IN THE CIRCUIT COURT OF

THE FIFTEENTH JUDICIAL CIRCUIT

IN AND FOR THE COUNTY OF

PALM BEACH, STATE OF FLORIDA

THE STATE OF FLORIDA, et al.,

Plaintiffs,

v.

THE AMERICAN TOBACCO COMPANY, et al.,

Defendants.

Civil Division Case No. 95-1466AO

April 19, 1996

FLORIDA'S MEMORANDUM IN OPPOSITION TO MOTION OF THE TOBACCO PARENT CORPORATION DEFENDANTS TO DISMISS FOR LACK OF PERSONAL JURISDICTION

I.

INTRODUCTION

The State of Florida ("Florida") has filed a significant, important, and courageous law suit against a multibillion dollar industry that has escaped liability for its tortious and intentional misdeeds for well over 40 years.

Tobacco related illnesses have directly cost the State of Florida for its Medicaid program alone more than $1.4 billion over a five-year period starting in 1990-1991. The members of the tobacco industry have done everything in their power to thwart Florida's attempts to recoup this money and to protect its children from the scourge of cigarette smoking.

In their motions the tobacco parents, as defined below, want this Court to see them as innocent, disinterested stockholders who have no more control over the actions of their tobacco subsidiaries than any John Q. Public stockholder. They claim to have no involvement in the cigarette business beyond making billions of dollars from its continuing success. The truth is that these tobacco parents, who prefer to call themselves holding companies, are the result of a clever corporate shell game that has as its ultimate goal the protection of profits from the liabilities that should attach to the actions that resulted in those profits. As will be shown below, the tobacco parents own words establish their involvement in the tobacco industry. Florida asks this Court to reject the tobacco parents' fantasy and tell these multibillion dollar bullies that if one chooses to engage in and profit from the sale of cigarettes, which addicts our children, kills our citizens and depletes the State's Treasury, one must be ready to answer for those actions to the people of Florida as embodied by its State Court.

A. Summary of the Argument

The tobacco parent corporation defendants ("tobacco parents") in this action, namely Philip Morris Companies Inc., RJR Nabisco Inc., UST Inc., Loews Corporation, and B.A.T. Industries PLC, BATUS Holdings Inc. and American Brands Inc., have filed motions to dismiss for lack of personal jurisdiction. These motions should be denied because (1) the State of Florida ("Florida") has alleged sufficient jurisdictional facts in its First Amended Complaint ("complaint"), uncontroverted by the tobacco parents in their respective affidavits, to bring the action within the Florida long-arm statute and, moreover, through publicly available information Florida has shown sufficient minimum contacts with Florida to satisfy due process requirements, and (2) notwithstanding the sufficiency of Florida's showing of sufficient minimum contacts, the motions are premature as Florida has not been afforded the opportunity, as is its right, to conduct discovery to elicit jurisdictional facts. For either or both of these reasons, the motions to dismiss for lack of jurisdiction should be denied.

In their motions, supporting affidavits and memoranda, the tobacco parents have framed carefully-crafted, partial denials of Florida's jurisdictional allegations, disclaiming that they manufacture, market, distribute or sell cigarettes or other tobacco products, or, in fact, conduct any business activity whatsoever in Florida. These denials amount to but a part of the picture. Florida has alleged that the tobacco parents manufacture, market, distribute or sell cigarettes or other tobacco products not only individually, but also through their agents or alter ego subsidiaries. By and large, the tobacco parents have left these allegations uncontroverted in their respective affidavits. Regardless, as will be discussed, infra, publicly available documents and information show that the tobacco parents are intimately involved, directly and through their agents or alter ego subsidiaries, in the manufacture, marketing, distribution or sale of cigarettes or other tobacco products in Florida.

In addition to this publicly documented involvement, individually and through their agents or alter ego subsidiaries, in the manufacture, marketing, distribution or sale of cigarettes or other tobacco products in Florida, the tobacco parents are involved in the ongoing conspiracy to suppress the dissemination of information of the health dangers of the cigarettes and other tobacco products, and to create confusion regarding those health hazards in order to protect the market for their tobacco products. This cynical conspiracy has had a severe impact on the physical and fiscal health of the residents of the State of Florida and has caused the damages which Florida seeks to recover. It is well-settled black-letter law that the acts and declarations of one co-conspirator are the acts and declarations of all the co-conspirators. Thus, the acts in Florida of the tobacco parents' co-conspirators are the acts in Florida of the tobacco parents as well, and serve as a valid basis for the exercise of personal jurisdiction over the tobacco parents.

Finally, public documents also demonstrate a substantial amount of activity in Florida by these multibillion dollar, multinational, Fortune 500 tobacco parents relating to the manufacture, marketing, distribution or sale of a wide variety of other brand name consumer products and other business activity.

The evidence summarized above has sufficiently established the propriety of this Court's exercise of personal jurisdiction over the tobacco parents. Additionally, there is a separate and independent reason for denying the tobacco parents' motions to dismiss; that is, Florida's right to conduct discovery on issues related to jurisdiction. Due to the stay in proceedings of this case, on the motion of defendants to this action and pending the resolution of the Associated industries v. State of Florida appeal in the Florida Supreme Court, Florida has been unable to conduct any discovery, including discovery on issues relating to personal jurisdiction. As a result, there is ample support for this Court to deny the tobacco parents' motion to dismiss.

II.

LEGAL STANDARD

A Florida court may properly exercise personal jurisdiction over a nonresident defendant if (1) sufficient jurisdictional facts have been alleged to bring the action within the Florida long-arm jurisdiction statute, and (2) sufficient minimum contacts with Florida exist to satisfy federal due process requirements. Doe v. Thompson, 620 So.2d 1004, 1005 (Fla. 1993); Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502 (Fla. 1989).

A defendant wishing to contest the sufficiency of the allegations of the pleadings concerning personal jurisdiction or the existence of sufficient minimum contacts must file affidavits in support of its position. Venetian Salami, 554 So.2d at 502. The burden then shifts to plaintiff to prove the basis upon which jurisdiction may be obtained. Venetian Salami, 554 So.2d at 502. The measure of proof is a preponderance of the evidence. Passy v. Lewis, 553 So.2d 223, 224 (Fla. 1st DCA 1989), rev. denied, 553 So.2d 223 (Fla. 1990). In the event plaintiff's counter- affidavit raises conflicting facts, the trial court should hold a limited evidentiary hearing to resolve the disputed facts and determine the personal jurisdiction issue. Venetian Salami, 554 So.2d at 503.

A. Florida Long-Arm Statute

The Florida long-arm statute, Florida Statutes Annotated, Section 48.193, provides in pertinent part that:

(1) Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself or herself and, if he or she is a natural person, his or her personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following acts:

(a) Operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state.

(b) Committing a tortious act within this state.

***

(f) Causing injury to persons or property within this state arising out of an act or omission by the defendant outside this state, if, at or about the time of the injury, either:

1. The defendant was engaged in solicitation or service activities within this state; or

2. Products, materials, or things processed, serviced, or manufactured by the defendant anywhere were used or consumed within this state in the ordinary course of commerce, trade, or use.

***

(2) A defendant who is engaged in substantial and not isolated activity within this state, whether such activity is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the claim arises from that activity.

***

The language of the long-arm statute makes clear that personal jurisdiction can be predicated not only on one's personal acts, but also on the acts of one's agent. Fla. St. Ann. § 48.193(1). The question of whether one is acting through an agent within the meaning of section 48.193(1) is one for the jury. Saudi Arabian Airlines Corp. v. Dunn, 395 So.2d 1295, 1296 (Fla. 1st DCA 1981) (holding that ultimate determination by trier of fact on issue of agency for liability purposes also used to finally settle issue of agency for purposes of exercise of personal jurisdiction).

B. Due Process Analysis

The mere proof of the applicability of one of the provisions of section 48.193 as the basis for obtaining personal jurisdiction over a nonresident defendant does not, however, by itself automatically satisfy the due process requirement of minimum contacts.

Venetian Salami, 554 So.2d 499. A due process analysis must also be undertaken. Venetian Salami, 554 So.2d 499.

In making its due process analysis, the court must inquire as to whether (1) the nonresident has sufficient minimum contacts with Florida, and (2) the exercise of personal jurisdiction over the nonresident defendant would offend traditional notions of "fair play and substantial justice." Magic Pan Internat'l, Inc. v. Colonial Promenade, 605 So.2d 563, 565 (Fla. 5th DCA 1992).

1. Minimum contacts

The minimum contacts prong of the inquiry contemplates the existence of one of two types of personal jurisdiction -- "specific" or "general." Specific jurisdiction exists "when a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum." Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 411 n. 8, 104 S.Ct. 1868, 1872 n. 8 (1984); American Overseas Marine Corp. v. Patterson, 632 So.2d 1124, 1127 (Fla. 1st DCA 1994). Specific jurisdiction is also known as "connexity jurisdiction" since it requires a causal connection between the nonresident defendant's activities in the forum and the plaintiff's cause of action. American Overseas Marine Corp., 632 So.2d at 1127. Implicit within the case law is the principle that an agent's contacts with the forum may be imputed to the principal to satisfy due process requirements. See, e.g., Saudi Arabian Airlines Corp., 395 So.2d 1295 (holding that resolution of agency issue by the jury would resolve personal jurisdiction issue). As the State has properly alleged that the tobacco parents participate through their agents in the manufacture and sale of cigarettes in the State of Florida, this Court should allow the jury to determine the agency relationship between the tobacco parents and their tobacco subsidiaries and deny the tobacco parents' motions to dismiss.

In contrast, general jurisdiction does not require a causal connection between the nonresident defendant's activities in the forum and the plaintiff's cause of action. American Overseas Marine Corp., 632 So.2d at 1127. Instead, the defendant must have maintained "continuous and systematic general business contacts" with the forum so that it might properly be considered to be "present" in the forum. American Overseas Marine Corp., 632 So.2d at 1127. The general jurisdictional language found in the Florida long-arm statute, "substantial and not isolated activity," has been held to be identical in meaning to "continuous and systematic general business contacts." American Overseas Marine Corp., 632 So.2d at 1128.

Notably, "implicit within several of the enumerated circumstances [of Fla. St. Ann. § 48.193] are sufficient facts which if proven, without more, would suffice to meet the requirements of International Shoe Co.," and, hence the due process requirements of minimum contacts. Venetian Salami, 554 So.2d at 502.

2. Fair play and substantial justice

Once it is satisfied that the requisite minimum contacts exist, the court should inquire to ensure that the exercise of personal jurisdiction over the nonresident defendant comports with traditional notions of "fair play and substantial justice." Internat'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158 (1945); Magic Pan, 605 So.2d at 567. In determining the fairness and reasonableness of a state's exercise of personal jurisdiction, the court must consider: (1) the burden on the defendant, (2) the interests of the forum state, (3) the plaintiff's interest in obtaining relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies. Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 113, 107 S.Ct. 1026, 1033 (1987) quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564 (1980); Magic Pan, 605 So.2d at 567.

III.

FLORIDA HAS SUFFICIENTLY PLED FACTS IN ITS COMPLAINT ESTABLISHING THAT THE TOBACCO PARENTS ARE SUBJECT TO PERSONAL JURISDICTION UNDER THE FLORIDA LONG-ARM STATUTE

In its complaint, Florida has alleged that Florida "has incurred significant expenses associated with the provision of necessary health care and other such necessary assistance under the Medicaid programs to Medicaid recipients . . . who suffer, or who have suffered, from tobacco-related injuries, diseases or sickness." Complaint ¶ 3. Florida has further alleged that the defendants in this action "have significantly benefited over many years from not having to pay the medical cost of the impoverished Medicaid recipients injured by their products and behavior. The defendants have been able to privatize the profits while socializing the costs of their misconduct." Complaint ¶ 1.

Florida has alleged that the defendants in this action have, "at all pertinent times, manufactured, tested, designed, promoted, marketed, packaged, sold, distributed, and/or placed into the stream of commerce in and into the State numerous brands of defective, unreasonably dangerous and hazardous cigarettes, or other tobacco products, or, in the course of business, materially participated with, conspired with and/or otherwise aided, abetted and assisted others in so doing." Complaint ¶ 5; see also Complaint ¶ 54. Florida has further alleged that the defendants in this action, including the tobacco parents, have "acted through their duly authorized agents, servants, and employees who were then acting in the course and scope of their employment, and in furtherance of the businesses of said defendants." Complaint ¶ 53 In addition to these allegations, Florida has alleged specifically as to the tobacco parents that they manufacture, distribute, and sell cigarettes and other tobacco products both individually and through their agents or alter ego tobacco subsidiaries. [ In order to state a cause of action against a parent corporation for the acts of its subsidiary corporation, it is sufficient to allege the latter to be the alter ego or agent of the parent corporation. Vantage View, Inc. v. Bali East Development Corp. , 421 So.2d 728, 733 (Fla. 4 th DCA 1982).] Complaint ¶¶ 18, 20, 21, 23, 25, 31 & 33; see also Complaint ¶ 38.

Florida has made detailed factual conduct allegations against the defendants as to the manufacture of fraudulent science, Complaint ¶¶ 60-70, suppression of the design and manufacture of "safer" cigarettes, Complaint ¶¶ 71 -77, nicotine addiction and manipulation, Complaint ¶¶ 78-84, deceit, fraud and conspiracy, Complaint ¶¶ 85-97, and youth targeting, Complaint ¶¶ 98-119, and laid out the impact of these actions of the defendants' on Florida, Complaint ¶¶ 120-144, in support of Florida's claims for restitution and unjust enrichment, Complaint ¶¶ 145-152, indemnity, Complaint ¶¶ 153-158, negligence, Complaint ¶¶ 159-163, strict liability, Complaint ¶¶ 164-169, breach of warranties, Complaint ¶¶ 170-176, negligent performance of a voluntary undertaking, Complaint ¶¶ 177-183, fraud and intentional misrepresentations, Complaint ¶¶ 184-191, conspiracy and concert of action, Complaint ¶¶ 192-202, aiding and abetting liability, Complaint ¶¶ 203-208, and injunctive relief, Complaint ¶¶ 209-212.

These allegations, taken in conjunction with the following jurisdictional facts gleaned from publicly available records, answer the tobacco parents' affidavits (to the extent necessary) and show that the tobacco parents have 'personally or through an agent" done one or more of the acts enumerated in the Florida long-arm statute necessary for the exercise of specific jurisdiction. Fla. St. Ann. § 48.193(1); Fla. St. Ann. §§ 48.193(1)(a), (b) & (f); see also Complaint ¶ 42. Alternatively, the parents are engaged in sufficient substantial and not isolated activity in Florida for this court to exercise general jurisdiction over the tobacco parents. Fla. St. Ann. § 48.193(2); see also Complaint ¶ 42.

A. The exercise of personal jurisdiction over the tobacco parents is proper based upon Florida's allegations of aiding and abetting, concert of action and conspiracy

Florida law explicitly holds that if plaintiff successfully alleges a cause of action for conspiracy, and that if plaintiff, moreover, successfully alleges that any member of the conspiracy committed tortious acts in Florida in furtherance of the conspiracy, then all of the conspirators are subject to the jurisdiction of the Florida courts through the Florida long-arm statute. This holding is founded on the Florida long-arm statute, which provides that any person, whether or not a resident of Florida, who personally or through an agent, commits a tortious act within Florida submits to the personal jurisdiction of the courts of Florida for any cause of action arising out of the tortious act committed in Florida. Wilcox v. Stout, 637 So.2d 335, 337 (Fla. 2d DCA 1994) ("where a civil conspiracy to commit tortious acts has been successfully alleged, and some of those acts are alleged to have been accomplished with e state of Florida, we have no hesitancy in applying the well-accepted rules [of conspiracy to jurisdictional issues];" Fla. St. Ann. § 48.193(1).

Florida specifically alleged that the tobacco parents are liable individually, but also as co-conspirators and/or aiders and abettors in the alleged wrongful conduct. Complaint ¶¶ 5, 54. To the extent that this Court has jurisdiction over any of the co-conspirators, the Court has jurisdiction over all. Wilcox v. Stout, 637 So. 2d 337.

B. Publicly available information supports Florida's allegations and demonstrates that the tobacco parents have sufficient contacts with Florida

1. The tobacco parents, individually and through their agents, are in the business of manufacturing and selling cigarettes and other tobacco products in Florida

Although they deny any involvement in the manufacture and sale of cigarettes and other tobacco products, the tobacco parents' annual reports and SEC filings -- notably, prepared outside the adversary context of litigation -- unequivocally reveal not only that they are in the business of manufacture and sale of cigarettes and other tobacco products, but also that they themselves believe that they, individually and through their agents, are in the business of the manufacture and sale of cigarettes and other tobacco products.

a. B.A.T. Industries PLC

BAT, formerly known as British-American Tobacco and based in London, operates worldwide through numerous affiliated companies -- including Brown & Williamson Tobacco Corporation ("Brown & Williamson"), one of the Big Six cigarette manufacturers in the United States and a co-defendant in this action. BAT announced in its most recent annual report that BAT had purchased American Tobacco from American Brands in December of 1994. BAT is a named defendant in this action, not merely because of its 100% ownership of Brown & Williamson but also because of its own deliberate and wrongful actions aimed directly at the State of Florida.

In fact, in 1995 BAT and Brown & Williamson became the focus of public controversy earlier this year when internal documents, authored by both the parent and the subsidiary, were provided to the media and to Congress. These documents begin to chronicle the manner in which BAT -- or the "BAT Group," as the company refers to its worldwide operations -- has directed and participated in intentional and tortious acts expressly aimed at the U.S. market, including the State of Florida.

The recent disclosures are so extraordinary that a federal judge in Washington, D.C., indicated that internal corporate documents "may reveal that the Brown & Williamson Tobacco Company concealed for decades that it knew its products to be both health hazards and addictive" and may be "the proverbial 'smoking gun'...." Maddox v. Williams, 855 F. Supp. 406,415-16 (D.C.D.C.1994). (Exhibit 1)

Another indication of the explosive nature of BAT Group documents is that a Brown & Williamson attorney facing mounting pressure from cigarette litigation in the United States some years ago, recommended declaring certain documents "deadwood" and shipping them "to BAT" in England -- obviously in an attempt to remove them from the jurisdiction of the United States. (Exhibit 2)

The recent disclosures reveal that:

Decades ago, as evidence of the health hazards of cigarettes began to mount, BAT recognized that the survival of the industry was at stake and that it was necessary to coordinate the policies on smoking and health of its operating companies worldwide, including Brown & Williamson in the United States. BAT designated Brown & Williamson as "our contact" with the Council for Tobacco Research, the trade group through which the U.S. cigarette manufacturers have coordinated their research and public relations efforts. The BAT board of directors also issued a "policy" that there would be no competition with other cigarette companies, outside of the BAT Group, on health grounds. (Exhibit 3) BAT also advised Brown & Williamson to withhold company research from U.S. authorities. (Exhibit 4)

To this day, Brown & Williamson -- and the rest of the Big Six cigarette manufacturers in the United States -- continue to deny that cigarette smoking causes adverse health effects. Despite this public denial, research conducted by BAT -- and shared with Brown & Williamson -- has confirmed the deadly properties of cigarettes. BAT Group research has concluded that cigarette smoke condensate is "a complete carcinogen" and that "the scientific basis for the case against smoking . . . has long ceased to be an area for scientific controversy." (Exhibit 5)

BAT, working with Brown & Williamson, attempted to develop a "safer" cigarette and, indeed, may have succeeded in a design with "substantially reduced biological activity." However, the chairman of BAT made it clear, decades ago, that the sale of a "safer brand" would create "a very difficult public relations situation" because it would be an admission that other types of cigarettes "might be harmful." (Exhibit 6)

BAT also conducted extensive research on nicotine, recognizing that its addictive qualities were critical to the survival of the industry. More than 30 years ago, a BAT official concluded that "smoking is a habit of addiction" and that "nicotine is not only a very fine drug, but the techniques of administration by smoking has considerable psychological advantages ...." (Exhibit 3) The BAT Group also designed and tested cigarettes with increased levels of nicotine, and cigarettes of this type apparently were marketed in the United States. (Exhibit 7) Yet to this day, Brown & Williamson -- and the rest of the Big Six cigarette manufactures -- continue to publicly deny that nicotine is addictive.

In view of this evidence, it is remarkable that BAT has filed an affidavit with this Court -- the sole "factual" basis for its present motion -- in which the company secretary denies that BAT ever researched, tested, or designed any tobacco products intended for sale in the United States. This affidavit stands in stark contrast to the documents described above. Indeed, the affidavit is also contradicted by BAT's most recent annual report to stockholders, in a statement authored by the same corporate official, which describes "the Group's" research into "various aspects of the current medical controversy on smoking." The most obvious explanation for this discrepancy is that BAT, with its extended and complex structure, is attempting to engage in a corporate shell game.

Defendant B.A.T. Industries, PLC ("BAT") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that BAT:

has never manufactured, tested, designed, marketed, packaged, sold, distributed or advertised any product anywhere in the United States or anywhere else. It has never conducted research with respect to tobacco products or any other goods or products sold or intended for sale anywhere in the United States, including the State of Florida. [It] has never, at any time, owned any manufacturing facilities or research facilities relating to tobacco products or any products. BAT Affidavit by David Wilson at ¶¶ 3-4.

BAT also contends that:

No subsidiary of BAT Industries has ever held express or implied authority to act as BAT Industries's agent to manufacture, test, design, market, package, sell, distribute, advertise or conduct research with respect to tobacco products or any other goods or products anywhere in the United States, including the State of Florida. BAT Affidavit by David Wilson at ¶ 6.

Just as it is with PMCI, RJRN, UST and Loews, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by BAT outside the litigation context:

"BAT is the world's most international cigarette company[.]" Factfile, BAT Industries (emphasis added). (Exhibit 8)

"In 1994 BAT sold over 572 billion cigarettes, increasing its share of total world sales to 10.6 per cent." Factfile, BAT Industries (emphasis added).

"BAT cigarettes are available in almost every country in the world and are manufactured in over 50 countries." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"In 1994 BAT's global cigarette volumes increased by 4 per cent and its export volumes by 13 per cent." Factfile, BAT Industries (emphasis added).

"Over 52,000 people are employed by BAT's tobacco operations around the world, excluding the employees of associate companies." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"BAT offers a [cigarette] brand for every taste." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"In all, BAT sells about 250 brands, including some of the world's best known cigarettes." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"BAT's national and regional [cigarette] brands are market leaders around the world." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"The Company's leading national and regional brands include: . . . GPC -- The USA's second best-selling cigarette [and] Carlton -- one of the leading ultra-low tar brands in the USA." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"BAT is America's third largest cigarette business[.]" (Exhibit 8) Factfile, BAT Industries (emphasis added).

"BAT's tobacco operations in the USA are managed by Brown & Williamson (B&W), which in 1994 sold over 55 billion cigarettes in the USA." (Exhibit 8) Factfile, BAT Industries (emphasis added).

"In tobacco the Group [BAT] is the world's most international cigarette manufacturer, selling products in almost every country." B.A.T. 1994 Industries Annual Review and Summary Financial Statement (emphasis added).

"[W]e continue to invest heavily in our traditional markets where our goal is to have fewer factories producing greater volumes to ensure our position as a low cost producer of high quality cigarettes." (Exhibit 9) B.A.T. 1994 Industries Annual Review and Summary Financial Statement, "Chief Executive's Review" (emphasis added).

BAT held periodic Group research & development conferences, including one at Duck Key, Florida in 1974, the purpose of which was the "co-ordination of research and development programmes and co-operation across the Group ...." "Notes on the Group Research & Development Conference at Duck Key, Florida, 12th - 18th January, 1974," (Exhibit 10) 500011111.

A November 9, 1979 Memorandum from J. Kendrick Wells, III to Ernest Pepples, both B&W lawyers, discusses "various alternatives for handling BAT scientific reports which come to B&W in a way that would afford some degree of protection against discovery." (Exhibit 11) 680585389.

A June 12, 1984 "File Note" by J. Kendrick Wells, III, B&W corporate counsel, references a conference with BAT legal counsel on U.S. products liability litigation, noting that "[i]t is likely that statements by a tobacco affiliate of B&W would be admitted and smoking and health research done in-house or by contract by any company owned by the BAT certainly would be admissible." (Exhibit 12)

These statements leave no doubt that BAT sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the BAT's desire to protect its income stream.

b. BATUS Holdings Inc.

Defendant BATUS Holdings Inc. ("BATUS") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that BATUS:

has never manufactured, tested, designed, marketed, packaged, sold, distributed or advertised any product anywhere in the United States or anywhere else. It has never conducted research with respect to tobacco products or any other goods or products sold or intended for sale anywhere in the United States, including the State of Florida. [It] has never, at any time, owned any manufacturing facilities or research facilities relating to tobacco products or any products. BATUS Affidavit by Glenn Shadburne at ¶¶ 2-3.

BATUS also contends that:

No subsidiary of [BATUS] has ever held express or implied authority to act as [BATUS]'s agent to manufacture, test, design, market, package, sell, distribute, advertise or conduct research with respect to tobacco products or any other goods or products anywhere in the United States, including the State of Florida. BAT Affidavit by Glenn Shadburne at ¶ 5

Just as it was with PMCI, RJRN, UST, Loews and BAT, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by BATUS outside the litigation context:

"Effective Jan. 1, 1980, BATUS, Inc. assumed sole management responsibility for BAT Industries' major business interests in the U.S.A., including the tobacco and retail companies that had been operating under B&W Industries. BATUS reports directly to the main board of BAT Industries in London." Tobacco Industry Companies, Committees and Organizations (as of 5/12/89). (Exhibit 13)

Baker of BAT's legal department corresponded with David A. Schechter of BATUS regarding the issue of attribution of damaging BAT statements and positions concerning smoking and health to B&W and strategies to deal with the issue. (Exhibit 14) Baker - Schechter Correspondence, February 4, 1985, 680582454; see also (Exhibit 15) Schechter - Baker Correspondence, August 30, 1985 (w/attachment), 521015578.

"BATUS was -- BATUS was the holding company in the United States for BAT Industries, and I believe the chairman of Brown & Williamson reported to somebody at BATUS and that person's role was to get an understanding of the tobacco industry and make recommendations to Brown & Williamson if they thought something should be changed and would also report -- would report to the BATUS board -- no, that's not true, either, because the chairman of Brown & Williamson sat on the BATUS board. It's really hard for me to articulate what BATUS did vis-à-vis Brown & Williamson or BAT. I think BATUS was a management company, and it -- it had a responsibility to understand what Brown & Williamson was doing and advise them if they had ideas on, you know, changes that might be helpful." (Exhibit 16) Deposition of David Allen Schechter, President, CEO and General Counsel, BATUS, January 31, 1996, Mike Moore v. American Tobacco Co., et al., Chancery Court of Jackson, Mississippi, No. 94-1429, pp. 54-55.

These statements leave no doubt that BATUS sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the BATUS' desire to protect its income stream.

c. Philip Morris Companies Inc.

Defendant Philip Morris Companies Inc. ("PMCI") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that PMCI:

does not now, nor has it ever, manufactured, tested, designed, promoted, marketed, packaged, adver-tised, or sold cigarettes or other tobacco products in the State of Florida.... PMCI Affidavit by Diane M. McAdams at ¶ 8.

PMCI also contends that it:

does not now, nor has it ever, maintained any employees, agents, or other representatives in the State of Florida for the transaction of business of any nature.

PMCI Affidavit by Diane M. McAdams at ¶ 7 It is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by PMCI outside the litigation context:

Just inside the cover of defendant Philip Morris Companies Inc.'s 1994 annual report is a prominent full-page photograph picturing various PMCI consumer products, including a carton of Marlboro brand cigarettes and a package of Merit brand cigarettes, with the legend in large point, all-caps typeface: THIS IS PHILIP MORRIS. (Exhibit 17) PMCI 1994 Annual Report (emphasis added).

"Many know we are the biggest U.S. tobacco company and the number one international tobacco company in the world." (Exhibit 17) PMCI 1994 Annual

Report, PMCI Chairman and CEO Geoffrey C. Bible's "Dear Shareholder" letter (emphasis added).

"Our tobacco operations enjoyed continued sales and profit growth. We sold almost 200 million more cigarettes in the United States than in 1990 ...." (Exhibit 18) PMCI 1991 Annual Report, PMCI Chairman and CEO Michael A. Miles & President and COO William Murray's "Dear Stockholder" letter (emphasis added).

"To satisfy growing worldwide demand for American-blend cigarettes, we have begun a series of expansions and upgrades of our tobacco facilities, from Virginia and North Carolina to Germany and the Netherlands." (Exhibit 18) PMCI 1991 Annual Report, PMCI Chairman and CEO Michael A. Miles & President and COO William Murray's "Dear Stockholder" letter (emphasis added).

"Our manufacturing and marketing activities involve us in a wide variety of public policy issues in every country in which we do business.... While we believe that consumers are aware of the claimed health risks of smoking, nonetheless, in February 1992, we took actions to begin placing the U.S. Surgeon General's health warning on all our cigarette packages ...." (Exhibit 18) PMCI 1991 Annual Report, PMCI Chairman and CEO Michael A. Miles & President and COO William Murray's "Dear Stockholder" letter (emphasis added).

"[W]e have more than 155,000 dedicated employees around the world…." (Exhibit 17) PMCI 1994 Annual Report, PMCI Chairman and CEO Geoffrey C. Bible's "Dear Shareholder" letter (emphasis added).

"[T]he best way to do that [i.e., create wealth] over the long term is to continue growing profitably and delivering strong cash flows in each of our core businesses -- tobacco, food and beer." (Exhibit 17) PMCI 1994 Annual Report, PMCI Chairman and CEO Geoffrey C. Bible's "Dear Shareholder" letter (emphasis added).

"In our domestic tobacco business, our pricing strategy for Marlboro cigarettes… catapulted our best-selling brand to its highest retail share ever." (Exhibit 17) PMCI 1994 Annual Report, PMCI Chairman and CEO Geoffrey C. Bible's "Dear Shareholder" letter (emphasis added).

"In the legal arena, we are committing all the resources necessary to defend the company [i.e., defendant Philip Morris Companies, Inc.] from new forms of litigation, making sure we have better firepower than our foes, no matter how formidable. In the new class-action suits and state Medicaid cases, we believe the law continues to be on our side. Although these cases pose difficult challenges, we should ultimately prevail in them, just as we have been successful in other types of cases over the last 40 years. It is important to note here that the tobacco industry has never lost or paid to settle a case. Beyond defending ourselves, we are turning the legal tables on some of those who attack us. We are going on the offensive to vindicate our rights and to make it clear that current notions of "political correctness cannot be used to justify unlawful conduct that abridges those rights. We're suing the EPA over its misleading report on second smoke, suing state and local governments that have unlawfully restricted public smoking, and suing ABC for falsely accusing us of "spiking" our cigarettes with extra nicotine. We're also running ads to let the public know our position on such issues as accommodating the rights of smokers and non-smokers, and preventing cigarette sales to minors. We believe that we are absolutely right in all of the positions we take on these issues. And we are fighting very hard for what we believe in." (Exhibit 17) PMCI 1994 Annual Report, PMCI Chairman and CEO Geoffrey C. Bible's "Dear Shareholder" letter (emphasis added).

We will aggressively defend our right to manufacture and market cigarettes to adults who choose to smoke.... The Capital Cities/ABC apology for its accusation that we "spike" our cigarettes with extra nicotine is just one more demonstration that we can defend ourselves very effectively, in the interests of our business and of the truth. (Exhibit 19) PMCI 1995 Mid-Year Update (emphasis added).

These statements leave no doubt that PMCI sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the PMCI's desire to protect its income stream.

d. RJR Nabisco Inc.

Defendant RJR Nabisco Inc. ("RJRN") contends in its affidavit accompanying its motion to dismiss for leek of personal jurisdiction that RJRN:

has never manufactured, designed, advertised, market, packaged, sold, distributed, or placed into the stream of commerce any product, including tobacco products. RJRN Affidavit by Suzanne P. Jenney at ¶ 5.

RJRN also contends that it:

maintains no agents, distributors, brokers, wholesalers, or other representatives in Florida for the transaction of business of any nature. RJRN Affidavit by Suzanne P. Jenney at ¶ 6.

Just as it was with BAT and PMCI, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by RJRN outside the litigation context:

RJRN, in its 1990 annual report, describes itself as "a world leader in manufacturing and marketing of consumer packaged goods. Our brands, such as Winston, Salem, Camel, Oreo, Chips Ahoy!, Ritz, Premium Shredded Wheat, Life Savers, Planters and Care*Free have been household names to generations of families." (Exhibit 20) RJRN 1990 Annual Report (emphasis added).

"RJR Nabisco's worldwide tobacco operations are managed in the U.S. by R.J. Reynolds Tobacco Co.…" (Exhibit 21) RJRN 1992 Annual Report (emphasis added).

"Together, we've developed four key operation strategies for the company [RJRN]: Rebuild a strong market position in our domestic tobacco business . . . . Our domestic tobacco company invested heavily in an ambitious marketing and product-quality improvement effort for its core brands, which is the key to turning around a market share performance that has been declining for several years. After an especially sharp drop early in the year, we began to see indications that our share performance was on the mend.... And reinvigorating brands like Winston and Salem, with innovative new packaging that underscores our renewed commitment to superior quality in all of our tobacco products." (Exhibit 22) RJRN 1991 Annual Report, "Chairman's Letter," Louis V. Gerstner, Jr. (emphasis added).

In April 1993, our largest competitor in the domestic tobacco business stood the industry on its head with massive promotions and price reductions that changes competitive dynamics and cost us (and the industry) significant income -- at least in the short term. These changes prompted us to accelerate our efforts to reduce costs in our domestic tobacco business and make certain our cost structure would remain competitive in all our tobacco and food businesses. In domestic tobacco, for instance, we have reduced our U.S. cost base by 25 percent. By year end, we had put in place a restructuring program throughout the company that should enhance future net income. (Exhibit 23) RJRN 1993 Annual Report, RJRN Chairman and CEO Charles M. Harper (emphasis added).

These statements leave no doubt that RJRN sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the RJRN's desire to protect its income stream.

e. UST Inc.

Defendant UST Inc. ("UST") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that UST:

has never manufactured, sold or distributed cigarettes or any other tobacco product anywhere, including the State of Florida. UST Affidavit by Debra A. Baker at ¶ 2.

UST also contends that it:

does not have any agents, distributors, servants, employees, officers, directors. brokers, wholesalers or other representatives in Florida for the purpose of conducting business there. UST Affidavit by Debra A. Baker at ¶ 4.

Just as it was with BAT, PMCI and RJRN, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by UST outside the litigation context:

"UST Inc., through its subsidiaries (collectively "registrant" unless the context otherwise requires), is engaged in manufacturing. importing and selling consumer products in the following industry segments: Tobacco Products: Registrant's primary activities are manufacturing and selling smokeless tobacco (snuff and chewing tobacco) and importing and selling other tobacco products...." (Exhibit 24) UST March 1, 1996 10-K405 (emphasis added).

"Registrant [UST] sells tobacco products throughout the United States principally to chain stores and tobacco and grocery wholesalers." Id. (Emphasis added).

"[W]e are totally committed to… expanding the market four our moist smokeless tobacco products." (Exhibit 25) UST 1993 Annual Report, "Letter to Stockholders," Chairman and CEO, Vincent A. Grierer (emphasis added).

"Nothing has fueled our growth more than our flagship brands, Copenhagen and the Skoal family of products." (Exhibit 25) UST 1993 Annual Report, "Letter to Stockholders," Chairman and CEO, Vincent A. Grierer (emphasis added).

"Our objectives for 1995 remain the same: expand the market for our moist smokeless tobacco products ...." (Exhibit 26) UST 1994 Annual Report, "Letter to Stockholders," Chairman and CEO, Vincent A. Grierer (emphasis added).

"Our flagship brands, Copenhagen and Skoal, the best-selling brands on the market, continued to build upon their tremendous brand identities in 1994, providing adult male consumers with premium products.... Our two newest line extensions, Skoal Long Cut cherry and Skoal Long Cut spearmint, were successfully introduced in 1993 and continued to grow in 1994. As part of our efforts to bring new adult consumers into the market, we will continue to develop line extensions that offer the highest degree of quality and product choice." (Exhibit 26) UST 1994 Annual Report, "Letter to Stockholders," Chairman and CEO, Vincent A. Grierer (emphasis added).

"The tobacco industry faced a number of challenges in 1994, and while many of these involved the cigarette industry, United States Tobacco Company did not escape allegations questioning the integrity of our Company [i.e., UST, Inc.] and our products.... We confronted these challenges by constructing a team from all operations of the Company. The team, led by our executive officers, developed and executed strategies for each challenge. As a result, our Company successfully defended itself, and demonstrated that it would not be intimidated on any issue adversely affecting our products, our industry or our stakeholders." (Exhibit 26) UST 1994 Annual Report, "Letter to Stockholders," Chairman and CEO, Vincent A. Grierer (emphasis added).

These statements leave no doubt that UST sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the UST's desire to protect its income stream.

f. Loews Corp.

Defendant Loews Corp. ("Loews") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that Loews:

does not now, and has never, manufactured, distributed or sold cigarettes or any other product in Florida or anywhere else. Loews Affidavit by Gary W. Garson at ¶ 4

Loews also contends that it:

maintains no employees, agents, or other representatives within the state of Florida for the transaction of business of any nature. Loews Affidavit by Gary W. Garson at ¶ 6.

Just as it was with BAT, PMCI, RJRN and UST, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by Loews outside the litigation context:

"The Company [i.e., Loews] continues to seek expansion of existing businesses [e.g., its existing tobacco business] ...." Loews 1994 Annual Report, "To Our Shareholders and Employees," Co-chairmen & Co-CEOs Laurence A. Tisch and Preston R. Tisch. (Exhibit 27)

Documents of its subsidiary, Lorillard, establish the participation of high level Loews' executives including the CEO L.A. Tisch in Lorillard's tobacco business. For example, a 1970 memo from Arthur J. Stevens to Yellen of Lorillard regarding the engagement of a Dr. Dalhamn as a research consultant, is cc'ed to L.A. Tisch of Loews. The memo states:

On M[arc]h 12, 1970, the Company concluded a new consultantship agreement with Dr. Dalhamn in connection with his research studies on Project 111.

***

In accordance with the security measures now being observed in connection with this matter, a copy of the agreement for file retention is being furnished only to Dr. Spears. We shall, however, be happy to review the details of the agreement with any of the addressees of this memorandum who wish additional information. (Exhibit 28; Memo dated March 16, 1970, Arthur J. Stevens to Yellen)

In 1972, C.H. Judge of Lorillard forwarded a report on a presentation to the National Cancer Institute by Dr. Spears of Lorillard's R&D department to several addressees. Laurence Tisch of Loews was one of the addressees. The memo reads in part:

Alex advises that there was unanimous interest on the part of all those representing the NCI. They were also unanimous in their interest in longer term (our longest term is six weeks) inhalation study on animals. They agree that there is no way to test human beings. They share our concern with the possible side effects of the compound in smoke and side effects of the material itself.

***

Dr. Spears believes that should the research results be positive towards 111, that the NCI would move on publicly endorsing 111 without FDA involvement.

This means that we are now into Phase III as agreed upon in the board room some months ago. Phase I was the "feeler" by Dr. Spears to NCI; Phase II was the formal presentation which was completed last week. Phase III is our agreement to allow NCI to test 111.

So far, the script has evolved exactly as Dr. Spears felt it would. We all hope it will continue to do so. (emphasis in original) (Exhibit 29; Memo from C.H. Judge to Tisch, et al., February 1, 1972)

Larry Tisch's interest in Dr. Dalhamn's human testing continued into 1975. In a memo dated May 5, 1975, Arthur Stevens writes to Dr. Spears regarding Mr. L. Tisch's continued interest in Project 111:

On May 5th, during a brief discussion with Larry and Bob Tisch, Larry Tisch questioned me concerning the status of this matter.

I indicated to him that to my knowledge the second phase of human testing, with a larger population, was underway in Sweden under Dalhamn's direction.

I also advised that the National Cancer Institute, on its initiative in response to a submission by Dalhamn, was sponsoring extensive inhalation tests -- and that such tests would require two years to complete. There was no discussion as to when such tests commenced.

I declined to respond to Larry Tisch's question as to whether the inhalation tests were structured in such a way so as to indicate both positive, as well as negative results.

Finally, I indicated to the Messrs. Tisch that insofar as I knew the matter was proceeding entirely according to the timetable.

At your convenience, please confirm the accuracy of the information I gave to the Messrs. Tisch. (Exhibit 30; Memo from Stevens to Spears May 5, 1975)

In a letter written on Lorillard stationery by Sara Ridgway to Ms. Linda Cahill, Appointment Secretary for the Mayor of New York, dated March 16, 1978, Ms, Ridgway firmed up plans for a visit by Preston Tisch President of Loews "to share with Mayor Koch a special New York City promotion we have developed at Lorillard." On the letterhead Lorillard is identified as a division of Loews Theatres, Inc. [ In minutes of the Council for Tobacco Research dated November 10, 1972, Lorillard is identified as a division of Loews. (Exhibit 38; Minutes of Board of Directors, Nov 10, 1972, CTR). In 1984, the Wall Street Journal identified Loews Theatre Inc. as a division of Loews Corporation. 1984 WL-The Wall Street Journal 219966.] (Exhibit 31; Letter from Ridgway to Cahill March 16, 1978) The attached "Publicity Plan" contains the following provision:

Strategy

Have True host a media/VIP inaugural bus trip from Lorillard headquarters to City Hall to the Federal Reserve Bank, dramatizing cooperative nature of promotion and civic participation by Lorillard/True/Loews. (emphasis in original)

There can be no doubt that Lorillard viewed itself as a mere division of Loews and that upper management was involved in the testing of Lorillard's cigarette products -- hardly the actions of a disinterested, ignorant, powerless stockholder.

These statements leave no doubt that Loews sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the Loews' desire to protect its income stream.

g. American Brands Inc.

Defendant American Brands Inc. ("American Brands") contends in its affidavit accompanying its motion to dismiss for lack of personal jurisdiction that American Brands:

does not now, nor has it ever, manufactured, distributed, tested, designed, promoted, marketed, advertised, or sold cigarettes or other tobacco products in the State of Florida. American Brands Affidavit by Louis F. Fernous, Jr. at ¶ 7.

American Brands also contends that it:

does not now, nor has it ever, maintained any employees, agents, or other representatives in the State of Florida for the transaction of business of any nature. American Brands Affidavit by Louis F. Fernous, Jr. at ¶ 6.

Just as it was with PMCI, RJRN, UST, Loews, BAT and BATUS, it is impossible to reconcile these baseless contentions with the reality of pronouncements and claims made by American Brands outside the litigation context:

"[American Brands'] businesses include Tobacco, Distilled Spirits, Life Insurance, Hardware and Home Improvement Products, Office Products and Specialty Businesses." (Exhibit 32) American Brands 1993 Annual Report (emphasis added).

"Our largest core business, tobacco, performed very well, with record operating income, up 10%, and, for the third consecutive year, higher worldwide unit sales." (Exhibit 33) American Brands 1989 Annual Report, "To Our Stockholders," American Brands Chairman and CEO William J. Alley (emphasis added).

"Our largest core business, tobacco, achieved record revenues, record operating income and another gain in worldwide cigarette unit sales." (Exhibit 34) American Brands 1990 Annual Report, "To Our Stockholders," American Brands Chairman and CEO William J. Alley (emphasis added).

"For American Brands, 1991 was a record year. Revenues, operating income, net income and earnings per share all reached new highs, despite severe worldwide recession, substantial tax increases affecting our tobacco and distilled spirits businesses and fierce competition in all markets." (Exhibit 35) American Brands 1991 Annual Report, "To Our Stockholders," American Brands Chairman and CEO William J. Alley (emphasis added).

"The competitive pressures have been especially evident in the U.S. and U.K. tobacco markets. Even so, contribution from our tobacco operations rose to a record $1.1 billion." (Exhibit 36) American Brands 1992 Annual Report, "To Our Stockholders," American Brands Chairman and CEO William J. Alley (emphasis added).

These statements leave no doubt that American Brands sees itself as a member of the tobacco industry and depends on the health of the tobacco business for its own fiscal well-being. As such, its interest and involvement in the wrongful actions alleged by Florida can be unequivocally connected to the American Brands' desire to protect its income stream.

C. The exercise of personal jurisdiction over the tobacco parents is proper based upon principles of specific jurisdiction

Not only has Florida sufficiently pled facts to bring the action within the Florida long-arm statute, but also the publicly available evidence, discussed, supra, indicates that the tobacco parents are and have been, individually and through their agent subsidiaries, involved in the manufacture and sale of cigarettes and other tobacco products in Florida. Contemporaneous with this manufacture and sale of cigarettes and other tobacco products individually and through their agents has been a decades-long course of tortious conduct toward Floridians, including but not limited to the manufacture of fraudulent science, suppression of the design and manufacture of "safer" cigarettes, nicotine addiction and manipulation, deceit, fraud and conspiracy, and youth targeting. Complaint ¶¶ 60-119. This involvement and conduct gives rise to specific jurisdiction over the tobacco parents. Fla. St. Ann. § 48.193(1)(a), (b).

Likewise, specific jurisdiction over the tobacco parents arises under the "ordinary course of commerce" theory. Fla. St. Ann. § 48.193(1)(f). The United States Supreme Court has stated that a defendant, by placing its products into the stream of commerce with knowledge that the product would be used in the forum state is enough to constitute minimum contacts. World Wide Volkswagen, 444 U.S. at 298. The tobacco parents' annual reports and SEC filings emphasize their efforts, individually and through their agent subsidiaries, to place their cigarettes and other tobacco products into the ordinary course of commerce knowing and intending that the cigarettes and other tobacco products are routinely delivered to and used nationwide, including by Floridians. And as consequence of these efforts, Floridians have suffered smoking-related disease resulting in a cost to Florida of hundreds of millions of dollars in Medicaid assistance. Complaint ¶¶ 1-3. See, discussion, supra. Accordingly, the exercise of personal jurisdiction is proper pursuant to Fla. Sta. Ann. § 48.193(1)(f). Moreover, the foregoing discussion makes clear that each of the tobacco parents "has 'purposefully directed' his activities at residents of the forum, and litigation results from the alleged injuries that 'arise out of relate to' those activities." Burger King Corp. v. Rudzewicz, 105 S. Ct. 2174, 2182 (1985) (citations omitted). The conduct and contacts are such that the tobacco parents should "reasonably anticipate being hauled into court" in Florida. See World-Wide Volkswagen, 100 S. Ct. at 567. Thus, the "minimum contacts" due process requirements for the exercise of personal jurisdiction have been satisfied.

D. The exercise of personal jurisdiction over the tobacco parents is proper based upon their subsidiaries as alter egos

There is no disputing that the subsidiaries of the tobacco parents have sufficient minimum contacts with Florida to be subject to the exercise of personal jurisdiction by this court. Given that these subsidiaries are so controlled and dominated by the tobacco parents that these subsidiaries do not in reality constitute separate and distinct entities, this court may properly disregard the subsidiaries' "independent" corporate existence and exercise personal jurisdiction over the tobacco parents on the same basis as the tobacco subsidiaries. Notably, however, not a single tobacco defendant, in their respective affidavits, explicitly contested the jurisdictional allegation that their subsidiaries were acting as their alter egos.

This jurisdictional principle was recognized in Qualley v. Int'l Air Service Company, Ltd., 595 So.2d 194 (Fla. 3d DCA 1992), where the court of appeals stated:

the presence of a subsidiary corporation within Florida is not enough, without more, to subject a non-Florida parent corporation to long-arm jurisdiction within this state.... [But t]he rule is otherwise where, for example, the alter ego test can be met, or where the non-Florida parent company independently satisfies the test for jurisdiction under Florida's long-arm statutes....

Qualley, 595 So.2d at 197 (internal citations omitted) (emphasis added). Under the facts before the court, there is more, much more, to support the exercise of personal jurisdiction over the tobacco parents.

The tobacco subsidiaries are wholly owned subsidiaries of the tobacco parents. Philip Morris U.S.A. is a wholly owned subsidiary of Philip Morris Companies Inc. R.J. Reynolds Tobacco Company is a wholly owned subsidiary of RJR Nabisco Inc. Brown and Williamson Tobacco Corporation and BATUS are wholly owned subsidiaries of B.A.T. Industries PLC. Lorillard Tobacco Company is a wholly owned subsidiary of Loews Corporation. United States Tobacco Company is a wholly owned subsidiary of UST Inc. And The American Tobacco Company was a wholly owned subsidiary of American Brands, Inc.

Moreover, the tobacco parents often share headquarters and office buildings with their tobacco subsidiaries. For example, Philip Morris Companies Inc. and Philip Morris U.S.A. both claim 120 Park Avenue, New York, NY as their principal place of business. Loews Corporation and Lorillard Corporation both claim 1 Park Avenue, New York, NY as their principal place of business. And UST Inc. and United States Tobacco Company both claim 100 West Putnam Avenue, Greenwich, CT as their principal place of business.

Additionally, a number of the tobacco parents -- for example, RJRN, UST and Loews and American Brands -- share or have shared at least some officers, directors and/or employees with their tobacco subsidiaries. See, e.g., RJRN 1990, 1991, 1992, 1993 Annual Reports; Loews 1992 & 1994 Annual Reports; UST 1993 & 1994 Annual Reports; American Brands 1989, 1990 & 1991 Annual Reports. Similarly, BATUS, Brown & Williamson and BAT have shared common directors (Sir Patrick Sheehy, BAT's Chairman was President of BATUS in 1994, and Brown & Williamson's former CEO, Ramm Pritchard, was a member of BATUS' Board. See Dunn & Bradstreet (1994).)

And the tobacco parents exercise authority over the tobacco subsidiaries' general policies and daily operations. For example, the tobacco parents claim the employees of their respective tobacco subsidiaries as their own. The tobacco parents, in their 10-K's and annual reports, claim their respective tobacco subsidiaries' revenues, inventories, properties, etc. as their own. And the tobacco parents even share the same attorneys in this litigation with their respective tobacco subsidiaries. For example, PMCI and Philip Morris U.S.A. are both represented by Carlton, Fields, Ward, Emmanuel, Smith & Cutler and Jones, Foster, Johnston & Stubbs; RJRN and R.J. Reynolds Tobacco Company both are represented by Popham, Haik, Schnobrich & Kaufman; and UST and United States Tobacco Company are both represented by Carlson & Bales; Loews and Lorillard Corp. are both represented by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel and Shook, Hardy & Bacon.

The cumulative weight of this degree of control and domination by the tobacco parents over their tobacco subsidiaries is sufficient to justify the application of "alter ego" jurisprudence to facilitate the exercise of personal jurisdiction over the tobacco parents.

E. As the tobacco parents do business generally in Florida, the exercise of personal jurisdiction over the tobacco parents is proper based upon principles of general jurisdiction

Each of the tobacco parents holds itself out to be an interstate, if not international, business engaged in a wide range of activities. The business activities of the tobacco parents in Florida are substantial and not isolated.

For example, PMCI states, under the headline "Philip Morris: The World's Best Brands," that: "Building on the power and appeal of our brands, we will achieve our Mission to be the most successful consumer packaged goods company in the world." PMCI 1993 Annual Report. Similarly, RJRN, in its 1993 annual report, describes itself as: "a world leader in consumer packaged goods. The company's familiar brand names -- such as Winston, Salem, Camel, Oreo, Ritz, Life Savers, and Planters -- are synonymous with high quality and superior value in more than 160 countries and territories." RJRN 1993 Annual Report. UST is involved in the wine and entertainment businesses, in addition to its tobacco products business, throughout the United States. UST 1994 Annual Report. Likewise, besides tobacco, Loews' United States business activities range from insurance, to operating hotels and oil and gas rigs, to the distribution and sale of watches and other timing devices. Loews 1994 Annual Report. BAT states that it "is one of the UK's leading business enterprises with interests principally in tobacco and financial services.... The Group operates in more than 90 countries, employing some 173,000 people." BAT 1994 Annual Review and Summary Financial Statement. American Brands bills itself as "a global consumer products holding company. Its businesses include tobacco, distilled spirits, life insurance, hardware and home improvement products, office products and specialty businesses." American Brands 1993 Annual Report.

Thus, the tobacco parents are large national and multinational corporations that are engaged in wide array of businesses throughout the United States, including Florida. See, discussion, supra To proudly claim these businesses as their own when the purposes suit them, and then to argue, as these multimillion dollar, Fortune 500, publicly traded corporations do in their motions to dismiss, that they do not continuously and systematically conduct business in Florida, is cynical and disingenuous. The tobacco parents simply cannot have it both ways. The exercise of personal jurisdiction over the tobacco parents is proper based upon the principles of general jurisdiction. Fla. St. Ann. §48.192(2). The foregoing makes clear, moreover, that the activities of these tobacco parents in Florida are so continuous and systematic -- one can find their products on virtually every supermarket shelf -- that being haled into a Florida court must have been reasonably anticipated. The "minimum contacts" due process requirements for the proper exercise of personal jurisdiction have been met.

F. The exercise of personal jurisdiction over the tobacco parents comports with notions of fair play and substantial justice

Evaluating (1) the burden on the tobacco parents in litigating this claim in Florida, (2) the interests of Florida in resolving the claim in Florida, (3) Florida's interest in obtaining convenient and effective relief in Florida, (4) the interstate judicial system's interest in obtaining the most efficient resolution of this controversy, and (5) Florida's interest in furthering fundamental substantive social policies can only point to the conclusion that the exercise of personal jurisdiction over the tobacco parents comports with traditional notions of fair play and substantial justice. See Asahi Metal Industry, 480 U.S. at 113, 107 S. Ct. at 1033.

The tobacco parents are multinational, Fortune 500 corporations. They will suffer no undue burden in litigation this claim in Florida. Discovery directed at the tobacco parents will occur contemporaneously -- not duplicatively -- with discovery taken of the tobacco subsidiary agents. It is anticipated that the discovery will involve many of the same documents and witnesses. Moreover, the tobacco parents and tobacco subsidiaries are, by and large, represented by the same attorneys, thereby imposing no significant additional legal expense on the tobacco parents. Finally, the tobacco parents have failed to articulate any legitimate practical reason why the exercise of personal jurisdiction over them would be unduly burdensome.

The interest of Florida in resolving the claim in Florida is obvious. The action involves the recovery of the significant expenses associated with provision of necessary health care and other such necessary assistance under the state Medicaid programs to Floridian Medicaid recipients who suffer or who have suffered from tobacco-related injuries, disease or sickness. Resolution of the action will necessarily involve the application of Florida law. The plaintiff party is Florida. It would make absolutely no sense to attempt to resolve this action in another jurisdiction. Likewise, convenient and effective relief can be had only if this action is resolved in its entirety in Florida. Florida's claims against the tobacco subsidiaries will be resolved here in Florida. To force the resolution of Florida's claims against the tobacco parents in a myriad of other jurisdictions would not only be inconvenient for the parties, it would involve needless duplicative, inefficient and expensive additional litigation. The interests of Florida and the judiciary are thus served by resolving this action in a single proceeding in a Florida court.

Finally, Florida has a fundamental social policy of enforcing corporate responsibility and to ensure that injured parties are duly compensated for the damages caused by such corporations. As the tobacco parents are engaged in the manufacture and sale of cigarettes and other tobacco products in Florida, and these cigarettes and other tobacco products have not only brought enormous financial benefits to the tobacco parents but also caused massive injury. Florida, as outlined in its complaint and as set out in Exhibit 37 [Joyner Sims article], resolution of this action in the Florida courts will fulfill the fundamental social policy of Florida of accountability. In sum, then, it is obvious that the exercise of personal jurisdiction over the tobacco parents does not offend traditional notions of fair play and substantial justice.

IV.

EVEN WERE FLORIDA FOUND TO HAVE NOT SATISFIED ITS BURDEN, THE MOTIONS OF THE TOBACCO PARENTS SHOULD NOT BE GRANTED; FLORIDA IS ENTITLED TO CONDUCT JURISDICTIONAL DISCOVERY OF THE TOBACCO PARENTS

While Florida contends that it was established through the use of the evidence available from public sources by a preponderance of the evidence that the exercise of personal jurisdiction over the tobacco parents is proper, in the event this Court disagrees, it would nonetheless be improper to grant the tobacco parents' motions to dismiss as these motions are premature. This is so because Florida has had no opportunity to conduct discovery of jurisdictional or any other issues.

A plaintiff is entitled to conduct limited discovery on the jurisdictional issues in order to gather facts, file opposing affidavits and assist the trial court in answering the question of whether to grant or deny jurisdiction. Gleneagle Management Co. v. Leondakos 602 So.2d 1282, 1284 (Fla. 1992); see also, Magic Pan, 605 So.2d at 567 (plaintiff entitled to conduct jurisdictional discovery); Avila v. Pacindat Mutual Protection & Indemnity Association, Ltd., 528 So.2d 510 (Fla. 3d DCA 1988) (plaintiff entitled to reasonable opportunity to conduct discovery on personal jurisdiction issue). Due to the stay in the proceedings of this case pending the appeal to the Florida Supreme Court of a related proceeding, however, Florida has not been afforded the opportunity to conduct any discovery on the issue of personal jurisdiction.

Accordingly, the presently pending motions to dismiss should be held in abeyance, or denied with leave to refile. In the meanwhile, Florida should be allowed to serve interrogatories, document requests, requests for admission, and take depositions on the issue of personal jurisdiction. Only upon Florida's completion of the jurisdictional discovery should the tobacco parents motions to dismiss come again for hearing.

V.

CONCLUSION

For the foregoing reasons, the tobacco parents motions to dismiss for lack of personal jurisdiction should be denied.

Respectfully submitted,

J. Anderson Berly, III, Esquire

Ness, Motley, Loadholt, Richardson & Poole

151 Meeting Street, Suite 600

P.O. Box 1137

Charleston, SC 29402

803 720-9000 (Phone)

803 577-7513 (Fax)

South Carolina Bar No.

Robert M. Montgomery, Jr., Esquire

Montgomery & Larmoyeux, P.A.

1016 Clearwater Place

P. O. Drawer 3086

West Palm Beach, FL 33402-3086

407-832-2880 (Phone)

407-832-0887 (Fax)

Florida Bar No. 056153


Back to Florida STIC Library