USA v Philip Morris : A Pivotal Case

1999: the government initiates its first federal case against large tobacco companies. UNITED STATES OF AMERICA v PHILIP MORRIS USA INC. commences.

This case is important. Tobacco companies have been completely successful fending off lawsuits for three decades. Very recently, however, victories both in and out of court have uncovered mountains of internal tobacco documents. This finally provides the evidence the Department of Justice needs to prosecute the tobacco industry. Their goal: to punish the industry for decades of fraud. They cannot seek money for past medical damages, but will try to prove fraud and show that the industry has been in violation of RICO, the Racketeer Influenced and Corrupt Organizations Act.

After six years of pre-trial motions and discovery, DOJ prosecutor Sharon Eubanks heads a team of government attorneys in their litigation against American Tobacco, British American Tobacco, Brown & Williamson, Liggett, Lorillard, Philip Morris, and R.J. Reynolds.

The case is the biggest civil case ever prosecuted by the DOJ, but several obstacles stand in the way of a government win:

1. Sharon Eubanks’ superiors tell her to take it easy on tobacco. She resigns. ¹

2. The US Court of Appeals rules that disgorgement is not permissible under RICO; the government cannot claim money for 1971-2001 sales, only to prevent future damage. There will be no monetary punishment.

In order to prevent future racketeering, presiding judge Gladys Kessler renders judgement forcing the tobacco companies to issue corrective statements explaining tobacco’s health effects. The companies are forbidden to make misleading statements about tobacco, and can no longer use “light”, “low-tar”, “natural”, or other misleading descriptors. They are told to maintain databases of documents unearthed through the trial².

However, like many judgements against tobacco companies, Judge Kessler’s remedy is being debated in the US Court of Appeals. We will watch eagerly to see whether these public health measures will survive.

The monumental, in size and in impact, seventeen hundred page opinion from Judge Kessler³ provides us with a catalogue of methods used by tobacco companies. These have been laid out in the findings of fact section of the opinion.

These facts, found through the adversarial process of trial and stated by a United States federal judge, represent a foundation of truth about the tobacco industry, and provides a launching pad for further action - legal or political - against tobacco. This is becoming ever more crucial as multinational tobacco companies, many of American origin, push nicotine addiction into every country around the world. These 4088 facts compiled together provide us with a clear image:

the tobacco industry

• was aware yet denied tobacco’s addictive/harmful effects on the public
• targeted young people
• denied the effects of second hand smoking
• used misleading descriptors like “low-tar”/”filtered”/”lite”
• suppressed scientific research from public
• designed methods to keep people addicted

These quotes have been pulled from a very helpful summary by the Tobacco Control Legal Consortium⁴.

Findings of Fact | United States v. Philip Morris

509 <- Findings of Fact #
Cigarette smoking causes disease, suffering, and death.

864
By 1988, almost every major public health organization, including the Surgeon General, the National Institute on Drug Abuse, the World Health Organization, the American Psychiatric Association, the Harvard School of Public Health, and others, had declared that smoking is an addiction driven by the drug nicotine… .

The Tobacco Industry Was Aware yet Denied Tobacco’s Addictive/Harmful Effects on the Public

824
From at least 1953 until at least 2000, each and every one of these Defendants repeatedly, consistently, vigorously — and falsely — denied the existence of any adverse health effects from smoking.

829
Since the 1950s, Defendants have researched and recognized, decades before the scientific community did, that nicotine is an addictive drug, that cigarette manufacturers are in the drug business, and that cigarettes are drug delivery devices.

1359
For approximately forty years, Defendants publicly, vehemently, and repeatedly denied the addictiveness of smoking and nicotine’s central role in smoking.

1360
[T]here is no question that the public health community lacked the substantial and sophisticated understanding of nicotine’s effects and role that Defendants possessed.

736
During [a] televised interview, [Philip Morris President Joseph] Cullman falsely denied that cigarettes posed a hazard to pregnant women or their infants: “[I]t’s true that babies born from women who smoke are smaller, but they are just as healthy as the babies born to women who do not smoke. Some women would prefer to have smaller babies.”

697
In 1974…British American Tobacco (Investments) Ltd. (BATCo)…was considering placing a warning on cigarette packages sold in England — with no government attribution — that stated that smoking “causes lung cancer, bronchitis, heart disease.” In a letter addressed to BATCo, David Hardy of [the law firm of] Shook, Hardy & Bacon advised that this admission of fact would impede the defense of smoking and health litigation in the United States.

974
[Scientist Claude] Teague wrote a memorandum dated December 1, 1982 to Research and Development Vice President Robert DiMarco in which he stated that… [R.J. Reynolds] needed to contemplate the future scenario where smokers who want to stop can stop; if this happened, he wrote, RJR would “go out of business.” Therefore, RJR “cannot be comfortable marketing a product which most of our consumers would do without if they could.”

1269
A September 9, 1980 Tobacco Institute internal memorandum revealed the recognition by the member companies that a public admission that nicotine was addictive would undermine their litigation defense that a person’s decision to smoke is a “free choice” … .

994
[In a February 13, 1962 memorandum, Sir Charles Ellis, scientific director to the BAT Board of Directors, stated: “]As a result of these various researches we now possess a knowledge of the effects of nicotine far more extensive than exists in published scientific literature.[”]

The Industry Targeted Young People

3296
The evidence is clear and convincing — and beyond any reasonable doubt – that Defendants have marketed to young people twenty-one and under while consistently, publicly, and falsely, denying they do so.

3301
Defendants spent billions of dollars every year on their marketing activities in order to encourage young people to try and then continue purchasing their cigarette products in order to provide the replacement smokers they need to survive.

2637
As Bennett LeBow, President of Vector Holdings Group, stated, “If the tobacco companies really stopped marketing to children, the tobacco companies would be out of business in 25 to 30 years because they will not have enough customers to stay in business.”

2789
Ted Achey, Lorillard’s Director of Sales in the Midwest…demonstrates that Lorillard recognized the significance of the underage market to the company: The … base of our business is the high school student.

3264
Steven C. Watson, Lorillard Vice President, External Affairs, was responsible for issuing a press release in 2001, stating “Lorillard Tobacco Company has never marketed or sold its products to youth.”

Second Hand Smoking

3303
During the 1970s, scientific evidence suggesting that exposure to cigarette smoke was hazardous to nonsmokers began to grow, and public health authorities began to warn of a potential health risk to both adults and children.

3304
A 1986 [British American Tobacco (Investments) Ltd. (BATCo)] document stated: “The world tobacco industry sees the ETS issue as the most serious threat to our whole business.”

3305
… currently no Defendant publicly admits that passive exposure to cigarette smoke causes disease or other adverse health effects.

3362
Defendants recognized that secondhand smoke contained high concentrations of carcinogens and other harmful agents.
… research funded by Defendants themselves provided evidence confirming the public health authorities’ warnings that nonsmokers exposure to cigarette smoke was a health hazard.

3861
Despite the fact that Defendants’ own scientists were increasingly persuaded of the strength of the research showing the dangers of ETS to nonsmokers, Defendants mounted a comprehensive, coordinated, international effort to undermine and discredit this research.
Philip Morris Companies Vice Chairman Bill Murray was advised … in 1987: “…ETS is the link between smokers and non-smokers and is, thus, the anti’s [anti-smoking activists] silver bullet.”

Tobacco Companies Deceive Using Terms Like “Low-Tar”/”Filtered”/”Lite”

2072
Because each smoker smokes to obtain his or her own particular nicotine quota, smokers end up inhaling essentially the same amount of nicotine — and tar — from so-called “low tar and nicotine” cigarettes as they would inhale from regular, “full flavor” cigarettes… . Virtually all smokers, over 95%, compensate for nicotine.

2163
A February 4, 1976 memorandum from Ernest Pepples, [Brown & Williamson (B&W)] Senior Vice President … reveals Defendants’ knowledge that the low tar and filter cigarettes they were marketing as less harmful were not producing less tar and less nicotine to the smoker and were not likely to actually be less harmful … .

2627
It is clear, based on their internal research documents, reports, memoranda, and letters, that defendants have known for decades that there is no clear health benefit from smoking low tar/low nicotine cigarettes as opposed to conventional full-flavor cigarettes.

Methods Tobacco Companies Utilize to Deny or Suppress Scientific Research from Public

3861[cont]
Defendants poured money and resources into establishing a network of interlocking organizations. They identified, trained, and subsidized “friendly” scientists through their Global Consultancy Program, and sponsored symposia all over the world from Vienna to Tokyo to Bermuda to Canada featuring those “friendly” scientists, without revealing their substantial financial ties to Defendants.
They conducted a mammoth national and international public relations campaign to criticize and trivialize scientific reports demonstrating the health hazards of ETS to nonsmokers and smokers.

3863
Defendants attempted to and, at times, did prevent/stop ongoing research, hide existing research, and destroy sensitive documents in order to protect their public positions on smoking and health, avoid or limit liability for smoking and health related claims in litigation, and prevent regulatory limitations on the cigarette industry.

4034
The foregoing Findings of Fact demonstrate that, over the course of approximately fifty years, different Defendants, at different times, took the following actions in order to maintain their public positions on smoking and disease-related issues, nicotine addiction, nicotine manipulation, and low tar cigarettes, in order to protect themselves from smoking and health related claims in litigation, and in order to avoid regulation which they viewed as harmful: they suppressed, concealed, and terminated scientific research; they destroyed documents including scientific reports and studies; and they repeatedly and intentionally improperly asserted the attorney-client and work product privileges over many thousands of documents (not just pages) to thwart disclosure to plaintiffs in smoking and health related litigation and to federal regulatory agencies, and to shield those documents from the harsh light of day.

677
In 1970, Philip Morris’s President complained to RJR about the work going on in the Mouse House. Despite the progress made there, RJR responded to the complaint by abruptly losing the Mouse House — disbanding the entire research division in one day, without giving notice to the staff, firing all twenty-six scientists at the Mouse House, and destroying years of smoking and health research.

1303
None of the results or conclusions from the Philip Morris Nicotine Program or Behavioral Research Program were made public or were included in Philip Morris’s and the industry’s collective submission to the FDA in 1996.

4020
During the 1990s, Liggett scientists were directed to label their work as privileged and confidential in order to prevent its discovery in civil litigation. As stated by Liggett’s Manager of Science Issues, “We had become sensitized to labeling a lot of documents privileged and confidence [sic] without thinking[,] it was kind of just a matter of fact thing to do… . [M]ost of the documents that we put out, I think, are always subject to discovery. And not knowing exactly where — where this was gonna go, it was just considered almost standard practice to do that.”

The Industry Designed Methods to Keep People Addicted

1366
Defendants have designed their cigarettes to precisely control nicotine delivery levels and provide doses of nicotine sufficient to create and sustain addiction. At the same time, Defendants have concealed much of their nicotine-related research, and have continuously and vigorously denied their efforts to control nicotine levels and delivery.

636
Defendants recognized — and used — the denial and rationalization used by smokers. In a memo to Joseph F. Cullman of Philip Morris, George Weissman, Executive Vice President Overseas (International), described how, in response to the 1964 Surgeon General’s Report, “we must in the near future provide some answers which will give smokers a psychological crutch and a self-rationale to continue smoking.”
Among the “crutches” and “rationales” proposed to be offered to the smokers were questions of medical causation, “that more research is needed,” and that there are “contradictions” and “discrepancies.”