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Utah AG Tobacco Complaint, filed 9-30-96
GIAUQUE, CROCKETT, BENDINGER & PETERSON ATTORNEYS FOR PLAINTIFFS
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF UTAH, CENTRAL DIVISION
COMPLAINT
THE STATE OF UTAH, ex rel., JAN GRAHAM, in her capacity as ATTORNEY GENERAL OF THE STATE OF UTAH.
RJR NABISCO, INC., THE AMERICAN TOBACCO COMPANY; AMERICAN BRANDS INC.; BROWN & WILLIAMSON TOBACCO CORPORATION; B.A.T. INDUSTRIES, PLC; BATUS HOLDINGS INC.; BRITISH AMERICAN TOBACCO COMPANY, LTD.; BRITISH-AMERICAN TOBACCO (HOLDINGS) LTD.; PHILIP MORRIS INCORPORATED (PHILIP MORRIS U. S. A.); PHILIP MORRIS COMPANIES, INC.; LIGGETT &; MYERS, INC.; THE BROOKE GROUP LIMITED; LIGGETT GROUP INC.; LORILLARD TOBACCO CO.; LOEWS CORPORATION; THE COUNCIL FOR TOBACCO RESEARCH -- U.S.A. INC.; (successor-in -interest to the TOBACCO INDUSTRY RESEARCH COMMITTEE); TOBACCO INSTITUTE, INC.; and HILL & KNOWLTON INC., Defendants. I. Introduction
1. In the name of profits, cigarette manufacturers have chosen to ignore and suppress the truth about the human hazards of smoking. As a result, Medicaid and other publicly-funded health care recipients in the State of Utah have contracted smoking-related diseases, including, without limitation, cancer, emphysema and heart disease. The care of these Medicaid and other publicly-funded health care recipients has placed a significant burden on the State of Utah. This burden should rightly be borne by the cigarette manufacturers, which have been able to privatize their profits while socializing the costs of their misconduct. Therefore, the State of Utah has filed this lawsuit to force the cigarette manufacturers to pay for the health care crises their cigarettes have caused. 2. The State of Utah and its agencies, by and through its Attorney General and consistent with its constitutional, statutory, common law, and equitable authority, does hereby bring this action for the purposes of obtaining reimbursement for all monies paid for medical assistance to Medicaid and other publicly-funded health care recipients who suffer, or who have suffered, from tobacco-related disease as a result of the actions of defendants, as well as such other relief as will afford a full and complete remedy. Unless otherwise noted, each and every count alleged applies to each and every defendant. 3. The allegations contained herein are made on information and belief. II. Parties
A. Plaintiffs 4. The State of Utah is a sovereign state of the United States. The State of Utah, by and through its Attorney General Jan Graham, brings this action on its own behalf. B. Defendants 5. R.J. Reynolds Tobacco Company is a New Jersey corporation whose principal place of business is located at 4th & Main Street, Winston-Salem, North Carolina 27102. Defendant R.J. Reynolds Tobacco Company is an agent, alter ego, subsidiary and/or division of defendant RJR Nabisco, Inc. At times pertinent to the Complaint, defendant R.J. Reynolds Tobacco Company designed, tested, manufactured, marketed and sold cigarettes, including the brands Camel, Vantage, Magna, Now, Doral, Winston, Sterling and Salem, for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 6. RJR Nabisco, Inc. is a Delaware corporation whose principal place of business is 1301 Avenue of the Americas, New York, New York 10015. Defendant RJR Nabisco, Inc. is the parent corporation of defendant R.J. Reynolds Tobacco Company. At times pertinent to the Complaint, defendant RJR Nabisco, Inc., individually and/or through its agent, alter ego, subsidiary and/or division, defendant R.J. Reynolds Tobacco Company (sometimes hereinafter referred to as "RJR") designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 7. The American Tobacco Company is or was a Delaware corporation whose principal place of business is or was located at 6 Stamford Forum, Stamford, Connecticut 06904. Defendant The American Tobacco Company is or was an agent, alter ego, subsidiary and/or division of defendant American Brands, Inc. At times pertinent to the Complaint, defendant The American Tobacco Company (sometimes hereinafter referred to as "ATC") designed, tested, manufactured, marketed and sold cigarettes, including the brands Lucky Strike, Pal Mall, Tareyton, Malibu, American, Montclair, Newport, Misty, Iceberg, Silk Cut, Silva Thins and Carlton, for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. On information and belief, The American Tobacco Company was purchased by Brown & Williamson, who has succeeded the liabilities of ATC by operation of law or as a matter of fact. 8. American Brands, Inc. is a Delaware corporation whose principal place of business is located at 1700 East Putnam Avenue, Old Greenwich, Connecticut 06870. Defendant American Brands, Inc. is or was the parent corporation of or the successor in interest to defendant ATC. At times pertinent to the Complaint, defendant American Brands, Inc., individually and/or through its agent, alter ego, subsidiary and/or division, defendant ATC, designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 9. Brown & Williamson Tobacco Corporation is a Delaware corporation whose principal place of business is located at 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Defendant Brown & Williamson Tobacco Corporation is or was an agent, alter ego, subsidiary and/or division of defendant Batus Holdings, Inc., defendant British American Tobacco Company, Ltd., defendant British-American Tobacco (Holdings), Ltd., and/or defendant B.A.T. Industries, PLC. At times pertinent to the Complaint, defendant Brown & Williamson Tobacco Corporation (sometimes hereinafter referred to as "Brown & Williamson"); designed, tested, manufactured, marketed and sold cigarettes, including the brands Kool, Belair, Barclay, Capri, Raleigh and Viceroy, for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 10. B.A.T. Industries, PLC is a British corporation whose registered office is located at Windsor House, 50 Victoria Street, London, England SWIH ONL. Defendant B.A.T. Industries, PLC is or was the parent corporation of defendant Brown & Williamson Tobacco Corporation and defendant Batus Holdings, Inc. At times pertinent to the Complaint, defendant B.A.T. Industries, PLC, individually and/or through its agents, alter egos, subsidiaries and/or divisions, defendant Brown & Williamson Tobacco Corporation and defendant Batus Holdings, Inc., designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 11. Batus Holdings, Inc. (sometimes hereafter as "BATUS") is a Delaware corporation with its principal place of business at 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Defendant Batus Holdings, Inc. is or was an agent, alter ego, subsidiary and/or division of defendant B.A.T. Industries, PLC, defendant British American Tobacco (Holdings), Ltd. and/or British American Tobacco Company, Ltd. Defendant Batus Holdings, Inc. is a parent corporation of defendant Brown & Williamson Tobacco Corporation. At times pertinent to the Complaint, defendant Batus Holdings, Inc., individually and/or through its agent, alter ego, subsidiary and/or division, defendant Brown & Williamson Tobacco Corporation, designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 12. British American Tobacco Company, Ltd. ("BATCO"), is a British corporation whose registered office is at Millbank, Knowle Green, Staines, Middlesex, England TW18 1DY. Defendant British American Tobacco Company, Ltd., is or was a parent corporation of defendant Brown & Williamson Tobacco Corporation and defendant BATUS. At times pertinent to the Complaint, defendant BATCO, individually and/or through its agent, alter ego, subsidiary and/or division, defendant Brown & Williamson Tobacco Corporation, designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 13. British-American Tobacco (Holdings), Ltd. is a British corporation whose registered office is at Millbank, Knowle Green, Staines, Middlesex, England TW18 1DY. Defendant British-American Tobacco (Holdings), Ltd. is or was a parent corporation of defendant Brown & Williamson Tobacco Corporation and defendant BATUS. At times pertinent to the Complaint, defendant British-American Tobacco (Holdings), Ltd., individually and/or through its agent, alter ego, subsidiary and/or division, defendant Brown & Williamson Tobacco Corporation, designed, tested, manufactured, marketed and sold cigarettes for use in the State of Oklahoma or materially participated, conspired, assisted, encouraged and otherwise aided and abetted one or more of the other defendants in doing so. 14. Philip Morris Incorporated (Philip Morris U.S.A.) is a Virginia corporation whose principal place of business is located at 120 Park Avenue, New York, New York 10016. Defendant Philip Morris Incorporated (Philip Morris U.S.A.) is an agent, alter ego, subsidiary and/or division of defendant Philip Morris Companies, Inc. At times pertinent to the Complaint, defendant Philip Morris Incorporated (Philip Morris U.S.A.) designed, tested, manufactured, marketed and sold cigarettes, including the brands Philip Morris, Merit, Cambridge, Marlboro, Benson & Hedges, Virginia Slims, Alpine and Players, for use in the State of Utah or materially participated, conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 15. Philip Morris Companies, Inc. is a Virginia corporation whose principal place of business is located at 120 Park Avenue, New York, New York 10016. Defendant Philip Morris Companies, Inc. is the parent corporation of defendant Philip Morris Incorporated (Philip Morris U.S.A.) (sometimes herein referred to as "Phillip Morris"). At times pertinent to the Complaint, defendant Philip Morris Companies, Inc., individually and/or through its agent, alter ego, subsidiary and/or division, defendant Philip Morris Incorporated (Philip Morris U.S.A.), designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 16. Liggett & Myers, Inc. is a Delaware corporation whose principal place of business is located at 700 West Main Street, Durham, North Carolina 27701. Defendant Liggett & Myers, Inc. is an agent, alter ego, subsidiary and/or division of defendant Brooke Group, Limited and defendant Liggett Group, Inc. At times pertinent to the Complaint, defendant Liggett & Myers, Inc. (sometimes hereinafter referred to as Liggett) designed, tested, manufactured, marketed and sold cigarettes, including the brands Chesterfield, Decade, L+M, Pyramid, El Dorado, Eve, Stride, Generic and Lark, for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 17. The Brooke Group, Limited is a Delaware corporation whose principal place of business is located at 100 Southeast 2nd Street, Floor 32, Miami, Florida 33131. Defendant Brooke Group, Limited is the parent corporation of defendant Liggett Group, Inc. and defendant Liggett & Myers, Inc. At times pertinent to the Complaint, defendant Brooke Group, Limited, individually and/or through its agents, alter egos, subsidiaries and/or divisions, defendant Liggett Group, Inc. and defendant Liggett & Myers, Inc., designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 18. Liggett Group, Inc. is a Delaware corporation whose principal place of business is located at 700 West Main Street, Durham, North Carolina 27701. Defendant Liggett Group, Inc. is an agent, alter ego, subsidiary and/or division of defendant Brooke Group, Limited. Defendant Liggett Group, Inc. is a parent corporation of defendant Liggett & Myers, Inc. At times pertinent to the Complaint, defendant Liggett Group, Inc., individually and/or through its agent, alter ego, subsidiary and/or division, defendant Liggett & Myers, Inc., designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 19. Lorillard Tobacco Co. is a Delaware corporation whose principal place of business is located at 1 Park Avenue, New York, New York 10016. Defendant Lorillard Tobacco Co. is an agent, alter ego, subsidiary and/or division of defendant Loews Corporation. At times pertinent to the Complaint, defendant Lorillard Tobacco Co. designed, tested, manufactured, marketed and sold cigarettes, including the brands Old Gold, Kent, Triumph, Satin, Max, Spring, Newport and True, for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 20. Loews Corporation is a Delaware corporation whose principal place of business is located at 1 Park Avenue, New York, New York 10016. Defendant Loews Corporation is the parent corporation of defendant Lorillard Corporation. At times pertinent to the Complaint, defendant Loews Corporation, individually and/or through its agent, alter ego, subsidiary and/or division, defendant Lorillard Corporation, designed, tested, manufactured, marketed and sold cigarettes for use in the State of Utah or materially conspired, assisted, encouraged, and/or otherwise aided and abetted one or more of the other defendants in doing so. 21. The Council for Tobacco Research - U.S.A., Inc. (successor in interest to the Tobacco Industry Research Committee) is a non-profit corporation organized under the laws of the State of New York with its principal place of business located at 900 3rd Avenue, New York, New York 10022. At times pertinent to the Complaint, defendant Council for Tobacco Research - U.S.A., Inc. acted individually and as the agent and/or co-conspirator of the tobacco industry. 22. Tobacco Institute, Inc. is a non-profit corporation organized under the laws of the State of New York with its principal place of business located at 1875 Street NW, Suite 800, Washington, D.C. 20006. At times pertinent to the Complaint, defendant Tobacco Institute, Inc. acted individually and as the agent and/or co-conspirator of the tobacco industry. 23. Hill & Knowlton, Inc. is a Delaware corporation with its principal place of business located at 420 Lexington Avenue, New York, New York 10070. At times pertinent to the Complaint, defendant Hill & Knowlton, Inc. acted individually and as the agent and/or co-conspirator of the tobacco industry. III. Jurisdiction and Venue
24. This Court has jurisdiction over this action pursuant to 28 U.S.C. ' 1331 and 18 U.S.C. ' 1964 and principals of ancillary jurisdiction. This Court also has jurisdiction pursuant to 28 U.S.C. ' 1332 as the plaintiff and defendants are citizens of different states and the amount in controversy exceeds $50,000. 25. Defendants, and/or their predecessors and successors in interest, themselves and/or through their agents, servants, employees and instrumentalities, performed such acts as were intended to, and did, result in, assist in and/or contribute to the design, testing, manufacture, marketing or sale of cigarettes for use in the State of Utah. In connection with these acts, defendants, and/or their predecessors and successors in interest, transacted business within the State of Utah, committed the tortious acts complained of herein within the State of Utah, and/or caused to persons or property within the State of Utah injury. Each of defendants is thus subject to personal jurisdiction in this Court pursuant to 18 U.S.C. 1965 and Utah Code Ann. Sec 78-27-24(1), (2) and (3). 26. The State of Utah brings this action to obtain legal and equitable relief and requests trial by jury of the issues so triable. The State of Utah seeks to prevent continued violations of the law and breaches of duties by defendants, to recoup its tobacco-related health care costs, to cause disgorgement of defendants' tobacco-related profits and gains, and to recover actual and punitive damages on its own behalf and on behalf of its residents. These damages include damages for both past and future expenditures for medical assistance provided under the Medical Assistance Act pursuant to Utah Code Ann. Sec. 26-18-1 et seq. and Medicaid pursuant to 42 U.S.C. ' 1396, et seq., including the costs of caring for persons with tobacco-related diseases who receive services through hospitals, health care facilities, residential facilities and other similar facilities owned, operated, maintained and/or funded by the State of Utah. These damages also include the provision of sick leave and health insurance benefits provided by and through the State of Utah to its employees and retirees. 27. Under these Medicaid and other publicly-funded health care programs, the State of Utah pays out large sums of money for the provision of necessary assistance to eligible residents in the State of Utah (Medicaid and other publicly-funded health care recipients), some of whom have been and/or are now being treated in Salt Lake County, Utah and elsewhere throughout the State of Utah for tobacco-related diseases. Venue is thus proper in this district pursuant to 28 U.S.C. ' 1391(b)(2) and Utah Code Ann. Sec. 78-13-7. IV. Conduct Allegations
A. General 28. At all pertinent times, defendants acted individually and by and through their duly authorized agents, servants and employees who were then acting in the course and scope of their employment or agency and in furtherance of the businesses of said defendants. At all pertinent times, defendants Tobacco Institute and Council for Tobacco Research were the agents, servants, and/or employees of defendants and acted individually and/or within the scope of said agency, servitude and/or employment. At pertinent times, defendant Hill & Knowlton was the agent, servant, and/or employee of defendants and defendants Tobacco Institute and Council for Tobacco Research and acted individually and/or within the scope of said agency, servitude and/or employment. 29. The cigarettes for which these defendants are responsible are substantially interchangeable. 30. Substantially similar issues, both legal and factual, are involved in determining liability of each of these defendants. 31. At all pertinent times, defendants purposefully and intentionally engaged in these activities, and continue to do so, knowing full and well that when the State of Utah's residents used their cigarettes as they were intended to be used, those residents would be substantially certain to suffer injury, disease, and illness, including cancer, emphysema, heart disease and other illnesses causing disability and death and that the State of Utah itself would be economically injured thereby. 32. Also, at all pertinent times, defendants purposefully and intentionally engaged in these activities, and continue to do so, knowing full and well that the State of Utah would unofficiously confer a benefit upon defendants by providing or paying for health care and other necessary medical goods and services for certain of the State of Utah's residents thus harmed by the intended use of defendants' cigarettes, and, in the absence of performance of such duty by defendants, that the State of Utah itself thereby would be harmed. 33. Cigarette-related disease has killed, and continues to kill, untold millions of Americans. The Center for Disease Control ("CDC") has estimated that 400,000 persons die each year from tobacco. Nearly one in five deaths is attributable to smoking. Thousands of residents of the State of Utah die each year as a result of smoking cigarettes. 34. Each day, more than 3,000 young people begin to smoke--or more than one million each year. Most of the new smokers who replace the smokers who quit or die prematurely from smoking-related disease are children or teens. About 90% of smokers born since 1935 started smoking before age twenty-one (21) and almost 50 percent started before age eighteen (18). 35. The monetary consequences of smoking cigarettes are equally staggering. In May of 1993, the Office of Technology Assessment advised the United States Congress that in 1990 smoking-related illnesses cost United States taxpayers a total of approximately $68 billion, broken down as follows: $20.8 billion in direct costs; $6.9 billion in indirect costs for morbidity; $40.3 billion indirect costs for mortality. 36. The State of Utah spends millions of dollars each year to provide or pay for health care and other necessary facilities and services on behalf of indigents and other eligible residents whose said health care costs are directly caused by tobacco-induced cardiovascular disease, lung cancer, emphysema and other respiratory diseases as well as the complications of pregnancy and childbirth, including but not limited to low-weight babies. 37. Defendants have known for decades of the lethal dangers of smoking their cigarettes. By the late 1930s, based on published research, defendants had notice of the potential health hazards presented by smoking cigarettes. In 1946, defendants' chemists themselves reported concern for the health of smokers. Dr. Ernst L. Wynder, in 1953, reported to the scientific community, and to defendants, a definitive link between cigarette smoking and cancer. B. The Composition of the Cigarette Industry in the United States 38. Philip Morris, RJR, Brown & Williamson, Lorillard, Liggett and ATC (hereafter sometimes collectively the "Cigarette companies") together control virtually 100% of the cigarette market in the United States and Utah. Philip Morris and RJR are the largest cigarette manufacturers, with market shares in the United States of 42 percent and 30 percent, respectively. The national market shares of the other defendant tobacco companies are approximately as follows: Brown & Williamson - 11 percent; Lorillard - 7 percent; ATC - 7 percent; and Liggett - 2 percent. 39. The cigarette industry is one of the most profitable industries in the United States, with profit margins estimated to be in the range of 30 percent. Industry profits are in the billions of dollars annually from domestic sales alone. 40. The unusual concentration of the cigarette industry has facilitated the planning, implementation and funding of a decades-long conspiracy by the cigarette companies and their trade associations and agents relating to the issues of smoking, health and addiction. C. 1994 Congressional Testimony by Cigarette Manufacturers. 41. The basic terms of the industry strategy of deception remain intact today. For example, on April 14, 1994, seven tobacco company chief executives 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"). Each of these executives knowingly made material misrepresentations and/or omissions to the Waxman Subcommittee. 42. For example, Chairman Waxman and Andrew Tisch, CEO of Lorillard, had the following exchange about smoking and cancer: Mr. Waxman: In a deposition last year you were asked whether cigarette smoking causes cancer. Your answer was I don't believe so. Do you stand by that answer today? Mr. Tisch: I do, sir. Mr. Waxman: Do you understand how isolated you are in the belief from the entire scientific community? Mr. Tisch: I do, sir. Mr. Waxman: You're the head of manufactur[er] [sic] of a product that's been accused by the overwhelming scientific community to cause cancer. You don't know? Do you have an interest in finding out? Mr. Tisch: I do, sir, yes. Mr. Waxman: And what have you done to pursue that interest? Mr. Tisch: We have looked at the data and the data that we have
been able to see has all been statistical data that has not convinced me
that smoking causes death. 43. Philip Morris President and CEO William I. Campbell gave the following false testimony about nicotine and addiction: a. "Philip Morris" does not manipulate nor independently control the level of nicotine in our products'. b. "Cigarette smoking is not addictive." c. "Philip Morris research does not establish that smoking is addictive." 44. RJR CEO James W. Johnston told the Subcommittee that: "smoking
is no more addictive than coffee, tea, or Twinkies." 46. These representations were made despite a substantial body of evidence developed by the cigarette manufacturers themselves, dating from as early as 1962, indicating that nicotine is not only addictive, but is the reason why people smoke. 47. While the tobacco manufacturers 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," there is widespread agreement in the medical and scientific communities that its primary, if not sole, function is to make tobacco products addictive. 48. Major medical organizations recognize nicotine as an addictive substance. These include 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. 49. The testimony of the cigarette manufacturers that smoking is not a proven cause of disease and death, and that nicotine is not addictive, is also contradicted by their own internal documents. Numerous documents, many marked confidential, describe industry studies that show that the cigarette companies have known for decades that nicotine is addicting, and that their products cause cancer, disease, and death. The cigarette manufacturers have made every effort to hide this research from the public, and to misrepresent the facts about smoking, health and addiction. The testimony of the cigarette executives before Congress last year is only a recent example of an ongoing pattern of deception and suppression that began more than 40 years ago. D. The 1953 Big Scare and the Joint Industry Response 50. In December, 1953, Dr. Ernest L. Wynder of the Sloan-Kettering Institute published the results of a study where he painted the shaved backs of mice with cigarettesmoke condensate residue. Malignant tumors grew in 44 percent of the mice in Dr. Wynder's study, providing biological evidence that cigarette smoke causes cancer. The previous year, a British researcher, Dr. Richard Doll, published a statistical analysis showing 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. The widespread reporting of these studies caused what cigarette company officials later called the "Big Scare." 51. The cigarette industry responded quickly to the mounting adverse publicity of a link between smoking and cancer. The Chief Executive officers of the leading cigarette manufacturers met on December 15, 1953, at the Plaza Hotel in New York City. Also in attendance was the public relations firm of Hill & Knowlton, which was to play a central role in formulating and executing the industry response. 52. According to a Hill & Knowlton memorandum summarizing the
meeting, cigarette 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 53. The participants in the meeting agreed that a strong public relations response from the industry was necessary. From the beginning, the emerging research linking smoking and cancer was viewed by the defendants as a pubic relations problem, not a public health issue. According to the Hill & Knowlton memorandum summarizing the meeting: a. The Chief Executive officers of all the leading companies, except Liggett, "have agreed to go along with a public relations program on the health issue." Liggett decided not to participate at this point because it "feels that the proper procedure is to ignore the whole controversy." b. "They feel that they should sponsor a public relations campaign
which is positive in nature and is entirely 'pro-cigarettes.'" c. "They are also emphatic in saying that the entire activity is a long-term, continuing program, since they feel that the problem is one of promoting cigarettes and protecting them from these and other attacks that may be expected in the future. Each of the company presidents attending emphasized the fact that they consider the program to be a long-term one." d. The role of Hill & Knowlton in executing the plan was also discussed. "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." E. Creation of the Tobacco Industry Research Committee 54. Nine days later, Hill & Knowlton presented a detailed recommendation to the cigarette companies. The recommendation recognized the importance of gaining the public trust, and avoiding the appearance of bias, if the pro-cigarette industry strategy was to be successful. According to the memorandum:
* * *
* * *
55. As a result of the meeting of December 15, 1953, and the recommendations of Hill & Knowlton, five of the six cigarette companies agreed to create the Tobacco Industry Research Committee ("TIRC"). Liggett joined the industry trade group in 1964, the same year the Surgeon General issued his first report on smoking which concluded that cigarette smoking was a cause of lung cancer. Also in 1964, TIRC changed its name to the Council for Tobacco Research ("CTR"). A second trade group, the Tobacco Institute ("TI") was formed by cigarette manufacturers in 1958. F. TIRC Control 56. As had been proposed at the December 15, 1953 meeting, the five cigarette companies (and Liggett after 1964, through Hill & Knowlton, operated and effectively controlled "TIRC"). 57. TIRC was physically established in the Empire State building, one floor below the Hill & Knowlton offices. Internal documents confirm that Hill & Knowlton, and not the independent scientists, actually ran TIRC. A "highly confidential"internal memo reported:
58. The confidential memorandum also states that Hill & Knowlton"provided assistance in selecting" the TIRC Scientific Advisory Board; "proposed" the Scientific Director; and "handled liaison, agendas, organizational plans, business affairs, reports, and materials for meetings of the Tobacco Industry Research Committee, [and] the Scientific Advisory Board . . . in addition to developing operating procedures for the research program . . . ." 59. In 1954, 35 staff members of Hill & Knowlton worked full or part time for TIRC. In that year, TIRC spent $477,955 on payments to Hill & Knowlton, over 50 percent of TIRC's entire budget. G. The Industry's Pledge to Smokers 60. Shortly after creating TIRC, defendants made an unambiguous pledge to the public, including the people of Utah. Defendants represented that through TIRC, they would conduct and report objective and unbiased research regarding smoking and health. When they made this representation, defendants intended that the public and government regulators believe and rely upon it, and knew or should have known that Utah consumers would consider the representation material to their decisions to purchase and smoke cigarettes and that government regulators would consider the representation material to their decisions to regulate cigarettes. At that time, and continuing to the present, defendants knew or should have known that their failure to fulfill the duty they undertook would directly increase the health care costs to Utah. 61. On January 4, 1954, defendants announced the formation and purpose of TIRC, with a full page newspaper advertisement entitled "A Frank Statement to Cigarette Smokers." The statement appeared in 448 newspapers across the nation, reaching a circulation of 43,245,000 in 258 cities. 62. The "A Frank Statement to Cigarette Smokers"stated in part:
63. By the spring of 1955, the self-defense strategy recommended by Hill & Knowlton and implemented by the industry through the "Frank Statement" was largely successful. Hill & Knowlton reported to TIRC:
H. History of Industry Knowledge that Smoking is Harmful 64. Even before defendants represented in the Frank Statement that there is no proof that cigarette smoking is one of the causes" of lung cancer, an industry researcher had reported the contrary. 65. As early as 1946, Lorillard chemist H.B. Parmele, who later became Vice President of Research and a member of Lorillard's Board of Directors, wrote to his company's manufacturing committee:
66. After the 1954 " Frank Statement," the cigarette industry's breach of its assumed duty to report objective facts on smoking and health was virtually immediate. As evidence mounted, both through industry research and truly independent studies, that cigarette smoking causes cancer and other diseases, the cigarette industry continued publicly to represent that nothing was proven against smoking. Internal documents show that the truth was very different. The cigarette companies knew and acknowledged among themselves the veracity of scientific evidence of the health hazards of smoking, and at the same time suppressed such evidence where they could, and attacked it when it did appear. 67. Internal cigarette industry documents reveal, for example:
68. These internal Liggett documents sharply contrast with the information Liggett provided to the Surgeon General in 1963. Liggett withheld from the Surgeon General the views of its researchers and consultants that the evidence shows cigarette smoking causes human disease. A Draft of an Outline for a Background Paper on the Smoking Problem to be Used in Connection with a Presentation of Arguments Before the Surgeon General's Committee states: a. All Types of Smoking are Associated with Increased Mortality from all causes combined. . . . b. "For cigarette smokers who smoke regularly, excess mortality increases with current number of cigarettes smoked. . ." c. "Lung cancer extremely rare among nonsmokers . . . ." d. As "reported by Hammond . . . Excess Mortality [is] (1) higher for cigarette smokers than others, and (2) increases with daily cigarette consumption." e. "For both sexes, all chronic respiratory diseases, chronic bronchitis, irreversible obstructive lung diseases . . . increased in prevalence with increasing current amount of smoking. (Emphasis in original.) 69. The report Liggett presented to the Surgeon General did not contain any of these conclusions, and instead, focused on alternative causes of disease, such as air pollution, coffee and alcohol consumption, diet, lack of exercise, and genetics. Liggett criticized the known statistical association between smoking and mortality and various diseases as "unreliably conducted" and "inadequately analyzed." The Liggett report concluded that the association between smoking and disease was inconclusive, and was in fact due to other factors coincidentally associated with smoking. 70. Philip Morris also concealed from the public its actual views of the research conducted outside the influence of the industry. A 1971 memorandum written by Dr. H. Wakeham, then Vice President of Research and Development, discussed a recent study which found cigarette smoke inhalation caused lung cancer in beagles:
71. The memorandum goes on to describe how the industry publicly dismissed the mice cancer studies, such as the 1953 Wynder research. Dr. Wakeham explained that "mouse skin is not human lung tissue," "smoke condensate has different chemical composition from inhaled smoke," and "painting is not the method of application practised (sic) by human smokers." 72. In contrast to the mice studies, however, Dr. Wakeham continued:
73. Taken together with the internal acknowledgments of cigarette smoking as a cause of human disease, this memorandum from a senior Philip Morris researcher demonstrates that the 1954 Frank Statement representations were deceptions, and that the cigarette industry promptly breached the duties it had undertaken. Far from "accept[ing] an interest in people's health as a basic responsibility, paramount to every other consideration in our business" and "cooperat[ing] closely with those whose task it is to safeguard the public health," the cigarette industry approach was to deny and attack with "counter-propaganda" the mounting evidence that smoking caused human disease -- evidence that the industry plainly viewed internally as accurate. I. Health Risks of Nicotine 74. Not only did the cigarette manufacturers know that cigarette smoking caused cancer and other disease, they knew that nicotine was toxic to the heart. In a 1963 memorandum Philip Morris's Wakeham stated, "The Cardiovascular Effects in smoke are believed to be mainly due to nicotine and have been thoroughly explored in literature and conference. We do not believe this will be a specific area of attack. If forced to, we could produce a fairly tasty low nicotine product." 75. As alleged in more detail below, in 1980 Philip Morris hired Dr. Victor DeNoble with the specific mission of researching and developing nicotine analogues -- compounds that would mimic nicotine's effect on the brain, but without the cardiovascular effects, such as rapid heartbeat. 76. Brown & Williamson and its British parent(s) 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 . . . ." 77. A memorandum from Dr. S.R. Evelyn of BATCO, dated May 30, 1974, reported: "Nicotine: The reported correlation of nicotine with tumorigenicity was considered to be of the utmost importance to the industry." 78. Again, in February 1979, BATCO held a group research and development conference to review the activities of its laboratories located throughout the world. Notes from the conference reveal that research conducted at a BATCO laboratory found that high nicotine cigarettes are more tumorigenic and possibly more malignant. The notes also indicated that the laboratory was continuing work on nicotine analogues. 79. At a 1984 research conference held in the United Kingdom, Brown & Williamson and BATCO were informed of the harmful effects of nicotine. As a report from that conference stated: "The role of nicotine and cardiovascular disease was outlined, in particular the role of smoke in decreasing prostacyclen and increasing thromboxane levels." Researchers at the conference also recommended that the company perform additional studies on the role of nicotine in heart disease, and its effect on developing fetuses. J. Repeated False Promises to the Public 80. Despite increasing internal knowledge of the dangers of cigarette smoking which they did not disclose, the defendants continued, renewed and repeated the representations and undertakings of the 1954 Frank Statement to Cigarette Smokers. The cigarette industry continued to pursue its two-pronged strategy of falsely representing the objectivity of industry research to the public in order to gain credence, and then misrepresenting, distorting, and suppressing information in order to support its pro-cigarette position. 81. For example, RJR chairman Bowman Gray told Congress in 1964: "If it is proven that cigarettes are harmful, we want to do something about it regardless of what somebody else tells us to do. And we would do our level best. It's only human." 82. Additional representations were made in 1970 when the cigarette industry, through its lobbying group the Tobacco Institute, placed a number of advertisements similar to the 1954 "Frank Statement." These advertisements stated in part:
83. Another advertisement in 1970 stated that the industry believed the American public is "entitled to complete, authenticated information about cigarette smoking and health. The tobacco industry recognizes and accepts a responsibility to promote the progress of independent scientific research in the field of tobacco and health. 84. Yet another advertisement co-sponsored by TIRC and the TI called A Statement about Tobacco and Health, stated:
* * *
85. In 1972, Tobacco Institute President Horace Kornegay testified before Congress:
86. In 1984, RJR placed an editorial style advertisement in the New York Times stating:
87. Each of the representations to the public that defendant tobacco companies were sponsoring independent objective research, that they were endeavoring to bring the truth to light, and that the public could therefore rely upon the statements made, were false and deceptive. These misrepresentations were designed to gain the trust of the public in order to better distort and suppress substantive information about smoking and health. K. The Gentlemen's Agreement 88. This industry strategy depended for its success on joint and concerted action by the defendants. Upon information and belief, each of defendants agreed not to reveal to the public the true nature of TIRC, and later CTR, and not to disclose adverse information on smoking and health, in order to protect continued cigarette sales. 89. Each company also agreed not to perform research on smoking and health on its own. The tobacco companies referred to this agreement as the "Gentlemen's Agreement." A 1968 internal Philip Morris draft memorandum entitled "Need for biological research by Philip Morris research and development," and prepared by the company's Vice President of Research and Development, states:
90. Also in 1968, a memo addressed to the CEO of Liggett regarding a meeting of the research directors of the cigarette companies stated on the topic of smoking and health "a general feeling that an industry approach as opposed to an individual company approach was highly desirable." 91. As indicated by the 1968 "Gentlemens' Agreement" memo, it was believed within the industry that individual companies were performing certain research on their own, in addition to the joint industry research. But the fundamental understanding and agreement remained intact: that harmful information and activities would be restrained, suppressed, and/or concealed. This included restraining, suppressing, and concealing research on the health effects of smoking, including the addictive qualities of-cigarettes, and restraining, concealing, and suppressing the research and marketing of safer cigarettes. L. Role of CTR as a "Front" 92. Internal documents demonstrate that the joint industry research efforts undertaken through TIRC, and later, through CTR, were not disinterested or objective. Rather, they were designed and used to promote favorable research, to suppress negative research where possible, and to attack negative research where it could not be suppressed, all in order to convince the public that the case against smoking is not closed. 93. A 1974 report to the CEO of Lorillard provides a retrospective look at some of the true purposes of the joint industry research effort. Contrary to the public representations of joint industry research as designed to examine and resolve smoking and health questions, the author, a Lorillard research executive, described the actual criteria for CTR's selection of scientific projects:
94. Another internal document from a Tobacco Institute official to the group's president described the importance of using joint industry research to maintain public doubt about evidence of smoking and disease:
* * *
95. A 1978 memo addressed to the CTR file from a Philip Morris official provides another description of the history and role of the joint industry research effort, a role very different from that represented to the public.
. . . [T]he "public relations" value of CTR
must be considered and continued. . . . It is extremely important that
the industry continue to spend their dollars on research to show that we
don't agree that the case against smoking is closed. . . . There
is a "CTR basket" which must be maintained for "PR"
purposes. . . . 96. A former 24-year employee of CTR confirmed in public statements that the joint industry research efforts were never objective. A woman who wrote summaries of grantee research for CTR until 1989 stated: "When CTR researchers found out that cigarettes were bad and it was better not to smoke, we didn't publicize that. . . . The CTR is just a lobbying thing. We were lobbying for cigarettes." She continued, "Inthe 60s, . . . there was so much bad news about smoking that there really wasn't much the CTR could put out, but anything they could find they would use." 97. This evidence demonstrates that the role and purpose of TIRC and CTR in the cigarette company's strategy was to gain the public's trust, and then to use that trust to propagate pro-cigarette propaganda. A cigarette industry official wrote in his personal notes describing a meeting which included high level officials from the various cigarette companies that:
M. The Example of Dr. Freddy Homburger 98. Most CTR sponsored research projects were directed away from research that might add to the evidence against smoking. Nonetheless, when CTR sponsored research reached negative results, the information was distorted or simply suppressed. For example, Dr. Freddy Homburger, a researcher in Cambridge, Massachusetts, received a grant from CTR to study smoke exposure on hamsters. Half-way through the study, CTR changed his funding from a grant to a contract. Dr. Homburger states that the CTR changed his funding "so they could control publication -- they were very open about that." As a consequence, Dr. Homburger was required to send CTR a draft of his proposed publication of the research results. Dr. Homburger had found that when Syrian hamsters were exposed to inhaled smoke twice a day for 59 to 80 weeks, 40 percent of those of a cancer-susceptible strain and 4 percent of a resistant strain developed malignant tumors. 99. The Scientific Director of CTR and a CTR lawyer then visited Dr. Homburger. Dr. Homburger has testified that "[t]hey didn't want us to call anything cancer." "They wanted it to be pseudo-epitheliomatous hyperplasia, and that is a euphemism for lesions preceding cancer. And we said no, this isn't right. It is a cancer." Dr. Homburger also stated that the lawyer told him that he would "never get a penny more" if the paper was published without making the demanded changes. Dr. Homburger compromised, and changed the paper to read "microinvasive" cancer. 100. Dr. Homburger apparently then considered making public the events leading to the change in his paper. Internal CTR documents describe how Dr. Homburger attempted to call a press conference, and how CTR stopped it. "He was to tell the press that the tobacco industry was attempting to suppress important scientific information about the harmful effects of smoking. He was going to point specifically at CTR." "I arranged later that evening for it to be canceled." "Homburger was given a cordial welcome and nicely hastened out the door." "P.S. I doubt if you or Tom will want to retain this note." N. Special Projects 101. Another mechanism that CTR used to suppress research results that implicated smoking in disease was to selectively involve lawyers, and then invoke the attorney/client privilege to prevent the disclosure of harmful information. CTR used the term "special projects" to mean a project that carried a risk of a negative result that might have to be suppressed. "Special Projects" were selected and monitored by industry lawyers to prevent disclosure. 102. Notes prepared at a 1981 meeting of the cigarette industry's Committee of General Counsel state:
103. A memorandum addressed to CTR from a Philip Morris official characterizes CTR as a "front" for performing "special projects." "[S]pecial projects" are the best way that monies are spent. On these projects, CTR has acted as a "front"; however, there are times when CTR has been reluctant to serve in that capacity. . . . 104. The industry's use of lawyers and the claim of attorney/client privilege to insulate CTR funded research projects from disclosure to the public, and to government officials, demonstrates that each of the industry representations to jointly fund objective research, and to report the results of that research to the public, was utterly false. O. Clearing the Deadwood 105. Brown & Williamson went to even greater lengths to suppress and avoid disclosure of its internal research on smoking and disease. A memorandum from Brown & Williamson's general counsel, J. Kendrick Wells, recommended that much of the company's biological research be declared deadwood and shipped to England. He recommended that no notes, memos or lists be made about them. Wells stated, "I explained I had marked certain of the document references with an X. The X designated documents which I suggested were deadwood in the behavioral and biological studies area. I said that the B series are "Janus" series studies and should also be considered deadwood." ("Janus" was a name of a project which attempted to isolate and remove the harmful elements of tobacco.) Wells further recommended that the research, development and engineering department also "should undertake to remove the deadwood from its files." P. "Mouse House" Massacre 106. As indicated in the "Gentlemens' Agreement" memorandum, many of the defendants began to perform biologic research through their own facilities. In sharp contrast to the pro-cigarette research usually sponsored by CTR, some of this research was directed at examination of the link between smoking and disease. When this research revealed or suggested that cigarette smoking is harmful, rather than reporting it to the public as they had undertaken and represented, the cigarette companies suppressed it. 107. One example of this practice occurred at RJR. In the 1960s, RJR established a facility in Winston-Salem, North Carolina, nicknamed the "Mouse House," to perform research on the health effects of smoking using mice. There, RJR scientists conducted research in a number of specific areas, including studies of the actual mechanism whereby smoking causes emphysema in the lungs. 108. The RJR lab made significant progress in understanding the role of substances known as pulmonary surfactants in air sacks in the lungs. RJR Researchers learned that smoking damages the pulmonary surfactants, meaning the lung air sacks were damaged at the cellular level, and had made progress in learning how that led to emphysema. Despite this progress, RJR disbanded the entire research division in one day, and fired all 26 scientists without notice. 109. Several months before the 1970 closure and firings, RJR attorneys had collected dozens of research notebooks from the scientists. The notebooks have still not been disclosed. 110. One of the researchers later stated about RJR's executives and lawyers, They like to take the position that you can't prove harm because you don't know mechanism . . . . And sitting right under their noses is evidence of mechanism. What are they going to do with this stuff? They decided to kill it. 111. RJR later wrote a confidential report which favorably described the Mouse House emphysema work. The 1985 report states that the work is the more important of the smoking and health research effort because it comes close to determining what was thought to be the underlying pathology of emphysema. None of the work done at the "Mouse House" was disclosed to the public. Q. "Safer" Cigarettes 112. One of the reasons RJR and other cigarette companies began to do internal biological research appears to have been to attempt to develop a cigarette with reduced health risks. In order to reduce the health risk, studies were needed to discover how cigarette smoking causes disease. Once this was known, attempts could be made to remove or modify the harmful agents. Several companies performed research of this kind by 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 specific constituents in tobacco smoke were carcinogens, or were linked to other diseases. This research was kept secret and never reported to the public. 113. Even more shocking, industry documents reveal that a number of companies successfully removed certain harmful constituents from cigarette smoke, and developed prototype cigarettes with reduced health effects, but that these products were never marketed. The reason was the industry conspiracy not to reveal harmful research results that would undermine the unified position that there is no proof that smoking causes disease. 114. A 1987 memorandum, written by an attorney at the firm of Shook, Hardy & Bacon, long-time lawyers for the cigarette industry, confirmed that there was an industry-wide position regarding the issue of a safer cigarette. The memorandum referred to the marketing by R.J. Reynolds of a smokeless cigarette, Premier, which heated rather than burned tobacco. The Shook, Hardy attorney wrote that the smokeless cigarette could "have significant effects on the tobacco industry's joint defense efforts " and that "[t]he industry position has always been that there is no alternative design for a cigarette as we know them." The memorandum also noted that, "Unfortunately, the Reynolds announcement . . . seriously undercuts this component of industry's defense." 115. 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. . . ." 116. Philip Morris did perform the research and development of such a product. However, the company never released the research, and never informed the public that existing cigarettes were not safe or that a safer cigarette was possible. A 1964 Philip Morris research and development presentation to its Board of Directors stated:
117. The research and development department at Philip Morris nonetheless continued to perform research on smoking and health, including research into safer cigarettes. The company viewed this as necessary in order to compete if another cigarette company marketed a safer cigarette. This was viewed as less likely, because work was being done through joint industry sponsored research abroad. The presentation to the Philip Morris Board of Directors continued:
is working to establish a strong technological base with both defensive
and offensive capabilities in the smoking and health situation. Our philosophy
is not to start a war, but if a war comes, we aim to fight well and to
win. R. Liggett Safer Cigarette: XA 118. Liggett also developed a safer cigarette. Company researchers believed that they had discovered which cigarette smoke constituents were carcinogens, and found a way to remove them. And unlike the Philip Morris product, Liggett officials believed the Liggett product was commercially marketable. Nonetheless, in violation of the company's representations and duty to the public, Liggett never marketed the cigarette, and suppressed the research that led to its development. 119. Liggett began its research by repeating the smoke condensate painting studies of mice performed by Dr. Wynder. Through a contract with Arthur D. Little, Inc., Liggett sought to determine the validity of Wynder's results when the appropriate smoking conditions were used, and to determine the effect of different types of tobacco on the response level. An extensive program was also directed toward defining the nature of the material responsible for the tumorigenic effect. 120. This work began soon after Dr. Wynder's study was published in 1953, and was successful. A Liggett document discussing the history of the project states:
121. As a result of these discoveries, in 1968, Liggett began a tobacco additive program designed to reduce or eliminate the tumorigenic activity of cigarette smoke. Company researchers discovered that palladium metal and magnesium nitrate, when added to cigarette tobacco, acted as catalysts in the burning process that removed carcinogenic compounds from the cigarette smoke. Liggett performed animal studies which indicated that [c]igarette tar has been neutralized" and that there was no evidence for "new or increased hazard to the smoker. 122. By 1979, Liggett had declared the work a success. Company documents state:
123. Liggett concluded that it had isolated carcinogens in cigarette smoke and found a way to reduce them in cigarettes of commercial quality. 124. Despite those findings, Liggett decided not to market the XA cigarette, and abandoned the project. On information and belief, Liggett did so for two reasons. One was the danger that the disclosure that a safer cigarette was possible would require the admission that all existing cigarettes were not safe. One Liggett executive wrote that, "[a]ny domestic activity will increase the risk of cancer litigation on existing products. US manufacture for export will be less risky." 125. The other reason was the apparent threat of retaliation by the largest cigarette company, Philip Morris, if Liggett violated the industry agreement not to disclose negative information on smoking and health. Dr. James Mold, the Assistant Research Director at Liggett during the development of the XA safer cigarette, has testified that: "Mr. Dey who was the . . . who at that time, and I guess still is the president of Liggett Tobacco, made the statement that he was told by someone in the Philip Morris Company that if we tried to market such a product that they would clobber us." S. Liggett, James Mold and the XA Research 126. The testimony of Dr. Mold, a central Liggett researcher on the safer cigarette project, provides additional insight into what Liggett discovered, and how the company suppressed that information from the public they had pledged to inform, and why it did not market the XA cigarette. Dr. Mold stated:
127. During the XA project, Liggett attempted to insulate the research by the use of company lawyers. Dr. Mold stated after 1975,
Dr. Mold stated that lawyers even collected all the notes after each meeting.
128. Dr. Mold stated that the company lawyers not only ultimately succeeded in stopping the project, but ordered him not to publish the results of the research that led to the safer cigarette. Dr. Mold stated:
129. Thus, despite the significance of the research, and Dr. Mold's requests to publish a scientific paper on the results, Liggett suppressed the work, and ordered Dr. Mold not to publish and not to present the findings to a scientific forum. Dr. Mold got as far as preparing a paper for publication and presentation. Dr. Mold explained that
130. Dr. Mold stated that he had requested permission to publish the paper in "Science" or in the "Journal of Preventative Medicine." He stated that the Liggett legal department had ordered him not to submit the paper. Dr. Mold also stated that the legal department had instructed him not to attend a conference on smoking and health. 131. Ultimately, only an abstract of the paper was published, and Dr. Mold was not allowed to have his name on the publication. Rather, after changes by the legal department, the abstract was published by the consulting firm Arthur D. Little. 132. When asked why Liggett never marketed the safer XA cigarette, Dr. Mold explained that:
T. Liggett Safer Cigarette Patent 133. In 1977, before deciding not to market the XA cigarette, Liggett obtained a patent for the process it had discovered to produce the safer cigarette. The patent application describes the reduction in cancer in mouse studies. Stories in the media then appeared stating that Liggett was the first cigarette company to admit that smoking caused cancer. In 1978 Liggett reacted by placing a advertisement it called a "Liggettgram" which stated:
134. At the time Liggett made these statements, including the statement that no conclusions regarding human cancer can be drawn from mouse studies, Dr. Mold estimates that Liggett, directly and through its consultant Arthur D. Little, had spent a total of $10 million on smoking and health research involving mice, in part to develop the safer XA cigarette. Liggett's internal reports on the benefit of the XA, and the absence of increased risk of harm from the new additives, specifically used animal studies as reliable indicators of the health effect of the product on humans. 135. Despite overwhelming scientific evidence, and the confirmation of this evidence by their own internal research, the cigarette manufacturers and their trade associations continue to this day to repeat again and again, in a unified stance, that there is no causal connection between cigarette smoking and adverse health effects. These representations are fraudulent, misleading, deceptive and untrue. They rest at the heart of the industry's ongoing conspiracy to market and profit from a product it knows is deadly, without having to pay the costs of the associated morbidity and mortality. U. The Role of Nicotine in Smoking 136. The other truth which the cigarette industry has made every effort to suppress, deny and misrepresent concerns the powerfully addictive properties of nicotine. While carefully studying its addictive character and acting upon that knowledge to maintain cigarette sales, the cigarette manufacturers have uniformly denied that nicotine is addictive. 137. This public deception and the cigarette industry's secret manipulations of nicotine were and are critically important to the cigarette manufacturers. As truly objective researchers increased their warnings of the health dangers of cigarettes, nicotine addiction kept people smoking. This second front in the war against the public health allows the cigarette manufacturers to continue to sell their dangerous products, even to those who eventually come to doubt the industry's health claims. And if a new consumer is fooled for a time by "pro-cigarette"disinformation on health, and takes up the habit, it may well be too late. Instead of a simple decision not to purchase a product, the consumer must grapple with an addiction. V. Industry Knowledge of the Addictiveness of Nicotine 138. The cigarette companies have long known of the addictive properties of the nicotine contained in the cigarettes they manufacture and sell. The following illustrates such knowledge:
W. Suppression and Concealment of Research on Nicotine Addiction 139. Defendants, rather than fulfilling their promise to the public to disclose material information about smoking and health, chose a course of suppression, concealment, and disinformation about the true properties of nicotine and the addictiveness of smoking. 140. Philip Morris' professed interest in discovering and disclosing the truth to the public was proved a lie early on. Philip Morris hired Victor DeNoble in 1980 to study nicotine's effects on the behavior of rats and to research and test potential nicotine analogues. DeNoble, in turn, recruited Paul C. Mele, a behavioral pharmacologist. DeNoble and Mele discovered that nicotine met two of the hallmarks of potential addiction -- self-administration (rats would press levers to inject themselves with a nicotine solution) and tolerance (a given dose of nicotine over time had a reduced effect). 141. However, Philip Morris instructed DeNoble and Mele to keep their work secret, even from fellow Philip Morris scientists. Test animals were delivered at dawn and brought from the loading dock to the laboratory under cover. 141A. DeNoble was later told by lawyers for the company that the data he and Mele were generating could be dangerous. Philip Morris executives began talking of killing the research or moving it outside of the company so Philip Morris would have more freedom to disavow the results. DeNoble recalled that Philip Morris discussed several possible scenarios, including having DeNoble and Mele leaving the company payroll and continuing as contractors, and shifting their work to a lab in Switzerland. 142. In August 1983, Philip Morris ordered DeNoble to withdraw from publication a research paper on nicotine that had already been accepted for publication after full peer review by the journal Psychopharmacology. According to DeNoble, the company changed its mind because-it did not want its own research showing nicotine was addictive or harmful to compromise the company's defense in litigation recently filed against it. DeNoble subsequently told Jack Heningfield, Ph.D., Chief of the Clinical Pharmacology Branch of the National Institute on Drug Abuse's Addiction Research Center, that Philip Morris officials had rightly interpreted the suppressed nicotine studies as showing that, in terms of addictiveness, nicotine looked like heroin. 143. In April 1984, Philip Morris, apparently to ensure that DeNoble and Mele's nicotine research remained suppressed and concealed, told DeNoble and Mele that the lab was being closed. DeNoble and Mele were forced abruptly to halt their studies, turn off their instruments and turn in their security badges by morning. Philip Morris executives threatened them with legal action if they published or talked about their nicotine research. According to DeNoble, the lab literally vanished overnight. The animals were killed, the equipment was removed and all traces of the former lab were eliminated. DeNoble recalled, The lab was gone, everything was gone. The cages were gone, the animals were all gone, all the data was gone. It was empty rooms. 144. DeNoble testified to the Waxman Subcommittee that senior research management in Richmond, Virginia, as well as top officials at the Philip Morris Company in New York continually reviewed our research and approved our research. DeNoble also stated that these officials were specifically told about nicotine's addictiveness. 145. Brown & Williamson also chose to suppress and conceal its own substantial body of research on nicotine. Potentially damaging and sensitive research was undertaken to a large degree by Brown & Williamson's British affiliates at the industry's lab at Harrogate. Harrogate performed research for a number of cigarette manufacturers, and some of this research was shared with these other manufacturers and with the Tobacco Institute. 146. By 1963, Brown & Williamson had also chosen to conceal material information from the Surgeon General. The company debated internally whether to disclose to the U.S. Surgeon General, who was preparing his first official report on smoking and health, what the company knew about the addictiveness of nicotine and the adverse effects of smoking on health. 147. Addison Yeaman, general counsel at Brown & Williamson, stated in a 1963 report that [w]e are, then, in the business of selling nicotine, an addictive drug. . . . Yeaman advised Brown & Williamson to accept its responsibility and disclose its findings to the Surgeon General. He said that such disclosure would then allow the company openly to research and develop a safer cigarette. 148. Brown & Williamson rejected Yeaman's advice to make full disclosure to the Surgeon General. A series of six letters and telexes exchanged by Yeaman and senior BATCO official A.D. McCormick between June 28 and August 8, 1963, document the company's decision not to disclose to the Surgeon General the company's research findings on the addictive and other harmful effects of nicotine and the disease-causing properties of cigarettes. X. The Industry's Interest in Nicotine 149. The cigarette companies also understood early on that nicotine played a pivotal role in the success of the tobacco industry. A chronology of the industry's research and development activities leaves no doubt about the cigarette companies' conviction that nicotine was the key to their industry's success. 150. The results of research undertaken by Brown & Williamson more than 30 years ago for a study called Project Hippo were finally disclosed by the company in May 1994. Documents from this study show that as far back as 1961, the tobacco industry was actively studying the physiological and pharmacological effects of nicotine. 151. In a 1968 internal report, BATCO noted that "[i]n view of its pre-eminent importance, the pharmacology of nicotine should continue to be kept under review. . . ." 152. In 1972, a BATCO report again noted:
153. To this day, the cigarette manufacturers have deliberately determined not to disclose to the public or to public health officials their extensive knowledge of the addictive properties of nicotine and its critical role in smoking and not to use that knowledge to reduce or eliminate nicotine from their products. Instead, the cigarette companies have chosen to focus their energies and research on developing new and more sophisticated methods of hooking smokers and keeping them hooked, all to boost cigarette sales. 154. The cigarette industry's intense interest in the pharmacology of nicotine led to industry efforts to find an artificial nicotine that would have the addictive and psychopharmacological properties of nicotine without nicotine's dangerous effects on the heart. 155. For example, one of Dr. DeNoble's primary functions at Philip Morris was to research and develop a nicotine analogue. DeNoble testified to the Waxman Subcommittee that he did, in fact, discover a nicotine analogue that caused animals to behave as if they were getting a nicotine high but without signs of the heart distress that comes with nicotine. 156. Philip Morris, however, chose to halt its effort to determine whether the nicotine analogue could be used to make a safer cigarette. On information and belief, Philip Morris decided not to pursue nicotine analogues in order to avoid the risk of adverse publicity and of compromising the industry's consistent position that there was no alternative design for cigarettes. 157. Brown & Williamson also understood that for purposes of maintaining its sales, nicotine was the essential ingredient in tobacco. The company attempted to develop a "safer" cigarette which internal documents described as "a device for the controlled administration of nicotine." Project Ariel focused on heating, rather than burning, the tobacco, and according to company documents, was "a nicotine delivery device." 158. RJR's efforts to develop a safer cigarette also focused on delivering nicotine to the consumer without the harmful constituents of tobacco smoke. In the late 1980's, RJR developed and test marketed Premier, a smokeless and virtually tobacco-free cigarette which was, in essence, a nicotine delivery system. RJR conducted human studies to determine whether the nicotine from Premier was absorbed, metabolized and excreted from blood at the same rate as a standard cigarette. 159. Former head of RJR Nabisco, F. Ross Johnson, a driving force behind the development of Premier, said about tobacco, "Of course, it's addictive. That's why you smoke the stuff." 160. RJR, like the other cigarette manufacturers, concealed and suppressed its findings on the addictiveness of smoking and continued to misrepresent to the public its commitment to determining whether smoking was harmful. 161. The cigarette companies have affirmatively misrepresented to consumers and to Congress the role of nicotine in tobacco use. Even today, the cigarette industry continues to claim that nicotine is important in cigarettes solely for flavor. 162. A substantial body of evidence refutes that claim. Tobacco industry patents specifically distinguish nicotine from flavorants. An RJR book on flavoring tobacco, while listing approximately a thousand flavorants, fails to include nicotine as a flavoring agent. 163. In fact, the cigarette industry has concentrated on developing technologies to mask the flavor of increased levels of nicotine in cigarettes. According to the Merck Index, an internationally recognized listing of drugs, nicotine has "an acrid, burning taste." U.S. Patent 4,620,554 describes the taste of nicotine as "hazardous." The role of nicotine in the tobacco industry's business is pure and simple -- to hook smokers on their deadly products and keep them hooked in the face of mounting evidence that smoking causes human disease. The cigarette industry has focused tremendous energy and resources on developing the technology to ensure that smokers become and remain addicted to the industry's cigarettes. Y. Light Cigarettes: a Marketing Hoax 164. The cigarette industry's conspiracy to deceive the public about the dangers of smoking was not confined to suppressing and concealing their own findings and discrediting or dismissing the findings of outside researchers. The conspiracy also extended to efforts to retain that segment of the smoking market that was becoming increasingly concerned about health. The cigarette industry was well aware that low-nicotine products -- while better for the heart -- were worse for business. As one company researcher reported to Philip Morris executives:
165. The cigarette industry's research indicated that low-tar cigarettes with correspondingly low levels of nicotine were likely to be rejected by consumers and therefore, attempted to determine to what extent the craving for nicotine overrode other considerations, including health. 166. Brown & Williamson's parent company, BATCO, for example, commissioned a study called "Project Wheat." More than 1,000 British male smokers were questioned about their smoking habits, about nicotine, and about their attitudes toward smoking and health. Among Project Wheat's findings were that: (1) reductions in nicotine delivery caused progressive rejection of the cigarette by consumers; (2) a large group of smokers had both a high "inner need" for nicotine and a high concern for health; and (3) concern for the possible health risks of smoking influenced smokers' willingness to try low tar brands, but there is evidence of a conflict between their concern for health and their desire for a satisfying cigarette." 167. On information and belief, a restricted report on Project Wheat by Group Research & Development Centre, a subsidiary of BATCO, shows that the cigarette industry's promotion and marketing of low-tar cigarettes was a deliberate attempt to deceive health-conscious smokers with high nicotine needs into believing that light cigarettes were less addictive:
168. The report pointed out the substantial market potential of a cigarette with lower tar and higher nicotine delivery to those smokers with an "inner need" for nicotine but a concern for health. Brown & Williamson's introduction of Barclay -- a low tar, high nicotine cigarette -- was a result of the findings from Project Wheat. 169. The cigarette industry has cultivated that health-conscious segment of the smoking market by promoting and selling "light" cigarettes with reduced tar and added nicotine. National Gallup polls have found that smokers believe that cigarette brands labeled "light" are less hazardous to their health and less addictive because they deliver less tar and less nicotine. This widely-held belief -- although false -- has been promoted by the cigarette companies through several misleading strategies. 170. First, the cigarette industry has consistently told the public and the FDA that nicotine levels follow tar levels. a. For example, in the words of Dr. Alexander Spears, Vice Chairman of Lorillard, in his 1994 testimony before the Waxman Subcommittee, "[n]icotine [level] follows the tar level," and the correlation between the two "is essentially perfect." b. ATC similarly told the Waxman Subcommittee in an October 14, 1994 letter that "nicotine follows 'tar 'delivery, i.e. high 'tar'' -- high nicotine, low 'tar'-- low nicotine . . . . Nicotine is neither adjusted nor altered to compensate for losses inherent in the manufacturing process." 171. Internal company documents reviewed by the Waxman Subcommittee, however, show that ATC has experimented extensively with adding nicotine to its tobacco -- extensively enough that ATC executive John T. Ashworth instructed employees in a confidential memorandum: "In the future, our use of nicotine should be referred to as 'Compound W'' in our experimental work, reports, and memorandums, either for distribution within the Department or for outside distribution. 172. Moreover, recent tests conducted at the direction of the FDA show that the low-tar brands actually have more nicotine than the non-"light" brands. Given the cigarette industry's statements that nicotine levels follow tar levels, the unexpectedly high level found in lower tar cigarettes seriously misleads consumers and renders the industry's claim of "an essentially perfect correlation" completely false. 173. Second, the nicotine deliveries, as measured by the Federal Trade Commission ("FTC") method, published by the cigarette industry, seriously mislead consumers. The cigarette manufacturers know that the significant changes they have made in cigarette design make the FTC method of measuring nicotine and tar deliveries highly inaccurate. Cigarette manufacturers also know that the machine-measured deliveries understate the amounts of nicotine and tar actually ingested by human smokers. As Philip Morris senior scientist William L. Dunn, Jr., noted in a 1972 internal report:
174. Third, cigarette manufacturers add various ammonia compounds during the manufacturing process which increase the efficiency of nicotine delivery to the smoker and thereby increase the smoker's absorption of the drug. In April 1994, the industry disclosed the 599 ingredients added to tobacco. Among them were several ammonia compounds which, according to David A. Kessler, M.D., Commissioner of Food and Drugs, and confirmed by the industry's own internal documents, increase the delivery of nicotine and almost double the nicotine transfer efficiency of cigarettes. 175. Fourth, on information and belief, the cigarette industry also misleads consumers by fortifying the tobacco used for its "light" brands with additional nicotine in order to ensure that the nicotine content of the low-tar cigarettes remains at addictive levels. The cigarette industry thereby maintains a continuing market for what consumers are misled to believe is a lower tar, lower nicotine and thus, less addictive product. For example, a 1981 study by "essentially perfect correlation" author, Dr. Spears, states explicitly that "low-tar cigarettes use special blends of tobacco to keep the level of nicotine up while tar is reduced: The lowest tar segment [of product categories] is composed of cigarettes utilizing a tobacco blend which is significantly higher in nicotine." 176. In March 1994, the FDA's Dr. Kessler summarized for the Waxman Subcommittee the Federal Trade Commission data on nicotine levels. He testified that the nicotine/tar ratio was higher in the ultra-low tar group of cigarettes, even though low tar has usually been associated with low nicotine. Dr. Kessler posed to Congress the obvious question:
177. Dr. Kessler's question appears to have been answered by the compelling evidence recently made public by the Waxman Subcommittee of nicotine manipulation and control by the cigarette industry. Z. Industry Control and Manipulation of Nicotine 178. The cigarette industry's control and manipulation of nicotine levels in their cigarettes goes well beyond fortifying low-tar or "light" style cigarettes with nicotine. Recent evidence shows that the cigarette manufacturers are capable of and do, in fact, manipulate the amount and even the presence of nicotine in cigarettes. 179. The cigarette companies have developed and use highly sophisticated technologies designed to deliver nicotine in precisely calculated quantities -- quantities that are more than sufficient to create and sustain addiction in the vast majority of individuals who smoke regularly. AA. "Y-1" 180. The story of Brown & Williamson's development of a new tobacco plant dubbed "Y-1" is one of the more egregious examples of the cigarette industry's outright lies about its control and manipulation of the nicotine levels in its products. 181. On June 21, 1994, Dr. Kessler told the Waxman Subcommittee that FDA investigators had discovered that Brown & Williamson had developed a super-high nicotine tobacco plant, which the company called "Y-l." This discovery followed Brown & Williamson's flat denial to the FDA on May 3, 1994, that it had engaged in "any breeding of tobacco for high or low nicotine levels." 182. Four FDA investigators who had visited the Brown & Williamson plant in Macon, Georgia on May 3, 1994 swore in affidavits that company officials had denied that Brown & Williamson was involved in breeding tobacco for specific nicotine levels. Only after the FDA had learned of the development of Y-1 in its investigation and confronted company officials with the evidence did the company admit that it was growing and using the high-nicotine plant. 183. In fact, in a decade-long project, Brown & Williamson secretly developed a genetically-engineered tobacco plant with a nicotine content more than twice the average found naturally in flue-cured tobacco. Brown & Williamson took out a Brazilian patent for the new plant, which was printed in Portuguese. Brown & Williamson and a Brazilian sister company, Souza Cruz Overseas, grew Y-1 in Brazil and shipped it to the United States for use in five Brown & Williamson cigarette brands sold in Utah, including three labeled "light." When the company's deception was uncovered, company officials admitted that close to four million pounds of Y-1 were stored in company warehouses in the United States. 184. As part of its massive cover-up, Brown & Williamson even went so far as to instruct the DNA Plant Technology Corporation of Oakland, California, which had developed Y-1, to tell FDA investigators that Y-1 had "never been commercialized." Only after the FDA discovered two United States Customs Service invoices indicating that "more than a half-million pounds" of Y-1 tobacco had been shipped to Brown & Williamson on September 21, 1992, did the company admit that it had developed the high-nicotine tobacco. BB. Other Methods of Nicotine Manipulation 185. The number and pattern of tobacco industry patents show that the cigarette industry has developed the capability to manipulate nicotine levels in cigarettes to an exacting degree. The following quotations from industry patents demonstrate the industry's capabilities:
186. The FDA's Dr. Kessler testified in detail before the Waxman Committee about the various forms of nicotine manipulation practiced by the tobacco industry: manipulating the rate at which nicotine is delivered in the cigarette; transferring nicotine from one material to another; increasing the amount of nicotine in cigarettes; and adding nicotine to any part of a cigarette. 187. Dr. Kessler's disclosures show that nicotine is not an inevitable or unavoidable component of tobacco products. In fact, cigarette manufacturers have the capability to remove all or virtually all of the nicotine from their products using technology already in existence. 188. Other revealing evidence of the cigarette companies' manipulation and control of nicotine levels includes the emergence of companies that specialize in manipulating nicotine and that are now doing business with tobacco manufacturers. On information and belief, Philip Morris uses or has used a process called tobacco reconstitution, patented and marketed by the Kimberly-Clark Corporation subsidiary, LTR Industries, for controlling nicotine levels. 189. Reconstituted tobacco is made from stalks and stems and other waste that cigarette companies used to discard and now use to make cigarettes more cheaply. On information and belief, ordinarily, reconstituted tobacco contains 25 percent or less of the nicotine in regular tobacco. A former RJR manager who demanded anonymity told the ABC news program "Day One," that on the average, currently marketed brands contain about 22 percent reconstituted tobacco and that cut rate or generic brands typically contain about double that amount. 190. A laboratory analysis commissioned by "Day One" and conducted by the American Health Foundation confirmed the industry's heavy use of reconstituted tobacco. One RJR brand had 25 percent and another had about 33 percent reconstituted tobacco. Yet, tested samples of the reconstituted tobacco implanted in RJR brands, Winston, Salem, Magna and Now had up to 70 percent, rather than the expected 25 percent, of the nicotine that would be found in regular tobacco, indicating that RJR had fortified the reconstituted tobacco with additional nicotine. 191. On information and belief, reconstituted tobacco has inferior taste and less nicotine, so the cigarette manufacturers or their agents apply a powerful tobacco extract either alone or as part of a solution of flavorings to the reconstituted tobacco. RJR and the other cigarette manufacturers have the technology to add flavorings with or without nicotine, so the addition of nicotine to reconstituted tobacco is purely at the manufacturer's discretion. 192. The Kimberly-Clark tobacco reconstitution process is believ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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