovery action is not intended to set policy. It is intended to get the government's money back. (This, too, is addressed more fully below.)

Fourth, the oft-cited "legality" of the tobacco industry's products is limited to sales to adults. The industry's targeted marketing to the illegal youth market underlies the industry's successful perpetuation of its business and, thus, the epidemic of tobacco-related illness and health care expenditures that justifies a government recovery action. The industry also has engaged in what appears to have been widespread fraud and conspiracy, as discussed earlier in this analysis, making irrelevant the question of the "legality" of its products.

Fifth, will a cost recovery action against the tobacco industry lead to a slippery slope that will envelope other industries? No. The tobacco industry is unique. Cigarette companies produce and mass-market the only legal consumer product - legal for adults, that is -- that kills many of its users when used precisely as intended by the manufacturer. As noted earlier, cigarette companies have been found to have engaged in a unique "conspiracy of silence and suppression of scientific research."⁴⁷ Finally, every slippery slope argument made by the tobacco industry has, without exception, turned out to be a red herring. There is no basis for believing that this situation will be any different.

Finally, the claim that everyone has known for "decades" about "the risks associated with the use of tobacco products" does not stand up in light of the huge body of evidence that has emerged since 1994, which marked the beginning of an unprecedented cascade of revelations about the industry's long-hidden knowledge and misconduct. That is not to say, in any event, that knowledge of "risks" is tantamount to knowledge that cigarette smoking causes numerous fatal diseases and makes most users physically dependent on nicotine - which, in spite of its own superior knowledge, the tobacco industry for decades has publicly denied to the government and the American public.

For purposes of a government cost recovery action, ultimately it is not whether the government itself was deceived by the tobacco industry -- though clearly it was -- but rather whether consumers were deceived by the actions of the tobacco industry. The industry denied the harmfulness of its products and, by bringing to bear its unparalleled influence with key elected officials, ensured that health warning labels (cited by Rep. Jones as another industry defense) were initially nonexistent and, once implemented, weak and insufficiently informative regarding what the industry already knew about the health effects of tobacco use. An excerpt from testimony delivered before Congress on May 17, 1994 by Joseph A. Califano, Jr., the former U.S. Secretary of Health, Education, and Welfare, is instructive:

The evasions, lies, and transfer of documents overseas by the tobacco industry to prevent any Government agency or cigarette-injured patient from finding them has distorted U.S. Government policy for 30 years.

...

In 1965 I was working on the White House staff of President Lyndon Johnson. The administration was pressing to put warning labels on cigarettes. The tobacco industry wanted no labeling or labeling as weak as possible. The law which Congress passed in 1965 provided only that packages of cigarettes carry labels saying, "Cigarette smoking may be hazardous to your health."

That relatively weak admonition was not changed until 1970 and again in 1984 as evidence of the dangers of smoking accumulated and thanks to the work of this subcommittee, I might note. It was not until 1972 that the Federal Trade Commission was able to extend the warning to cigarette advertising as well as packaging. Had the administration and the Congress known what the tobacco industry knew, the warnings in the public health program of the U.S. Government would have been much stronger.

...

In discussions this weekend with President [Jimmy] Carter and Dr. [Julius] Richmond,⁴⁸we all agreed to this. Had we known what the tobacco companies knew and had we been privy to their research on the addictive nature of nicotine and their ability to manipulate the amount of nicotine in cigarettes, the 1979 Surgeon General's report would have found cigarettes addictive and we would have moved to regulate them. Unfortunately, the President of the United States, the Secretary of Health, Education, and Welfare, and the Surgeon General of the United States were all victims of the concealment and disinformation campaign of the tobacco companies.

It was not until May 16, 1988, almost 10 years later, that Surgeon General C. Everett Koop was able to state unequivocally that cigarettes and other forms of tobacco "are addicting"; nicotine is "the drug in tobacco that causes addiction" and "the pharmacologic and behavioral processes that determine tobacco addiction are similar to those that determine addiction to such drugs as heroin and cocaine."⁴⁹

In this way, the industry deceived and harmed consumers while helping them rationalize their addiction and forestall diligent efforts to quit smoking. Consequently, the industry's misconduct also resulted in enormous fiscal harm to an innocent third party: The United States government. Thus, tobacco manufacturers made countless billions of dollars in profits, year after year, by acting as an enabler, targeting children, enhancing nicotine delivery to addict people,⁵⁰ and by intentionally creating doubt about the fatal effects of cigarette smoking. 

B. The Truth Regarding the "Everybody Knew" Defense

As noted earlier in this analysis, the court in the State of Minnesota's cost recovery action against the cigarette industry found that the tobacco industry and its lawyers had engaged in "a conspiracy of silence and suppression of scientific research."⁵¹ Following a detailed review of hundreds of thousands of pages of internal tobacco industry documents that industry lawyers fought unsuccessfully to keep from public view, the court determined that the industry had engaged in a systematic, decades-long effort to keep the public ignorant of the truth.

That the American public and the federal government were kept thoroughly in the dark by the tobacco industry regarding even the most basic aspects of cigarette design and the addictiveness of cigarettes was underscored in February 1994, when the Food and Drug Administration ("FDA") and investigative journalists announced their discovery that U.S. cigarette manufacturers had been secretly controlling nicotine levels in their products to dose consumers with fine-tuned deliveries of the drug.⁵² It was at that time that the FDA embarking on a historic two-and-a-half-year probe into the industry's knowledge of nicotine's drug effects and its exploitation of sophisticated technology to foist nicotine dependency on millions of tobacco consumers.⁵³ The FDA's investigation was, in turn, augmented by 10 months of historic congressional hearings before the Subcommittee on Health in 1994.⁵⁴ Representative Henry Waxman later supplemented his subcommittee's findings by reading hundreds of newly obtained, and previously secret, nicotine-research documents from Philip Morris into the Congressional Record on the floor of the House of Representatives in July 1995, not long after a front-page expose in the New York Times first disclosed their existence.⁵⁵ Providing additional synergy with the FDA and congressional investigations were reams of internal tobacco company documents obtained in lawsuits filed by state attorneys general, classes of addicted and injured smokers, and individual plaintiffs.⁵⁶

The flood of new disclosures proved one thing, above all: "Everyone" did not know the truth about cigarette smoking, cigarette design practices, or the decades-long cover-up engineered by the tobacco industry to keep the facts from the public and the government. If "everyone knew" the truth about cigarette smoking, it is perplexing that, fully 25 years before the Surgeon General made an official determination that nicotine is an addictive drug, Addison Yeaman, general counsel to Brown and Williamson ("B&W"), was able to declare in a memorandum to colleagues, "Moreover, nicotine is addictive. We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms." Addison Yeaman, "Implications of Battelle Hippo I & II and the Griffith Filter," 1963, quoted in John Slade et al., "Nicotine and Addiction: The Brown and Williamson Documents," J.Am.Med.Ass'n, Vol. 274, No. 3, pp. 225-33, July 19, 1995 (emphasis added). Yeaman's observation was made shortly before Brown and Williamson executives, including Yeaman, decided to illegally withhold their findings on the addictiveness of nicotine from the Surgeon General, who was then in the process of preparing the first Surgeon General's report on smoking and health.

Another telling observation was made in 1962 by Sir Charles Ellis, an influential scientific adviser to British American Tobacco, B&W's parent, who wrote in another confidential memorandum:

What we need to know above all things is what constitutes the hold of smoking, that is, to understand addiction ... As a result of these various researches, we now possess a knowledge of the effects of nicotine far more extensive than exists in published scientific literature ... Experiments have so far only been carried out with rats ... Subsequent similar measurements will be made on human nonsmokers and on addicted smokers.

Similar conclusions were reached by top scientists and executives at the other cigarette companies. One of myriad examples is found in the comments of Claude E. Teague, Jr., an assistant director of research at R.J. Reynolds who was later promoted to an executive position:

In a sense, the tobacco industry may be thought of as being a specialized, highly ritualized and stylized segment of the pharmaceutical industry. Tobacco products, uniquely, contain and deliver nicotine, a potent drug with a variety of physiological effects ... Thus a tobacco product is, in essence, a vehicle for delivery of nicotine, designed to deliver the nicotine in a generally acceptable and attractive form. Our industry is then based upon design, manufacture and sale of attractive dosage forms of nicotine, and our Company's position in our Industry is determined by our ability to produce dosage forms of nicotine which have more overall value, tangible or intangible, to the consumer than those of our competitors.

Such candid observations were made secretly. They were never intended to be seen by the public, government regulators, the medical community, or the media. Indeed, the tobacco industry kept them hidden for decades.

Furthermore, unbeknownst to those outside of the tobacco industry until recently, cigarette manufacturers capitalized on their knowledge of the drug effects of nicotine by developing an arsenal of methods to manipulate its delivery with the utmost precision.⁵⁷ As a result of its emergence since 1994, this information has become a major focus of the Justice Department's broad criminal investigation of the tobacco industry.⁵⁸ These methods include the following, among others:

· adjustment of tobacco blends by using high-nicotine tobaccos and higher-nicotine parts of tobacco leaves to raise the nicotine concentration in lower-"tar" cigarettes;⁵⁹

· addition and/or re-application of nicotine to fortify tobacco stems, scraps, and other waste materials, which are processed into "reconstituted tobacco," an artificial product used in significant quantities in most major cigarette brands;⁶⁰

· addition of ammonia compounds, which speed the delivery of free nicotine to smokers by raising the pH, or alkalinity, of tobacco smoke, causing the smoker to freebase the drug into his or her bloodstream, much as crack users freebase cocaine;⁶¹

· use of filter and ventilation systems that remove a higher percentage of tar than nicotine;⁶²

· genetic engineering of tobacco plants to substantially boost nicotine content, as Brown and Williamson has done by producing and using in mass-marketed cigarettes the super-charged "Y-1" tobacco, conduct which earlier this year led to a federal criminal conviction;⁶³

· use of nearly-invisible ventilation holes that dilute the smoke and thus reduce nicotine delivery in machine tests -- leading to lower advertised nicotine levels -- but which are often covered by the fingers and lips of human smokers, who consequently inhale much higher levels of the drug, as well as the cancer-causing tar;⁶⁴ and

· use of chemicals, such as acetaldehyde and pyridine, that act synergistically to strengthen nicotine's impact on the brain and central nervous system.⁶⁵

To those who choose to argue on the tobacco industry's behalf that the federal government and the consuming public have long been aware of the truth about cigarettes and the tobacco industry's conduct, the question is thus raised: When and where exactly did the tobacco industry inform government authorities and tens of millions of addicted smokers about the health effects and cigarette design strategies described above? Didn't the industry's executives again testify under oath before Congress -- this year -- that nicotine is not an addictive drug?⁶⁶ As Dr. C. Everett Koop -- who was the leading federal government health official during most of the 1980s, and the man responsible for the 1988 Surgeon General's report on nicotine addiction⁶⁷ -- told ABC News in February 1994 when told about new revelations that tobacco manufacturers manipulated nicotine in cigarettes: "Well, as you describe that, which I've heard for the first time, it makes my blood boil, because what they are now selling is not a natural tobacco product which happens to have nicotine in it, but they are selling a nicotine dispenser, and that is quite different."⁶⁸

The intentional failure of the industry over decades to provide such information to the government was, and remains, directly responsible for the government's inability to adequately warn consumers about nicotine addiction and the companies' manipulation of the drug to addict unsuspecting consumers. Such information would have given the government the essential tools with which it could have sought to mitigate the dire effects of the tobacco epidemic starting at least 35 years ago - by providing full and adequate warnings to consumers and by arming the government with the information necessary to impose sensible regulatory controls on the tobacco industry.

Instead, impeded both by the industry's withholding of material health-related data and the industry's extraordinary level of expertise and influence in the game of national "power politics," federal government health authorities were unable to take an official position regarding nicotine addiction until 1988. To this very day, the tobacco industry's lobbying machine has successfully prevented Congress or any federal health agency from taking the simple and essential step of adding a nicotine addiction warning label to cigarette packages and advertisements.

It has been 14 years since Congress last updated the health warnings that appear on cigarette packages and advertisements. 15 U.S.C. §1331 et seq. In 1984, for the first time, Congress⁶⁹ legislated a series of new rotating warning labels that mentioned specific illnesses caused by smoking, such as cancer, heart disease and effects on pregnant women and their fetuses. Pub.L. 98-474, §3, Oct. 12, 1984, 98 Stat. 2200, amended Pub.L. 99-92, §13, Aug. 16, 1985, 99 Stat. 404. The tobacco companies made certain that the configuration and placement of the warnings would effectively camouflage them and render them difficult to read. Worse, in a "compromise" reached between the industry and a small coterie of overmatched health advocates that was facilitated by then-Congressman Albert Gore, the reference to nicotine addiction was deleted from the bill. See Michael Pertschuk, Giant Killers (New York, NY: W.W. Norton & Co., Inc., 1986), pp. 50-81.

Why is a thorough understanding of this history important? Put simply, without nicotine and nicotine addiction, there would be no tobacco epidemic. The industry's intentional failure to inform the government and public of this fact, which the industry thoroughly understood by the early-1960s, should shatter the industry's disingenuous arguments that "everyone knew the health risks" and that the government was contributorily negligent. The facts presented here offer a mere glimpse of the whole story. In the event the Justice Department brings a medical care cost recovery action against the tobacco industry, it will be essential that the court be made fully aware of the depth of the industry's fraud, conspiracy, perjury, and extraordinary influence over the political process.

IV. Conclusion

This analysis has been prepared to encourage to the Department of Justice to take legal action against the tobacco industry at the earliest available opportunity. As described in the introduction, the tobacco industry continues to wield considerable political clout in Washington. Moreover, due largely to the industry's aggressive marketing tactics, smoking by minors rose an unprecedented 73 percent between 1988 and 1996,⁷⁰ according to the Centers for Disease Control and Prevention. Contrary to the conventional wisdom, it now appears that the tobacco industry is winning the war for the hearts, minds and lungs of America's youth.

Since Dr. Ochsner first linked the increased incidence of lung cancer to the growing consumption of mass-marketed cigarettes, smoking has become the leading preventable cause of death and disability in the United States, causing one of every three deaths of those under the age of 70 and one of five deaths overall. More than 400,000 Americans die annually from cigarette smoking, more than the combined toll wrought by illegal drugs, AIDS, automobile accidents, alcohol, murders, suicides, natural disasters, plane crashes, and fires (most of which are also caused by cigarettes). Smoking-related deaths often are preceded by lengthy periods of illness, imposing an extraordinary burden on the United States economy in health care costs and lost productivity.⁷¹

The public health catastrophe that has befallen this country since modern cigarette manufacturing and marketing practices came into widespread use earlier in this century did not occur by accident. It is not as though a natural plague quietly and surreptitiously swept the continent, leaving millions of dead and injured persons in its wake. On the contrary, the plague that is responsible for more than 20 million premature dead in the United States -- the modern,

mass-marketed cigarette -- was spread deliberately and knowingly by the major cigarette companies: Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard, and Liggett.⁷²

Against this backdrop, it has become an urgent moral and legal imperative that the United States take all available action against the manufacturers of the chief preventable cause of illness and death. This is all the more so in light of the settlement by all of the state attorneys general of their lawsuits against the major tobacco companies, settlements whose long-term impact in reducing tobacco use and protecting children from nicotine addiction has been strongly questioned.⁷³

It is encouraging that senior White House officials favor the bringing of a federal reimbursement action.⁷⁴ Indeed, the Administration reportedly has been conducting a comprehensive review of the options for federal lawsuits to recover Medicare costs, as well as similar suits to recover the cost of treating smoking-related illnesses under other federal health insurance programs.⁷⁵

Some observers believe that a federal government recovery action against the tobacco industry would help to mitigate the escalating damage by increasing pressure on the major tobacco companies to return to the bargaining table with Congress and the Administration and accept the types of effective controls that the industry continues to fight,⁷⁶ including regulation of nicotine. Indeed, certain Wall Street analysts have gone so far as to suggest that "this Administration would [not] bring an action for recovery of federal moneys associated with tobacco unless there were clear indications that the industry would embrace such an action as a settlement vehicle."⁷⁷

While it may be appropriate to seek to entice the tobacco companies back to the federal bargaining table, this analysis is premised on the view that the bringing of a federal government recovery action is warranted based on public policy and legal grounds alone, irrespective of any related political goals.

The Department of Justice should take one or more of the legal actions recommended above at its earliest opportunity.
 

REFERENCES:

1 3189 Rumsey Drive, Ann Arbor, Michigan 48105. This analysis was commissioned by Action on Smoking and Health (ASH), Washington, D.C.

2 The author wishes to acknowledge the assistance of Brent H. Hall, J.D. candidate, University of Michigan Law School.

3 Jeffrey Taylor, "Clinton Weighs Suing Cigarette Makers to Recoup U.S. Costs for Sick Smokers," Wall Street Journal, July 15, 1998, p. A4; Wendy Koch, "Clinton Pushed to Sue Tobacco Firms," USA Today, July 14, 1998, p. 1A; Peter Baker and Saundra Torry, "Federal Tobacco Lawsuit Mulled," Washington Post, July 15, 1998, p. A11; Alissa J. Rubin and Myron Levin, "Federal Suit Over Tobacco's Impact on Medicare Weighed," Los Angeles Times, August 16, 1998; and Robert Pear, "U.S. May Sue Big Tobacco for Care Costs," New York Times, August 17, 1998, p. A9.

4 Melinda Henneberger, "Industry Ad campaign Helps Stall Tobacco Bill," New York Times, May 22, 1998, p. A1; Nancy Gibbs, "Up in Smoke: The Tobacco Bill Almost Made it Until the Republicans Decided to Blow it Off," Time, June 29, 1998, pp. 38-40; Editorial, "Tobacco Bill Succumbs; Who Now Will Tackle Addiction," USA Today, June 19, 1998, p. 7A; and Editorial, "Did Tobacco Company Money Kill the Anti-Smoking Bill?," USA Today, June 22, 1998, p. 16A.

5 C. Everett Koop and David Kessler, "Desperate for a Deal," Washington Post, November 20, 1998, p. A29; John Carey, "Commentary: Big Tobacco Makes a Stinky Bedfellow," Business Week, December 7, 1998, p. 34; Editorial, "Spending the Tobacco Billions," New York Times, December 1, 1998, p. A30; and Editorial, "New 8-State Deal Derails Plans to Cut Teen Smoking," USA Today, October 12, 1998, p. 14A.

6 Nancy Gibbs, "Up in Smoke: The Tobacco Bill Almost Made it Until the Republicans Decided to Blow it Off," Time, June 29, 1998, pp. 38-40.

7 Charles Lewis, The Buying of the Congress (New York, NY: Avon Books, 1998), p. 108.

8 Editorial, "Did Tobacco Company Money Kill the Anti-Smoking Bill?," USA Today, June 22, 1998, p. 16A.

9 Charles Lewis, The Buying of the Congress (New York, NY: Avon Books, 1998), p. 62.

10 The cigarette company executives denied, under oath, that nicotine is addictive and that cigarettes have been proved to cause lung cancer and other fatal illnesses.

11 Id. at 124.

12 Leonard S. Miller, Xiulan Zhang, Dorothy P. Rice, and Wendy Max, "State Estimates of Total Medical Expenditures Attributable to Cigarette Smoking, 1993," Public Health Reports, September/October 1998, Volume 113, pp. 447-458.

13 Jeffrey E. Harris, Testimony before the Senate Committee on Agriculture, Nutrition, and Forestry, Hearings on the Tobacco Settlement and the Future of the Tobacco Industry, September 11, 1997.

14 See Wendy Koch, "Clinton Pushed to Sue Tobacco Firms," USA Today, July 14, 1998, p. 1A.

15 Gary Black and John Rooney, Sanford C. Bernstein & Co., Inc., "Tobacco: Why the Feds Won't Rain on the Industry's Victory Parade," August 26, 1998 (unpublished report).

16 Alissa J. Rubin and Myron Levin, "Federal Suit Over Tobacco's Impact on Medicare Weighed," Los Angeles Times, August 16, 1998.

17 Philip J. Hilts, Smoke Screen: The Truth Behind the Tobacco Industry Cover-up (Reading, MA: Addison-Wesley Publishing Co., 1996), p. 3.

18 For extensive treatments of this history, reference may be made to Richard Kluger, Ashes to Ashes: America's Hundred Year War, the Public Health, and the Unabashed Triumph of Philip Morris (New York, NY: Alfred A. Knopf, Inc., 1996). Another good reference is the series of complaints filed by dozens of state attorneys general and state BlueCross/BlueShield health insurers against the tobacco industry, which provide detailed treatments of the industry's decades-long conspiracy to mislead the government and public regarding the health effects and addictiveness of tobacco products.

19 See Martin T. Meehan, Prosecution Memorandum: Requesting a Formal Investigation by the United States Department of Justice of the Possible Violation of Federal Criminal Laws by Named Individuals and Corporations in, or Doing Business with, the Tobacco Industry, December 14, 1994 (unpublished); Ann Davis and Brian Duffy, "Double Trouble? Criminal Probes Dogging Industry," Wall Street Journal, July 10, 1998, p. B1; John Schwartz, "Firm Pleads Guilty to Criminal Charge in Tobacco Probe," Washington Post, January 24, 1998, p. A4; and Scott Shane, "Criminal Probes Shadow Tobacco: Cigarette Makers Face Federal Investigations on Top of Civil Lawsuits; 3 Grand Juries Involved; Industry Executives Could Face Prison if Convicted of Fraud," Baltimore Sun, June 20, 1997, p. A1.

20 The New Jersey federal court dismissed most of a cost recovery action brought by multi-employer health and welfare trust funds to recover moneys expended on health care for tobacco-caused illnesses suffered by union workers, their families, and covered retirees, but distinguished Hedgebeth v. Medford, 74 N.J. 360, 378 A.2d 226, 228 (1977), discussed below, on the basis that in Hedgebeth, the United States had a statutory cause of action.

21 See generally Alissa J. Rubin and Myron Levin, "Federal Suit Over Tobacco's Impact on Medicare Weighed," Los Angeles Times, August 16, 1998. 

22 Pub.L. 104-201.

23 See, e.g., Health Ins. Ass'n of Amer., Inc. v. Shalala, 23 F.3d 412, 419 (D.C. Cir. 1994) (in case involving challenges to agency regulation interpreting administration of Medical Secondary Payor Act, court stated in dicta that act appeared similar to the Medical Care Recovery Act in that it created a federal independent right of recovery, which entitles government to full recovery even where tort victim's right would be limited by comparative negligence); and Holbrook v. Andersen Corp., 996 F.2d 1339, 1341 (1st Cir. 1993) (government has "an independent right of recovery against the tortfeasor" and "is not defeated even by certain restrictions that might bar the injured person's own recovery").

24 Citing, inter alia, H.R.Rep. No. 1534, 87th Cong., 2d Sess., pp. 2-4 (1964).

25 "We hold ... that the United States had the right, after six months from the date it began to furnish medical care to the injured person, to institute its independent action for the recovery of its value, even though he had sued the tortfeasor within that time and had already reduced his claim to judgment before the United States commenced its action." Id. at 26.

26 Citing, inter alia, United States v. Merrigan, 389 F.2d 21, 24 (3d Cir. 1968); Maddux v. Cox, 382 F.2d 119, 124 (8th Cir. 1967); United States v. Greene, 266 F.Supp. 976, 978-79 (N.D. Ill. 1967); and Tolliver v. Shumate, 151 W.Va. 105, 150 S.E.2d 579, 582 (1966).

27 The Texas court noted that "the Defendants would have this Court direct that the State bring individual subrogation claims pursuant to [the Texas Human Resources Code]. Although this approach may be preferred in situations where a single tortfeasor inflicts a one-time harm against a single individual who receives Medicaid benefits, the practical consequence of the Defendants' position would be to prohibit a state from ever instituting a suit that alleges a broad based harm to millions of citizens. It would be impractical, if not impossible, for the states to follow the mandates of the Medicaid statute's reimbursement provisions, because proceeding on a claim-by-claim basis would be cost prohibitive and inefficient." Id. (emphasis added).

28 Certain Defendants' Opposition to Motions to Intervene, Texas v. The American Tobacco Co., No. 5-96CV91 (E.D.Tex.), at 15 (filed Mar. 9, 1998).

29 Another state, Massachusetts, enacted a statute granting an independent right of recovery, but in so doing did not deal with the state's authority to pursue an aggregate action. That state's case was allowed to proceed by the court. See Elizabeth A. Frolich, "Statutes Aiding States' Recovery of Medicaid Costs from Tobacco Companies: A Better Strategy for Redressing an Identifiable Harm," 21 Am.J.L.&Med. 445, 463-64 (1995). (The Massachusetts case ended when the state joined in the recently adopted 46-state settlement with the tobacco industry.)

30 Jonathan S. Massey, "The Florida Tobacco Liability Law: Fairy Tale Objections to Reasonable Solution to Florida's Medicaid Crisis," 46 Fla.L.Rev. 591, 605 (1994). Massey's reference is to the Florida Medical Third-Party Liability Act, discussed below. He notes that the statute "recognizes that Florida's injury is an aggregate one: the sum total of its Medicaid expenditures attributable to smoking-related diseases." Id. at 602-604.

31 See James Schultz, Thomas Novotny and Dorothy Rice, U.S. Department of Health and Human Services, Centers for Disease Control, Office on Smoking and Health, SAMMEC 2.1. Computer Software and Documentation, 1990.

32 See, e.g., Leslie Boden, "The Economic Impact of Environmental Disease on Health Care Delivery," 18 J.Occupational Med. 467-472 (1976); and Bryan Luce and Stuart Schweitzer, "Smoking and Alcohol Abuse: A Comparison of Their Economic Consequences," 298 N.Eng.J.Med. 569-571 (1978).

33 See, e.g., Thomas Lynch and Richard Hopkins, "Estimating Tobacco-Related Health-Care and Mortality Costs in Florida," 83(2) J.Fla.M.A. 128-33 (1996); Joyner Sims, "Tobacco Use in Florida: Consequences and Costs," 1(5) Cancer Control 441-45 (1994).

34 U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, Office on Smoking and Health, Reducing the Health Consequences of Tobacco: 25 Years of Progress, A Report of the Surgeon General (Atlanta, Georgia: U.S. Government Printing Office, 1989).

35 See, e.g., Nita Gunter, "Smoking and Its Cost to Mississippi," 7(3) Miss.Morbidity Rpt. 1-2.

36 Jonathan S. Massey, "The Florida Tobacco Liability Law: Fairy Tale Objections to Reasonable Solution to Florida's Medicaid Crisis," 46 Fla.L.Rev. 591, 606 (1994).

37 See, e.g., Testimony of William A. Farone, Ph.D. (former Director of Applied Research for Philip Morris), in Engle v. R.J. Reynolds Company et al., (Dade County Cir.Ct., FL), Case No. 94-08273 CA22, Transcript of Trial Proceedings, Vol. 136-39, November 17-18, 1998.

38 See Marie Brenner, "The Man Who Knew Too Much," Vanity Fair, p. 170 et seq.; and Suein L. Hwang and Milo Geyelin, "Getting Personal: Brown & Williamson Has 500-Page Dossier Attacking Chief Critic," Wall Street Journal, February 1, 1996, p. A1.

39 Press Release, Humphrey Achieves Historic $6.1 Billion Settlement of Tobacco Lawsuit with Ironclad Ban Against Marketing to Children, State of Minnesota Office of the Attorney General, May 8, 1998.

40 Quoted in David Shaffer, "Judge Decries Tobacco Lawyers for Their Role in `Conspiracy of Silence," Pioneer Planet, December 17, 1997; and Henry Weinstein, "Judge Orders Tobacco Firms to Hand Over Secret Papers," Los Angeles Times, December 17, 1997 (emphasis added).

41 Henry Weinstein, "Tobacco Firms Ordered to Give Up Secret Files," Los Angeles Times, March 8, 1998, p. A1.

42 See Clifford E. Douglas, "Tobacco Execs Dance Around Definition of Addiction," Letter, USA Today, February 2, 1998, p. 12A; and Clifford E. Douglas, "Tobacco Deal Lets the Industry Off the Hook," Letter, New York Times, February 5, 1998, p. A22.

⁴³See, e.g., Testimony of William A. Farone, Ph.D. (former Director of Applied Research for Philip Morris), in Engle v. R.J. Reynolds Company et al., (Dade County Cir.Ct., FL), Case No. 94-08273 CA22, Transcript of Trial Proceedings, Vol. 136-39, November 17-18, 1998.

44 Fred Panzer, "The Roper Proposal," Memorandum to Horace R. Kornegay, Tobacco Institute, May 1, 1972 (Minnesota Trial Exhibit 20987).

45 Robert Pear, "U.S. May Sue Big Tobacco For Care Costs," New York Times, August 17, 1998, p. A9.

46 Walter Jones, Jr., "Should the Federal Government Sue Tobacco Companies for Medicare and Medicaid Payments? - Tobacco Farmers Must be Supported," Roll Call, September 28, 1998, "Health Care Policy Briefing," p. 5.

47 See David Shaffer, "Judge Decries Tobacco Lawyers for Their Role in `Conspiracy of Silence," Pioneer Planet, December 17, 1997; and Henry Weinstein, "Judge Orders Tobacco Firms to Hand Over Secret Papers," Los Angeles Times, December 17, 1997.

48 Dr. Julius Richmond was the U.S. Surgeon General during the Carter administration.

49 Joseph A. Califano,