1. Smoking is the primary cause of premature death in the United States.
According to the Centers for Disease Control and Prevention, over 400,000
deaths occur each year--more than 30,000 of them in New York--as a result
of tobacco related-illness. Millions of New Yorkers are now addicted and
thousands more become addicted each year to cigarettes and other tobacco
products.
2. The State of New York has made it unlawful to sell cigarettes and
other tobacco products to minors in this State. In light of the alarming
statistics regarding tobacco related deaths, during the past year, an ongoing
enforcement effort pursuant to this legislation was led by plaintiff, Attorney
General Vacco. According to the "Report on the Attorney General's
Investigation of the Sale of Tobacco Products to Minors" issued in
October, 1996, the level of teenagers smoking continues to grow by 3,000
each day. More teenagers smoke today than at any other time since the 1970's.
An estimated 3.1 million American teenagers--one out of every six-- are
regular smokers. In New York State, according to a report by the New York
State Office of Alcoholism and Substance Abuse Services, cigarette use
by children in grades seven through twelve increased to 55 percent in 1994,
up from 46% in 1990. One third of these new young smokers will eventually
die of tobacco-related illnesses. Moreover, health experts at the Centers
for Disease Control and Prevention have warned that unless smokers, particularly
teen smokers, quit soon, the progress which has been made in reducing lung
cancer and heart disease in the past twenty years will be lost.
3. Due to defendants' fraudulent and misleading activities over the
last forty years, teenagers as well as teenagers have not been fully apprised
of the health threat caused by smoking and have been ill informed about
the dangerous and addictive nature of nicotine. In fact, approximately
89% of all adult smokers in New York State started smoking before the age
of 18. Although the Surgeon General's warning appears in advertisements,
there is nothing in the advertisements or on the products themselves that
discloses the addictive nature of the product. By this critical ommision,
defendants have failed to achknowledge that when a person smokes or chews
tobacco, they become nicotine dependant and are forced to inhale or otherwise
expose themsleves to known carcinogens to satisfy that addiction. In fact,
defendants have done nothing at all to prevent the spread of cigarette
smoking addiction to children and adoles- cents which is of grave concern
to plaintiffs and is in total disregard of the public policy of the State
of New York. Rather than defendants actively encourage distribution of
tobacco products to children and adolescents through their advertising
and marketing pratices.
4. This action arises out of a combination of negligent and/or willful
and intentional wrongdoing by the leading tobacco companies, their advertising
agency and two not-for-profit corporations created by them, which together
comprise virtually the entire tobacco industry in New York State.
5. For decades, and continuing to date, the major manufacturers of tobacco
products and their agents have engaged in a conspiracy to conceal, mislead,
deceive and confuse the State of New York and its citizens regarding existing
evidence which was in their possession and control that the use of tobacco
products causes debilitating and fatal disease and that the nicotine in
tobacco products is a powerfully addictive substance. Although these manufacturers
promised New Yorkers over 42 years ago that they intended to lead the effort
to research, discover and disclose the effects of tobacco products on health
and they have conitinually renewed tht promise, in fact, they have systematically
and routinely suppressed and concealed material information and waged an
aggressive campaign of disinformation about the health conse- quences caused
by their products. In a determined effort to increase their profits, the
tobacco companies have taken these actions, even though they have known
for years, due to their own secret research, that their products can injure
or kill the user even when used exactly as intended and designed.
6. In addition, the major manufacturers of tobacco products and the
other defendants have known for decades, on the basis of their own long-concealed
research, that nicotine is addictive. At the same time, at least certain
tobacco companies have developed sophisticated techniques to manipulate
the amount of nicotine delivered by their tobacco products to the users
so as to create and sustain addiction. Yet publicly they have denied, and
continue to deny, that nicotine is addictive and that they manipulate the
nicotine delivery of tobacco products. In fact, they have affirmatively
claimed to have reduced the level of nicotine in tobacco products to induce
smokers to continue to engage in the habit of smoking, when in fact, this
alleged reduction may take place only after the level of nicotine found
in regular tobacco has already been significantly increased by defendants
either by employing a special blend of tobaccos, by adding ammonia or by
using reconsitutued tobacco.
7. The tobacco companies and the other defendants are engaged in this
course of conduct despite their knowledge that a vast majority of new users
of tobacco products are children and adolescents. Defendants knowingly
have placed cigarettes into the stream of commerce with the intent to have
them sold to children and adolescents. Each year, defendants spend millions
of dollars on marketing and public relations in New York to attract children
and adolescents to begin smoking even though they are aware that the sale
of tobacco products to children is illegal in the State of New York.
8. Defendants also suppressed the development of safer cigarettes.
9. This course of conduct was intended by the defendants to control
and maintain their markets, to maximize their profits, to ensure that the
health care costs caused by their products are borne by their customers
and the public and to minimize their legal exposure -- all for the "self
preservation" of the industry.
10. Defendants' collective conduct has resulted in an unprecedented
impact on the public health, in both human and economic terms. On information
and belief, the death toll in one year alone from tobacco use approximates
the number of American lives lost in battles in all the wars this country
has fought this century.
11. Tobacco addiction is not only a health menace but it is also an
economic menace. The State and its residents have suffered and incurred
enormous expenses as a result of defendants' misconduct. New York residents
have become ill and died from tobacco-related diseases such as lung and
other cancers, emphysema, and heart disease. On information and belief,
according to the New York State Health Department, the annual medical cost
to treat tobacco-related diseases in New York is $2.6 billion. Because
of tobacco-related diseases, the State expends hundreds of millions of
dollars annually in payments for Medicaid recipients, non-Medicaid indigent
care, and State employee health insurance. On information and belief, New
York lays out at least $650 million in Medicaid costs stemming from smoking
each year.
12. The Attorney General and the State of New York bring this action
to impose the legal responsibility upon defendants for the consequences
of their actions. The State and the Attorney General are seeking equitable
relief to protect its citizens--including children and adolescents--and
the public health of the State of New York, including restitution and civil
penalties.. This action also seeks damages for economic injuries to the
State and its residents which were caused by the unlawful actions of the
defendants.
13. Indeed, as demonstrated below, it is time that the tobacco industry
-- and not the State of New York or its residents-- take responsibility
for educating the public, particularly children and adolescents, about
the addictive nature of their products and pay for health care costs incurred
by the State because of their unlawful actions. In the past ten years alone,
the State of New York has spent over $650 billion in health care costs
for its residents and employees.
14. Specifically, such damages include, but are not limited to increased
expenditures:
a. (i) New York's Medicaid plan, N.Y.Social Services Law 363 et seq.
and 42 U.S.C. 1396 et seq. Under the Medicaid plan, the State pays approximately
25% of the costs of Medicaid. N.Y. Social Services Law 368-a.
(ii)Prospectively, for any expenditures to be made under New York's
Medicaid Plan as ammended by 1996 N.Y. Laws, ch.494, and the Personal Responsibility
or Work Oppertunity Act of 1996, P.L. 104-l93, reprinted in 1996 U.S.C.C.A.N.
2105.
In fulfilling its statutory duties, the State has expended and will
expend substantial sums of money due to the cost of providing health care
services for the diagnosis and treatment of tobacco-related illness and
diseases for Medicaid recipients. These expenditures have been caused by
the unlawful actions of the defendants.
b. For non-Medicaid indigent care in New York State facilities, N.Y.
Unconsolidated Laws 7411 et seq., and other State and federal laws. Pursuant
to New York State statute, it is the responsibility of the State of New
York to provide care and treatment for the ill and infirm regardless of
ability to pay or availability of reim- bursement from third party payors.
N.Y. Unconsolidated Laws 7412. In fulfilling its statutory duties, the
State has expended and will continue to expend substan- tial sums of money
to diagnose and treat tobacco-related diseases and addiction in uninsured
or underinsured, non-Medicaid, indigent persons.
c. As an employer, the State of New York makes available health coverage
for its more than 240,000 employees and retirees and their families, pursuant
to statute and its employment contracts,and is mandated by law to offer
hospital and medical health coverage and benefits. That coverage includes
treatment of tobacco-related diseases. To provide those benefits, the State
has entered into contractual agreements with certain health care service
providers and insurance plans, for which its pays premiums. The State has
paid and will continue to pay substantial sums of money for the costs of
premiums, including the cost of providing health care services for treatment
of tobacco-related diseases for State employees and retirees. These expenditures
have been caused by the unlawful actions of defendants.
15. Plaintiff the State of New York, by its Attorney General Dennis
C. Vacco brings this action in its capacity as sovereign (including on
behalf of public entities for whom the State may act), as parens patriae
on behalf of natural persons for whom the State may act, and as parens
patriae on behalf of the State's residents, economy and general welfare.
The violations of federal and State law alleged in this complaint have
caused loss and damage, and threaten further loss and damage:
a. To the State and parties represented by the State caused by the use
of Tobacco Products. These damages include, inter alia, past and future
Medicaid payments, medical assistance payments, costs of caring for persons
with tobacco-related illnesses, and increased costs of insurance, pensions,
and other health care benefits;
b. To consumers and other natural persons who could purchase or benefit
from safer products that could have competed with Tobacco Products; and
c. To the State's general welfare and economy.
16. Plaintiff Dennis C. Vacco is the Attorney General of the State of
New York, maintains an office in New York County and is authorized to prosecute
and defend any action in which the interests of the State of New York are
at issue. He brings this action pursuant to his authority under New York
State Executive Law 63(12), Business corporation law § 1101, the Not-For-Profit
Corporations Law § 1101, and the Donnelly Act § 340.1 and in
parens patriae on behalf of the People of the State of New York to protect
their welfare.
17. Philip Morris Incorporated ("Philip Morris") is a Virginia
corporation authorized to do business in the State of New York and which
actually does business in the State of New York and has its principal place
of business at 120 Park Avenue, New York, New York 10017. Among other things,
Philip Morris manufactures and distributes, or during times relevant herein
manufactured and distributed, tobacco products under the brand names of
Marlboro, Virginia Slims, Merit, Benson & Hedges, Cambridge, Saratoga
and Parliament.
18. Brown & Williamson Tobacco Corporation ("Brown & Williamson")
is a Delaware corporation authorized to do business in the State of New
York and which actually does business in the State of New York and has
its principal place of business at 1500 Brown & Williamson Tower, Louisville,
Kentucky 40202. The American Tobacco Company ("ATC") was purchased
by Brown & Williamson (or its parent or affiliate) and merged into
Brown & Williamson, and Brown & Williamson has succeeded to the
liabilities of ATC. Among other things, Brown & Williamson manufactures
and distributes, or during times relevant herein Brown & Williamson
or ATC manufactured and distributed, tobacco products under the brand names
of Kool, Blair, Raleigh, Barclay, Viceroy, Lucky Strike, Pall Mall, Tareyton,
and Bull Durham.
19. R.J. Reynolds Tobacco Company ("RJR") is a New Jersey
corporation authorized to do business in the State of New York and which
actually does business in the State of New York and has its principal place
of business at North Main Street, Winston-Salem, North Carolina 27102.
Among other things, RJR manufactures and distributes, or during times relevant
herein manufactured and distributed, tobacco products under the brand names
of Camel, Winston, Salem, Vintage, Doral and Now.
20. B.A.T. Industries P.L.C. ("B.A.T. Industries") is a British
corporation with its principal place of business at Windsor House, 50 Victoria
St., London, England SW1H ONL. Upon information and belief, through a succession
of intermediary corporations and holding companies, B.A.T. Industries is
the sole shareholder of Brown & Williamson. Through Brown & Williamson,
B.A.T. Industries has placed cigarettes into the stream of commerce with
the expectation that substantial sales of cigarettes would be made in the
United States and in the State of New York. In addition, B.A.T. Industries
conducted, or through its agents and/or co-defendants conducted, critical
research for Brown & Williamson on the issue of tobacco and health.
Further, Brown & Williamson is believed to have sent to England research
conducted in the United States on the issue of tobacco and health in an
attempt to remove sensitive and inculpatory documents from United States
jurisdic- tion, and these documents are subject to the control of B.A.T.
Industries. B.A.T. Industries has been involved in the actions described
herein and its actions have affected and caused harm in the State of New
York.
21. Lorillard Tobacco Company ("Lorillard") is a a Delaware
corporation authorized to do business in the State of New York and which
actually does business in the State of New York and has its principal place
of business at 1 Park Avenue, New York, New York 10016. Lorillard is a
successor to P. Lorillard Company. Among other things, Lorillard manufactures
and distributes, or during times relevant herein manufactured and distributed,
tobacco products under the brand names of Old Gold, Kent, Newport and True.
22. The American Tobacco Company ("American Tobacco") is a
cigarette manufacturer and a Delaware corporation authorized to do business
in the State of New York and which actually does business in the State
of New York and has its principal place of business at 281 Tresser Boulevard/6
Stamford Forum, Stamford, Connecticut 06904.
23. The Liggett Group, Inc. ("Liggett") is a Delaware corporation
authorized to do business in the State of New York and which actually does
business in the State of New York and has its principal place of business
at 700 West Main Street, Durham, North Carolina 27702. Among other things,
Liggett manufactures and distributes, or during times relevant herein manufactured
and distributed, tobacco products under the brand names of L&M, Chesterfield,
Eve, Lark and Dorado.
21. United States Tobacco Company ("U.S. Tobacco") is a manufacturer
of smokeless tobacco products (snuff and chewing tobacco) and a Delaware
corporation authorized to do business in the State of New York and which
actually does business in the State of New York and has its principal place
of business at 100 West Putnam Avenue, Greenwich, Connecticut. The word
"defendants" as used herein does not include defendant U.S. Tobacco
in the context of allegations concerning the manufacture, marketing, and/or
sale of cigarettes, including the deliberate refusal on the part of cigarette
manufacturers to research, develop and market a safer cigarette, the manipulation
of nicotine content in cigarettes, and the marketing of cigarettes to minors.
24. Hill and Knowlton, Inc. ("Hill and Knowlton") is a New
Jersey corporation authorized to do business in the State of New York and
which actually does business in the State of New York and has its principal
place of business located at 420 Washington Avenue, New York, New York.
25. The Tobacco Institute, Inc. ("TI") is a Type A not-for-profit
corporation organized under the laws of the State of New York, authorized
to do business in the State of New York and which actually does business
in the State of New York and has its principal place of business at 1875
I Street N.W. Suite 800, Washington, D.C. 20006. TI at all relevant times
was a trade association of the tobacco companies, was funded and controlled
by them, and operated as their public relations and lobbying arm.
26. The Council for Tobacco Research - U.S.A., Inc. ("CTR"),
successor in interest to the Tobacco Institute Research Committee ("TIRC"),
was formed as a Type B not-for-profit corporation organized under the laws
of the State of New York, authorized to do business in the State of New
York and which actually does business in the State of New York and has
its principal place of business at 900 Third Avenue, New York, New York
10022. At all relevant times CTR and TIRC were funded and controlled by
the tobacco companies.
27. At all times specified and for a long time prior thereto up to the
present time, defendants transacted a continuous and substantial business
with New York State and as a result of the injuries that are alleged herein,
defendants have committed tortious acts under the laws and regulations
of the State of New York.
28. Defendants have also committed tortious acts outside of the State
of New York causing injuries to the plaintiffs within New York State and
defendants regularly solicit business, do business and are engaged in a
permanent course of conduct in the distributing; retailing; transporting
and causing to be transported tobacco products to New York State and to
many other States and to have substantial revenue from the goods and services
rendered in New York State.
29. Defendants expected, reasonably expected or had substantial reason
to believe or expect that the plaintiff and consumers could have been injured
in New York State as a result of using tobacco products and that in addition,
defendants derived substantial revenue from interState and international
commerce particularly from New York State.
30. At all relevant times, the tobacco companies together controlled
virtually 100% of the tobacco products markets in New York and in the United
States.
31. Thus, the claims against all defendants arise out of contracts to
be performed in whole or in part in the State of New York; business solicited
in the State of New York; the production, manufacture and/or distribution
of goods by the defendants with the reasonable expectation that the goods
would be used or consumed in the State of New York and by its residents;
the production, manufacture and/or distribution of goods by the defendants
that were used or consumed in the State of New York; and tortious conduct
by defendants in or having an effect in the State of New York.
32. As used in this Complaint, the terms "defendant" and "defendants"
include all named defendants and all predecessor and successor entities
to the named defendants. As used in this Complaint, the term "tobacco
companies" refers to all defendants except Hill and Knowlton, TI and
CTR, and the term "trade associations" refers to defendant TI.
33. As used in this Complaint, the term "tobacco products"
refers to cigarettes and non-smoking tobacco such as chewing tobacco and
snuff. Non-smoking tobacco is sometimes referred to herein as "smokeless
tobacco."
THE HEALTH CONSEQUENCES OF TOBACCO
34. The human tragedy of smoking-related disease is enormous. On information
and belief, the number of deaths from tobacco related illnesses exceeds
the combined death caused by automobile accidents, AIDS, alcohol use, use
of illegal drugs, homicide, suicide and fires. Smoking-related illnesses
account for one of every five deaths each year in the United States.
35. On information and belief, at least 43 chemicals in the smoke inhaled
by persons using defendant cigarette manufacturers' products have been
determined to be carcinogenic. On information and belief, cigarette smoking
causes as much as 85% of all lung cancer. Tobacco products are also linked
to cancers of the mouth, larynx, esophagus, stomach, pancreas, uterus,
cervix, kidney and colon, among others. All told, tobacco use is responsible
for at least 30% of all deaths from cancer.
36. On information and belief, smoking is the cause of more than 80%
of deaths from pulmonary diseases such as emphysema and bronchitis.
37. Smoking is also responsible for thousands of deaths from cardiovascular
diseases, including stroke, heart attack, peripheral vascular disease and
aortic aneurysm. Tobacco use is also linked to a large number of other
serious illnesses.
38. The health consequences of smoking among women are of special concern
because of the deleterious effect on reproduction. Smoking reduces fertility,
increases the rate of miscarriages and stillbirths, retards uterine fetal
growth, and results in lower birth weight infants.
39. Cigarettes and other tobacco products result in devastating illness
and even death when used as intended and designed. There is no known level
of safe consumption.
THE ECONOMIC EFFECTS OF TOBACCO IN NEW YORK
40. Nationwide, the federal Centers for Disease Control estimates health
care costs for tobacco-related diseases are $50 billion annually. These
costs have been increasing at a precipi- tous rate, more than doubling
in the period from 1987 to 1993. The annual medical cost to treat tobacco
related illnesses in New York is $2.6 billion--at least $650 million of
which is Medicaid costs.
THE CONCENTRATION OF THE INDUSTRY
41. Cigarette manufacturing has been one of the most concentrated industries
in the United States throughout this century. Together, Philip Morris,
R.J. Reynolds, Brown & William- son, American Tobacco, Lorillard, and
Liggett comprise the Big Six cigarette manufacturers, which control virtually
100% of the market in the United States. Philip Morris and R.J. Reynolds
are the industry leaders, with, on information and belief, national market
shares of approximately 42% and 29%, respectively. On information and belief,
the approximate market shares of the other Big Six cigarette manufacturers
are: Brown & Williamson, 12%; Lorillard, 7%; American Tobacco, 7%;
and Liggett, 3%. On information and belief, U.S. Tobacco manufactures 88%
of the smokeless tobacco products sold in the United States.
42. In part because of its concentration, the tobacco industry has long
been one of America's most profitable businesses, with profit margins estimates
in at least the 30% range. The industry continues to harvest billions of
dollars in profits each year from domestic sales alone.
43. In addition, the concentration of the industry has allowed the defendants
to engage in a decades-long conspiracy relating to smoking, health and
addiction and to direct their considerable profits to further that conspiracy.
THE USE OF MARKETING TO INDUCE MINORS
44. It has been the longstanding public policy of this State to prevent
youth access to tobacco products and to discourage children from smoking.
The sale of tobacco products to children under the age of 18 violates both
the civil and criminal law of the State of New York. The Public Health
Law 1399-cc prohibits the sale of tobacco products to children under the
age of 18. The Penal Law 260.21 makes it a class B misdemeanor to sell
tobacco in any form to a child less than 18 years of age.
45. The increase in underage tobacco products use is perpetuated by
advertising campaigns that have particular appeal to children and adolescents.
Such campaigns promote the product for its symbolic attributes to convey
the impression that consumption of the product will enhance the user's
self image or image in the community. By way of example, the "Marlboro
Man," a Philip Morris campaign, presents an image of adventure and
freedom while RJR's "Joe Camel" gives humorous dating tips and
engages in activities such as motorcycle riding and waterskiing. Newport
advertisements show young men and women having fun, usually in sexually
suggestive positions, under the slogan "Alive with Pleasure"
or "Newport Pleasure." Such advertising techniques appeal to
children and adolescents by providing them with images to wear as badges
of identity.
46. Not surprisingly, Marlboro, Camel and Newport are the leading cigarette
brands used by children and adolescents, among them accounting for 85 percent
of the underage market in 1993. These three brands accounted for only 35
percent of the total market share in the same year.
47. Marlboro, which has traditionally dominated the children and adolescent
cigarette market, was originally a red tipped cigarette targeted toward
the female market with the slogan, "Mild as May." In the 1950s,
an advertising campaign which culminated in the creation of the Marlboro
cowboy, transformed Marlboro into a "masculine product" intended
to appeal to the starter market. Because young smokers often take up the
habit as an assertion of independence and adulthood, the Marlboro cowboy
campaign emphasizes themes of independence. The Marlboro man is always
alone, free from the constraints of an authority figure. There are no parents,
no older brothers and no bullies in Marlboro country.
48. While Philip Morris' Marlboro brand has been positioned to appeal
to young male smokers, Philip Morris and other defendant tobacco companies
have also specifically targeted young females, with brands such as Virginia
Slims, Eve and Silva Thins.
49. Thus, Philip Morris has had particular success in appealing to adolescent
girls with its "You've Come a Long Way Baby" campaign, promoting
Virginia Slims cigarettes. One of the most important psychological needs
of most adolescent girls, is to become independent from their parents.
Another important psycho- logical need of adolescent girls is to be perceived
as slim. By associating smoking with women's liberation, Philip Morris
intended to create in the minds of teenage girls the vision of smoking
as a symbol of autonomy and independence. By associating their cigarettes
with images of thin and glamorous models, Philip Morris conveys the image
that smoking will help girls to lose weight and look slimmer. Indeed, the
very name Virginia Slims, is suggestive. Ads for Virginia Slims and other
"feminine" cigarettes prey upon the natural and common insecurity
and sense of inferiority experienced by adolescents, by portraying the
cigarette as a crutch and a symbol of superiority.
50. As a result of these efforts to target young females, there was,
between 1967 and 1975, a substantial rise in the numbers of new female
smokers between the ages of 11 and 17.
51. RJR's subsequent use of the "Joe Camel" campaign is a
striking example of the power that marketing can have on capturing children
and adolescent smokers. The "Joe Camel" campaign was initiated
in 1987 to commemorate the 75th anniversary of Camel cigarettes. It soon
became evident that the "Joe Camel" cartoon character strikes
a responsive chord among children and adolescents. Since then, the campaign
has been used to target children to induce them to start smoking as early
as possible, so they can become addicted to nicotine and form brand loyalties
which will last the rest of their lives.
52. When RJR began the "Joe Camel" cartoon campaign, Camel's
share of the children's and adolescent's market was estimated to be between
0.5 percent and 3 percent. In just a few years, Camel's share of the children's
and adolescents' market increased to over 13 percent and by some accounts,
had increased to over 32 percent.
53. Tobacco products advertising is becoming increas- ingly concentrated
in youth-oriented publications. Moreover, tobacco product ads in these
youth-oriented magazines are frequently multi-page, pop-up ads which are
significantly more costly, but also more attention-grabbing than conventional
ads. By way of example, Rolling Stone magazine ran a "rockin Ticket-
master" ad in which the opening page featured the Joe Camel character
in a leather jacket and t-shirt looking down at the reader saying "Wanna
See a Show?" When the reader turns the page, the Joe Camel character
pops out of the magazine to hand the reader two tickets with the caption,
"Go ahead, its on me."
54. Another strategy that tobacco companies use to appeal to children
and adolescents is distributing promotional items, such as T-Shirts, baseball
caps and pocket knives through the mail and at promotional events. These
items encourage adolescents, to whom such items have great appeal, to accumulate
merchandise by buying more cigarettes. More importantly, the items, which
do not generally display warning labels, turn the children into walking
advertisements that penetrate into schools and other areas where advertising
would otherwise be restricted. A 1992 Gallup poll found that about half
of adolescent smokers and one quarter of non-smoking adolescents had received
at least one of these items.
55. Tobacco companies have also marketed to youth by inserting advertisements
for their products into movies that have appeal to children. Such movies
include, for example, Superman II, Supergirl and James Bond. A 1983 letter
signed by the actor Sylvester Stallone documents one such agreement. Mr.
Stallone writes, "I guarantee that I will use Brown & Williamson
tobacco products in no less than five feature films. It is my understand-
ing that Brown & Williamson will pay a fee of $500,000.00." Such
"stealth" advertisements are particularly disturbing in that
the child and adolescent are particularly susceptible to such role models
and is wholly unaware that he or she is the subject of the marketing.
56. Sponsorship of, and placement of billboards at, sporting and entertainment
events is another effective means of "stealth" advertising. Such
advertising makes its way onto television, where cigarette advertising
is otherwise prohibited. By way of example, when the 1989 Marlboro Grand
Prix was televised, the Marlboro logo could be seen for 46 of the 94 total
minutes of the event's broadcast time.
57. Despite the overwhelming evidence, the tobacco companies continue
to deny any youth-directed advertising and promotional activities. The
tobacco companies represent that the purpose and effect of their advertising
is limited to maintaining brand loyalty and enticing existing adult smokers
to switch brands and that it has no role in encouraging children and adolescents
to experiment with tobacco products. Whatever their purpose, the ads clearly
have the opposite effect.
THE SUCCESS OF THE STRATEGY
58. The tobacco companies have pursued, and continue to pursue, such
advertising campaigns knowing them to be particularly effective for inducing
children and adolescents to purchase, use and become addicted to tobacco
products. One study found that 30 percent of three year olds and 91 percent
of six year olds associated the "Joe Camel" cartoon character
with cigarettes. By the age of six, the face of "Joe Camel" and
the silhouette of Mickey Mouse were equally well recognized. Studies also
show that while adolescents' cigarette consumption tends to be closely
correlated to the level of advertising, adults tend to purchase generic
or "value category" cigarette brands, which use little or no
"image" advertising.
59. Studies have also demonstrated the success of the tobacco companies'
efforts to target young girls under the age of 18. Starting in 1987, with
the commencement of new campaigns targeting young girls, there was a sharp
rise in new users in the 12 - 17 year old group. The jump was 110 percent
in 12 year olds; 55 percent among 13 year olds; 70 percent among 14 year
olds; 75 percent among 15 year olds; 55 percent among 16 year olds; and
35 percent among 17 year olds. During the period 1967 to 1975, there were
billions of dollars of sales of Virginia Slims, Silva, and Eve.
60. The tobacco companies' own research confirms the appeal of its marketing
campaigns to children. A study funded by RJR found that among three to
six year olds, "Joe Camel" was more readily associated with cigarettes
than Ronald Mcdonald was with hamburgers. A 1969 research paper presented
to the Philip Morris Board of Directors concluded that "The 16 to
20-year old begins smoking for psychosocial reasons. The act of smoking
is symbolic; it signifies adulthood, he smokes to enhance his image in
the eyes of his peers."
61. Other tobacco companies research and marketing memoranda that recently
have been made public provide compelling evidence that advertising campaigns
were designed with the purpose and effect of targeting children and adolescents.
A 1976 Secret Memorandum entitled "Planning Assumptions and Forecast
for the Period 1976-1986 for R.J. Reynolds Tobacco Company," unabashedly
States, "Evidence is now available to show that the 14 to 18 year
old group is an increasing segment of the smoking population. RJR must
soon establish a successful new brand in this market if our position in
the industry is to be maintained over the long term."
62. A 1973 confidential document from RJR entitled "Research Planning
Memorandum on Some Thoughts about New Brands of Cigarettes for the Youth
Market" bluntly describes the strategy. The memo States:
"[I]f our Company is to survive and prosper, over the long term,
we must get our share of the youth market ...
"The expected or derived psychological effects are largely responsible
for influencing the pre-smoker to try smoking, and provide suffi- cient
motivation during the 'learning' period to keep the 'learner' going, despite
the physical unpleasantness and awkwardness of the period. "In contrast,
once the "learning" period is over, the physical effects become
of overriding importance and desirability to the confirmed smoker....
"Once this mechanism [the cigarete] has been experienced and used,
physical and psychological habit patterns are firmly established and become
self-perpetuating...
'Nicotine Effects - Nicotine should be deliv- ered at about 1.0 to 1.3
mg.\cigarette, the minimum for confirmed smokers. The rate of absorption
of nicotine should be kept low by holding pH down, probably below 6.
"II PSYCHOLOGICAL EFFECTS
" [T]here is strong psychological pressure, particularly as a young
person, to identify with the group, follow the crowd, and avoid being out
of phase with the group's value system...
" Thus a new brand aimed at the young smoker ... should emphasize
togetherness, belonging and group acceptance, while at the same time emphasizing
individuality and 'doing one's own thing'....
" Self-Image Enhancement - The fragile, developing self-image of
the young person needs all of the support and enhancement if can get. Smoking
may appear to enhance that self-image in a variety of ways. If one values,
for example, an adventurous, sophisticated, adult image, smoking may enhance
ones self-image....
" Experimentation - There is a strong drive in most people, particularly
the young, to try new things and experiences. This drive no doubt leads
many pre-smokers to experiment with smoking, simply because it is there
and they want to know more about it."
63. A similar document from a sister company of Brown & Williamson
provides: "If the last ten years have taught us anything, it is that
the industry is dominated by the companies who respond most effectively
to the needs of younger smokers." The document explained, "[t]he
smoker base is declining, primarily as a function of successful quitting.
And the characteristics of new smokers are changing such that the future
starting level may be in question."
64. RJR MacDonald, an RJR affiliate, conducted a "Youth Target"
survey, which was the first of a planned series to study the lifestyles
and value systems of young men and women in the 15-24 age range. The stated
purpose of the study was to "provide marketers and policy makers with
an enriched understanding of the mores and motives of this important emerging
adult segment which can be applied to better decision making in regard
to products and programs directed at youth." The study focused on
the "primary elements of lifestyle and values among the youth of today."
65. The tobacco companies' willingness to follow up on such plans is
demonstrated by the Congressional testimony of the model who portrayed
the "Winston Man" for RJR's Winston brand cigarettes. He stated:
"I was clearly told that young people were the market that we were
going after." He further testified, "it was made clear to us
that this image was important because kids like to role play, and we were
to provide the attractive role models for them to follow...
66. Tobacco companies are also aware that once children and adolescents
begin smoking, it will be difficult for them to stop. The RJR internal
document entitled "Confidential Research and Planning Memorandum on
Some Thoughts About New Brands of Cigarettes for the Youth Market"
explicitly noted that once the "learning period" for new smokers
is over, "physical and psychological" habit patterns become firmly
established and self-perpetuating. Studies prepared for an affiliate of
Brown & Williamson State that "[h]owever intriguing smoking was
at 11, 12 or 13, by the age of 16 or 17 many regretted their use of cigarettes
for health reasons and because they feel unable to stop smoking when they
want to." Another document prepared for the same company States, "the
desire to quit seems to come earlier now than before, even prior to the
end of high school. In fact, it often seems to take hold as soon as the
recent starter admits to himself that he is hooked on smoking. However,
the desire to quit, and actually carrying it out, are two quite different
things, as the would be quitter soon learns."
67. The financial allure of the underage market has not escaped the
attention of the smokeless tobacco industry. US Tobacco has successfully
revived a declining market for its smokeless tobacco products by targeting
children and adolescents. In 1970, moist snuff smokeless tobacco was consumed
primarily by men over 50 and young males were among the smallest market
share. By 1985, use of moist snuff by young males was double that of men
over 50.
68. US Tobacco's campaign to market to children and adolescents was
made clear at a 1968 U.S. Tobacco meeting focusing on future markets. According
to the minutes, Louis Bantle, then US Tobacco's Vice President for Marketing,
set forth the following marketing strategy: "We must sell the use
of tobacco in the mouth and appeal to young people...
69. US Tobacco's youth marketing campaign includes a "graduation
process" of starting new users on a low nicotine product, and having
them graduate to higher nicotine delivery brands as they progress. Advertising
dollars and promotions are disproportionately directed toward the low nicotine,
"starter brands." Such advertisements have been often delivered
by professional athletes and use slogans stressing that the product is
easy to use in "places where you can't light up." This message
conveys the not so subtle suggestion that the product can be used without
fear of adult detection.
70. Desiring that the users will soon become addicted and graduate to
higher nicotine brands, US Tobacco has pursued a strategy of distributing
its "starter" products as widely as possible. By way of example,
US Tobacco representatives are instructed to distribute free samples of
the low nicotine starter brands rather than the high nicotine brands. In
1978 US Tobacco ran advertisements in Sports Illustrated offering free
samples of fruit-flavored low-nicotine snuff for beginners. The samples
came complete with instructions for use.
71. Like advertising for cigarettes, smokeless tobacco advertising is
disproportionately concentrated on the products with the widest appeal
to children. In 1983, Skoal Bandits, US Tobacco's low nicotine starter
brand, accounted for 47 percent of US Tobacco's advertising dollars, but
only 2 percent of the market share by weight. US Tobacco's highest nicotine-delivery
brand had only 1 percent of the advertising expenditures, but 50 percent
of the market share.
72. Demonstrating the success of the youth marketing program, Bantle,
who had helped to initiate the campaign, stated in 1977 that, "In
Texas today, a kid wouldn't dare to go to school, even if he doesn't use
the product, without a can in his Levi's."
73. The ease with which children and adolescents can purchase tobacco
products from stores and vending machines ensures that the tobacco companies
will be able to reap the profits from the increased demand created by their
advertising targeted at children and adolescents.
74. In May and August 1996 the Attorney General conducted a State-wide
survey of retail stores which sell tobacco products and determine the level
of compliance with the prohibition against the sale of tobacco products
to minors. The survey found that 35% of New York retailers surveyed actually
sold cigarettes to minors. In another survey, 77 percent of smokers under
the age of 18 reported never having been asked for proof of age when purchasing
cigarettes in a store in the 30 days preceding the survey. Seventy-five
percent of eighth graders and nearly 90 percent of tenth graders have reported
that it would be fairly easy or very easy to obtain cigarettes and 94 percent
of junior and high school students said that it was either easy or only
rarely difficult to purchase smokeless tobacco products.
75. Although New York State and the other States bans the sale of tobacco
products to children ,over half billion packs of cigarettes and 26 million
containers of chewing tobacco are sold illegally each year to children
under the age of 18.
76. In New York State cigarette use by children in grades 7-12 increased
to 55% in 1994 up from 46 % in 1990 according to the New York State Office
of Substance Abuse Services.
77. Although tobacco companies are aware of the easy access that children
and adolescents have to their product and that the sale of tobacco products
to children is illegal in New York, they have taken no meaningful steps
to prevent such distribution. In fact, the tobacco companies have attempted
to convey the impression that they wish to discourage sales to minors,
without taking any meaningful action to prevent such sales. Thus, despite
the fact that Philip Morris had promised to suspend merchandising payments
to merchants caught selling to minors, and despite the fact that Philip
Morris had been informed of a number of merchants who were convicted of
selling to minors, Philip Morris has admitted that not one merchandising
payment in the entire country has been suspended under this program. Instead,
the tobacco companies actively encourage such distribution through their
advertising and marketing practices.
78. Part of the tobacco companies' marketing strategy is to attract
children and adolescents by placing advertising and promotional material
in stores located near high schools. In a 1990 memorandum marked "very
important" a division manager of RJR ordered its employees to identify
stores near high schools and colleges for the purpose of increasing marketing
efforts in those locations. This was not an isolated incident but a nationwide
policy. In April of that year, another memorandum, from a different RJR
manager located in a different region, listed as targets for an increased
marketing campaign facilities that are "located across from, adjacent
to or in the general vicinity of High Schools or College Campus."
79. A July 1995 report by the California Department of Health Services
found that stores within 1,000 feet of a school had significantly more
tobacco advertising and promotions than average. Stores near schools were
more likely to have at least one tobacco advertisement placed next to candy
or displayed at three feet or below. A significantly higher average number
of tobacco advertisements also were found on the exterior of stores located
in young neighborhoods - communities in which at least one-third of the
population was 17 years of age or less.
FALSE ASSURANCES GIVEN TO BUILD THE ADOLESCENT
MARKET
80. The tobacco companies have launched a number of campaigns designed
to make the public at large believe that they wish to discourage young
people from smoking. In reality, such campaigns have the purpose and effect
of assuaging parental and governmental concerns while imposing minimal
restraints on tobacco companies' ability to continue to market to children
and adoles- cents.
81. In 1965, in response to Federal Trade Commission efforts to regulate
cigarette advertising, the cigarette companies created a self-regulatory
cigarette advertising and promotional code. The code prohibited testimonials
from athletes or other celebrities perceived to appeal to the young, representations
that smoking was essential to social success, representations that the
healthiness of models was due to cigarette smoking, the use of models who
were participating in physical activity or the use of models who were younger,
or appeared younger, than 25 years of age. Such guidelines have been routinely
ignored and violated. Indeed, four months after the code had been put into
effect, Viceroy ads depicted tennis players smoking, Salem ads utilized
images of a young couple playing alongside a waterfall and a television
producer admitted to looking to models for cigarette advertisements who
were over 25 but appeared to be younger.
82. In late 1980, the Tobacco Institute, on behalf of the tobacco companies,
inaugurated a new public relations campaign designed to convince the general
public, the federal government and State governments that the tobacco companies
wished to discourage young people from using tobacco products. Several
tobacco companies began their own campaigns at the same time.
83. In fact, these programs were and are just a continuation of the
tobacco companies ongoing campaign of misrepre- sentation, disinformation
and conspiracy. Brochures, like "Tobacco: Helping Youth Say No",
are being distributed by the Tobacco Institute and tobacco products manufacturers.
In reality, these brochures are a subterfuge designed to promote tobacco
products use. The brochure presents tobacco products use as a permissible
"adult" decision and as something an "adult" can safely
do. The only reason given children for not using tobacco products is that
- like getting married or driving a car - smoking is for grown ups. Such
message really makes the smoking more desirable to kids. An RJR brochure
even tells parents to tell their children that the parents smoke "because
they enjoy it." None of these brochures disclose that smoking is highly
addictive and harmful to human life.
84. The tobacco companies' wrongful conduct has gone on for years and
continues to date. In January 1990, in response to letters received from
school children, the Manager of Public Relations of RJR wrote the principal
of a public school that:
"The tobacco industry is also concerned about the charges being
made that smoking is responsible for so many serious diseases. Long before
the present criticism began the tobacco industry in a sincere attempt to
determine the harmful effects, if any, smoking might have on human health,
established the Council for Tobacco Research-USA. The industry has also
supported research grants by the American Medical Association. Over the
years the tobacco industry has given in excess of $162 million to independent
research on the controversies surrounding smoking - more than all voluntary
health associations combined.
" Despite all the research going on, the simple and unfortunate
fact is that scientists do not know the cause or causes of the chronic
dis- eases reported to be associated with smoking. The answers to many
unanswered controversies surrounding smoking - and the fundamental causes
of the diseases often statistically associated with smoking - we do believe
can only be determined through much more scientific research. Our company
intends, therefore, to continue to support such research in a continuing
search for answers.
We would appreciate your passing this information along to your students...."
85. These misrepresentations are totally inconsistent with the Surgeon
General's warning that must be placed on every pack of cigarettes, are
confusing to adolescents and are clearly intended to undermine the import
of that warning.
TOBACCO COMPANIES HAVE A HISTORY OF CHOOSING SALES
OVER PUBLIC HEALTH AND SAFETY FOR ADULTS AS WELL
86. In the 1930's and through the 1950's, in response to what industry
spokemen referred to as "the health scare", the tobacco companies
made express claims and warranties as to the healthiness of their products
with reckless disregard to the falsity of their claims and the consequential
adverse impact on consumers. Examples of these health warranties include
the following: Old Gold- " Not a cough in a Carload"; Camel-
" Not a single case of throat irritation due to smoking Camels";
Philip Morris- "The Throat-tested cigarette."
87. In 1942, Brown and Williamson claimed that Kools would keep the
head clear and/or give extra protection against colds.
88. In 1952, Liggett & Myers conducted a test for advertising purposes
to demonstrate the absence of harmful effects of smoking Chesterfields
on the nose, throat and affected organs. The test was conducted by Arthur
D. Little, Inc. and was designed so as to have little scientific value.
Nonetheless, its conclusion that smoking Chesterfields had no harmful effect
on the organs in question was widely publicized and the purported results
used to assure the general public that Chesterfields were harmless.
89. During the 1950's, Ligget & Myers sponsored the nationally popular
Arthur Godfrey radio and television show wherein health claims were made
based on the alleged scientific studies assuring "smoking Chesterfileds
would have no adverse effects on the throat, sinuses, or affected organs."
Arthur Godfrey died from lung cancer caused by smoking cigarettes.
90. Earlier consumer oriented ads from the 1930's and 1940's often carried
wide-ranging medical claims that placed cigarette-touting physicians in
the company of endorsers such as Santa Claus (Luckies are easy on my throat"),
movie stars, sports heros and steady nerved circus stars. Similar ads even
appeared in medical journals, where ads were directed solely at physicians.
One, for example, touted the Camel cigarettes booth as the American Medical
Association's 1942 Annual Meeting. In the New York State Journal of Medicine,
Chesterfield ads began running in 1933. They often carried claims such
as, " Just as pure as the water you drink...and practically untouched
by human hands."
91. The tobacco companies sponsored cigarette ads the New England Journal
of Medicine, Journal of the American Medical Association ("JAMA"),
and The Lancet for the 1930's though the 1940's.
92. For 15 years, Philip Morris used various claims, including one it
ran in JAMA in 1949: "Why many leading nose and throat specialists
suggest, 'Change to Philip Morris'.." In 1935, Phil Morris ran an
ad in the New York State Medical Journal touting studies that purportedly
showed Philip Morris cigarettes were less irritating. An ad by the company
in 1943 issue of the National Medical Journal read:" 'Don't smoke'
is advice hard for patients to swallow. May we suggest instead, "Smoke
Philip Morris/' Tests showed three out of every four cases of smokers'
cough cleared on changing to Philip Morris. Why not observe the results
of yourself?" Other companies added different angles for physicians.
Camel cigarettes paid tribute to medical pioneers and concluded: "Experience
is the best teacher...experience is the best teacher is cigarettes too."
Old Gold reacted the early negative medical studies with the slogan: "If
pleasure's your aim, not medical claims.."
93. The appearance of landmark studies such as the 1952 JAMA article
on smoking and bronchial carcinoma, by Alton Ochsmer, M.D., and others
prompted JAMA's decision to ban cigarette ads from their journal.
94. The health-claim advertising campaigns were patently false, misleading,
deceptive and/or fraudulent. These campaigns were disseminated nationally
in popular magazines, press, radio and television and were calculated to
induce non-smokers to commence smoking and the induce smokers to continue
their addiction.
95. During the 1950's the tobacco companies employed yet another method
of deception in manufacturing and advertising sales to counter the "health
scare"--"the Filter Derby" and "Tar Wars". The
tobacco companies manufactured filtered cigarettes that were advertised
with explicit and/or implicit warranties of tar/nicotine content and health
claims. The tobacco companies' health claims and claims as to effectiveness
of the filters in removing tar and nicotine were knowingly deceptive when
made, and/or were made with reckless disregard for the health risks to
cigarette smokers.
NATURE OF DEFENDANTS' WRONGFUL CONDUCT AND CONSPIRACY
96. This action arises out of an ongoing course of wrongful conduct
by each defendant individually and in conspiracy with each other.
97. Defendants have pursued a course of conduct and conspiracy of deceit
and misrepresentation against the public in order to promote and maintain
sales of tobacco products, and the profits derived therefrom, to shield
themselves from having to pay the health care costs of tobacco-related
diseases and to shift those costs to others, such as the State of New York.
98. Defendants conspiracy consists of two strategies: first, they agreed
to represent falsely to the public that they were creating a new, unbiased
and therefore trustworthy source to answer questions about smoking and
health, and second, they counted on the public's acceptance of their representations
of such trustworthiness to misrepresent, suppress, distort and confuse
the facts about the health dangers of tobacco products, including nicotine
addiction.
99. The tobacco companies set their plan in motion by creating a joint
industry research organization in 1954. Since that time, they have used
the credibility gained by false claims of disinterested industry-funded
research to suppress and/or misrepresent the material facts to the public.
Although knowing of the serious health dangers inherent in the use of their
products and the addictive nature of their products, the defendants have
utilized the above scheme to further their fallacious arguments that there
is insufficient "objective" research to determine if use of tobacco
products causes disease and death, and that tobacco products are not addictive.
100. The two interconnected strategies of suppression of material information
and misrepresenting their objectivity to gain credibility, and using that
credibility better to deceive the public about smoking and health, have
been repeated consistently for more than four decades. Defendants have
engaged in a continuous conspiracy to deceive the public regarding facts
material to the decision to purchase tobacco products.
101. Moreover, as internal industry research confirmed the dangers of
using tobacco products and addiction, the defen- dants' deception rose
to a new level; although promising the public that they would make full
disclosure of the results of their research, defendants concealed their
own negative health and addiction research results from both the public
and public health officials. These research results have still not been
voluntarily released.
102. Defendants also have not disclosed to the public that the tobacco
companies manipulate and control the content and delivery of nicotine in
their products to create and sustain consumers' addiction to tobacco products.
103. The success of the industry's campaign of deceit and misinformation
depended, in large part, on the tobacco companies acting in concert. Without
the agreement of each tobacco company to suppress the truth about the health
consequences and addictive nature of using tobacco products, the deception
that the joint industry research efforts were objective would be revealed,
and the substantive claim that "not enough facts are known" to
indict the use of tobacco products would ring hollow. The tobacco companies
agreed to come together and to stay together in order to accomplish what
would not have otherwise occurred-- the unified and consistent distortion
of public information about the use of tobacco products, health and addiction.
104. Defendants were aware that unless they took the actions they agreed
to take and subsequently took, the volume of their sales of tobacco products
would substantially decrease, and accordingly the profits the tobacco companies
would realize would substantially diminish. Defendants were also aware
that if they were required to pay the health care costs caused by the use
of their products, then the tobacco companies' profits would have been
substantially decreased.
105. The non-tobacco companies have acted in concert with defendant
tobacco companies by implementing marketing and public relations strategies,
facilities and operations to carry out the purpose and effect of the conspiracy
and wrongful conduct alleged herein.
106. With respect to these unlawful activities, each defendant is sued
as a primary violator and as an aider and abettor who rendered substantial
assistance in the accomplishment of the acts or omissions alleged herein.
In acting to aid and abet and substantially assist the commission of the
fraud and other wrongful conduct complained of herein, each defendant acted
with an awareness of the fraud and other wrongful conduct and realized
that its conduct would substantially assist the accomplishment of the fraud
and was aware of its overall contribution to the conspiracy, scheme and
common course of wrongful conduct alleged herein.
107. Defendants set their plan in motion by creating a joint industry
research organization in 1954. Since that time, they have used the credibility
gained by claims of industry-funded "disinterested" researchers
better to misrepresent the material facts to the public. In what has become
the industry mantra, defendants claim that there is insufficient research
to determine whether tobacco use causes diseases and that tobacco is not
addictive.
108. Defendants' misrepresentation of their objectivity to gain credibility
and use of that credibility better to deceive the public about tobacco
and health have continued for more than four decades. Defendants have engaged
in a continuing conspiracy to deceive the public regarding facts material
to the decision to purchase cigarettes and other tobacco products.
109. Finally, defendants conspired to suppress the development, testing
and marketing of safer cigarettes, while fraudulently maintaining that
their products are safe or that there are no safer alternatives to their
products.
THE BEGINNING OF THE CONSPIRACY: "The Big
Scare"
110. The industry conspiracy and combination began as early as the 1950s,
when the tobacco companies were confronted with the publication of several
scientific studies which sounded grave warnings on the health hazards of
tobacco. One of the first of these studies was published in 1952 by Dr.
Richard Doll, a British researcher. On information and belief, Dr. Doll,
in a statistical analysis, found that lung cancer was more common among
people who smoked and that the risk of lung cancer was directly proportional
to the number of cigarettes smoked.
111. A second study was published in December 1953 by Dr. Ernest Wynder
of the Sloan-Kettering Institute. Dr. Wynder painted the shaved backs of
laboratory mice with a residue of cigarette smoke. Malignant tumors grew
in 44% of the mice, providing biological information of the cancer-causing
properties of cigarettes.
112. The Doll and Wynder studies generated widespread public concern
about the health hazards of cigarettes. The widespread reporting of these
studies caused what officials of the tobacco companies later called the
"Big Scare." Confronted with this evidence, the presidents of
the leading tobacco companies,inc- luding all of the defendant tobacco
companies except Liggett, met at an extraordinary gathering in the Plaza
Hotel in New York City on December 15, 1953. Hill and Knowlton, a public
relations agency, coordinated the meeting and later prepared a memorandum
summarizing the discussions of that day.
113. According to a Hill and Knowlton memorandum summarizing the meeting,
industry executives viewed the problem as "extremely serious and worthy
of drastic action." The document continues, "officials stated
that salesmen in the industry are frantically alarmed and that the decline
in tobacco stocks on the stock exchange market has caused grave concern...."
The Hill and Knowlton memorandum also revealed that:
a. The companies had not met together before because two previous antitrust
decrees had prohibited "many group activities."
b. The problem was viewed entirely in terms of a public relations problem,
as opposed to a public health concern. The industry leaders "feel
that the problem is one of promoting cigarettes and protecting them from
these and other attacks that may be expected in the future" and that
the industry "should sponsor a public relations campaign which is
positive in nature and is entirely `pro-cigarettes.'"
c. All of the leading manufacturers, except Liggett, agreed to "go
along" with the public relations strategy. Liggett decided not to
participate at that time "because that company feels that the proper
procedure is to ignore the whole controversy."
d. The group discussed forming an association "specifically charged
with the public relations function."
e. Hill and Knowlton was to play a central role in the industry association.
"The current plans are for Hill and Knowlton to serve as the operating
agency of the companies, hiring all the staff and disbursing all funds."
114. Nine days later, Hill and Knowlton presented a detailed recommendation
to the tobacco companies and others. The recommendation recognized the
importance of gaining the public trust, and avoiding the appearance of
bias, if the "precigarette" strategy was to be successful. According
to the memorandum: "[T]he grave nature of a number of recently highly
publicized research reports on the effects of cigarette smoking...have
[sic] confronted the industry with a serious problem of public relations.
"It is important that the industry do nothing to appear in the light
of being callous to considerations of health or of belittling medical research
which goes against cigarettes...
"The situation is one of extreme delicacy. There is much at stake
and the industry group in moving into the field of public relations, needs
to exercise great care not to add fuel to the flames."
115. As a result of the December 15, 1953 meeting and the recommendations
of Hill and Knowlton, Philip Morris, RJR, Brown & Williamson, ATC,
Lorillard and US Tobacco agreed to create the Tobacco Industry Research
Committee ("TIRC").
CONTROL OF TIRC BY TOBACCO COMPANIES THROUGH HILL
AND KNOWLTON
116. But, apparently TIRC never operated independently, and was created
for and continues to operate for the primary purpose of suppressing information
from the public regarding research on the use and health of tobacco products
to ensure the commercial success of the tobacco companies. As had been
proposed at the December 15, 1953 meeting, the tobacco companies, through
their agent Hill and Knowlton, operated and effectively controlled TIRC.
117. TIRC was physically established in the Empire State Building in
New York City, one floor below the Hill and Knowlton offices. Internal
documents confirm that Hill and Knowlton, and not independent scientists,
actually ran TIRC. A "highly confiden- tial" internal memo reported:
"Since the [TIRC] had no headquarters and no staff, Hill and Knowlton,
Inc. was asked to provide a working staff and temporary office space. As
a first organizational step, public relations counsel assigned one of its
experi- enced executives, W.T. Hoyt, to serve as account executive and
handle as one of his functions the duties of executive secretary for the
[TIRC]."
118. There has been substantial staff overlap between Hill and Knowlton
and TIRC (and later CTR). In l954, 35 staff members of Hill and Knowlton
worked full or part time for TIRC. In that year, TIRC, a purported research
firm, paid $477,955 to Hill and Knowlton, the public relations arm of the
tobacco companies. This amount constituted over 50% of TIRC's entire operating
budget.
119. Liggett joined TIRC in 1964, the same year the Surgeon General
issued his first report linking cigarette smoking to lung cancer. Also
in 1964, the TIRC changed its name to the Council for Tobacco Research-USA,
Inc. ("CTR").
120. On or about January 8, 1971, CTR was formed as a not-for-profit
Type B corporation purportedly created for the purpose of aiding and assisting
research into tobacco use and health and to make available to the public
factual information on this subject. However, CTR functioned as did its
predecessor, TIRC, solely for the commercial benefit of the tobacco companies
to increase tobacco sales.
121. In addition, trade association, the Tobacco Institute, was formed
by the tobacco companies in 1958. Hill and Knowlton, however, continued
to have substantial involvement in both TIRC and the Tobacco Institute.
Hill and Knowlton's role in these organiza- tions has been described by
industry participants as: "Straddling both and acting as a buffer
for each...Hill and Knowlton decides whether questions from outside individuals
or organizations are to be directed to the Tobacco Institute or the T.I.R.C."
122. Hill and Knowlton coordinated the public relations activities of
both TIRC and the Tobacco Institute. In this role, Hill and Knowlton helped
forge a multi-prong industry propaganda strategy to counter the growing
evidence that tobacco use causes adverse health consequences and the growing
call for governmental regulation of tobacco products. At a 1963 strategy
meeting of TIRC, the Tobacco Institute, Hill and Knowlton and representatives
of the tobacco companies, Hill and Knowlton's role in responding to the
anticipated Report of the Surgeon General was described: "Because
Phase I [of the Surgeon General's Report] is expected to be scientific
in na- ture, T.I.R.C. expressed the belief that it will logically be the
responsive agency, with Dr. Little or Mr. Hartnett as spokesman and with
Hill & Knowlton providing public relations guidance. By the same token,
the Tobac- co Institute believes that Phase II [dealing with regulator
action] will probably be its primary concern, again with Hill * Knowlton's
counseling."
123. Over the course of time, the purported information and research
regarding tobacco use and health which TI and TIRC/CTR intentionally failed
to disseminate to the public violated the purposes for which they were
established. Such failure is unlawful and is against the public policy
of the State of New York.
THE TOBACCO COMPANIES' FALSE PROMISE TO THE PUBLIC
124. On January 4, 1954, Philip Morris, RJR, Brown & Williamson,
ATC, Lorillard, US Tobacco and others announced the formation and purpose
of TIRC, with a full page newspaper adver- tisement entitled "A Frank
Statement to Cigarette Smokers." The statement appeared in 448 newspapers
across the nation, reaching a circulation of 43,245,000 in 268 cities.
125. At the time of forming TIRC, the industry undertook an unambiguous
continuing duty to protect health by representing that it would conduct
and disclose unbiased and authenticated research on the health risks of
tobacco use. As set forth below, this advertisement included an unambiguous
pledge to the public, including the people of New York State and to advance
and protect the public health, that through TIRC these tobacco companies
would conduct and report objective and unbiased research regarding the
use of tobacco products and their effects on health. When they made this
promise, the tobacco companies knew or should have known that consumers
in New York State were the primary object of TIRC's activities and that
the information which TIRC failed to disseminate was material to their
decision to purchase and use tobacco products.
126. The "Frank Statement to Cigarette Smokers" stated, in
part:
a. "Recent reports on experiments with mice have given wide publicity
to a theory that cigarette smoking is in some way linked with lung cancer
in human beings."
b. "Although conducted by doctors of professional standing, these
experiments are not regarded as conclusive in the field of cancer research."
c. "[T]here is no proof that cigarette smoking is one of the causes
of lung cancer."
d. "We accept an interest in people's health as a basic responsibility,
paramount to every other consider- ation in our business."
e. "We believe the products we make are not injurious to health."
f. "We always have and always will cooperate closely with those
whose task it is to safeguard the public health."
g. "We are pledging aid and assistance to the research effort into
all phases of tobacco use and health."
h. "For this purpose we are establishing a joint industry group
consisting initially of the undersigned. This group will be known as TOBACCO
INDUSTRY RESEARCH COMMITTEE."
i. "In charge of the research activities of the Committee will
be a scientist of unimpeachable integrity and medical repute. In addition
there will be an Advisory Board of scientists disinterested in the cigarette
industry. A group of distinguished men from medicine, science, and education
will be invited to serve on this Board. These scientists will advise the
Committee on its research activities."
j. "This statement is being issued because we believe the people
are entitled to know where we stand on this matter and what we intend to
do about it."
127. At that time, and continuing to the present, these defendants know
or should have known that their failure to fulfill the duty they undertook,
and other conduct as alleged herein, would directly stabilize or increase
the use of tobacco products. They also knew that an increase in health
care costs for tobacco products users, including health care costs that
would be incurred by the State of New York, was the substantially certain
consequence of the past and continued use of tobacco products.
128. By the spring of 1955, the self-defense strategy recommended by
Hill and Knowlton and implemented by the industry through the "Frank
Statement" was largely successful in securing the confidence of those
to whom it was directed. Hill and Knowlton reported to TIRC:
a. "[P]rogress has been made.... The first `big scare' continues
on the wane."
b. "The research program of the [TIRC] has won wide acceptance
in the scientific world as a sincere, valuable and scientific effort."
c. "Positive stories are on the ascendancy."
DEFENDANTS REPEATEDLY DECLARE THAT THEY HAVE ASSUMED
A SPECIAL DUTY
129. Despite the deception by the industry contained in the 1954 "Frank
Statement to Cigarette Smokers", the industry consistently reviewed
and publically repeated its commitment to conduct honest research by the
industry. RJR Chairman Bowman Gray told Congress in 1954: I stated that
we feel, and we are on public record, that more research is needed and
a great deal more research is needed. We are doing what we can in our best
efforts to encourage and provide for this research." If it is proven
that cigarettes are harmful, we want to do something about it regardless
of what somebody else tells us to do. And we would do our level best. It's
only human."
130. In 1970, the Tobacco Institute ran an advertisement captioned,
"A Statement About Tobacco and Health," which stated, on information
and belief:
a. "We recognize that we have a special responsi bility to the
public -- to help scientists determine the facts about tobacco and health,
and about certain diseases that have been associated with tobacco use."
b. "We accepted this responsibility in 1954 by establishing the
Tobacco Industry Research Committee, which provides research grants to
independent scientists. We pledge continued support of this program of
research until all the facts are known.
c. "Scientific advisors inform us that until much more is known
about such diseases as lung cancer, medical science probably will not be
able to determine whether tobacco or any other single factor plays a causative
role -- or whether such a role might be direct or indirect, incidental
or important."
d. "We shall continue all possible efforts to bring the facts to
light."
131. Additional representations were made in 1970 when the tobacco companies,
acting through the Tobacco Institute, placed a number of advertisements
similar to the 1954 "Frank Statement." One advertisement stated
in part:
a. "After millions of dollars and over 20 years of research: The
question about smoking and health is still a question."
b. "In the interest of absolute objectivity, the tobacco industry
has supported totally independent research efforts with completely non-restrictive
funding."
c. "In 1954, the Industry established what is now known as CTR,
the Council for Tobacco Research-USA, to provide financial support for
res earch by i ndependent scientists into all phases of tobacco use and
health. Completely autonomous, CTR's research activity is directed by a
board of ten scientists and physicians who retain their affiliations with
their respective universities and institutions. This board has full authority
and responsibility for policy, development and direction of the research
effort."
d. "The findings are not secret."
e. "From the beginning, the tobacco industry has believed that
the American people deserve objective, scientific answers."
132. Again in 1970, TI stated:
"The Tobacco Institute believes that the American public is entitled
to complete, authenticated information about cigarette smoking and health."
133. TI further stated that:
"The tobacco industry recognizes and accepts a responsi- bility
to promote the progress of independent scientific research in the field
of tobacco and health."
134. In 1972, Tobacco Institute President Horace Kormegay testifying
before Congress stated that "the cigarette industry is as vitally
concerned or more so than any other group in determining whether cigarette
smoking causes human disease . . . . That is why the entire tobacco industry
. . . since 1954 has committed a total of $40 million for smoking and health
research through grants to independent scientists and institutions."
135. In March of 1983, Sheldon Sommers, M.D., scientific director of
CTR testified before Congress that "Cigarette smoking has not been
scientifically established to be a cause of chronic diseases, such as cancer,
cardiovascular disease, or emphysema. Nor has it been shown to affect pregnancy
outcome adversely."
136. In 1984, RJR placed an editorial type advertisement in The New
York Times stating that "[s]tudies which conclude that smoking causes
disease have regularly ignored significant evidence to the contrary."
137. In 1994, the chief executives of the tobacco companies testified
under oath before the Subcommittee on Health and the Environment of the
Committee on Energy and Commerce, U.S. House of Representatives, chaired
by Congressman Waxman ("Waxman Subcommittee"). These executive
knowingly made material misrepresentations and/or omissions to the Subcommittee
about tobacco products, health and addiction, and in particular, stated
that nicotine is not addictive. These statements, as with the other deceptive
statements and misrepresentations cited herein, were consistent with defendants'
practice of providing disinformation to the public and were made with the
knowledge and intention that they would be widely disseminated to the public,
and communicated to New York consumers.
138. These continuing representations by defendants to the public about
sponsoring independent objective research and bringing the truth to light
were false and deceptive. The suppression of information and the misrepresentations
were made to gain the trust of the public to further defendants' scheme
of distorting and suppressing substan- tive information about smoking and
health in order to assure the continuing widespread sale and use of tobacco
products.
139. Defendants' representation that their products are not addictive
were made despite a substantial body of evidence, including evidence developed
by the tobacco companies themselves, indicating that nicotine is not only
addictive, but is the reason why people smoke and that the primary, if
not sole, function of nicotine is to provide a pharmacological effect on
the smoker that leads to addiction. The tobacco companies continue to deny
that nicotine is addictive and instead use various misleading euphemisms
to describe the role of nicotine, such as "satisfaction," "impact,"
"strength," "rich aroma" and "pleasure."
DEFENDANTS' EARLY AND CONTINUOUS KNOWLEDGE THAT TOBACCO
PRODUCT IS HARMFUL
140. Even before the sponsors of the "Frank Statement" represented
that there is no proof that cigarette smoking is one of the causes of lung
cancer, an industry researcher had reported the contrary. On information
and belief, as early as 1946, Lorillard chemist H.B. Parmele, who later
became Vice President of Research and member of Lorillard's Board of Directors,
wrote to this company's manufacturing committee: "Certain scientists
and medical authorities have claimed for many years that the use of tobacco
contributes to cancer development in susceptible people. Just enough evidence
has been presented to justify the possibility of such a presumption."
141. In the years following the 1954 "Frank Statement," and
continuing to the present, defendants have repeatedly acted fraudulently
and failed to carry out their assumed duty to report objective facts on
tobacco use and health. As evidence mounted, both through industry research
and truly independent studies, that tobacco use causes cancer and other
diseases, defendants continued publicly to represent that nothing was proven
against tobacco use. Internal documents show that the defendants knew that
the truth was very different. Defendants knew and acknowledged internally
the veracity of scientific evidence of the health hazards of tobacco use
and at the same time suppressed such evidence where they could -- and attacked
it when it did appear.
142. On information and belief, internal industry documents reveal,
for example:
a. A 1956 memorandum from the Vice President of Philip Morris' Research
and Developmental Department to top executives at the company regarding
the advantages of a "ventilated cigarette" States that "Decreased
carbon monoxide and nicotine are related to decreased harm to the circulatory
system; as a result of smoking ... decreased irritation is desirable ...
as a partial elimination of a potential cancer hazard."
b. A 1958 memorandum sent to the Vice President of Research at Philip
Morris, who later became a member of its Board of Directors, from a company
researcher States: "the evidence ... is building up that heavy cigarette
smoking contributes to lung cancer either alone or in association with
physical and physiological factors...."
c. A 1961 document presented to the Philip Morris Research and Development
Committee by the company's Vice President of Research and Development included
a section entitled "Reduction of Carcinogens in Smoke." The document
States, in part:
"To achieve this objective will require a major research effort,
because carcinogens are found in practically every class of compounds in
smoke. This fact prohibits complete solution of the prob- lem by eliminating
one or two classes of compounds. The best we can hope for is to reduce
a particular- ly bad class, i.e., the polynuclear hydrocarbons, or phenols
. . . . Flavor substances and carcino- genic substances come from the same
classes, in many instances."
d. A 1963 memorandum of Philip Morris' President and CEO from the company's
Vice President of Research describes a number of classes of compounds in
cigarette smoke which are "known carcinogens." The document goes
on to describe the link between smoking and bronchitis and emphysema. "Irritation
problems are now receiving greater attention because of the general medical
belief that irritation leads to chronic bronchitis and emphysema. These
are serious diseases involving millions of people. Emphysema is often fatal
either directly or through other respiratory complications. A number of
experts have predicted that the cigarette industry ultimately may be in
greater trouble in this area than in the lung cancer field."
e. Brown & Williamson and its parent company, B.A.T. Industries,
researched the health effects of nicotine and were aware early on, as reported
at a B.A.T. Group Research Conference in November 1970, that "nicotine
may be implicated in the aetiology of cardiovascular disease...."
f. A 1961 "Confidential" memorandum from the consulting research
firm hired by Liggett to do research for the company States:
"There are biologically active materials present in cigarette tobacco.
These are: a) cancer causing b) cancer promoting c) poisonous d) stimulating,
pleasurable, and flavorful."
g. A 1963 memorandum from the Liggett consulting research firm States:
"Basically, we accept the inference of a causal relationship between
the chemical properties of ingested tobacco smoke and the development of
carcinoma, which is suggested by the statistical association shown in the
studies of Doll and Hill, Horn, and Dorn with some reservations and qualifi-
cations and even estimate by how much the incidence of cancer may possibly
be reduced if the carcino- genic matter can be diminished, by an appropriate
filter, by a given percentage."
143. These internal Liggett documents sharply contrast with the information
Liggett provided to the Surgeon General in 1963. Liggett withheld from
the Surgeon General the views of its researchers and consultants that the
evidence showed that the use of tobacco products causes human disease.
Instead, the report Liggett presented to the Surgeon General focused on
the alternative causes of disease, such as air pollution, coffee, alcohol
consump- tion, diet, lack of exercise and genetics. Liggett criticized
the known statistical association between smoking and mortality and various
diseases as "unreliably conducted" and "inadequately analyzed."
The Liggett report concluded that the association between tobacco products
and disease was inconclusive and that diseases generally associated with
tobacco products were, in fact, due to other factors.
144. Philip Morris also concealed from the public its actual views of
the research conducted outside the influence of the industry. In a 1971
memorandum, Dr. H. Wakeham, then Vice President of Research and Development,
stated in referring to a recent study that found cigarette smoke inhalation
caused lung cancer in beagles: "1970 might very properly be called
the year of the beagle. Early in the year, the American Cancer Society
announced that they had finally demonstrated the formation of lung cancer
in beagles by smoke inhalation in the now infamous Auerbach and Hammond
study." Although Dr. Wakeham criticized the mice cancer studies, he
conceded that "the beagle test was a critical one...for the cigarette
causation hypothesis."
145. Dr. Wakeham's memorandum demonstrates Philip Morris' approval of
the industry's public dismissals of these independent studies: "The
strong opposition of the industry to the beagle test is indicative of a
new, more aggressive stance on the part of the industry in the smoking
and health controversy. We have gone over from what I have called the 'vigorous
denial' approach, the take it on the chin and keep quiet attitude, to the
strongly voiced opposition and criticism. I personally think this counter-propaganda
is a better stance than the former one."
146. Similarly, BAT's internal view of the validity of mouse skin painting
experiments differed markedly from the view expressed in public statements.
Minutes from a 1969 BAT research conference stated "[h]istorically,
bioassay experiments were undertaken by the industry with the object of
clarifying the role of smoke constituents in pulmonary carcinogenesis.
The most widely used of these methods [was] mouse-skin painting.... In
the foreseeable future, say five years, mouse-skin painting would remain
as the ultimate court of appeal on carcinogenic effects."
147. Two years later a Brown & Williamson public relations document
stated that "[m]uch of the experimental work involves mouse-painting
or animal smoke inhalation experiments.... [T]he results obtained on the
skin of mice should not be extra- polated to the lung tissue of the mouse
or to any other animal species. Certainly such skin results should not
be extrapolated to the human lung."
DEFENDANTS' CAMPAIGN OF SUPPRESSION, DECEIT
AND MISREPRESENTATIONS
A. Suppressing Research and Concealing the Facts About
Tobacco and Health
148. Despite overwhelming scientific evidence, and the confirmation
of the evidence by their own internal research, defendants continue to
this day to repeat -- over and over, in a unified stance -- that there
is no causal connection between tobacco use and adverse health effects
and that nicotine is not addictive. These representations -- which are
fraudulent, mislead- ing, deceptive, and untrue -- and the failure to disclose
information which they had to the contrary are the core of the industry's
ongoing conspiracy to market and profit from a product it knows is deadly
and addictive.
149. The industry's promise of full disclosure and objective scientific
research were never fulfilled. For example, in the late 1960s, R.J. Reynolds
had a State-of-the-art laboratory in Winston-Salem, nicknamed "the
mouse house." There, scientists conducted research with mice, rats,
and rabbits, and began to uncover promising avenues of investigation into
the mechanisms of tobacco-related disease. In 1970, this entire research
division was disbanded in one day, and all 26 scientists were fired without
notice. Company attorneys had collected dozens of research notebooks, still
undisclosed, from the scientists several months before the firings.
150. Instead of the full disclosure and objective research promised,
the defendants TI and TIRC/CTR -- dominated by public relations officials
and attorneys, as opposed to independent scientists -- have served as industry
fronts in a campaign of deceit and misinformation aimed at undermining
the public percep- tion of the health risks of tobacco use. Internal documents
demonstrate that the joint industry research effort undertaken through
TIRC (and later through CTR) was not disinterested or objective. Rather,
it was designed and used to promote favorable research, to suppress negative
research where possible, and to attack negative research where it could
not be suppressed, all to promote the sale of tobacco products by convincing
the public that the case against smoking and other uses of tobacco is not
closed.
151. In 1964, the year of the first Surgeon General's Report on Smoking
and Health. CTR formed a "special projects division" to assist
the industry in concealing unfavorable information, thus making a further
mockery of the undertaking to conduct and disclose all of the facts relating
to tobacco use and health. Under the auspices of the special projects division,
industry research that might indict tobacco use as a cause of illness was
diverted and shielded from the public by questionable claims of attorney-client
privilege. As the notes of one CTR meeting, written in 1981 "When
we started the CTR Special Projects, the idea was that the scientific director
of CTR would review a project. If he liked it, it was a CTR special project.
If he did not like it, then it became a lawyers' special project."
Another memorandum from 1981 explained, on information and belief, "Difference
between CTR and Special Four (lawyers' projects). Director of CTR reviews
special projects -- if project was problem for CTR, use Special Four."
152. As with many of its strategies, the industry has been successful
in using the CTR Special Projects division to conceal harmful information
despite the fact that such conduct was contrary to its stated purposes
as a Type B not-for-profit corporation. To this day, research from the
special projects division remains shielded from public scrutiny.
153. A 1974 report to the CEO of Lorillard from a research executive
described CTR's scientific projects as "hav[ing] not been selected
against specific scientific goals, but rather for various purposes such
as public relations, political relations, positions for litigation, etc.
Thus, it seems obvious that review of such programs for scientific relevance
and merit in the smoking and health field are not likely to produce high
ratings.... In general, these programs have provided some buffer to public
and political attack of the industry, as well as background for litigious
[sic] strategy."
154. A 1978 memo addressed to the CTR file from a Philip Morris official
characterized CTR as "an industry `shield.'" The memorandum goes
on to state:
"CTR began as an organization called Tobacco Industry Research
Council (TIRC). It was set up as an industry `shield' in 1954. That was
the year statistical accusations relating smoking to diseases were leveled
at the indus- try; litigation began; and the Wynder/Graham reports were
issued. CTR has helped our legal counsel by giving advice and technical
infor- mation, which was needed at a court trial.... [T]he `public relations'
value of CTR must be considered and continued.... It is very important
that the industry continue to spend their dollars on research to show that
we don't agree that the case against smoking is closed.... There is a `CTR
basket' which must be maintained for `PR' purposes...."
155. In 1993, a former 24-year employee of CTR stated publicly that
the joint industry research efforts were not objective:
"When CTR research found out that cigarettes were bad and it was
better not to smoke, we didn't publicize that ... the CTR is just a lobbying
thing. We were lobbying for cigarettes."
156. Describing a meeting which included high level officials from various
tobacco companies, an industry official wrote in his personal notes that:
"CTR is best & cheapest insurance the tobacco industry can
buy and without it the Industry would have to invent CTR or would be dead."
157. Other internal industry documents also shed light on the true nature
of the trade associations, as the following quotations from those documents
demonstrate:
a. "Historically, it would seem that the 1954 emergency was handled
effectively. From this experience there arose a realization by the tobacco
industry of a public relations problem that must be solved for the self-preservation
of the industry."
b. "When the products of an industry are accused of causing harm
to users, certainly it is the obligation of that industry to endeavor to
determine whether such accusations are true or false. Money spent for such
purpose should not be regarded as a charitable contribution but as a business
expense -- an expense necessary to keep that industry alive. In view of
the billions of dollars of annual sales of our industry our expenditures
for health research has [sic] been of a minimal order."
c. "For nearly twenty years, this industry has employed a single
strategy to defend itself on three major fronts -- litigation, politics,
and public opinion. While the strategy was brilliantly conceived and executed
over the years, helping us win important battles, it is only fair to say
that it is not -- nor was it intended to be -- a vehicle for victory. On
the contrary, it has always been a holding strategy, consisting of ...
creating doubt about the health charge without actually denying it....
In the cigarette controversy, the public -- especially those who are present
and potential supporters (e.g. tobacco State congressmen and heavy smokers)
-- must perceive, understand, and believe in evidence to sustain their
opinions that smoking may not be the causal factor." This and other
evidence demonstrates that the role and purpose of TIRC and CTR in the
tobacco companies' strategy was to seek to use the public's trust to propagate
pro-tobacco propaganda.
158. Further, despite defendants' knowledge of the deleterious effects
of tobacco use on health and the addictive nature of nicotine, they did
not make public their research. For example, on information and belief,
the report Liggett presented to the Surgeon General in 1963 omitted all
of these views. Instead, it focused on alternative causes of disease, such
as air pollution, coffee and alcohol consumption, diet, lack of exercise,
and genetics. Liggett criticized the known statistical association between
tobacco use and mortality and various disease as "unreli- ably conducted"
and "inadequately analyzed." The Liggett report concluded that
the association between tobacco use and disease was inconclusive and was
in fact due to other factors coincidentally associated with tobacco use.
B. Suppressing Safer Cigarettes
159. Several tobacco companies' biological research appears to have
been directed toward developing a cigarette with reduced health risks.
These companies performed research that involved dividing cigarette smoke
into its different chemical constituents, or "fractions," to
discover which part of the cigarette smoke caused disease. Several companies
were successful in discovering which constituents in tobacco smoke were
carcino- gens, or were otherwise linked to diseases. This research was
kept secret and never reported to the public.
160. Had this research been disclosed, alternative health care strategies
could have been developed. By their failure to disclose this research,
defendants also failed to mitigate the damages suffered by the State of
New York.
161. A number of companies also successfully removed certain harmful
constituents from cigarette smoke or treated the products to decrease the
harmful effects of such constituents, and developed prototype cigarettes
with reduced adverse health effects. These products were never marketed.
162. At least one manufacturer -- Liggett -- was successful in researching
and developing a safer cigarette. Liggett decided not to market this product,
on information and belief, after a threat of retaliation by another manufacturer
and after executives expressed concern that marketing a safer cigarette
would imply that traditional cigarettes were not safe.
163. Liggett initiated its safer cigarette project, called XA, in 1968.
After an expenditure of only $14 million, Liggett was able, internally,
to proclaim the project a success in 1979. By applying an additive of palladium
metal and magnesium nitrate to tobacco to act as a catalyst in the burning
process, Liggett found that "[c]igarette tar has been neutralized."
164. Liggett had also obtained a patent for the process it had discovered
to produce its "safer cigarette." The patent application described
the reduction in cancer in mouse studies, prompting stories in the media
that Liggett was the first cigarette company to admit that smoking caused
cancer. Liggett responded by issuing a press release it called a "Liggettgram"
which stated:
Liggett and the cigarette industry continue to deny, as they have consistently,
that any conclusions can be drawn relating such test results on mice in
laboratories to cancer in human beings. It has never been established that
smoking is a cause of human cancer.
165. The laboratory experiments reported in the patent were conducted
for Liggett by an independent researcher, The Life Sciences Division of
Arthur D. Little, Inc.
166. Dr. James Mold, who was assistant director of research at Liggett
during the development of the safer cigarette, has estimated that, at the
time Liggett made this statement, Liggett had spent a total of $10 million
on research involving mice, in part to develop the XA cigarette. Liggett's
internal reports on the benefit of the XA, and the absence of increased
risk of harm from the additives used, specifically used animal studies
as reliable indicators of the health effect of the product on humans.
167. Using this process, Liggett was able to produce cigarettes "of
commercial quality." These cigarettes, however, were never marketed.
168. On information and belief, two reasons apparently led Liggett to
abandon its XA project. One was fear that the marketing of a "safer"
cigarette would be, in essence, a confession that its -- and the industry's
-- other cigarettes were not safe.
169. Dr. Mold, has stated:
a. The XA project produced a safer cigarette. "We produced a cigarette
which was, we felt, commercially acceptable as established by some consumer
tests, which eliminated carcinogenic activity...."
b. After 1975, all meeting on the XA project were attended by lawyers,
lawyers collected all notes after the meetings, and all documents were
directed to Liggett's law offices to maintain a questionable attorney-client
privilege. "Whenever any problem came up on the project, the Legal
Department would pounce upon that in an attempt to kill the project, and
this happened time and time again.
c. Liggett believed a safer cigarette, "if put on the market, would
seriously indict them for having sold other types of cigarettes that didn't
contain this, for example." Mr. Dey, the then president of Liggett
Tobacco, said that he was told by someone in the Philip Morris company
that, if Liggett tried to market such a product, "they would clobber
us."
170. Philip Morris also explored research to develop a safer cigarette,
or, in the words of one memorandum to the board of directors, cigarettes
with "superior physiological performance." The research and development
department at Philip Morris nonetheless viewed continued research into
"safer cigarettes" as necessary to compete in the event that
another cigarette company marketed a "safer cigarette." A memorandum
noted competitive pressures to produce "less harmful" cigarettes,
but, however, was careful to state that "Our philosophy is not to
start a war, but if war comes, we aim to fight well and to win."
171. As early as 1958, a memorandum from a Philip Morris researcher
to the company's Vice President of Research and Development proposed that
the company attempt to make a "safer cigarette" that could enable
it to "jump on the other side of the fence . . . on the issue of tobacco
smoking and health . . . ."
172. Although Philip Morris did undertake research and development of
such a product, the company never released the research, and never informed
the public that existing cigarettes were not safe or that a "safer
cigarette" was possible. As a research and development presentation
to Philip Morris' Board of Directors in 1964 stated:
"Two years ago, in anticipation of a health crisis to be precipitated
by the Smoking and Health Report of the Surgeon General's Commit- tee,
we undertook to develop a physiologically superior cigarette.
[W]e put together a charcoal filter product with performance superior
to anything in the market place. That product was known as Saratoga. Physiologically
it was an outstand- ing cigarette. Unfortunately then after much discussion
we decided not to tell the physio- logical story which might have appealed
to a health conscious segment of the market. The product as test marketed
didn't have good "taste" and consequently was unacceptable to
the public ignorant of its physiological superiority."
173. RJR also undertook efforts to develop a so-called "safer cigarette,"
focusing on delivering nicotine to the consumer without the harmful constituents
of tobacco smoke. In the later 1980's, RJR developed and test marketed
Premier, a smokeless and virtually tobacco-free cigarette, which was in
essence a nicotine delivery system. RJR ultimately abandoned development
of Premier or other "safer" cigarette products.
174. A 1987 memorandum authored by an attorney at the firm of Shook,
Hardy & Bacon, long-time lawyers for the tobacco industry, confirms
that there was an industry-wide position regarding the issue of a safer
cigarette. It states that a smokeless cigarette announced by R.J. Reynolds
could "have significant effects on the tobacco industry joint defense
efforts" and that "[t]he industry position has always been that
there is no alternative design for a cigarette as we know them.... Unfortunately,
the Reynolds announcement ... seriously undercuts this component of the
industry's defense."
175. Brown & Williamson also attempted to develop a so-called "safer
cigarette." By the end of the 1970's, however, Brown & Williamson,
in a pattern that was repeated throughout the industry, halted all work
on a "safer cigarette."
C. Suppressing and Concealing Research on Nicotine Addiction
176. The nicotine in tobacco is addictive. Although defendants conspired
to conceal the truth, nicotine is now recognized as addictive by major
medical organizations including: the Office of the U.S. Surgeon General,
the World Health Organization, the American Medical Association, the American
Psychiatric Association, the American Psychological Association, the American
Society of Addiction Medicine, and the Medical Research Council in the
United Kingdom. All of these organizations acknowledge tobacco use as a
form of drug dependence or addiction with severe adverse health consequences.
Nicotine is equally addictive as delivered in either cigarettes or smokeless
tobacco products, which deliver a similar amount of nicotine.
177. The industry has developed sophisticated technology to control
the levels of nicotine in order to maintain its market. David A. Kessler,
M.D., Commissioner of the Food and Drug Administration, testified in 1994
before a Congressional committee that cigarette manufactur- ers can precisely
manipulate nicotine levels in cigarettes, all in an effort to create and
sustain addiction.
178. In a subsequent appearance before Congress, Dr. Kessler testified
that one manufacturer, Brown & Williamson, had developed a tobacco
plant code-named Y-1 with perhaps twice the nicotine content of regular
tobacco. Brown & Williamson manufac- tured and marketed cigarettes
with Y-1 tobacco in the United States in 1993.
179. As a result of the industry's actions, as many as 74% to 90% of
smokers are addicted. Eight out of ten smokers say they wish they had never
started smoking. Two-thirds of adults who smoke say they wish they could
quit. Seventeen million try to quit each year, but fewer than one out of
ten succeed. A high percent- age of smokers who have had surgery for lung
cancer or heart attacks return to smoking, as do 40% of smokers who have
had their larynxes removed.
180. Beyond its addictive qualities, nicotine is believed to contribute
to cardiovascular disease and death -- a fact which, the tobacco industry
has known for a long time.
181. Defendants have also long known of the addictive property of nicotine,
although it continues to this day publicly to deny it. However, internally,
cigarette manufacturers have quite explicitly and for a long time viewed
the cigarette as a high technology nicotine delivery system.
182. Defendants have made every effort to conceal and deny that nicotine
is a powerfully addictive substance, while it simultaneously studied its
addictive character and acted upon that knowledge to maintain tobacco product
sales.
183. This public deception and the industry's secret manipulation of
nicotine were and are critically important to the tobacco companies. As
objective researchers increased their warnings of the health dangers of
tobacco products, nicotine addiction kept people using tobacco and has
allowed the tobacco companies to continue to sell their dangerous products
even to those who eventually come to doubt the industry's health claims.
If a new consumer is fooled for a time by pro-tobacco disinforma- tion
on health and takes up the habit, it may well be too late. Instead of a
simple decision not to purchase a product, the new consumer must fight
an addiction.
184. Defendants have known since at least the early 1960s of the addictive
properties of the nicotine contained in the tobacco products they manufacture
and sell. Industry documents are replete with evidence of such knowledge:
a. In 1962, Sir Charles Ellis, scientific advisor to the board of directors
of BATCO, Brown & Williamson's parent company, stated at a meeting
of BATCO's worldwide subsidiaries, that "smoking is a habit of addiction"
and that "[n]icotine is not only a very fine drug, but the technique
of administration by smoking has considerable psychological advantages...."
He subsequently described Brown & Williamson as being "in the
nicotine rather than the tobacco industry."
b. A research report from 1963 commissioned by Brown & Williamson
States that, when a chronic smoker is denied nicotine, "[a] body left
in this unbalanced State craves for renewed drug intake in order to restore
the physiological equilibrium. This unconscious desire explains the addiction
of the individual to nicotine." No information from that research
has ever been voluntarily disclosed to the public.
c. Addison Yeaman, general counsel at Brown & Williamson, stated
in an internal memorandum also in 1963: "moreover, nicotine is addictive.
We are, then, in the business of selling nicotine, an addictive drug effective
in the release of stress mechanisms."
d. Internal reports prepared by Philip Morris Morris U.S.A. Research
Center in March 1978 demonstrate Philip Morris' understanding of the role
of nicotine in tobacco use: "we think that most smokers can be considered
nicotine seekers, for the pharmacological effect of nicotine is one of
the rewards that come from smoking. When the smoker quits, he foregoes
his accustomed nicotine. The change is very noticeable, he misses the reward,
and so he returns to smoking."
e. From 1940 to 1970, The American Tobacco conducted its own nicotine
research, funding over ninety studies on the pharmacological and other
effects of nicotine on the body, 80% of all biological studies funded by
American Tobacco over this period. In 1969, American Tobacco even test
marketed a nicotine-enriched cigarette in Seattle, Washington.
f. In a 1972 document entitled "RJR confidential research planning
memorandum on the nature of the tobacco business and the crucial role of
nicotine therein," an RJR executive wrote: "In a sense, the tobacco
industry may be thought of as being a specia
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