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State of Wisconsin v Philip Morris, Inc. et al.
CIRCUIT COURT DANE COUNTY
Other Injunction or Restraining Order. COMPLAINT The State of Wisconsin, by James E. Doyle, Attorney General, brings this complaint against the above-named defendants and alleges as follows: I. NATURE OF THE ACTION 1. For years, and continuing to date, the major manufacturers of tobacco products and their agents have engaged in a conspiracy to mislead, deceive and confuse the public, including the State of Wisconsin and its residents, regarding the evidence 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 that they would lead the effort to discover and disclose the truth about tobacco products and health, they have, in fact, systematically suppressed and concealed material information and waged an aggressive campaign of disinformation about the health consequences caused by their products. The tobacco companies have taken these actions, even though they have known for years, based on their own secret research, that their products often injure or kill the consumer when used exactly as intended. 2. 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 create, sustain and/or 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. 3. The defendants are engaged in this course of conduct despite their knowledge that the vast majority of new users of tobacco products are children and adolescents. Each year, these companies spend millions of dollars on marketing and public relations in Wisconsin to attract children and adolescents, with the effect that each year, more Wisconsin children and adolescents begin using and continue to use tobacco products. The Centers for Disease Control and Prevention ("CDC") has reported that more than 80 percent of all smokers start before the age of eighteen. Every day more than 3,000 American teenagers begin smoking. Surveys show that in Wisconsin, 31.8 percent of high school students smoke, and as many as 21 percent of male high school students use smokeless tobacco. The tobacco companies market their products to children and adolescents, who cannot legally purchase them, as a central part of the defendants' business strategy. 4. Thousands of Wisconsin residents die each year from using the defendants' tobacco products. Each year, the State of Wisconsin must spend millions of dollars to purchase or provide medical and related services for Wisconsin residents suffering from tobacco-related diseases. At the same time the manufacturers of tobacco products reap huge profits from the sale of tobacco products in Wisconsin. 5. The State of Wisconsin has a long-standing policy of preventing children from using tobacco products and of preventing anyone from facilitating children's access to or desire for such products. It is a violation of Wisconsin law to "sell or give cigarettes or tobacco products to any person under the age of 18." Section 134.66(2), Stats. It is also a violation of Wisconsin law for children to purchase or possess tobacco products. Section 48.983(2), Stats. 6. The State of Wisconsin has a public policy of paying the health care costs for its residents who cannot pay these costs themselves. In 1994 alone, the State of Wisconsin spent over $835 million in health care costs for its needy residents through the Medicaid Program, representing approximately 15 percent of the State's annual budget. Since the earliest days of this State policy, the State of Wisconsin has also had a policy of recovering those costs from those who should have paid them. 7. The State of Wisconsin seeks monetary damages, civil penalties, declaratory and injunctive relief, and restitution for the conduct described in this complaint. The State seeks an injunction requiring the defendants to cease marketing tobacco products to children, to disclose their research on smoking, addiction, and health, to fund a remedial public education campaign on the health consequences of smoking, and to fund smoking cessation programs for nicotine-dependent consumers of tobacco products. The State seeks to prevent continued violations of law and duties by the defendants, to cause disgorgement of defendants' unlawfully obtained tobacco-related profits and gains and to recover actual and punitive damages. These damages include past and future expenditures for medical assistance provided under secs. 49.43 et seq., Stats., and the costs, both medical and non-medical, of caring for persons with tobacco-related illnesses who receive services through hospitals, health care facilities, residential facilities and other similar facilities owned, operated or maintained by the State of Wisconsin or facilities under contract to the State to render similar services; and health care benefits for State of Wisconsin employees and retirees, including sick leave and the provision of health insurance. II. THE PARTIES A. The Plaintiff 8. The State of Wisconsin brings this action pursuant to the authority granted, inter alia, by Wisconsin statutory and common law, and by the authorization of the Governor. B. The Defendants 9. Philip Morris Incorporated ("Philip Morris") is a Virginia corporation with its principal place of business at 120 Park Avenue, New York, New York 10017. Its registered agent in Wisconsin is C.T. Corporation System, 44 East Mifflin Street, Madison, Wisconsin 53703. Philip Morris manufactures and distributes, or during times relevant hereto has manufactured and distributed, in Wisconsin and elsewhere, tobacco products under various brand names, including Marlboro, Virginia Slims, Merit, Benson & Hedges, Cambridge, Saratoga and Parliament. 10. R.J. Reynolds Tobacco Company ("RJR") is a New Jersey corporation with its principal place of business at North Main Street, Winston-Salem, North Carolina 27102. RJR manufactures and distributes, or during times relevant hereto has manufactured and distributed, in Wisconsin and elsewhere, tobacco products under various brand names, including Camel, Winston, Salem, Vantage, Doral, Now, and Red Kamel. 11. Brown & Williamson Tobacco Corporation ("Brown & Williamson") is a Delaware corporation with its principal place of business at 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Its registered agent in Wisconsin is C.T. Corporation System, 44 East Mifflin Street, Madison, Wisconsin 53703. 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. Brown & Williamson manufactures and distributes, or during times relevant hereto Brown & Williamson or ATC has manufactured and distributed, in Wisconsin and elsewhere, tobacco products under various brand names, including Kool, Belair, Raleigh, Barclay, Viceroy, Lucky Strike, Pall Mall, Tareyton, and Bull Durham. 12. B.A.T. Industries P.L.C. ("BAT") is a British corporation with its principal place of business at Windsor House, 50 Victoria Street, London. Through a succession of intermediary corporations and holding companies, BAT is the sole shareholder of Brown & Williamson. Through Brown & Williamson, BAT has placed tobacco products into the stream of commerce with the expectation that substantial sales of tobacco products would be made in the United States, including Wisconsin. BAT has also conducted, or through its agents, subsidiaries, associated companies, and/or co-conspirators, conducted significant research for Brown & Williamson on the topics of smoking, disease and addiction. Brown & Williamson also sent to England research conducted in the United States on the topics of smoking, disease and addiction in order to remove sensitive and inculpatory documents from United States jurisdiction, and such documents were and are subject to BAT's control. BAT is a participant in the conspiracy described herein and has caused harm in Wisconsin. In addition to its direct participation, BAT is responsible for the acts of Brown and Williamson Tobacco Company, which served as an alter ego for BAT. 13. Lorillard Tobacco Company ("Lorillard") is a Delaware corporation with its principal place of business located at 1 Park Avenue, New York, New York 10016. Lorillard is a successor to P. Lorillard Company. Its registered agent in Wisconsin is The Prentice Hall Corp. System, Inc., 25 West Main Street, Madison, Wisconsin 53703. Lorillard manufactures and distributes, or during times relevant hereto has manufactured and distributed, in Wisconsin and elsewhere, tobacco products under various brand names, including Old Gold, Kent, Newport and True. 14. Liggett Group, Inc. ("Liggett") is a Delaware corporation with its principal place of business at 700 West Main Street, Durham, North Carolina 27702. Its registered agent in Wisconsin is CSC-Lawyers Incorporating Service Co., 25 West Main Street, Madison, Wisconsin 53703. Liggett manufactures and distributes, or during times relevant hereto has manufactured and distributed, in Wisconsin and elsewhere, tobacco products under various brand names, including L&M, Chesterfield, Eve, Lark and Dorado. 15. United States Tobacco Company ("US Tobacco") is a Delaware Corporation with its principal place of business located at 100 West Putnam Avenue, Greenwich, Connecticut 06830. US Tobacco manufactures and distributes, or during times relevant hereto has manufactured and distributed, in Wisconsin and elsewhere, smokeless tobacco products under various brand names, including Happy Days, Skoal and Copenhagen. US Tobacco is the principal manufacturer of smokeless tobacco products in the United States. 16. Hill and Knowlton, Inc. ("Hill and Knowlton") is a New Jersey corporation with its principal place of business located at 420 Washington Avenue, New York, New York 10070. Hill & Knowlton has, in its capacity as the advertising and public relations agency for The Tobacco Institute, CTR and several members of the tobacco industry, aided the defendants in creating and disseminating false information and covering up the truth concerning the health effects of tobacco product use, the addictiveness of tobacco, and the true nature of the activities of CTR and its relationship to the industry. 17. The Council for Tobacco Research - U.S.A., Inc. ("CTR"), successor in interest to the Tobacco Industry Research Committee ("TIRC"), is a New York corporation with its principal place of business at 900 3rd Avenue, New York, New York 10022. At all times relevant hereto, CTR and TIRC operated as public relations and lobbying arms of the tobacco companies and as their agents and employees. They also acted as facilitating agencies in furtherance of defendants' combination and conspiracy as described in this complaint. In doing so, CTR and TIRC acted within the course and scope of their agency and employment, and acted with the consent, permission, and authorization of the tobacco companies. CTR and TIRC have been involved continuously in the conspiracy described and their actions have caused harm in Wisconsin. 18. The Tobacco Institute, Inc. ("Tobacco Institute") is a New York corporation with its principal place of business at 1875 I Street N.W., Suite 800, Washington, D.C. 20006. At all times relevant hereto, the Tobacco Institute operated as a public relations and lobbying arm of the tobacco companies and as their agent and employee. It also acted as a facilitating agency in furtherance of the combination and conspiracy of the defendants described in this complaint. In doing so, the Tobacco Institute acted within the course and scope of its agency and employment, and acted with the consent, permission, and authorization of the tobacco companies. The Tobacco Institute has been involved in the conspiracy described in this complaint and its actions have caused harm in Wisconsin. 19. The Smokeless Tobacco Council, Inc. ("STC") is a New York corporation with its principal place of business at 1627 K Street Northwest, Washington, D.C. 20006. STC, at all times material hereto, operated as a public relations and lobbying arm of the tobacco companies and as their agent and employee. It also acted as a facilitating agency in the furtherance of the defendants' combination and conspiracy as described in this complaint. In doing so, STC acted within the course and scope of its agency and employment, and acted with the consent, permission and authorization of the tobacco companies. STC has been involved continuously in the conspiracy described and its actions have caused harm in Wisconsin. 20. When in this complaint reference is made to the conduct, statement, representation, act or practice of any of the defendants, such allegation shall be assumed to mean the conduct, statement, representation, act or practice of each defendant acting individually or as part of a common scheme or plan among the defendants. 21. When in this complaint reference is made to the conduct, statement, representation, act or practice of any of the defendants, such allegation shall be assumed to mean that the officers, agents, representatives or employees of said defendants did or authorized such conduct, statement, representation, act or practice while acting within the scope of their actual or apparent authority. 22. 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." 23. At all relevant times, the tobacco companies together controlled virtually 100 percent of the tobacco products markets in Wisconsin and in the United States. 24. The claims against all defendants arise out of contracts to be performed in whole or in part in the State of Wisconsin; business solicited in the State of Wisconsin; 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 Wisconsin; the production, manufacture and/or distribution of goods by the defendants that were used or consumed in the State of Wisconsin; and tortious or other wrongful conduct by the defendants in or having an effect in the State of Wisconsin. 25. The defendants in this action acted with a common scheme or plan so as to make them jointly and severally liable to the State of Wisconsin, pursuant to sec. 895.045(2), Stats. III. NATURE OF DEFENDANTS' WRONGFUL CONDUCT AND CONSPIRACY A. In General 26. This action arises out of an ongoing course of wrongful conduct by each defendant individually and in conspiracy with each other. 27. The 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 associated with tobacco-related diseases and to shift those costs to others, such as the State of Wisconsin. 28. The means by which the defendants have carried out their conspiracy are twofold: 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. 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 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 false assertions that there is insufficient "objective" research to determine if the use of tobacco products causes disease and death, and that tobacco products are not addictive. 29. The two interconnected strategies of misrepresenting their objectivity to gain credibility, and using that credibility to better deceive the public about tobacco and health, have been repeated consistently for more than four decades. The defendants have engaged in a continuous conspiracy to deceive the public regarding facts material to the decision to purchase tobacco products. 30. Moreover, as internal industry research confirmed the dangers of using tobacco products and their addictiveness, the defendants' deception rose to a new level: although promising the public that they would make full disclosure of the results of their research, the 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. 31. The defendants have also 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. 32. The success of the industry's campaign of deceit and misinformation depended, in large part, on the tobacco companies acting in concert. Without their agreement to suppress the truth about the health consequences and addictive nature of 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" 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. 33. The 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 their profits would be substantially diminished. The defendants also knew or should have known that if they were required to pay the health care costs caused by the use of their products, then their profits would have been substantially decreased. 34. The non-tobacco company defendants have acted in concert with the 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. B. The 1953 "Big Scare" And The Joint Industry Response 35. Cigarette smoking increased dramatically in the first half of the 20th century. With the increase of cigarette smoking came an increase in lung cancer. Dr. Alton Ochsner, a New Orleans surgeon and regional medical director of the American Cancer Society, told an audience at Duke University on October 23, 1945, that "there is a distinct parallelism between the incidence of cancer of the lung and the sale of cigarettes . . . the increase is due to the increased incidence of smoking . . . ." 36. In 1946, tobacco company chemists themselves reported cause for concern for the health of smokers. In a 1946 letter, Lorillard chemist H.B. Parmele, who later became the company's vice-president of research and a member of its board of directors, wrote to Lorillard's manufacturing committee that "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." 37. In December of 1953, Dr. Ernest L. Wynder of the Sloan-Kettering Institute published the results of a study in which he produced tumors by painting the shaved backs of mice with cigarette smoke condensate, providing biological evidence that cigarette smoke caused 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 officials of the tobacco companies later called the "big scare." 38. The tobacco industry responded quickly to the mounting adverse publicity of a link between the use of tobacco products and cancer. The chief executive officers of the leading tobacco companies met on December 15, 1953, at the Plaza Hotel in New York City. Included at that meeting were representatives of Philip Morris, RJR, Brown & Williamson, ATC, Lorillard, Liggett and US Tobacco. Also in attendance was the public relations firm of Hill and Knowlton, which was to play a central role in formulating and executing the industry response. 39. 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 . . . ." 40. The participants in the meeting agreed that a strong public relations response from the industry was necessary. From the beginning, the emerging research linking use of tobacco products and cancer was viewed by these defendants as a public relations problem, not a public health issue. According to the Hill and Knowlton memorandum summarizing the meeting: a. The Chief Executive Officers of all the leading tobacco companies, except Liggett, "agreed to go along with a public relations program on the health issue." b. 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. c. 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. C. Creation Of The Tobacco Industry Research Committee 41. Nine days later, Hill and Knowlton presented a detailed recommendation to the tobacco companies. The recommendation recognized the importance of gaining the public trust, and avoiding the appearance of bias, if the pro-cigarette strategy was to be successful. According to this 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. 42. 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"). Liggett joined in 1964, the same year the Surgeon General issued his first report linking cigarette smoking to lung cancer. Also in 1964, TIRC changed its name to the Council for Tobacco Research - USA, Inc. ("CTR"). 43. A second entity, the Tobacco Institute, was formed by the tobacco companies in 1958 to assist with the industry's lobbying and public relations needs. Hill and Knowlton, however, continued to have substantial involvement in both TIRC and the Tobacco Institute. Hill and Knowlton's role in these organizations 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." 44. 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 as follows: Because Phase I [of the Surgeon General's Report] is expected to be scientific in nature, 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 Tobacco Institute believes that Phase II [dealing with regulatory action] will probably be its primary concern, again with Hill & Knowlton's counseling. D. Control Of TIRC By The Tobacco Companies Through Hill And Knowlton 45. As had been proposed at the December 15, 1953 meeting, the tobacco companies, through their agent Hill and Knowlton, operated and effectively controlled TIRC. 46. TIRC's offices were located in the Empire State Building, one floor below the Hill and Knowlton offices. Internal documents confirm that Hill and Knowlton, and not independent scientists, actually ran TIRC. A "highly confidential" 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 experienced executives, W.T. Hoyt, to serve as account executive and handle as one of his functions the duties of executive secretary for the [TIRC]. 47. There has been substantial staff overlap between Hill and Knowlton and TIRC (and later CTR). In 1954, 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 percent of TIRC's entire operating budget. E. The Tobacco Companies' False Promise To The Public 48. 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 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. The advertisement ran in the daily newspapers in Wisconsin, including newspapers in Madison and Milwaukee. As set forth below, this advertisement included a promise to the public 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. 49. The "Frank Statement to Cigarette Smokers" stated in part: Recent reports on experiments with mice have given wide publicity to a theory that cigarette smoking is in someway linked with lung cancer in human beings. Although conducted by doctors of professional standing, these experiments are not regarded as conclusive in the field of cancer research. * * * Distinguished authorities point out: * * * That there is no proof that cigarette smoking is one of the causes [of lung cancer]. We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business. We believe the products we make are not injurious to health. We always have and always will cooperate closely with those whose task it is to safeguard the public health. * * * 1. We are pledging aid and assistance to the research effort into all phases of tobacco use and health. * * * 2. For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as [the] TOBACCO INDUSTRY RESEARCH COMMITTEE. 3. In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry. A group of distinguished men from medicine, science, and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities. This statement is being issued because we believe the people are entitled to know where we stand on this matter and what we intend to do about it. 50. These representations were made by these defendants for the purpose and with the effect that consumers would consider the representations material to their decisions to purchase and use tobacco products. At that time, and continuing to the present, these defendants knew or should have known that their failure to fulfill the duty they undertook, and other conduct as alleged herein, would increase the use of tobacco products. They also knew or should have known that an increase in health care costs for tobacco product users, including health care costs that would be incurred by the State of Wisconsin, was the substantially certain consequence of the past and continued use of tobacco products. 51. By the spring of 1955, the defendants were reassured that the self-defense propaganda strategy recommended by Hill and Knowlton and implemented by the industry through the "frank statement" had made steady progress towards its desired results, including 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. F. Defendants' Knowledge That Tobacco Product Use Is Harmful 52. In the years following the 1954 "frank statement," and continuing to the present, the tobacco companies have repeatedly acted in breach of their assumed duty to report objective facts on tobacco product use and health. As evidence mounted through industry research and truly independent studies that the use of tobacco products causes cancer and other diseases, the defendants continued publicly to represent that the link between tobacco use and human disease was not proven, despite the fact that even their own studies and information were to the contrary. Internally, the defendants knew and acknowledged the veracity of the scientific evidence demonstrating the health hazards of using tobacco products and at the same time suppressed such evidence where they could and attacked it when it did appear. 53. Internal industry documents reveal, for example: a. A 1956 memorandum from the vice president of Philip Morris's Research and Development Department to top executives at the company regarding the advantages of "ventilated cigarettes" stated that: "Decreased carbon monoxide and nicotine are related to decreased harm to the circulatory system as a result of smoking . . . . Decreased irritation is desirable . . . as a partial elimination of a potential cancer hazard." b. A 1958 memorandum sent to the vice president of Research at Philip Morris, who later became a member of its board of directors, from a company researcher stated: "the evidence . . . is building up that heavy cigarette smoking contributes to lung cancer either alone or in association with physical and physiological factors . . . ." c. A 1961 document presented to the Philip Morris Research and Development Committee by the company's vice president of Research and Development included a section entitled "Reduction of Carcinogens in Smoke." The document stated, in part: To achieve this objective will require a major research effort, because - Carcinogens are found in practically every class of compounds in smoke. This fact prohibits complete solution of the problem by eliminating one or two classes of compounds. The best we can hope for is to reduce a particularly bad class, i.e., the polynuclear hydrocarbons, or phenols . . . - Flavor substances and carcinogenic substances come from the same classes, in many instances. d. A 1963 memorandum to Philip Morris's 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, BAT, researched the health effects of nicotine and were aware early on, as reported at a BAT Group Research Conference in November 1970, that "nicotine may be implicated in the aetiology [cause] 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 qualifications and even estimate by how much the incidence of cancer may possibly be reduced if the carcinogenic matter can be diminished, by an appropriate filter, by a given percentage. 54. 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 alternative causes of disease, such as air pollution, coffee, 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 tobacco products and disease was inconclusive and that diseases generally associated with tobacco products were, in fact, due to other factors. 55. Philip Morris also concealed from the public its actual views of the research conducted outside the influence of the industry. In a 1971 presentation, 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." 56. Dr. Wakeham's memorandum demonstrates Philip Morris's 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. 57. 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. 58. 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 extrapolated 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. G. Defendants' Repeated Declarations Of Their Assumed Duty 59. The deceptions of the 1954 "Frank Statement to Cigarette Smokers" were consistently renewed and repeated by the industry. RJR Chairman Bowman Gray told Congress in 1964: 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. 60. Another advertisement co-sponsored by TIRC and the Tobacco Institute, on behalf of the tobacco companies, called "A Statement about Tobacco and Health," stated: We recognize that we have a special responsibility to the public -- to help scientists determine the facts about tobacco and health, and about certain diseases that have been associated with tobacco use. We accepted this responsibility in 1954 by establishing the TIRC, which provides research grants to independent scientists. We pledge continued support of this program of research until the facts are known. We shall continue all possible efforts to bring the facts to light. 61. 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 research by independent scientists into all phases of tobacco use and health. Completely autonomous, CTR's research activity is directed by a board of ten scientists and physicians who retain their affiliations with their respective universities and institutions. This board has full authority and responsibility for policy, development and direction of the research effort. d. The findings are not secret. 62. Another advertisement in 1970 stated that the industry "believes 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." 63. In 1972, Tobacco Institute President Horace Kornegay, 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. 64. 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." 65. In 1984, RJR placed an editorial style advertisement in The New York Times stating that "[s]tudies which conclude that smoking causes disease have regularly ignored significant evidence to the contrary." 66. 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 (the "Waxman Subcommittee"). These executives knowingly made material misrepresentations and/or omissions in their testimony 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 in this Complaint, were consistent with the 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 consumers, including those in Wisconsin. These defendants' testimony to the Waxman Subcommittee included the following: a. Philip Morris President and CEO William I. Campbell said, in response to what he described as: a number of charges . . . leveled against the tobacco industry generally, and Philip Morris specifically, . . . our consumers are being misled and when that happens Philip Morris has and will continue to speak out loudly and clearly. Our consumers deserve to know the truth . . . . Campbell further stated that: i. Philip Morris does not manipulate nor independently control the level of nicotine in our products. ii. Cigarette smoking is not addictive. iii. Philip Morris research does not establish that smoking is addictive. b. Andrew Tisch, then CEO of Lorillard, asserted that smoking does not cause cancer. "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." c. RJR CEO James W. Johnston said that, "smoking is no more 'addictive' than coffee, tea or Twinkies." d. US Tobacco's President Joseph Taddeo stated: i. The assertion that smokeless tobacco use can be addictive is without merit. ii. U.S. Tobacco does not in any way manipulate the nicotine level in its tobacco products . . . . iii. Oral tobacco has not been established as a cause of oral cancer. 67. The continuing representations by the defendants to the public about sponsoring independent objective research and bringing the truth to light were false and deceptive. The misrepresentations were made to gain the trust of the public to further the defendants' scheme of distorting and suppressing substantive information about smoking and health in order to assure the continuing widespread sale and use of tobacco products. 68. The defendants' representations 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," "flavor" and "pleasure." H. Defendants' Wrongful Agreement 69. The industry's strategy depended for its success on joint and concerted action by the tobacco companies and the other defendants. The defendants agreed not to reveal to the public the true nature of TIRC, and later CTR, and not to disclose adverse information on tobacco product use and health, in order to protect continued industry sales and profits and to prevent the manufacturers from having to pay the health care costs associated with the use of tobacco products. 70. In 1968, a memo addressed to the CEO of Liggett regarding a meeting of the research directors of the tobacco companies stated on the topic of tobacco and health "a general feeling that an industry approach as opposed to an individual company approach was highly desirable." 71. An example of the industry's united front and concerted action was demonstrated in 1977 after it was revealed that an employee of US Tobacco had stated to The New York Times that "[smokeless tobacco] presents the least possible danger of all [and] that it's when you light tobacco that you start doing damage." US Tobacco apologized to each of the cigarette companies despite the fact that the disclosure did not directly implicate its own products. US Tobacco assured the cigarette companies that the employee is "no longer employed at US Tobacco." Additionally, US Tobacco assured the other companies that it had undertaken action to prevent a similar breach by its employees. US Tobacco instituted a program within its company to educate its employees that the industry position was to disavow any relationship between tobacco products and disease. 72. Cigarette manufacturers and smokeless tobacco manufacturers monitored each other's research to assure that their common objectives were achieved. Thus, Brown & Williamson joined the Smokeless Tobacco Council in order to make sure that research that confirmed the link between tobacco product use and adverse health consequences was not done. Brown & Williamson described its reason for joining the STC this way: "The primary purpose of such membership, however, would be to know what the Smokeless Tobacco Council is doing as a protective measure both for our interest in that product area and against the possibility that some research they do could impact on our cigarette business." 73. Each company also agreed not to perform its own independent research on the use of tobacco products and health. This agreement was referred to as the "gentlemans [sic] 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: "We have reason to believe that in spite of the gentlemans agreement for the tobacco industry in previous years that at least some of the major companies have been increasing biological studies with their own facilities." 74. As indicated by the 1968 "gentlemans 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 tobacco product use, including the addictive qualities of tobacco, and restraining, concealing, and suppressing the research and marketing of less hazardous tobacco products. I. Suppression And Concealment Of Industry-Sponsored Biological Research 1. Role of CTR as a "Front" 75. In 1977, Addison Yeaman, chairman and president of CTR, stated during a public speech that "[CTR] has no propaganda function of any kind or any degree." Internal documents demonstrate, however, that the tobacco companies' joint efforts undertaken through TIRC, and later, through CTR, were not disinterested or objective. Rather, they were designed and used to promote favorable research, to suppress negative research when possible, and to attack negative research where it could not be suppressed, all in order to convince the public that the "case against smoking is [not] closed." 76. A 1974 report to the CEO of Lorillard from a research executive described CTR's scientific projects as hav[ing] not been selected against specific scientific goals, but rather for various purposes such as public relations, political relations, position for litigation, etc. Thus, it seems obvious that reviews of such programs for scientific relevance and merit in the smoking and health field are not likely to produce high ratings. 77. A 1972 internal document from a Tobacco Institute official to the group's president described the importance of using joint industry research to maintain public doubt about the link between smoking and disease: For nearly twenty years, this industry has employed a single strategy to defend itself on three major fronts -- litigation, politics, and public opinion. While the strategy was brilliantly conceived and executed over the years helping us win important battles, it is only fair to say that it is not - nor was it ever intended to be - a vehicle for victory. On the contrary, it has always been a holding strategy, consisting of * creating doubt about the health charge without actually denying it * advocating the public's right to smoke, without actually urging them to take up the practice * encouraging objective scientific research as the only way to resolve the question of the health hazard. As an industry, therefore, we are committed to an ill-defined middle ground which is articulated by variations on the theme that, 'the case is not proved.' In the cigarette controversy, the public -- especially those who are present and potential supporters (e.g. tobacco state congressmen and heavy smokers) -- must perceive, understand, and believe in evidence to sustain their opinions that smoking may not be the causal factor. As things stand, we supply them with too little in the way of ready-made credible alternatives. 78. A 1978 memo addressed to the CTR file from a Philip Morris official characterized CTR as "an industry 'shield.'" The memorandum goes on to state: "the 'public relations' value of CTR must be considered and continued . . . It is extremely important that the industry continue to spend their dollars on research to show that we don't agree that the case against smoking is closed for 'PR' purposes . . . ." 79. In 1993, a former 24-year employee of CTR confirmed publicly that the joint industry research efforts were not objective: "When CTR researchers found out that cigarettes were bad and it was better not to smoke, we didn't publicize that. The CTR is just a lobbying thing. We were lobbying for cigarettes." 80. This and other evidence demonstrates that the role and purpose of TIRC and CTR in the tobacco companies' strategy was to seek to use the public's trust to propagate "pro-tobacco" propaganda. An industry official wrote in his personal notes describing a meeting that included high level officials from various tobacco companies that: "CTR is the best & cheapest insurance the tobacco industry can buy and without it the Industry would have to invent CTR or would be dead." 81. Nonetheless, in its annual reports published between 1985 and 1992, CTR stated that its Scientific Advisory Board funded peer-reviewed research projects "judging them solely on the basis of scientific merit and relevance." In 1994, Dr. James F. Glenn, CEO of CTR, submitted testimony to the Waxman Subcommittee that: a. The Council . . . sponsors research into questions of tobacco use and health and makes the results available to the public. b. [G]rantees are assured complete scientific freedom in conducting these studies . . . . [P]ublication [of research results] is encouraged in every instance. 2. The Example of Dr. Homburger 82. In fact, CTR-sponsored research projects were directed away from research that might add to the evidence against the use of tobacco products. When CTR-sponsored research did produce unfavorable results the information was distorted or simply suppressed. For example, Dr. Freddy Homburger, a researcher in Cambridge, Massachusetts, undertook a study of smoke exposure on hamsters. According to Dr. Homburger, he received a grant from CTR that was changed half-way through the study to a contract "so they could control publication -- they were quite open about that." Dr. Homburger has testified that when the study was completed in 1974, the scientific director of CTR and a CTR lawyer "didn't want us to call anything cancer" and that they threatened Dr. Homburger with "never get[ting] a penny more" if his paper was published without deleting the word cancer. 83. An internal CTR document describes how Dr. Homburger attempted to call a press conference about the incident and how CTR stopped it: He . . . was to tell the press that the tobacco industry was attempting to suppress important scientific information about the harmful effects of smoking. He was going to point specifically at CTR. . . . I arranged later that evening for it to be canceled. Homburger was given a cordial welcome and nicely hastened out the door. P.S. I doubt if you or Tom will want to retain this note. 3. CTR Special Projects Division 84. Another mechanism that CTR used to suppress research results that demonstrated the link between tobacco products and disease was to involve lawyers selectively, and then invoke the attorney/client or work product privilege to prevent the disclosure of harmful information. CTR used the term "special projects" to refer to projects funded by CTR that did not get approved through CTR's traditional peer review process but that were still desirable for the industry's public relations and propaganda purposes. "Special projects" were selected and monitored by industry lawyers to prevent disclosure if the results were adverse to the industry position. One Philip Morris official characterized CTR as a "front" for performing "special projects." 85. Notes prepared at a 1981 meeting of the tobacco companies' Committee of General Counsel state: When we started the CTR Special Projects, the idea was that the scientific director of CTR would review a project. If he liked it, it was a CTR special project. If he did not like it, then it became a lawyers' special project. . . . [W]e were afraid of discovery for FTC and Aviado, we wanted to protect it under the lawyers. We did not want it out in the open. 4. Use of Lawyers to Further the Conspiracy 86. The Kansas City law firm of Shook, Hardy & Bacon and other lawyers played a critical role in furthering the conspiracy to suppress and conceal information about the adverse health effects caused by the use of tobacco products. The lawyers' strategy was to attempt to protect damaging tobacco-related documents from disclosure under the attorney-client or work product privileges regardless of whether such documents were prepared in anticipation of litigation or represented confidential communications made between lawyer and client for the purpose of rendering legal advice. Lawyers routinely provided a number of non-legal services to the defendants such as deciding which CTR "special projects" should receive funding, dispensing funding to the "scientists" involved in such projects, and designing the scope and approach of the special project. Shook, Hardy & Bacon also undertook to coordinate the tobacco companies CTR "special projects" subterfuge. 87. For example, in 1976, Donald K. Hoel of Shook, Hardy & Bacon wrote to in-house lawyers at the various tobacco companies that a study to measure environmental tobacco smoke should be modified in such a way so that the study would yield more favorable results for the tobacco companies' position. The study was subsequently modified to de-emphasize the role of second-hand tobacco smoke relating to indoor environmental quality. 88. In addition, a May 19, 1981 letter from Ernest Pepples, vice president and general counsel of Brown & Williamson, to Patrick Sirridge of Shook, Hardy & Bacon requests that Sirridge evaluate the qualifications of various scientists seeking to conduct scientific studies for Brown & Williamson. Shook, Hardy responded by providing biographical sketches of potential consultants including whether they previously had taken a scientific position favorable to the industry's position. Sirridge also cooperated with Pepples' request in 1984 to transfer the funding of some helpful research by a cooperative scientist from a CTR account to a law firm project: "I do not think . . . that we should continue burdening CTR with such programs, and instead suggest that they be handled as law firm projects." 89. In 1972, William Shinn of Shook, Hardy & Bacon wrote to tobacco company officials that a potentially favorable study should be secretly funded by the tobacco companies as a "special project (non-CTR)" in order to make the study appear independent of the industry and thus heighten its perception as unbiased and reliable. 90. By becoming intimately involved in the funding and design of these scientific studies, these lawyers attempted to further the conspiracy and fraud of the tobacco companies and CTR by (1) clothing such studies in the attorney-client or work product privilege in order to protect them from disclosure if their results were unfavorable, and (2) by creating the perception that CTR and the tobacco companies were fairly and appropriately fulfilling their obligations and promises to the public that they would, in a vigorous and unbiased manner investigate and report to the public the link between their products and human disease. 91. At least one tobacco company used similar tactics in-house to suppress and avoid disclosure of its internal research on smoking and disease. At a time when the company was resisting discovery in a number of personal injury lawsuits, Brown & Williamson's general counsel, J. Kendrick Wells, recommended in a memorandum dated January 17, 1985, that 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 these documents. Wells stated, "I had marked certain of the document references with an X . . . which I suggested were deadwood in the behavioral and biological studies area. I said that the "B" series are "Janus" series studies and should also be considered as deadwood." ("Janus" was a name of a project that attempted to isolate and remove the harmful elements of tobacco.) Wells further recommended that the research, development and engineering department also should undertake "to remove the deadwood from the files." 92. Thus, the tobacco companies and their lawyers have misused claims of attorney/client privilege to insulate CTR-funded research projects and internal documents from disclosure to the public and to government officials. This conduct demonstrates the falsity of the tobacco companies' representations that they would jointly fund objective research and report the results of that research to the public. J. Suppression And Concealment Of Internal Biological Research 1. "Mouse House Massacre" 93. In the 1960s, RJR established a facility in Winston- Salem, North Carolina, to perform research on the health effects of smoking using mice, nicknamed the "Mouse House." Here, RJR scientists conducted research in a number of specific areas, including studies of the mechanism whereby smoking causes emphysema in the lungs. 94. Although the RJR lab made significant progress in understanding this mechanism, RJR disbanded the entire research division in one day, and fired all 26 scientists without notice. 95. Several months before the 1970 closure and firings, RJR attorneys collected dozens of research notebooks from the scientists. The notebooks still have not been disclosed. One of the researchers later stated about RJR's executives and lawyers that "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." 96. Internally, an RJR-commissioned report favorably described the Mouse House work as "the more important of the smoking and health research effort because it comes close to determining what was thought to be the underlying pathobiology of emphysema." None of the work done at the "Mouse House" was disclosed to the public. 2. The "Safer Cigarette" 97. 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 carcinogens, or were otherwise linked to diseases. This research was kept secret and never reported to the public. 98. 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. 99. A memorandum written by an attorney at Shook, Hardy & Bacon articulated the industry-wide position regarding the issue of a so-called "safer cigarette." The 1987 memorandum, referring to the marketing by RJR of a smokeless cigarette, Premier, stated that the smokeless cigarette could "have significant effects on the tobacco industry's joint defense efforts" and that "[t]he industry position has always been that there is no alternative design for a cigarette as we know them." The attorney also noted that, "unfortunately, the Reynolds announcement . . . seriously undercuts this component of the industry's defense." 100. 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 . . . ." 101. 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's 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 Committee, 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 outstanding cigarette. Unfortunately then after much discussion we decided not to tell the physiological story which might have appealed to a health conscious segment of the market. The product as test marketed didn't have good 'taste' and consequently was unacceptable to the public ignorant of its physiological superiority. 102. 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." The presentation to the Philip Morris Board of Directors continued: "The Research and Development Department 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 war comes, we aim to fight well and to win." (a) Liggett's "Safer Cigarette": XA 103. Liggett also developed a cigarette with reduced adverse health effects. Company researchers believed that they had discovered which cigarette smoke constituents were carcinogens, and found a way to remove them. Despite Liggett's belief that the product was commercially marketable, the company never marketed the cigarette and suppressed the research that led to its development. 104. Liggett began its research by repeating the smoke condensate painting studies of mice performed by Dr. Wynder through a contract with a consulting firm. The consulting firm confirmed Dr. Wynder's findings, and as a result, in 1968, Liggett began "a tobacco additive program designed to reduce or eliminate the tumorigenic activity of cigarette smoke." 105. By 1979, Liggett had declared the work a success. Company documents state: "Briefly, as a result of 20 years effort in cooperation with [the consulting firm], we have developed a cigarette system which produces smoke of reduced biological activity. Additives has [sic] resulted in a product with lower carcinogenic effects . . . ." 106. Liggett's "safer cigarette," a product called "XA," was never marketed and the XA project was abandoned. Liggett did so for two reasons. First, disclosing the feasibility of a "safer cigarette" would imply that all existing cigarettes were not safe. Second, Philip Morris apparently threatened Liggett with retaliation if Liggett violated the industry agreement not to disclose negative information on use of tobacco products and health. Liggett's Assistant Research Director, Dr. James Mold, reported that Liggett's president said 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." (b) Liggett, James Mold and Suppression of the XA Research 107. During the XA project, Liggett attempted to insulate the research by the use of company lawyers. According to Dr. Mold, after 1975, "all meetings that we had regarding this project were to be attended by a lawyer . . . . All paper that was generated . . . [was] to be directed to the Law Department." Dr. Mold stated that lawyers even collected all the notes after each meeting. 108. Dr. Mold stated that despite its significance, Liggett's 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." Only an abstract of the paper, modified by the legal department, was published by the consulting firm, without Dr. Mold's name. 109. When asked why Liggett never marketed the safer XA cigarette, Dr. Mold explained that: "[Management circles] felt that such a cigarette if put on the market would seriously indict them for having sold other types of cigarettes that didn't contain this, for example. Or that they were carrying on this biological research at the same time saying it meant nothing." (c) Liggett's "Safer Cigarette" Patent 110. 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. The laboratory experiments reported in the patent were conducted for Liggett by an independent researcher, The Life Sciences Division of Arthur D. Little, Inc. 111. Dr. Mold 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 effects of the product on humans. 112. Brown & Williamson also attempted to develop a so-called "safer cigarette." By the end of the 1970s, however, Brown & Williamson, in a pattern that was repeated throughout the industry, halted all work on a "safer cigarette." 113. 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 late 1980s, 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. K. Environmental Tobacco Smoke 114. The tobacco companies have also attempted to mislead the public regarding the health risks of environmental tobacco smoke. Environmental tobacco smoke, also called "second hand smoke," consists primarily of sidestream smoke (SSS) and mainstream smoke (MSS). SSS is the smoke that issues from the end of a burning cigarette, cigar or pipe in between puffs. MSS is the smoke that smokers draw into and expel from their lungs. Approximately 85 percent of environmental tobacco smoke is SSS. 115. The United States Environmental Protection Agency has listed environmental tobacco smoke as a Class A (known human) carcinogen and a major source of respiratory problems in children. It is estimated that 750-800 non-smoking Wisconsin residents die each year due to the effects of environmental tobacco smoke. 116. The tobacco companies have long known that environmental tobacco smoke is dangerous to human health but, despite their repeated promises to investigate the health risks of their products, they have not disclosed this knowledge to the public. For example, internal documents of Brown & Williamson and BAT demonstrate that, as early as the mid-1970s, the industry began the work of identifying "sidestream constituents which may be considered harmful to non smokers." Internal documents show that BAT was actively engaged in measuring the levels of nitrosamine, a potent human carcinogen, in second hand smoke: It is clear that in many countries there is a concern over the level of nitrosamine in foodstuffs. This explains in part the sensitivity to the presence of nitrosamine in tobacco smoke, and, perhaps particularly, the levels of nitrosamine in sidestream smoke. The latter is a potential threat to the currently held view by many authorities that passive smoking does not constitute a direct hazard. 117. In fact, in recognition of the dangers of environmental tobacco smoke, Brown & Williamson and BAT secretly attempted to reduce the amount of sidestream smoke from cigarettes. Notes from a 1980 BAT research conference state: "There was strong support for research into the generation and control of sidestream smoke. . . . The research into the source and mechanism of formation of nitrosamine in both sidestream and mainstream should be considered with urgency." Notes from a 1982 research conference state: Sidestream has long been known to be different chemically from mainstream, but only recently have there been signs from [BAT's] inhalation studies that the biological activity [carcinogenic effect] of sidestream may also be significantly different from mainstream. An early design of reduced sidestream product developed at [BAT's] research facilities in Southampton, England] has recently been screened. 118. In conjunction with the attempt to reduce sidestream smoke because of its admitted dangers, Brown & Williamson and BAT--in violation of the promise to investigate in an unbiased manner the health effects of smoking--also conducted defensive scientific research designed "to anticipate and refute claims about the health effects of passive smoking." 119. The attempt to mislead the public about the dangers of environmental tobacco smoke and to conceal and distort the true facts was not limited to Brown & Williamson and BAT. The tobacco industry as a whole, through CTR and the Tobacco Institute, also participated in the deception and wrongful conduct. For example, CTR sponsored a research project on sick building syndrome to be conducted by an allegedly independent firm. However, the Tobacco Institute, the industry's chief public relations and lobbying arm, chose the homes that would participate in the study. The tobacco companies also heavily relied on another study, funded through an industry sponsored organization, to support its claim that the dangers of environmental tobacco smoke were not proven. That study was later found, following a congressional inquiry, to be rife with falsified data and grossly underestimated the impacts of environmental tobacco smoke on indoor air quality. 120. The tobacco companies have also attacked independent studies that demonstrate the link between environmental tobacco smoke and adverse health effects despite internally recognizing their validity. For example, a 1981 Japanese study found that non-smoking women married to smokers have a greater chance of dying of lung cancer than non-smoking women married to non-smokers. The Tobacco Institute immediately ran large advertisements in newspapers and magazines denouncing the study despite the fact that industry scientists privately recognized its validity. L. Success And Renewal of the Conspiracy 121. Since its inception in the mid 1950s, the plan of the tobacco companies to engage in a pattern of misrepresentation, disinformation and suppression regarding the adverse health effects caused by tobacco products has been carried out for four main purposes: (1) to prevent, limit or forestall the erosion of demand for tobacco products; (2) to shield tobacco companies from having to pay the health care costs for tobacco-related diseases; (3) to restrain competition within the tobacco products industry and (4) to prevent, limit and forestall governmental regulation of tobacco products. Reflecting back on this plan, a 1972 internal Tobacco Institute memorandum stated: "For nearly twenty years, this industry has employed a single strategy to defend itself on three major fronts--litigation, politics and public opinion. . . . On the litigation front for which the strategy was designed, it has been successful. . . . [W]e have not lost a liability case." 122. That 1972 Tobacco Institute memorandum recognized the need to continue and intensify the work of the past twenty years: In the cigarette controversy, the public-especially those who are present and potential supporters (e.g., tobacco state congressman and heavy smokers) -- must perceive, understand and believe in evidence to sustain their opinions that smoking may not be a causal factor. As things stand, we supply them with too little in the way of ready-made credible alternatives. The memorandum goes on to propose the "steps required to start a shift in public opinion" in part by designing a study whose results would be disclosed only "if favorable." 123. Despite overwhelming scientific evidence, and the confirmation of this evidence by their own internal research, the tobacco companies and the other defendants continue to this day to repeat over and over, in a unified stance, that there is no causal connection between the use of tobacco products and human diseases. These representations are 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. IV. THE ROLE OF NICOTINE IN TOBACCO PRODUCTS 124. The tobacco companies have also made every effort to conceal and deny that the nicotine in tobacco products is a powerfully addictive substance. Because nicotine is addictive, consumers who use tobacco products often find themselves "hooked" and are unable to stop using the products even if they want to. Of the 17 million smokers who try to quit each year, fewer than one out of ten succeeds. The tobacco companies have carefully studied nicotine's addictive character and acted upon that knowledge to maintain tobacco product sales. Yet, each of the tobacco companies has denied that nicotine is addictive. 125. This public deception and the industry's concealment of the manipulation of nicotine were and are critically important to the tobacco companies. As objective researchers increased their warnings about the health dangers of tobacco products, nicotine addiction kept people using those products despite those warnings. This aspect of their deception allowed and continues to allow the tobacco companies 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-tobacco" disinformation on health or seduced by the industry's aggressive marketing techniques, and uses tobacco products, it may well be too late. Instead of a simple decision not to purchase a product, the consumer then must fight an addiction to nicotine--an addiction which has recently been likened to heroin or cocaine. A. Industry Research On Nicotine And Knowledge Of Its Addictiveness 126. Tobacco companies 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 BAT, stated at a meeting of BAT'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 describes the results if a chronic tobacco products user 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." c. Addison Yeaman, general counsel at Brown & Williamson, summarized his view about nicotine 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 in 1972 and the Philip Morris U.S.A. Research Center in March 1978, demonstrate Philip Morris's 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 [sic] 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 Company (ATC) conducted its own nicotine research, funding, in whole or in part, over 90 studies on the pharmacological and other effects of nicotine on the body. This research constituted 80 percent of all biological studies funded by ATC over this period. From its earliest work, ATC understood that nicotine had addictive qualities.In a 1945 study summarized in an ATC report on its research, 24 smokers were given cigarettes with extremely low levels of nicotine. The study showed that 12 of the subjects "definitely missed the nicotine" and 9 of the subjects continued to do so throughout the one month period of the study. The study concluded that "with some individuals, nicotine becomes a major factor in the cigarette habit." f. In an April 14, 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 specialized, highly ritualized, and stylized segment of the pharmaceutical industry. Tobacco products uniquely contain and deliver nicotine, a potent drug with a variety of physiological effects. . . . Thus a tobacco product is, in essence, a vehicle for delivery of nicotine, designed to deliver the nicotine in a generally acceptable and attractive form. Our industry is then based upon design, manufacture and sale of attractive dosage forms of nicotine, and our Company's position in our Industry is determined by our ability to produce dosage forms of nicotine which have more overall value, tangible or intangible, to the consumer than those of our competitors . . . Therefore, in addition to competing with products of the tobacco industry, our products may, in a sense, compete with a variety of other products with certain types of drug action. g. In a 1972 memorandum on product development, US Tobacco noted that a particular focus should be on assuring adequate "nicotine satisfaction." In a 1981 memorandum, PerErik Lindqvist, US Tobacco Senior Vice President of Marketing set out the criteria for a new smokeless tobacco product: "Flavorwise we should try for innovation, taste and strength. Nicotine should be medium, recognizing the fact that virtually all tobacco usage is based upon nicotine, 'the kick,' satisfaction." Asked to later explain this statement, Lindqvist admitted: "All tobacco products contain nicotine. Nicotine gives the consumer satisfaction. Some would describe it as a pleasant feeling. Others would describe it as a kick . . . . Others would describe it as a relaxing feeling." 127. RJR CEO F. Ross Johnson was quoted in the Wall Street Journal on October 6, 1994, as follows: "Of course it's addictive. That's why you smoke the stuff." 128. The tobacco companies understood early on that nicotine was the key to their industry's success. They have conducted extensive research establishing that users of tobacco products require a certain level of nicotine and that tobacco "satisfaction" is attributable to nicotine's effect on the body after absorption. 129. Documents from a BAT study called Project Hippo demonstrate that as far back as 1961, BAT was actively studying the physiological and pharmacological effects of nicotine in order to understand "why cigarette smokers are so fond of their habit." Project Hippo reports were circulated to other U.S. tobacco product manufacturers and to TIRC, demonstrating that at least some of the industry's nicotine research was shared. BAT sent the reports to officials at Brown & Williamson and RJR, and circulated a copy to TIRC with a request that TIRC "consider whether it would help the U.S. industry for these reports to be passed on to the Surgeon General's Committee." 130. A 1983 industry report also concluded that the primary reason people use tobacco products "is probably the physiological satisfaction provided by the nicotine level of the product." 131. The industry's recognition of the extent to which nicotine defines its product is illustrated in a 1972 Philip Morris report on a CTR conference, which stated: As with eating and copulating so it is with smoking. The physiological effect serves as the primary incentive, all other incentives are secondary. The majority of the conferees would go even further and accept the proposition that nicotine is the active constituent of cigarette smoke. Without nicotine, the argument goes, there would be no smoking. . . . Why then is there not a market for nicotine per se, eaten, sucked, drunk, injected, inserted, or inhaled as a pure aerosol? The answer, and I feel quite strongly about this, is that the cigarette is in fact among the most awe-inspiring examples of the ingenuity of man. Let me explain my conviction. The cigarette should be conceived not as a product but as a package. The product is nicotine. . . Think of the cigarette pack as a storage container for a day's supply of nicotine. . . . Think of the cigarette as a dispenser for the dose unit of nicotine. 132. Similarly, in a "RJR Confidential Research Planning Memorandum on the Nature of the Tobacco Business and the Crucial Role of Nicotine Therein" dated April 14, 1972, an RJR executive wrote: Happily for the tobacco industry, nicotine is both habituating and unique in its variety of physiological actions, hence no other active material or combination of materials provides equivalent "satisfaction." * * * If nicotine is the sine qua non of tobacco products and tobacco products are recognized as being attractive dosage forms of nicotine, then it is logical to design our products -- and where possible, our advertising -- around nicotine delivery rather than "tar" delivery or flavor. To do this we need to develop new data on such things as the physiological effects of nicotine, the rate of absorption and elimination of nicotine delivered in different doses at different frequencies and by different routes, and ways of enhancing of diminishing nicotine effects and "satisfactions." * * * Only after experiencing smoking for some period of time do the physiological "satisfactions" and habituation become apparent and needed. Indeed, the first smoking experiences are often unpleasant until a tolerance for nicotine has been developed. This leaves us, then, in the position of attempting to design and promote the same product to two different types of market with two different sets of motivations, needs and expectations. . . . If what we have said about the habituated smoker is true, then products designed for him should emphasize nicotine, nicotine delivery efficiency, nicotine satisfaction, and the like. What we really should make and sell would be the proper dosage form of nicotine with as many other built-in attractions and gratifications as possible -- that is, an efficient nicotine delivery system with satisfactory flavor, mildness, convenience, cost, etc. On the other hand, if we are to attract the non-smoker or pre-smoker, there is nothing in this type of product that he would currently understand or desire. We have deliberately played down the role of nicotine, hence the non-smoker has little or no knowledge of what satisfactions it may offer him and no desire to try it. Instead, we somehow must convince him with wholly irrational reasons that he should try smoking, in the hope that he will for himself then discover the real "satisfactions" obtainable . . . Would it not be better, in the long run, to identify in our own minds and in the minds of our customers what we are really selling, i.e., nicotine satisfaction? 133. As recently as December 1995, the Wall Street Journal reported on an internal Philip Morris draft document analyzing the competitive market for tobacco products for the years 1990-1992. The report describes the importance of nicotine: Different people smoke for different reasons. But the primary reason is to deliver nicotine into their bodies. . . . Similar organic chemicals include nicotine, quinine, cocaine, atropine and morphine. While each of these substances can be used to affect human physiology, nicotine has a particularly broad range of influence. During the smoking act, nicotine is inhaled into the lungs in smoke, enters the bloodstream and travels to the brain in about eight to ten seconds. 134. The tobacco companies have long understood that reducing or eliminating nicotine from their products would hurt sales and profits. As an RJR executive wrote in a 1972 confidential memorandum: "If, as proposed above, nicotine is the sine qua non of smoking, and if we meekly accept the allegations of our critics and move toward reduction or elimination of nicotine from our products, then we shall eventually liquidate our business." Similarly, a company researcher wrote in a 1978 report to Philip Morris executives: "If the industry's introduction of acceptable low-nicotine products does make it easier for dedicated smokers to quit, then the wisdom of the introduction is open to debate." 135. Instead of reducing or eliminating nicotine from their products, the industry attempted to develop ways of delivering adequate doses of nicotine to create and sustain addiction in the user. Nicotine, in itself, however, causes dangerous cardiovascular effects. In particular, it causes a narrowing of the blood vessels, an increased heart rate, increased blood pressure, changes in lipid metabolism and, in some cases, irregular heart rhythms, all of which can accelerate the accumulation of fatty deposits in the arteries and contribute to myocardial infarctions. 136. Some tobacco companies studied artificial nicotine or nicotine analogues that would have the addictive and psycho- pharmacological properties of nicotine without its dangerous effects on the heart. Dr. Victor DeNoble was hired by Philip Morris in part to research and develop a nicotine analogue. 137. DeNoble discovered such an analogue, but Philip Morris chose to halt its effort to determine whether the analogue could be used to make a so-called "safer cigarette." 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. 138. Brown & Williamson also understood that nicotine was the essential ingredient in maintaining tobacco sales. During its efforts to develop the so-called "safer cigarette," internal documents describe such a product as "a nicotine delivery device." 139. RJR's efforts to develop its "safer cigarette" also focused on delivering nicotine to the consumer without the harmful constituents of tobacco smoke. 140. To this day, the tobacco companies have concealed from the public, public health officials, and Congress their extensive knowledge of the addictive properties of nicotine and its critical role in tobacco products use. 141. In addition to concealing their knowledge, the tobacco companies have affirmatively misrepresented the role of nicotine in tobacco use. Even today, defendants continue to claim that nicotine is important in cigarettes for taste and "mouth-feel." However, tobacco industry patents specifically distinguish nicotine from flavorants and an RJR book on flavoring tobacco, while listing approximately a thousand flavorants, fails to include nicotine as a flavoring agent. The tobacco companies have actually concentrated on developing technologies to mask the acrid flavor of increased levels of nicotine in cigarettes. 142. Perhaps the most recent example of the defendants' acts in furtherance of their conspiracy to conceal the addictiveness of nicotine is the combined response of B&W, Liggett, Lorillard, Philip Morris, and the Tobacco Institute in their January 1996 joint submission of twelve volumes in opposition to the 1995 proposed regulations of cigarettes and nicotine by the FDA. In this joint submission, the defendants perpetuate their disinformation campaign by denying that nicotine is a drug, by denying that cigarettes or smokeless tobacco are drug delivery devices, and by denying that nicotine in tobacco products is addictive. B. Suppression And Concealment Of Research On Nicotine Addiction 143. The tobacco companies, rather than fulfilling their promise to the public to disclose material information about the use of tobacco products and health, chose a course of suppression, concealment and disinformation about the true properties of nicotine and the addictiveness of using tobacco products. 144. Philip Morris hired Dr. Victor DeNoble in 1980 to study nicotine's effects on the behavior of rats and to research and test potential nicotine analogues. DeNoble carried out his research with Dr. Paul C. Mele, a behavioral pharmacologist from the University of Wisconsin. 145. 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). 146. 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. Memos, notebooks, external communications and internal reports were increasingly scrutinized, revised and censored by Philip Morris management to make sure that no sensitive terms such as "addictive" were being incorporated into any of the company's written documentation. 147. DeNoble was later told by the company that the data he and Mele were generating could be damaging. 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. 148. In August 1983, Philip Morris ordered DeNoble to withdraw from publication a research paper on nicotine that had already been accepted for publication after peer review by the journal Psychopharmacology. According to DeNoble, the company changed its mind because it did not want its own research to compromise the company's defense asserted in litigation recently filed against it. Philip Morris officials had interpreted the suppressed nicotine studies as showing that, in terms of addictiveness, "nicotine looked like heroin." 149. In April 1984, Philip Morris closed DeNoble's nicotine research lab. DeNoble and Mele were forced abruptly to halt their studies, turn off all their instruments and turn in their security badges by morning. Philip Morris subsequently 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. 150. DeNoble later testified to the Waxman Subcommittee that "senior research management in Richmond, Va., 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, including the president of Philip Morris, were specifically told that nicotine had addictive qualities. 151. Other tobacco companies were also actively suppressing and concealing their research on nicotine addiction. For example, Brown & Williamson undertook its potentially sensitive research on nicotine through a contractor in Geneva, Switzerland, and through British affiliates at an English lab called Harrogate. 152. In 1963, Brown & Williamson 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 the use of tobacco products on health. Addison Yeaman, the company's general counsel, 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." 153. Brown & Williamson rejected Yeaman's advice to make full disclosure to the Surgeon General. A series of letters and telexes exchanged by Yeaman and senior BAT official A.D. McCormick between June 28 and July 4, 1963, document the company's decision not to disclose its research findings to the Surgeon General. Some of that research was later characterized in a report in the Journal of the American Medical Association as "at the cutting edge of nicotine pharmacology." Tobacco industry internal research on the effects of nicotine preceded the main published reports from the general scientific community by several years. C. Industry Control And Manipulation Of Nicotine 154. The tobacco companies have developed and used 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 use tobacco products regularly. Tobacco companies control the nicotine content of their products through selective breeding and cultivation of plants for nicotine content, and careful tobacco leaf purchasing plans. The companies control nicotine delivery (i.e., the amount made available to the tobacco products user) with various design and manufacturing techniques. 1. Manipulation of Nicotine Content: Y-1 155. Brown & Williamson's development of a new tobacco plant dubbed "Y-1" is an egregious example of the cigarette industry's concealment of its control and manipulation of the nicotine levels in its products. 156. In a decade-long project, Brown & Williamson secretly developed a genetically-engineered tobacco plant, which the company called "Y-1," 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 where it was used in five of Brown & Williamson's cigarette brands, including three labeled "light." 157. When four investigators from the Food and Drug Administration ("FDA") visited the Brown & Williamson plant in Macon, Georgia, on May 3, 1994, Brown & Williamson officials denied that the company was involved in "any breeding of tobacco for high or low nicotine levels." As part of its attempt to cover-up its project, Brown & Williamson instructed the DNA Plant Technology Corporation of Oakland, California, which had developed Y-1, to tell FDA investigators that Y-1 had "never [been] commercialized." 158. 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 and that close to 4 million pounds of Y-1 were stored in company warehouses in the United States. 159. Philip Morris also undertook development of methods to boost or manipulate the nicotine content of tobaccos. According to Ian Uydess, a Philip Morris scientist: In the 1980's, Philip Morris conducted field experiments on the growth of tobacco with elevated nicotine levels for possible use in their products. Philip Morris examined a technique called 'ratooning' which involved cutting down of the tobacco plant early in the harvest cycle before the plant had fully matured. As the cut plant resumed its growth, the roots deposited elevated levels of nicotine in the leaves of the plant. . . . This technique produced tobacco leaves that had higher nicotine levels than the leaves of non-ratooned plants. 160. Y-1 and the experiments conducted by Philip Morris are examples of an overall trend in the tobacco industry to increase the nicotine content of tobaccos. American tobaccos of all types have undergone cumulative increases in total nicotine levels since the 1950s. Nicotine levels in the most widely grown American tobaccos increased 10 to 50 percent between 1955 and 1980. This increase is the result of the industry's active and controlling participation in efforts to breed and cultivate tobacco for high nicotine levels. 2. Manipulation of Nicotine Delivery 161. The nicotine content of unprocessed tobacco is not the only variable manipulated by the tobacco companies to deliver a pharmacologically active dose of nicotine to the tobacco product user. Modern tobacco products as sold in Wisconsin are painstakingly designed and manufactured to control nicotine delivery to the consumer. 162. David A. Kessler, M.D., commissioner of the Food and Drug Administration, testified in detail before the Waxman Subcommittee 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. 163. Dr. Kessler's testimony shows that nicotine is not an inevitable or unavoidable component of tobacco products, and that the tobacco companies have the capability to remove all or virtually all of the nicotine from tobacco products using technology already in existence. They also have the capability to add nicotine to tobacco products. 164. One tobacco company, ATC, has admitted test-marketing a nicotine-enriched cigarette in 1969. 165. Tobacco industry patents show that the tobacco companies have developed the capability to manipulate nicotine levels in cigarettes to an exacting degree. For example: a. A Philip Morris patent application discusses an invention that "permits the release . . . in controlled amounts and when desired, of nicotine into tobacco smoke." b. Another Philip Morris patent application explains that the proposed invention "is particularly useful for the maintenance of the proper amount of nicotine in tobacco smoke," and notes that "previous efforts have been made to add nicotine to Tobacco Products when the nicotine level in the tobacco was undesirably low." c. A 1991 RJR patent application states that "processed tobaccos can be manufactured under conditions suitable to provide products having various nicotine levels." 166. One method that the tobacco companies use to manipulate nicotine levels in their products involves the addition of several ammonia compounds during the manufacturing process which increase the delivery of nicotine and almost double the nicotine transfer efficiency of cigarettes. 167. Brown & Williamson has recently publicly denied that the use of ammonia in the processing of tobacco increases the amount of nicotine delivered to the smoker. Nevertheless, the company's own internal documents reveal that it and virtually all other tobacco companies use ammonia compounds to increase nicotine delivery. A 1991 Brown & Williamson confidential blending manual states: Ammonia, when added to a tobacco blend, reacts with the indigenous nicotine salts and liberates free nicotine . . . extractable nicotine to bound nicotine in the smoke may be altered in favor of extractable nicotine. As we know, extractable nicotine contributes to impact in cigarette smoke and this is how ammonia can act as an impact booster. According to the Brown & Williamson manual, all American tobacco companies except Liggett use ammonia technology in their cigarettes. 168. At Philip Morris, ammonia is regularly added to the slurry of tobacco by-products from which reconstituted tobacco leaf (RCL), and in turn, cigarettes, are made. 169. According to Dr. Jeffrey Wigand, a former Brown & Williamson scientist, "[t]he primary form of managing or manipulating nicotine delivery . . . is by use of ammonia compounds." 170. The tobacco companies' manipulation and control of nicotine levels is further evidenced by the emergence of companies that specialize in manipulating nicotine and that are now offering their services to tobacco manufacturers. A process called tobacco reconstitution, patented and marketed by a Kimberly-Clark Corporation subsidiary, LTR Industries, is widely used throughout the industry. 171. Reconstituted tobacco is made from stalks and stems and other waste that tobacco companies formerly discarded and is now used to make cigarettes more cheaply. In the reconstitution process, pieces of tobacco material undergo treatment that results in the extraction of some soluble components, including nicotine. The pieces are then physically formed into a sheet of tobacco material, to which the extracted nicotine is re-added. Although denied by tobacco executives, it has been publicly reported that this process adjusts nicotine levels in the products, and that one manufacturer, RJR, "readily admits to setting levels of nicotine . . . for the tobacco sheet." 172. An advertisement in tobacco industry trade publications for the Kimberly-Clark tobacco reconstitution process states: "Nicotine levels are becoming a growing concern to the designers of modern cigarettes, particularly those with lower 'tar' deliveries. The Kimberly-Clark tobacco reconstitution process used by LTR Industries permits adjustments of nicotine to your exact requirements . . . . We can help you control your tobacco." 173. The tobacco industry's own trade literature explains that the Kimberly-Clark process enables manufacturers to triple or even quadruple the nicotine content of reconstituted tobacco, thereby increasing the nicotine content of the final manufactured product. 174. Another enterprise quite explicitly specializes in the manipulation of nicotine and its use as an additive. This company does business under the name "The Tobacco Companies of the Contraf Group." An advertisement run by the Contraf Group in the international trade press states: "Don't Do Everything Yourself! Let us do it More Efficiently!" Calling itself "The Niche Market Specialists," Contraf lists among its areas of specialization "Pure Nicotine and other special additives." 175. Two former Philip Morris scientists, Ian Uydess and Jerome Rivers, have described in affidavits how Philip Morris manipulates the nicotine content of its tobacco products in order to deliver targeted levels of nicotine to the smoker. According to Dr. Uydess: Nicotine levels were routinely targeted and adjusted by Philip Morris in its various products at least in part through blend changes and blend design . . . Tobacco companies like Philip Morris learned a long time ago that it was hard to get people to stay with a good tasting product if the nicotine level was too low. . . The information gained by Philip Morris from the chemical analysis of tobacco of different varieties, ripeness, etc., was used in the blend design of new products to ensure that the desired amount of "high" or "low" nicotine tobaccos were present in order to deliver the amount of nicotine (or other tobacco constituents) that had been targeted for that product. Dr. Uydess also testified that if sales of a new product in test markets were disappointing, "it was suggested that the product development group might have to adjust the blend so as to raise the nicotine level in order to increase its 'staying power' (acceptability and sale) in the market place." 176. According to Dr. Jeffrey Wigand, a former researcher for Brown & Williamson, B&W manipulated nicotine levels in its products in a number of ways. In addition to using additives such as ammonia to change the pH of the tobacco smoke in order to convert total nicotine to free nicotine, Brown & Williamson, like Philip Morris, utilized blending techniques "as a way of assuring the appropriate nicotine level." The company also manipulated nicotine levels "through cigarette design, through filtration, through paper design." 3. Manipulation of Nicotine Delivery in Smokeless Tobacco 177. US Tobacco has intentionally manipulated the amount of nicotine in its products since at least the 1970s. This manipulation is achieved through several means. First, the amount of total nicotine contained in the product is manipulated through the selection and blending of particular types of tobacco leafs. Second, US Tobacco manipulates the amount of "free" nicotine in its products. The amount of "free" nicotine determines how much nicotine is actually absorbed into the users' system. Levels of "free" nicotine are controlled by adjusting the pH of the product, either through a fermentation process, by adding alkaline buffering agents such as sodium bicarbonate and ammonium bicarbonate, or by altering moisture content. 178. Several former US Tobacco chemists have admitted that US Tobacco manipulates the amount of free nicotine in its product. For example, one employee stated in 1994 that "US Tobacco routinely adds chemicals to its snuff to deliver the free nicotine faster and to make the product stronger." Another admitted: "The fermentation process involves adding chemicals and, at the end, you add some more chemicals which increase the pH too . . . . Without increasing the pH, you couldn't get nicotine release." 179. US Tobacco has used its manipulation of nicotine content in a carefully designed marketing strategy to attract new users to its smokeless tobacco and then to addict them to the nicotine in its products. This strategy has been described by US Tobacco as a "graduation" strategy because it employs lower nicotine product choices from which the more "experienced" smokeless tobacco user graduates to heavier nicotine brands. 180. If new users, such as children or adolescents, begin smokeless tobacco use with one of US Tobacco's high nicotine brands such as Skoal Fine Cut or Copenhagen, a toxic response to the nicotine such as dizziness or nausea may occur and the novice is more likely to quit before tolerance to the toxic effects of nicotine begins to develop. To respond to this scenario and to attract and keep new customers, US Tobacco has developed low nicotine starter brands such as Happy Days, Skoal Bandits and Skoal Long Cut. 181. In 1985, US Tobacco Vice President Jack A. Frick explained in a company newsletter: "As far as our strategy for entering a new market is concerned - for each market there is a set of criteria which have been established, and must be met. Skoal Bandits is the introductory product, and then we look towards establishing a normal graduation process." 182. Marketing consultants for US Tobacco also have described the graduation theory: New users of smokeless tobacco -- attracted to the category for a variety of reasons are most likely to begin with products that are milder tasting, more flavored, and/or easiest to contain in the mouth. After a period of time there is a natural progression of product switching to brands that are full-bodied, have flavored more concentrated tobacco taste than the entry brand. 183. US Tobacco has also referred to this strategy within the company. Ken Carlson, a division manger in US Tobacco's sales department from 1979 to 1986, has disclosed: "they talked about graduation all the time-- in sales meetings, memos and manuals for the college program. It was a mantra." 184. A 1986 brochure for US Tobacco's Skoal Bandits describes to new users how to begin the graduation process by developing a tolerance for the toxic effects of nicotine: How long should I keep the pouch in my mouth? If you haven't tried Skoal Bandits before, we recommend that you keep your first one in for about a minute--then remove. The next time you try another one, leave it in for a bi | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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