Back to Rhode Island STIC LibrarySUPERIOR COURT
STATE OF RHODE ISLAND
PROVIDENCE, SC.
C.A. NO. 97-
JURY DEMAND
COMPLAINT
I. INTRODUCTION AND NATURE OF THE ACTION
The State of Rhode Island (referred to hereafter as the "State"), by and through Attorney General Jeffrey B. Pine, brings this action for monetary damages, civil penalties, injunctive relief, and other equitable relief and alleges, upon information and belief, the following:
1. The diseases related to and caused by the smoking of cigarettes have killed millions of Americans over the last several decades; and the deaths continue as of this writing. In order to earn larger profits, tobacco manufacturers and their allied interests have chosen and continue to choose to ignore and actively suppress the truth concerning the hazards of smoking cigarettes. As a direct result, Rhode Island citizens have contracted smoking-related diseases including, without limitation, cancer, emphysema, lung and heart disease. The care and treatment of these Rhode Island citizens has placed a significant financial burden on the State. This burden on all Rhode Island citizens and the State should rightfully be borne by the tobacco manufacturers and their allied interests.
2. Under the Rhode Island Constitution, the laws of the State of Rhode Island, including Rhode Island's common law and Rhode Island General Laws, the State is responsible for the health, safety and welfare of its citizens, and the Attorney General has the duty to protect the interests of the general public. The State of Rhode Island, by Attorney General Jeffrey B. Pine, brings this action under State law for money damages, civil penalties, declaratory and injunctive relief, indemnity and restitution. As set forth more particularly below, the various Defendants, over a long period of time and continuing into the present day, conspired to deceive the State and its citizens about the addictive properties of nicotine and the full extent of the health risks of smoking. Every year in Rhode Island, close to 2000 addicted smokers die from using Defendants' products precisely as Defendants have designed and intended for those products to be used. Through a well-organized campaign of fraud, lies, intimidation and deception, Defendants have avoided legal responsibility for engineering, manufacturing and selling the most deadly and harmful consumer product in history, while reaping billions of dollars in profits.
3. This case challenges a massive unlawful course of conduct and conspiracy perpetrated by the Defendants. The Defendants' unlawful conduct includes a host of unfair, deceptive, anti-competitive, and unlawful acts, including, but not limited to, the following:
a. Publicly undertaking, as a "paramount" special responsibility, the duty of researching and disclosing to public health authorities and the public at large, including the State of Rhode Island, the full extent of the health risks of cigarette smoking, but then suppressing, concealing, distorting, and lying about the state and extent of their true knowledge of those risks;
b. Creating and/or funding fraudulent "rump" or "front" organizations, such as the Tobacco Industry Research Council (later known as The Council for Tobacco Research-U.S.A., Inc.), which was held out to the public as an independent research organization, but which was in fact controlled by lawyers and public relations firms, to prevent the public from learning what Defendants knew about the health risks of smoking and to create a false controversy about health risks of smoking;
c. Destroying, concealing, and/or otherwise spoliating and/or shipping overseas incriminating evidence of industry testing and research on the health risks of cigarette smoking and the addictive nature of nicotine, shutting down laboratories on short notice and making threats against scientists who tried to publish research revealing what the
industry actually knew about smoking, and asserting improper claims of attorney/client privilege and work product privilege to suppress and/or to conceal the results of adverse scientific research;
d. Engaging in unfair and deceptive trade practices by, among other things, jointly sponsoring false, deceptive, and misleading advertising, promotional and public relations campaigns intended to confuse and create doubt among governmental entities, including the State of Rhode Island, and the public about the health risks of cigarette smoking;
e. Jointly and collectively making false, misleading, and sham representations to Congress, other governmental entities, including the State of Rhode Island, and the public regarding the health risks of cigarette smoking, the addictive nature of nicotine, and the manipulation of nicotine levels in cigarettes, in order to inundate Congress and other federal and State entities with false and misleading information on the true risks of cigarette smoking, and with the intent to defraud, knowing that the State and others would reasonably rely on their representations;
f. Conspiring to eliminate and restrain competition and/or to use monopoly power, to suppress research into the health effects of smoking, to halt research, development of so-called "safer" cigarettes that caused less biological activity in smokers and agreeing not to market "safer cigarettes"; and
g. Engaging in unfair trade practices by targeting, marketing and advertising efforts to promote illegal sales of cigarettes to minors, and developing products and deceptive advertising campaigns designed to appeal specifically to young women; and
h. Conspiring to conceal and concealing the addictive nature of tobacco products and the Defendants' manipulation of nicotine levels in tobacco products.
4. As a direct and foreseeable result of these and other wrongful actions by Defendants, the State of Rhode Island has suffered substantial damages, and minors in Rhode Island continue to be lured into the illegal use of tobacco products. The Attorney General seeks to recover damages and penalties on behalf of the State of Rhode Island and to enjoin the continuing deceptive and unlawful practices described below.
The Defendants' Unlawful Conduct
5. The tobacco industry in the United States is a highly profitable oligopoly dominated by R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; Liggett & Myers, Inc.; Lorillard Tobacco Company, Inc.; Philip Morris Inc.; the American Tobacco Company, Inc.; B.A.T. Industries P.L.C.; and United States Tobacco Company (collectively referred to as the "Tobacco Companies" or "Tobacco Industry"). For decades, the Tobacco Companies have profited from the sale of tobacco products to millions of consumers. To build and sustain the market for their products, the Tobacco Companies concealed and/or misrepresented the addictive nature of tobacco products, created confusion concerning the damage to human health caused by tobacco products, manipulated the levels of nicotine in tobacco products in order to maintain and boost addiction, agreed not to compete for the sale of a "safer cigarette" and other innovative products, and focused their marketing efforts on minors.
6. Defendants are a cartel that controls nearly 100% of the market for cigarettes in the United States. Their longstanding conspiracy to mislead the public about the harmful and addictive effects of cigarette smoking has placed Defendants among the most profitable industries in the world. The breadth and boldness of the conspiracy recently was displayed before Congress when, in April of 1994, the chief executive officers of the leading tobacco manufacturers testified under oath that they do not believe that smoking causes death or that smoking is addictive. In truth, Defendants themselves have known for much longer than the scientific community and public health authorities, that cigarettes are both addictive and deadly.
7. The Tobacco Companies, as well as their public relations agents, lawyers and industry trade associations, have known for more than forty years that their tobacco products contained nicotine -- which they knew was a highly addictive substance -- as well as numerous carcinogens and other harmful elements.
8. Despite representations to the contrary, Defendants carefully calibrate, control and manipulate nicotine in cigarettes so that beginning smokers and others will become addicted to nicotine and develop a physical and psychological dependency that can be satisfied only by cigarette smoking. As a direct result of Defendants' knowledge of and methods chosen for the manufacture of cigarettes, long-term smokers find it extremely difficult and painful, and in many cases impossible, to withdraw from their physical dependency on nicotine.
9. Nicotine is addictive. The Tobacco Industry has known of the addictive nature of nicotine, as evidenced by internal industry documents.
10. Tobacco products are not only addictive, they are dangerous for human use. Tobacco products kill and injure those who use them. The Tobacco Companies know this, but continue to deny the existence of adverse health effects in their public statements.
11. The Tobacco Industry has manipulated the level of nicotine in tobacco products, and/or added other chemicals to tobacco in order to enhance nicotine's effect, in order to increase addiction and sell more product. The Industry has denied this practice, but the Food and Drug Administration has reported that nicotine manipulation does occur.
12. In 1953, the Tobacco Industry entered into a multifaceted unlawful conspiracy which continues to this day. One essential element of the conspiracy was an agreement to suppress harmful information concerning tobacco products which was accomplished as follows. First, the Tobacco Companies agreed to falsely represent that there is no proof that smoking is harmful. Second, they agreed to falsely represent that smoking is not addictive. And finally, the Tobacco Companies represented to the public and governmental regulators that they would undertake a special duty and responsibility to determine and to report the scientific truth about the health effects of tobacco, both by conducting internal research and by funding "independent" external research.
13. The industry's public special undertaking to pursue and report the truth about smoking was immediately breached. The industry's purported undertaking was part of a conspiracy to refute, undermine and neutralize information coming from the objective scientific and medical community and, at the same time, to confuse and mislead the public in an effort to avoid state or federal regulation, to encourage existing smokers to continue and to induce additional persons to commence smoking.
14. The industry's representations about the health and safety of smoking were and continue to be false. Despite the Tobacco Companies' denials, the Tobacco Industry knew its products were addictive and harmful. Further, the industry's publicly-proclaimed special undertaking to pursue and to report the truth about smoking was false, and deliberately misleading to the public in an effort to avoid state or federal regulation, to encourage existing smokers to continue smoking and to induce others to commence smoking.
15. An additional important element of the conspiracy was an agreement by the Tobacco Companies to restrain competition for development and sales of innovative "safer" cigarettes. The purpose and effect of this aspect of the conspiracy was to suppress and to restrain competition based on claims of health because such competition would have exposed the ill effects and addictive nature of smoking, thereby substantially increasing the Tobacco Companies' exposure to legal liability for the harm caused by cigarettes and tobacco products, and thereby threatening their shares of the tobacco market.
16. The conspiracy described above originated in response to medical and scientific studies in the early 1950's publicizing the adverse health impact of smoking. In response to what the industry internally called the "big scare," in late 1953 and early 1954, the Tobacco Companies and their public relations agent, Hill & Knowlton, jointly created a purportedly independent entity initially known as the Tobacco Industry Research Council (the "TIRC"). In 1964, the TIRC was renamed the Council for Tobacco Research (the "CTR"). As part of their unlawful conspiracy, the Tobacco Companies publicly represented that the TIRC would undertake, on behalf of the public, to perform objective research and to gather data concerning the relationship between cigarette smoking and health, and to publicize truthfully the results of this "independent" research. From 1954 forward, the industry has been using the TIRC and its successor, the CTR, to engage in a deceptive public relations campaign designed to mislead and confuse the American public regarding the relationship between smoking and health.
17. In the words of U.S. District Court Judge H. Lee Sarokin in Haines v. Liggett Group, Inc., Civ. Action 84-678, U.S. Dist. Court for the District of New Jersey, a "jury could reasonably conclude that the creation of ... [the TIRC] was nothing but a whore created for public relations purposes with no intention of seeking the truth or publishing it."
18. The Tobacco Companies, their lawyers and Hill & Knowlton controlled the affairs of TIRC/CTR by, among other things, causing it to publicize information, regardless of its merit, tending to obscure any relationship between cigarette smoking and disease. This course of conduct was designed to create the notion that there was a legitimate and good faith medical/scientific controversy over whether smoking is harmful to human health or whether nicotine is addictive.
19. Also in the 1950s, the Tobacco Companies began and continue thereafter, to tailor their cigarette advertisements, promotional activities and public statements to conceal and/or to misrepresent the addictive nature and the adverse health impact of cigarette smoking and tobacco use, while at the same time presenting cigarette smoking in a glamorous, youthful, exciting, relaxing posture by associating it with professional and economic success, intelligence, athletic ability and sexual attraction. This course of conduct accomplished the purpose of suppressing or misstating the addictive nature and the adverse health impact of smoking, so that new smokers, mainly young teenagers, could be "hooked," and existing smokers would continue smoking.
20. With full knowledge that they are selling an addictive and deadly product, Defendants deliberately advertise, promote and market cigarettes in such a way as to target promising markets of new smokers, such as minors. Every day, according to reputable studies, 3,000 American youths are seduced by Defendants' unfair and misleading advertising and marketing ploys and start smoking, each then becoming a potential addict and life-long profit center for Defendants.
21. Despite the particularly harmful health consequences of smoking for women, Defendants target advertising to this segment of the population. For women, smoking reduces fertility, increases the rate of miscarriages and stillbirths, retards uterine fetal growth and results in lower birth weights in infants. Yet Defendants have targeted and continue to target young women with advertising campaigns designed to appeal psychologically to this group of potential smokers.
22. These outrageous marketing strategies further the conspiracy to distort the truth about cigarette smoking. The net effect of Defendants' unlawful, deceptive, and unconscionable conduct, over the past several decades, has been to convey the message that intensive and thorough scientific and medical research has uncovered no reliable evidence about the real health effects of smoking. As described by one industry representative, Defendants' campaign of deception has been a "brilliantly conceived and executed" strategy to "creat[e] doubt about the health charge without actually denying it." Defendants knew that if smokers fully appreciated the risks of addiction and death, many would never have started smoking or would have quit, and Defendants would have lost the enormous profits they accumulated by shifting the costs of their conduct onto the State of Rhode Island and others.
23. Armed with coffers full from the highly profitable sale of an addictive drug, Defendants have successfully fended off legal attacks with a litigation strategy of expense, attrition and delay. According to information and belief, an attorney for Defendant R. J. Reynolds Tobacco Company asserted, "[t]he aggressive posture we (Reynolds) have taken regarding depositions and discovery in general continues to make these cases extremely burdensome and expensive for plaintiffs' lawyers, particularly sole practitioners. To paraphrase General Patton, the way we won these cases was not by spending all of [Reynolds's] money, but by making that other son of a bitch spend all his."
Damages Caused by the Tobacco Companies' Unlawful Conduct
24. The effects of the conspiracy are several and far-reaching, including, but not limited to, increased medical costs to the State of Rhode Island, the increased purchase of tobacco products by minors in violation of state law, and the failure of the industry to develop and to market "safer" innovative products.
Health Care Costs
25. One of the consequences of the Tobacco Companies' conduct has been to unjustly enrich the Tobacco Companies at the expense of Rhode Island's health care system and, ultimately, all Rhode Island residents and taxpayers.
(a) Defendants' conduct has generated a terrible human tragedy. Cigarette smoking is the leading cause of premature death in the United States. Approximately 50 million residents of the United States smoke cigarettes and another 6 million use smokeless tobacco products. According to the Federal Centers for Disease Control and Prevention, each year cigarette smoking kills more than 400,000 Americans, exceeding the combined deaths caused by automobile accidents, AIDS, alcohol abuse, use of illegal drugs, homicide, suicide, and fires. Smoking-related illnesses account for one of every five deaths each year in the United States.
(b) Cigarette smoking causes, among other serious illnesses, cancer, pulmonary diseases, and coronary heart disease:
Cancer -- Many chemicals in cigarette smoke have been determined to be carcinogenic. Cigarette smoking is responsible for at least 30% of all deaths from cancer. Cigarette smoking causes more than 85% of all lung cancer, which has now surpassed breast cancer as the primary cause of death from cancer among women. Smoking is linked to cancers of the mouth, larynx, esophagus, stomach, pancreas, uterus, cervix, kidney and colon, among others.
Pulmonary Disease -- Smoking is the cause of more than 80% of deaths from pulmonary diseases such as emphysema and bronchitis. These diseases have a
particularly profound social impact because of the prolonged and extended suffering and disability of their victims.
Heart Disease -- Cigarette smoking is one of the major independent causes of coronary heart disease. Smoking is also responsible for thousands of deaths from cardiovascular disease, including stroke, heart attack, peripheral vascular disease and aortic aneurysm.
(c) In Rhode Island, approximately 20% of high school seniors who smoke today will be addicted adult smokers of the future. Moreover, adults also use smokeless tobacco.
(d) Health care costs in the United States
are hundreds of billions of dollars each year. Tobacco-related health care costs are estimated to be more than seven percent of total United States health care costs, and for 1993, tobacco-related health care costs were approximately $50 billion.
(e) The Tobacco Companies' unlawful conduct described herein has wrongfully increased medical costs to the State of Rhode Island, including, but not limited to, increased Medicaid payments and increased health care insurance for public employees.
(f) Rhode Island's increased health care costs caused by the Tobacco Companies' conduct is in the millions of dollars. These costs would have been avoided if the Tobacco Companies had not engaged in the course of conduct described in this Complaint. Rhode Island's share of those costs are sought as damages in this case.
Targeting Minors in Violation of State Law
26. A further effect of the Tobacco Companies' course of unlawful conduct and continuing conspiracy is the targeting and eventual addiction of minors and young people. Recognizing the addictive nature of their products, the Tobacco Industry seeks new customers among the youth of the nation. Because of the deaths or smoking cessation of so many of the industry's adult customers, the Tobacco Companies must constantly add new customers in order to maintain their profits.
(a) According to a 1994 U.S. Surgeon General's Report, every day another 3,000 children become regular smokers. Eighty-two percent of adults who have ever smoked had their first cigarette before age 18 and more than half of them had already become regular smokers by that age. Reports published by the U.S. Centers for Disease Control and Prevention indicate that anyone who does not begin smoking in childhood is unlikely to begin as an adult. For those 3,000 children who do become regular users of tobacco products every day, projections of current trends indicate that 1,000 will die prematurely as a result of their tobacco use.
(b) It is against the law of Rhode Island for minors to purchase tobacco products, and efforts to encourage them to do so contravene public policy. Nonetheless, to lure minors into smoking, the Tobacco Companies have deceptively designed special marketing
campaigns particularly appealing to minors. This targeting of minors is accomplished by extensive marketing research, polling and surveys to determine the most effective means of advertising to minors. An integral part of this campaign is the use of images and advertising themes particularly appealing to minors, and the placement of promotional materials in locations likely to be accessed primarily by minors.
(c) Further, knowing that products such as
smokeless tobacco with too much nicotine can be harsh and thus deter new users from becoming new addicts, the Tobacco Companies seek to graduate new users, often minors, from "milder" products to those with more "kick" in order to attract and addict more customers.
(d) As a result of the Tobacco Companies' unlawful acts, each day minors in Rhode Island purchase tobacco products in violation of state law. The Attorney General seeks to halt this practice.
Public Interest
27. Through their continuous unlawful, deceptive and fraudulent business practices described herein, the Tobacco Companies have and will continue to deceive, mislead and financially injure the State of Rhode Island and its citizens. Therefore, the Attorney General believes these legal proceedings to be in the public interest: (a) to secure for the residents of the State of Rhode Island a fair and open market, free from deception and illegal restraints of trade; (b) to recover civil penalties, restitution and damages; (c) to require fair and full disclosure by the Tobacco Companies of the nature and effects of their products; (d) to obtain the return of the increased cost of health care caused by Defendants' wrongful conduct; (e) to halt the marketing of tobacco products to minors and to disgorge the Tobacco Companies' illegal proceeds from their sales of tobacco products accomplished through the violation of state law; (f) to require Defendants to fund a remedial public education campaign on the true health consequences of smoking; and (g) to require Defendants to fund smoking cessation programs for nicotine dependent smokers.
II. JURISDICTION AND VENUE
28. This Complaint is filed and these proceedings are instituted under the provisions of the Rhode Island Deceptive Trade Practices Act §§ 6-13.1-1 through 19; the Rhode Island Antitrust Act §§ 6-36-1 through 26; the Rhode Island Abatement of Public Nuisance Statute, §§ 10-1-1 through 10; and the Rhode Island Organized Crime Control Act, §§ 7-15-1 through 11.
29. Authority for the Attorney General to commence this action for injunctions, mandatory injunctions, damages, restitution, disgorgement, civil penalties, attorney fees, and such other relief as the Court deems proper, is conferred by the Constitution of Rhode Island, common law, and R.I. Gen. Laws §§ 6-36-12, inter alia §§ 6-13.1-8, §§ 6-13.1-9, §§ 7-15-4, §§ 42-9-6, and §§ 10-1-1.
30. The violations alleged herein have been and are being committed in whole or in part, and affect commerce in, and the Tobacco Companies do business in Providence County and elsewhere throughout the State of Rhode Island.
III. THE PARTIES
PLAINTIFFS
31. The Attorney General is the chief law enforcement officer and attorney for the State of Rhode Island and brings this action on behalf of the State and all political subdivisions of the State.
DEFENDANTS
32. Defendant American Tobacco Company, Inc. ("American Tobacco") is a Delaware corporation whose principal place of business is Six Stamford Forum, Stamford, Connecticut 06904. American Tobacco manufactured, advertised and sold Lucky Strike, Pall Mall, Tareyton, American, Malibu, Montclair, Newport, Misty, Iceberg, Silk Cut, Silva Thins, Sobrania, Bull Durham, and Carlton cigarettes and other tobacco products throughout the United States. American Tobacco advertised, promoted and sold its tobacco products throughout the State of Rhode Island. In 1994, American Tobacco was sold to British-American Tobacco Co., parent of Defendant Brown & Williamson.
33. Defendant Brown & Williamson Tobacco Corporation ("Brown & Williamson") is a Delaware corporation whose principal place of business is 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Brown & Williamson manufactures, advertises, and sells Kool, Raleigh, Barclay, BelAir, Capri, Richland, Laredo, Eli Cutter and Viceroy cigarettes and other tobacco products throughout the United States. Brown & Williamson advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
34. Defendant Liggett & Myers, Inc. ("Liggett") is a Delaware corporation whose principal place of business is Main and Fuller, Durham, North Carolina. Liggett manufactures, advertises and sells Chesterfield, Decade, L&M, Pyramid, Dorado, Eve, Stride, Generic and Lark cigarettes and other tobacco products throughout the United States. Liggett advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
35. Defendant Lorillard Tobacco Company, Inc. ("Lorillard"), is a Delaware corporation whose principal place of business is 1 Park Avenue, New York, New York 10016. Lorillard manufactures, advertises and sells Old Gold, Kent, Triumph, Satin, Max, Spring, Newport, and True cigarettes and other tobacco products throughout the United States. Lorillard advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
36. Defendant Philip Morris Inc. ("Philip Morris"), is a Virginia corporation whose principal place of business is 120 Park Avenue, New York, New York 10017. Philip Morris manufactures, advertises and sells Philip Morris, Merit, Cambridge, Marlboro, Benson & Hedges, Virginia Slims, Alpine, Dunhill, English Ovals, Galaxy, Players, Saratoga, and Parliament cigarettes and other tobacco products throughout the United States. Philip Morris advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
37. Defendant R. J. Reynolds Tobacco Company ("R.J. Reynolds") is a New Jersey corporation whose principal place of business is Fourth & Main Street, Winston-Salem, North Carolina 27102. Reynolds manufactures, advertises and sells Camel, Vantage, Now, Doral, Winston, Sterling, Magna, More, Century, Bright Rite and Salem cigarettes and other tobacco products throughout the United States. Reynolds advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
38. Defendant United States Tobacco Company ("U.S. Tobacco"), is a Delaware corporation whose principal place of business is 100 West Putnam Avenue, Greenwich, Connecticut. U.S. Tobacco manufactures, advertises and sells Sano cigarettes. U.S. Tobacco also manufactures, advertises and sells approximately 88% of the smokeless tobacco (snuff and chewing tobacco) sold in the United States, under various brand names including Happy Days, Skoll and Copenhagen. U.S. Tobacco advertises, promotes and sells its tobacco products throughout the State of Rhode Island.
39. Defendant B.A.T. Industries P.L.C. ("B.A.T. Industries") is a British corporation whose principal place of business is Windsor House, 50 Victoria Street, London. Through a succession of intermediary corporations and holding companies, B.A.T. Industries is the sole shareholder of Brown & Williamson. Through Brown & Williamson, B.A.T. Industries has placed cigarettes into the stream of commerce with the expectation that substantial sales of cigarettes would be made in the United States and in the State of Rhode Island. B.A.T. Industries 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. On information and belief, 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 subject to B.A.T. Industries' control. B.A.T. Industries is a participant in the conspiracy described herein and has caused harm and affected commerce in the State of Rhode Island.
40. The Defendants named in Paragraph 32-39 are sometimes herein collectively referred to as "Defendants", "Defendant Tobacco Manufacturers", "Tobacco Industry," "Tobacco Companies" or "Tobacco Cartel."
41. Defendant Hill & Knowlton, Inc. ("Hill & Knowlton") is an international public relations firm and New York corporation with offices located in major United States cities and whose principal place of business is 420 Lexington Avenue, New York, New York. Defendant Hill & Knowlton played an active and knowing role in the conspiracy complained of, aiding the circulation and/or publication of many of the false statements of the tobacco industry attributable to the Tobacco Industry Research Committee (now known as the Council for Tobacco Research-U.S.A., Inc.). Hill & Knowlton has been the primary advertising agency responsible for dissemination of the false and misleading information in question, in its capacity as the advertising and public relations agency for the Tobacco Institute, CTR and several members of the tobacco industry, including Liggett, Philip Morris, Reynolds, American Tobacco and Lorillard. In the course of such representation, Hill & Knowlton aided these Defendants in creating and issuing false information and covering up the truth concerning the tobacco industry, the link between smoking and cancer or other health hazards, the addictive nature of smoking and the true nature of the activities of the TIRC/CTR and its relationship to the industry. Hill & Knowlton has been involved in the wrongful conduct and conspiracy since its creation. Hill & Knowlton is referred to hereinafter as "The Tobacco Consultant".
42. Defendant The Council for Tobacco Research-U.S.A., Inc. ("CTR"), successor in interest to the Tobacco Industry Research Committee ("TIRC"), is a New York nonprofit corporation whose principal place of business is 900 Third Avenue, New York, New York 10022. At all relevant times, CTR and TIRC operated as public relations and lobbying arms of the Tobacco Companies and as agents and employees of the Tobacco Companies. They also acted as facilitating agencies in furtherance of Defendants' combination and conspiracy as described in this Complaint. In doing the things alleged, CTR and TIRC acted within the course and scope of their agency and employment, and acted with the consent, permission, and authorization of each of the Tobacco Companies. All actions of the CTR and TIRC alleged were ratified and approved by the officers or managing agents of the Tobacco Companies. CTR and TIRC have been involved continuously in the conspiracy
described and the actions of CTR and TIRC have affected commerce and caused harm in Rhode Island.
43. Defendant Tobacco Institute, Inc. ("Tobacco Institute") is a New York nonprofit corporation whose principal place of business is 1875 I Street Northwest, Suite 800, Washington, DC 20006. At all relevant times, Tobacco Institute operated as a public relations and lobbying arm of the Tobacco Companies and was an agent and employee of the Tobacco Companies. It also acted as a facilitating agency in furtherance of the combination and conspiracy of Defendants described in this Complaint. In doing the things alleged, Tobacco Institute acted within the course and scope of its agency and employment, and acted with the consent, permission, and authorization of each of the Tobacco Companies. All actions of the Tobacco Institute alleged were ratified and approved by the officers or managing agents of the Tobacco Companies. Tobacco Institute has been involved in the conspiracy described in this Complaint and the actions of Tobacco Institute have affected commerce and caused harm in Rhode Island.
44. The Council for Tobacco Research-U.S.A., Inc., (successor to the Tobacco Industry Research Committee) and Tobacco Institute, Inc., collectively are referred to as "The Tobacco Trade Associations."
45. Various other persons, firms, and corporations, who have been named as Unknown Corporations and John Doe 1-100 and Jane Doe 1-100 participated as co-conspirators in the illegal acts alleged and performed acts and made statements in furtherance of the combination and conspiracy alleged in this Complaint.
46. Defendants listed above, and/or their predecessors and successors in interest, did business in the State of Rhode Island; made contracts to be performed in whole or in part in Rhode Island and/or manufactured, tested, sold, offered for sale, supplied or placed in the stream of commerce, or in the course of business materially participated with others in so doing, cigarettes which Defendants knew to be defective, unreasonably dangerous and hazardous, and which Defendants knew would be substantially certain to cause injury to the State and to persons within the State thereby negligently and intentionally causing injury to persons within Rhode Island and to the State, and as described herein, committed and continue to commit tortious and other unlawful acts in and with consequences in the State of Rhode Island.
47. Each Defendant is sued individually as a primary violator and as a co-conspirator and aider and abettor, and the liability of each arises from the fact that each Defendant entered into an agreement with the other Defendants and third parties to pursue, and knowingly pursued, the common course of conduct to commit or participate in the commission of all or part of the unlawful acts, tortious acts, plans, schemes, transactions, and artifices to defraud alleged herein.
48. Such acts of conspiracy and aiding and abetting included, among other things, falsely advertising, marketing, promoting and selling cigarettes as safe, non-addictive, and not containing levels of nicotine manipulated by Defendants to cause and maintain addiction.
49. The liability of each Defendent arises from the fact that each committed and/or engaged in a conspiracy to accomplish the commission of all or part of the unlawful and/or tortious conduct alleged herein, and/or intentionally, knowingly, with evil motive, intent to injure, ill will and/or fraud and without legal justification or excuse, engaged in the conduct herein alleged.
50. Defendants, and/or their predecessors and successors in interest, performed such acts as were intended to, and did, result in the sale of cigarettes in the State of Rhode Island and the use and consumption of cigarettes by residents of the State of Rhode Island.
51. The term "addictive" used in this Complaint is synonymous and interchangeable with the term "dependence-producing"; both terms refer to the persistent and repetitive intake of psychoactive substances despite evidence of harm and a desire to quit. Some scientific organizations have replaced the term "addictive" with "dependence-producing" to shift the focus to dependent patterns of behavior and away from the moral and social issues associated with addiction. Both terms are equally relevant for purposes of understanding the drug effects of nicotine.
IV. RELEVANT TIMES
52. The relevant times for these claims for relief contained in this Complaint have not been determined specifically, but are believed to cover a period of time from at least December 1953 to the present date.
V. CONSPIRACY ALLEGATIONS
53. In committing the wrongful acts alleged, all of the Defendants and the other entities and persons identified, with the assistance and knowledge of their counsel, have pursued a common course of conduct, acted in concert with, aided and abetted and conspired with one another, in furtherance of their common plan and scheme outlined herein.
VI. NATURE OF TRADE AND COMMERCE
54. Cigarette manufacturing has been one of the most concentrated industries in the United States throughout this century. Together, Philip Morris, Reynolds, Brown & Williamson, Lorillard, American Tobacco, and Liggett comprise the "Big Six" cigarette manufacturers, who control virtually 100% of the market in the United States and in Rhode Island. Philip Morris and Reynolds are the industry leaders, with national market shares of approximately 46% and 25%, respectively. The approximate cigarette market shares of the remaining Big Six manufacturers are: Brown & Williamson, 12% (19% if American Tobacco is included); Lorillard, 8%; American Tobacco, 7%; and Liggett 2%. The smokeless tobacco market, dominated by U.S. Tobacco, is even more concentrated.
55. In part because of its concentration, the tobacco industry has long been one of America's most profitable businesses, with profit margins estimated to be at least 30%. The industry earns billions of dollars in profits each year from domestic sales alone. In 1995, Philip Morris Companies, Inc., parent of Defendant Philip Morris, reported record earnings, largely due to significantly increased tobacco sales abroad, especially in Eastern Europe. However, even its U.S. sales strengthened in 1995, and the domestic tobacco business shipped a record 422 billion cigarettes, earning $3.7 billion.
VII. RELEVANT MARKET
56. For the purposes of this action, the sale of cigarettes is the relevant product market. The relevant geographic markets are the United States and the State of Rhode Island.
VIII. COMMON FACTUAL ALLEGATIONS
Based upon information and belief, Plaintiff asserts the following common facts:
57. Senior tobacco industry executives have been quoted as acknowledging the addictive nature of cigarettes. F. Ross Johnson, former CEO of R.J. Reynolds was quoted in the October 6, 1994 edition of The Wall Street Journal as saying: "Of course it's addictive. That's why you smoke the stuff." In a 1963 document which was revealed in Congressional hearings in 1994, Addison Yeaman, Brown & Williamson's General Counsel, wrote: "We are, then, in the business of selling nicotine, an addictive drug...."
58. On April 14, 1994, each of the chief executives of the Tobacco Companies swore under oath that he believed nicotine is not addictive. Testifying before the House Subcommittee on Health and the Environment of the Committee on Energy and Commerce, chaired by Congressman Henry Waxman, these executives misrepresented their companies' knowledge about the health risks of smoking, nicotine addiction, and nicotine manipulation in the cigarette manufacturing process. William I. Campbell, then President and CEO of Philip Morris stated that "Philip Morris does not manipulate nor independently control the level of nicotine in our products."; that "Cigarette smoking is not addictive."; and "Philip Morris research does not establish that smoking is addictive." James W. Johnston, R.J. Reynolds' CEO said that "Smoking is no more addictive than coffee, tea or Twinkies." Andrew Tisch, then CEO of Lorillard, asserted that smoking does not cause death: "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."
59. In fact, research conducted by Philip Morris scientists -- which Philip Morris and other Defendants attempted to suppress -- has demonstrated, in the scientists' own words, that nicotine is addictive "on a level comparable to cocaine." High-ranking executives in the tobacco industry have privately acknowledged, since the early 1960s, that nicotine is an addictive drug. For example, Addison Yeaman, General Counsel at Brown & Williamson, wrote in an internal memorandum 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." And in 1962, the Scientific Advisor to the Board of Directors of British American Tobacco Company ("BATCO"), Brown & Williamson's parent company, stated 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."
60. The Tobacco Company executives' false Congressional testimony about nicotine is but the most recent episode in the industry's campaign, spanning 50 years, to sow confusion and misinformation about the true health effects of smoking. As described in various internal memoranda of Tobacco Industry executives, the scheme has been "a brilliantly conceived and executed" strategy to "creat[e] doubt about the health charge without actually denying it."
The Tobacco Industry Conspiracy to Deceive the
Public About Disease and Death
61. Although tobacco in various forms has been consumed by Americans for many, many years, it was not until the 19th century that an easily inhalable tobacco product, the cigarette, became widely popular. Cigarette smoking increased dramatically in the first half of the 20th century. As early as 1946, tobacco company chemists themselves reported concern for the health of smokers. A 1946 letter from a Lorillard chemist to its manufacturing committee states: "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." Neither this letter nor the information it contained was ever voluntarily released to the public.
Claiming Cigarettes Are Healthful
62. Industry spokesmen referred to these and similar reports as "the health scare," and throughout the 1930s through the 1950s, countered with express advertising claims and warranties as to the healthfulness of their products. These claims were knowingly and/or recklessly false, misleading, deceptive, unconscionable, and/or fraudulent. Examples of these health warranties appear in the following paragraphs 63 through 70.
63. Old Gold reacted to early medical studies with the slogan: "If pleasure's your aim, not medical claims..." and made claims such as "Old Gold -- Not a cough in a Carload."
64. R.J. Reynolds claimed that there was "Not a single case of throat irritation due to smoking Camels."
65. Philip Morris brand was held out as "The Throat-tested cigarette" on the basis of supposed studies showing that Philip Morris brand cigarettes were less irritating. An ad by the company in a 1943 issue of the National Medical Journal read: "'Don't smoke' is advice hard for patients to swallow. May we suggest instead 'Smoke Philip Morris?' Tests showed three out of every four cases of smokers' cough cleared on changing to Philip Morris. Why not observe the results yourself?"
66. In 1942, Brown & Williamson claimed that Kools would keep the head clear and/or give extra protection against colds.
67. In 1952, Liggett & Myers widely publicized the "results" of tests showing that "smoking Chesterfields would have no adverse effects on the throat, sinuses or affected organs." The tests were conducted by Arthur D. Little, Inc. for advertising purposes and were designed to have no real scientific value. These ads ran, among other places, on the nationally popular Arthur Godfrey radio and television show. Arthur Godfrey subsequently contracted lung cancer caused by smoking cigarettes.
68. Ads from the 1930s and 1940s often carried wide-ranging medical claims that placed cigarette-touting physicians in the company of endorsers such as Santa Claus ("Luckies are easy on my throat"), movie stars, sports heroes, and circus stars. Some companies hired attractive women to deliver cigarette samples to physicians and the patients in their waiting rooms.
69. In the New York State Journal of Medicine, Chesterfield ads began running in 1933 and often carried claims such as "Just as pure as the water you drink...and practically untouched by human hands."
70. During the 1950s, Defendants attempted to counter the "health scare" with campaigns like "The Filter Derby" and "Tar Wars," making false and fraudulent warranties of health claims based on tar and nicotine content.
71. Defendants sponsored cigarette ads in medical journals such as the Journal of the American Medical Association ("JAMA") from the 1930s through the 1950s. After the appearance of landmark studies such as the 1952 JAMA article on smoking and bronchial carcinoma by Alton Ocshner, M.D., JAMA ceased running cigarette ads.
The Conspiracy is Born to Counter "The Big Scare" and the
Beginning of the Industry Conspiracy to Suppress the Truth and
To Curtail Competition
72. Cigarette smoking increased dramatically in the first half of the 20th century. With the increase of cigarette smoking came an increase in lung cancer. Despite growing evidence showing their cigarettes caused lung disease and cancer, the Tobacco Companies chose sales over public health and safety. Starting in the 1930s, and continuing until the mid-1950s, the Tobacco Companies made express claims as to the healthfulness of their products without regard to the truth of their claims and the consequential adverse impact on consumers.
73. One of the key themes used to promote cigarette smoking during this period was a promise that individual cigarette brands were either "less irritating" or that "harmful irritants" had been removed. At some point during this period, every major cigarette brand made a false claim regarding health and/or irritation. These pre-1954 advertisements and representations demonstrate the Tobacco Companies' understanding prior to December 1953 that consumers wanted safer products, and, as a result, the Tobacco Companies engaged in vigorous competition on the basis of claims of health and safety.
74. In the early 1950s, scientists published two significant scientific studies warning of the health hazards of cigarettes. The first was published in 1952 by Dr. Richard Doll, a British researcher, who found that lung cancer was more common among people who smoked and that the risk of lung cancer was directly proportional to the number of cigarettes smoked. A second study was published in December, 1953 by Dr. Ernest Wynder and others of the Sloan-Kettering Institute, whose experiments with mice confirmed the cancer-causing properties of cigarettes. The widespread reporting of these studies caused what cigarette company officials called the "Big Scare."
75. The Tobacco Companies and their co-conspirators knew that published information about health risks would (a) increase consumer demand for safer tobacco products, (b) induce some competitors to promote their own brands or disparage competing brands on the basis of relative health risk, (c) materially reduce their profits and market shares, and (d) increase the likelihood of government regulation and decrease the likelihood that they could shift to the public the health costs caused by use of tobacco products. Armed with this knowledge, and as set forth below, the Tobacco Companies ultimately agreed not to compete in the market based on health claims, or in the market for "safer" or alternative products, and agreed to suppress adverse information concerning health risks and addiction.
76. The Tobacco Industry responded quickly to the Big Scare, which by late 1953 had caused a decrease in consumption of tobacco products and in the stock prices of many of the Tobacco Companies. Thus, on December 14, 1953, in the direct aftermath of the Wynder study and the public concern over it, Brown & Williamson President Timothy V. Hartnett circulated a memorandum to his counterparts at other tobacco companies and set out his proposals on how the industry should collectively deal with the "health issue."
77. Hartnett's actions were an invitation to Brown & Williamson's competitors to agree to restrain independent economic best interest in favor of collusion.
78. Confronted with the studies, the presidents of the leading Tobacco Companies met at an extraordinary gathering in the Plaza Hotel in New York City on December 15, 1953. Defendant Hill & Knowlton, a public relations agency, coordinated the meeting and later prepared a memorandum summarizing the discussions of that day. According to the Hill & Knowlton memorandum:
a. The companies had not met together since two previous antitrust decrees had prohibited "many group activities." However, the companies viewed the current problem "as being extremely serious and worth of drastic action."
b. Another indication of the seriousness of the problem was "that salesmen in the industry are frantically alarmed and that the decline in tobacco stocks on the stock exchange market has caused grave concern...."
c. The situation was viewed entirely in terms of a public relations problem, as opposed to a public health concern. The industry leaders "feel that the problem is one of promoting cigarettes and protecting them from these and other attacks that may be expected in the future" and that the industry "should sponsor a public relations campaign which is positive in nature and is entirely 'pro-cigarettes.'"
d. All of the leading manufacturers, except Liggett, agreed to "go along" with the public relations strategy. Liggett decided not to participate at that time "because that company feels that the proper procedure is to ignore the whole controversy."
e. The group discussed forming an association "specifically charged with the public relations function."
f. Hill & Knowlton was to play a central role in the industry association. "The current plans are for
Hill & Knowlton to serve as the operating agency of the companies, hiring all the staff and disbursing all funds."
79. At the Plaza Hotel meeting, these Tobacco Companies entered into a contract, combination and conspiracy to restrain competition on the basis of relative health risks. This conspiracy, which continues today, is a per se violation of the Rhode Island Antitrust Act, § 6-36-1 through 12.
80. The agreement reached at the Plaza Hotel to conceal adverse information and not to compete on the basis of health, was to be a permanent fixture of the Tobacco Companies' future relationship. According to the Hill & Knowlton memorandum, each of the company presidents attending emphasized the fact that they considered the program to be a long-term one.
81. Thus, at the December 15, 1953 meeting, the Tobacco Companies in attendance agreed to a public relations program on
the issue; formed an informal committee to control the public relations function; and charged Hill & Knowlton, a public relations firm, with the operation, hiring of staff and disbursement of funds. However, Liggett decided not to participate at that time, choosing to ignore the whole controversy.
82. Thus, the Tobacco Industry Research Committee ("TIRC"), eventually renamed as The Council for Tobacco Research ("CTR"), was conceived and born with five of the largest six cigarette manufacturers as original members. Liggett finally joined in 1964, in response to the Surgeon General's first report on smoking and health.
83. Nine days after the December 15, 1953 meeting, Hill & Knowlton presented a detailed recommendation to the cigarette manufacturers and others. The recommendation recognized the importance of gaining the public trust, and avoiding the appearance of bias, if the "pro-cigarette" industry strategy was to be successful. According to the memorandum:
a. "[T]he grave nature of a number of recently highly publicized research reports on the effects of cigarette smoking ... have confronted the industry with a serious problem of public relations."
b. "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."
c. "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."
84. Evidence of the tobacco cartel's agreement not to develop a "safer cigarette," and to restrain competition based on health, is the uniform shift in the nature of tobacco advertising starting in 1954 and continuing through the present. Prior to 1954, as set forth above, the tobacco industry responded to consumer demand by advertising and robustly competing based on claims related to health. After 1954, although the companies competed on issues such as filters, tar and nicotine, no further health claims were made nor was there any advertising on less harmful products.
The "Frank Statement to Cigarette Smokers"
-- a Scheme to Defraud Consumers
85. The cigarette industry announced the formation of TIRC on January 4, 1954, with newspaper advertisements placed in virtually every city with a population of 50,000 or more, reaching a circulation of more than 43 million Americans. The advertisement was captioned "A Frank Statement to Cigarette Smokers" and was run under the auspices of TIRC with, among others, five of the largest six manufacturers -- American Tobacco, R.J. Reynolds, Philip Morris, U.S. Tobacco, Lorillard, and Brown & Willamson Tobacco -- listed by name. The advertisement promised that Defendants would undertake the responsibility of learning and disclosing the facts about smoking:
RECENT REPORTS on experiments with mice having given wide publicity to a theory that cigarette smoking is in some way 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. However, we do not believe that any serious medical research, even though its results are inconclusive, should be disregarded or lightly dismissed.
At the same time, we feel it is in the public interest to call attention to the fact that eminent doctors and research scientists have publicly questioned the claimed significance of these experiments.
Distinguished authorities point out:
1. That medical research of recent years indicates many possible causes of lung cancer.
2. That there is no agreement among the authorities regarding what the cause is.
3. That there is no proof that cigarette smoking is one of the causes.
4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed the validity of the statistics themselves is questioned by numerous scientists.
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.
For more than 300 years tobacco has given solace, relaxation, and enjoyment to mankind. At one time or another during those years critics have held it responsible for practically every disease of the human body. One by one these charges have been abandoned for lack of evidence.
Regardless of the record of the past, the fact that cigarette smoking today should even be suspected as a cause of a serious disease is a matter of deep concern to us.
Many people have asked us what we are doing to meet the public's concern aroused by the recent reports. Here is the answer:
1. We are pledging aid and assistance to the research effort into all phases of tobacco use and health. This joint financial aid will of course be in addition to what is already being contributed by individual companies.
2. For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE.
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.
86. In this advertisement, the participating Defendant Tobacco Companies recognized their "special responsibility" to the public, and promised to learn the facts about smoking and health. The participating Defendant Tobacco Companies promised to sponsor independent research on the subject, claiming they would make health a basic responsibility, paramount to any other consideration in their business. The participating Defendant Tobacco Companies also promised to cooperate closely with public health officials. At the time these promises were made, Defendants had no intent to honor their promises. They have repeatedly breached their promises thus made to the public, including their promises made to the public health officials and citizens of Rhode Island.
"Scientific Research" as a Public Relations Front:
Control of TIRC by Hill & Knowlton
87. As had been proposed at the December 15, 1953 meeting, Defendant Tobacco Companies (without Liggett) through their agent Defendant Hill & Knowlton, operated and effectively controlled TIRC.
88. TIRC was physically established in the Empire State Building, one floor below the Hill & Knowlton offices. Internal documents confirm that Hill & Knowlton, and not independent scientists, actually ran TIRC. A "highly confidential" internal memo reported:
"Since the [TIRC] had no headquarters and no staff, Hill & 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]"
89. In 1954, 35 staff members of Hill & Knowlton worked full or part time for TIRC. In that year, TIRC spent $477,955.00 on payments to Hill & Knowlton, over 50% of TIRC's entire budget.
90. After lulling the public into a false sense of security concerning smoking and health, the TIRC continued to act as a front for tobacco industry interests. Despite the initial public statements and posturing, and the repeated assertions that they were committed to full disclosure and vitally concerned, the TIRC secretly failed to make the public health a primary concern. The Tobacco Trade Associations acted at the direction of the Tobacco Companies and the Tobacco Consultants to protect tobacco industry profits, and did not act to protect the public health. In fact, there was a coordinated, industry-wide strategy designed actively to mislead and confuse the public about the true dangers associated with smoking cigarettes. Rather than work for the good of the public health as it had promised, and sponsor independent research, the Tobacco Companies and Tobacco Consultants, acting through the Tobacco Trade Associations, refuted, undermined, distorted, concealed and neutralized information coming from the scientific and medical community.
91. By the spring of 1955, the self-defense strategy recommended by Hill & Knowlton and implemented by Defendants through the "Frank Statement" was largely successful. Hill and Knowlton reported to TIRC:
a. "progress 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."
The True Nature of the CTR
92. Since its inception, the CTR has functioned as a remarkably effective vehicle to perpetuate the deception that the health risks of smoking and nicotine addiction have never been proven. The industry has congratulated itself on a brilliantly conceived and executed strategy to create doubt about the charge that cigarette smoking is deleterious to health without actually denying it. A 1962 memo stated that the industry had handled the "Big Scare" effectively, by treating the public health threat as a public relations problem that was solved for the self-preservation of the industry's image and profit. One Defendant's executive called the CTR the best, cheapest insurance the tobacco industry can buy, noting that with it, Defendants would have to invent CTR or would be dead.
93. 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."
The Lawyers' Control of Scientific Research
94. The Defendants have used lawyers and fraudulent, deceptive, unconscionable, and false claims of Attorney/Client privilege and Work Product to insulate CTR-funded research projects from disclosure to the public and to government officials. This conduct demonstrates the falsity of the industry representations jointly to fund objective research and to report the results of that research to the public.
95. CTR used the term "Special Projects" to mean a project that carried a risk of a negative result that might have to be suppressed. "Special Projects" were selected and monitored by Tobacco Attorneys to prevent disclosure. One Philip Morris official characterized CTR as a "front" for performing "special projects."
96. Notes prepared at a 1981 meeting of the cigarette industry's 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. ... We were afraid of discovery for FTC and [Dr. Domingo] Aviado, we wanted to protect it under the lawyers. We did not want it out in the open."
97. The sole purpose of this "Special Projects" division within CTR was to conceal research that was harmful to the tobacco industry and to promote and develop research and expert witnesses needed for the defense of tort litigation. Incriminating reports and documents contained within this division were passed through the Tobacco Attorneys and are now claimed by Defendants to be privileged.
98. CTR-sponsored research projects were directed away from research that might add to the evidence against smoking. When CTR-sponsored research did produce unfavorable results, however, 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 which 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.
99. 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 cancelled. 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."
100. Not content with the holding strategy employed by the TIRC and the CTR, Defendants advocated a more offensive role through their lobbying arm, the Tobacco Institute. This tobacco industry-supported group actively seeks to increase doubt about the negative health effects of smoking by suggesting that there are alternative explanations to the data. One "theory" detailed how individual genetic makeups predisposed individuals to illnesses. Another, the "multi-factorial hypothesis," asserted that multiple factors, i.e., food additives, viruses, occupational hazards, air pollution or stress, should be blamed for causing cancer. The tobacco industry financed, supported and encouraged the manufacture of fraudulent science.
Tobacco Industry Concealment and Disinformation
101. On February 6, 1992, United States District Court Judge H. Lee Sarokin for the District of New Jersey issued an opinion in Haines v. Liggett Group, Inc., Civ. Action 84-678. After reviewing 1500 documents in camera, Judge Sarokin noted that "In 1954, the tobacco industry promised to disseminate the results of industry-sponsored, independent scientific research for the purpose of answering the question: 'Does cigarette smoking cause illness?' To fulfill its promise, the tobacco industry proffered the allegedly 'independent' research organization, the Council for Tobacco Research (the "CTR"), which purportedly would examine the risks of smoking and report its findings to the public." After his review of the withheld documents, Judge Sarokin concluded that Defendants had intentionally breached their promises to the public:
"Despite the industry's promise to engage independent researchers to explore the dangers of cigarette smoking and to publicize their findings the evidence clearly suggests the research was not independent; that potentially adverse results were shielded under the caption of 'special projects'; that the attorney-client privilege was intentionally employed to guard against such unwanted disclosure; and that the promise of full disclosure was never meant to be honored, and never was."
102. As a result of this finding, Judge Sarokin went on to note that Defendants' actions constituted a fraud:
"A jury might reasonably conclude that the industry's announcement of proposed independent research into the dangers of smoking and its promise to disclose its findings was nothing but a public relations ploy -- a fraud -- to deflect the growing evidence against the industry, to encourage smokers to continue and non-smokers to begin, and to reassure the public that adverse information would be disclosed."
Continued False Promises to the Public
103. Using CTR as a "front," Defendants pursued a public disinformation strategy to confuse and mislead public health authorities and the public about the true health risks of cigarette smoking.
104. Defendants created a publication called Tobacco and Health (later, Tobacco and Health Research), distributed it to the press, doctors, and health officials, to disseminate false information and generate confusion over the causal connection between cigarette smoking and disease. The "Criteria For Selection" of articles for publication included an example of "a report in which smoking-associated diseases are questioned."
105. The deceptions of the 1954 "Frank Statement to Cigarette Smokers" were renewed and repeated by the industry. R.J. Reynolds Chairman Bowman Gray told Congress in 1964: "If it is proven that cigarettes are harmful, we want to do something about it regardless of what somebody else tells us to do. And we should do our level best. It's only human."
106. The January 15, 1968 issue of True Magazine contained an article written by Stanley Frank called, "To Smoke or Not to Smoke -- That is Still the Question." The article dismissed the evidence against smoking as "inconclusive and inaccurate" and claimed that "[s]tatistics alone link cigarettes with lung cancer ... it is not accepted as scientific proof of the cause and effect." A few months later, a similar but shorter article appeared in the National Enquirer entitled "Cigarette Cancer Link is Bunk" written by "Charles Golden" (a fictitious name commonly used by the Enquirer). The real author was Stanley Frank. Two million reprints of the True Magazine article were distributed to physicians, scientists, journalists, government officials, and other opinion leaders with a small card which stated, "As a leader in your profession and community, you will be interested in reading this story from the January issue of True Magazine about one of today's controversial issues." The cost for this was paid by Brown & Williamson, Philip Morris and R.J. Reynolds. It was subsequently disclosed that author Frank had been paid $500 to write the article by Joseph Field, a public relations professor working for Brown & Williamson. Brown & Williamson reimbursed Field for that amount.
107. In 1970, the Tobacco Institute ran an advertisement captioned "A Statement about Tobacco and Health," which stated:
a. "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."
b. "We accepted this responsibility in 1954 by establishing the Tobacco Industry Research Committee, which provides research grants to independent scientists. We pledge continued support of this program of research until all the facts are known."
c. "Scientific advisors inform us that until much more is known about such diseases as lung cancer, medical science probably will not be able to determine whether tobacco or any other single factor plays a causative role -- or whether such a role might be direct or indirect, incidental or important."
d. "We shall continue all possible efforts to bring the facts to light."
108. Also, in 1970, the Tobacco Institute ran an advertisement captioned, "The question about smoking and health is still a question." In this advertisement, the Tobacco Institute stated:
a. "[A] major portion of this scientific inquiry has been financed by the people who know the most about
cigarettes and have a great desire to learn the truth ... the tobacco industry."
b. "[T]he industry has committed itself to this task in the most objective and scientific way possible."
c. "In the interest of absolute objectivity, the tobacco industry has supported totally independent research efforts with completely nonrestrictive funding."
d. "Completely autonomous, CTR's research is directed by a board of ten scientists and physicians. ... This board has full authority and responsibility for policy, development and direction of the research effort."
e. "The findings are not secret."
f. "From the beginning, the tobacco industry has believed that the American people deserve objective, scientific answers."
109. Again, in 1970, the Tobacco Institute stated, "The Tobacco institute believes that the American public is entitled to complete, authenticated information about cigarette smoking and health." The Tobacco Institute further stated that, "The tobacco industry recognizes and accepts a responsibility to promote the progress of independent scientific research in the field of tobacco and health."
The Tobacco Industry's Knowledge That Smoking Kills
110. In the years following the 1954 "Frank Statement" and continuing to the present, Defendants have repeatedly acted in breach of their assumed duty to report objective facts on smoking and health. As evidence mounted, both through industry research and truly independent studies, that cigarette smoking causes cancer and other diseases, Defendants continued publicly to represent that nothing was proven against smoking. Internal documents show that the truth was very different. Defendants knew and acknowledged internally the veracity of scientific evidence of the health hazards of smoking, and at the same time suppressed such evidence where they could, and attacked it when it did appear publicly.
111. As early as 1946, Lorillard chemist H.E. Parmele, who later became Vice President of Research and a member of Lorillard's Board of Directors, wrote to his company's manufacturing committee: "Certain scientists and medical authorities have claimed for many years that the use of tobacco contributes to cancer development in susceptible people. Just enough evidence has been presented to justify the possibility of such a presumption."
112. A 1956 memorandum from the Vice President of Philip Morris' 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."
113. 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. ..."
114. 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 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."
115. A 1963 memorandum to Philip Morris' President and CEO from the company's Vice President of Research describes a number of classes of compounds in cigarette smoke which are "known carcinogens." The document goes on to describe the link between smoking and bronchitis and emphysema. "Irritation problems are now receiving greater attention because of the general medical belief that irritation leads to chronic bronchitis and emphysema. These are serious diseases involving millions of people. Emphysema is often fatal either directly or through other respiratory complications. A number of experts have predicted that the cigarette industry ultimately may be in greater trouble in this area than in the lung cancer field."
116. Brown & Williamson and its parent company, British American Tobacco Company, Ltd., researched the health effects of nicotine and were aware early on, as reported at a B.A.T. Group Research Conference in November 1970, that "nicotine may be implicated in the aetiology [cause] of cardiovascular disease. ..."
117. 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."
118. 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 or 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 a appropriate filter, by a given percentage."
Suppressing the Truth About Cigarettes and Nicotine
119. Not only have Defendants failed to disclose the information they repeatedly pledged to make public, they have, or the contrary, actively conspired to suppress research and publication concerning the health risks of cigarette smoking, and to misstate and distort published research linking smoking to disease, even going so far as to make personal threats against the researchers themselves. A CTR director's claim that tobacco industry scientists could "freely publish what they find as they choose" was a hollow deception.
The Gentlemen's Agreement and the Lawyers'
Role in the Conspiracy
120. The actions of Defendants in suppressing and misleading the public as to the harmful effects of cigarettes stands in sharp contrast to Defendant Lorillard's 1994 assertion to Congress that the data had still not convinced its CEO that smoking causes death. The tobacco industry long ago entered into a "gentlemen's agreement" to suppress independent research on smoking and health. A 1968 internal Philip Morris draft memo refers to this conspiratorial agreement: "We have reason to believe that in spite of gentlemen's agreement from the tobacco industry in previous years that at least some of the major companies have been increasing biological studies within their own facilities." This memo also acknowledged that cigarettes are inextricably intertwined with the health field, stating "Most Philip Morris products, both tobacco and non-tobacco, are directly related to the health field."
121. The industry believed that individual Tobacco Companies were performing certain research on their own in addition to the joint industry research. But the fundamental understanding and agreement remained intact: any harmful information and activities would be restrained, suppressed, and/or concealed. This secret agreement included restraining, suppressing, and concealing research on the health effects of smoking, including the addictive qualities of nicotine, and restraining, concealing, and suppressing the research and marketing of safer cigarettes.
122. The General Counsel of the major cigarette manufacturers, through joint meetings to review and direct proposals for scientific research for the entire industry, furthered the conspiracy of the tobacco industry, including the Tobacco Attorneys and Tobacco Consultants, to intentionally mislead and defraud the public about smoking and health. For example, Defendants have attempted wrongfully to create a privilege for various documents reflecting scientific research that they wish to conceal by routing such documents to their legal departments and law firms to support claims that such materials are protected from disclosure by the Attorney/Client or Attorney Work Product privileges.
123. The Tobacco Attorneys have 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 Tobacco Attorney's 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 Defendants such as deciding which CTR "special projects" should receive funding, dispensing funding to the "scientist" involved in such projects, and designing the scope and approach of the special project. The Tobacco Attorneys also undertook to coordinate the Tobacco Companies' CTR "special projects" subterfuge.
124. The Council for Tobacco Research holds itself out, and has been held out by the Tobacco Companies and the Tobacco Attorneys, as a research body sponsoring independent research. Tobacco Attorneys used the TIRC, predecessor to the CTR, as an industry "shield." The CTR has acted as a "front" for the Tobacco Companies' litigation and public relations goals. The Tobacco Attorneys have been instrumental in this deception.
125. In orchestrating the CTR deception, the Tobacco Attorneys became deeply involved in the screening, selection, funding, supervision and ultimate disposition of research projects, channeling sensitive research into "special projects" and "special accounts."
126. As to research which was progressing "satisfactorily" -- that is turning up no negative results -- the Tobacco Attorneys recommended it receive additional funding. Research which was troubling, either in its direction or in its results, was redirected by the Tobacco Attorneys or terminated.
127. For example, in 1976, a Tobacco Attorney 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.
128. A 1980 letter from a Tobacco Attorney to the various General Counsel of the tobacco industry, recommends a grant to Dr. Domingo Aviado. Although the author states that "[t]his would be a no-strings attached grant and Dr. Aviado would be free to publish," the role of Tobacco Attorneys in supervising and ultimately controlling Dr. Aviado's research is clear. "We would anticipate a brief report toward the end of this year concerning the project. Providing the project is progressing satisfactorily, I anticipate recommending a renewal for a second year and, thereafter, with the same proviso, for a third year."
129. Indeed, "satisfactory" progress in research is always the touchstone for the Tobacco Attorneys. A telling 1981 memorandum between General Counsel J. Kendrick Wells and executive Ernest Pepples of Defendant Brown & Williamson tells of a visit by a Tobacco Attorney to a researcher: "It was a cordial meeting and Tim believes he has persuaded them to take a new thrust with their research. The new thrust will have questionable value but no negative."
130. In addition, a May 19, 1981 letter from Ernest Pepples, Vice President and General Counsel of Brown & Williamson, to a Tobacco Attorney requests that the attorney evaluate the qualifications of various scientists seeking to conduct scientific studies for Brown & Williamson. The attorney responded by providing biographical sketches of potential consultants, including whether they previously had taken scientific position(s) favorable to the industry's position. He 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."
131. In 1972, a Tobacco Attorney wrote to Tobacco Company officials that a potentially favorable study should be funded secretly by the Tobacco Companies as a "non-CTR special project" in order to make the study appear independent of the industry and thus heighten its perception as unbiased and reliable.
132. Similarly, a Tobacco Attorney wrote a letter to the General Counsel of the tobacco industry, urging them to approve a grant to Dr. Henry Rothschild, who was doing a study of genetic links to lung cancer. Although CTR had rejected Dr. Rothschild's request to renew his grant, the attorney urged funding on the ground that "[h]is research has evolved to a point where his primary focus was on a possible genetic factor rather than environmental or occupational factors."
133. The breadth of the involvement of the Tobacco Attorneys in the selection of research projects to be funded, including those funded by and through CTR, is reflected in the excerpts from the following letter:
The Research Liaison Committee has not had a meeting since July 1976. I have had discussion with individual members of the committee about calling a meeting. It has been suggested that the views of the companies with respect to the future activities of this committee should first be explored through the Committee of Counsel. . . . We may want to discuss research in a larger context, i.e., what are the industry's present needs? This, of course, involves consideration of the role of institutional type projects (tobacco, e.g., Harvard, and non-tobacco, e.g., Washington University); the role of CTR; and the need for specific areas of research with due regard for the politics of science, the importance of developing witnesses and the need for a responsive mechanism to meet unfounded claims made about tobacco.
134. In fact, a Tobacco Attorney chaired the Research Liaison Committee, a committee comprised of representatives of the major manufacturers "to study the research programs funded by our industry, both through CTR and independent projects that are brought to us from time to time." This committee "directed its primary attention to the question of how industry research should be recommended, decided upon, and supervised in order to accomplish the objective of an efficient and coordinated program which would best serve the needs and objectives of the industry." In addition to Tobacco Attorneys' involvement in the Research Liaison Committee, Tobacco Attorneys also sat on the CTR Committee of Counsel and the CTR Ad Hoc Committee.
135. In addition, the Tobacco Attorneys abused the Attorney/Client privilege and Work Product protections in order to shield Special Projects and special accounts documents and toconceal the CTR fraud from the public and government regulators. For example, in notes of a 1981 CTR Committee of Counsel meeting, transmitted by Tobacco Attorneys, an attorney is quoted as stating:
"With Speilberger, we 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."
136. The Tobacco Attorneys also participated in the suppression of development of a "safer" cigarette. Attempts by the tobacco industry to develop a "safer" cigarette inevitably required its researchers to engage in discussions regarding which constituents of tobacco smoke cause disease and how they might be eliminated. These discussions greatly concerned the Tobacco Attorneys because they would lead to statements constituting admissions that could be used against the Tobacco industry.
137. A 1970 letter from a Tobacco Attorney to DeBaun Bryant, General Counsel for Defendant Brown & Williamson, citing to the minutes of two research conferences, stated that:
A plaintiff would be greatly benefited by evidence which tended to establish actual knowledge on the part of a defendant that smoking is generally dangerous and should be removed, or that smoking causes a particular disease. This would not only be evidence that would substantially prove a case against the defendant company for compensatory damages, but could be considered as evidence of willfulness or recklessness sufficient to support a claim for punitive damages.
The author concludes that "employees in both companies should be informed of the possible consequences of careless statements on this subject." In short, the Tobacco Attorneys were arguing that the necessary discussions for the development of a "safer" cigarette must stop.
138. Likewise, in 1987, a Tobacco Attorney wrote a lengthy memorandum in which he expressed his concern that Defendant R.J. Reynolds' announcement of a non-burning "clean" cigarette "could immediately and significantly increase [tobacco companies'] exposure to liability for sales of conventional cigarettes." In introducing the product, particularly right before the start of two key trials, the attorney also questioned Defendant R.J. Reynolds' commitment to "joint defense efforts."
139. By becoming intimately involved in the funding and design of these scientific studies, these Tobacco Attorneys conspired with the Tobacco Companies and CTR by (a) clothing such studies in the Attorney/Client or Work Product privilege in order to protect them from disclosure if their results were unfavorable, and (b) 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.
140. In addition, Tobacco Attorneys have destroyed evidence of their internal research into smoking and health. For example, 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 effects of tobacco.) Wells further recommended that the research, development, and engineering departments also should undertake "to remove the deadwood from the files."
141. Thus, the Tobacco Companies and the Tobacco Attorneys 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.
The "Mouse House" Disappears
142. In the 1960s, R.J. Reynolds established a facility in Winston-Salem, North Carolina, to perform research on the health effects of smoking using mice. Nicknamed the "Mouse House," R.J. Reynolds' scientists conducted research in a number of specific areas, including studies of the actual mechanism whereby smoking causes emphysema in the lungs.
143. The R.J. Reynolds lab made significant progress in understanding this mechamism. Despite this progress, R.J. Reynolds disbanded the entire research division in one day, and fired all 26 scientists without notice.
144. Several months before the 1970 closure and firings, R.J. Reynolds' attorneys collected dozens of research notebooks from the scientists. The notebooks have still not been disclosed. One of the researchers later stated about R.J. Reynolds' 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 the stuff? They decided to kill it."
145. Internally, an R.J. Reynolds-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.
146. In a similar incident, Philip Morris hired Victor DeNoble in 1980 to study nicotine's effects on the behavior of rats and to research and test potential nicotine analogues. DeNoble, in turn, recruited Paul C. Mele, a behavioral pharmacologist.
147. 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).
148. However, Philip Morris instructed DeNoble and Mele to keep their work secret, even from fellow Philip Morris scientists. Test animals were delivered at dawn and brought from the loading dock to the laboratory under cover.
149. DeNoble was later told by lawyers for the company that the data he and Mele were generating could be dangerous. Philip Morris executives began talking of killing the research or moving it outside of the company so Philip Morris would have more freedom to disavow the results.
150. 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 executives threatened them with legal action if they published or talked about their nicotine research. According to DeNoble, the lab literally vanished overnight. The animals were killed, the equipment was removed, and all traces of the former lab were eliminated.
151. DeNoble has testified "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 were specifically told that nicotine was a drug of abuse.
152. In August 1983, Philip Morris ordered DeNoble to withdraw from publishing a research paper on nicotine that had already been accepted for publication after full peer review by the journal Psychopharmacology. According to DeNoble, the company changed its mind because it did not want its own research showing nicotine was addictive or harmful to compromise the company's defense in litigation recently filed against it. He said that Philip Morris officials had rightly interpreted the suppressed nicotine studies as showing that, in terms of addictiveness, "nicotine looked like heroin."
153. Liggett & Myers also refused to disclose research by Dr. Ernest Wynder showing the cancer-causing propensity of cigarettes.
154. 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.
155. 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 smoking on health. Addison Yeaman, 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.
156. Brown & Williamson rejected Yeaman's advice to make full disclosure to the Surgeon General. A series of six letters and telexes exchanged by Yeaman and senior British American Tobacco Company official A. D. McCormick between June 28 and August 8, 1963, document the company's decision not to disclose its research findings to the Surgeon General. The research, some of which was later characterized in a report in the Journal of the American Medical Association as "at the cutting edge of nicotine pharmacology," preceded the main published reports from the general scientific community by several years.
"Safer Cigarettes" Suppressed
157. Defendants could have designed and manufactured a safer cigarette, but refused to do so. The need for a "safer" tobacco product results from the harmful chemical compounds occurring in tobacco products and/or formed as a result of burning. These compounds include carbon monoxide, nicotine, nickel carbon dioxide, benzene, hydrazine, formaldehyde, Polonium-210, ammonia, nicotine sulfate, Freon II, hydrogen cyanide and certain liver toxins known collectively as furans. More than forty (40) known carcinogens are found in cigarette tobacco. Defendants artificially add chemicals and flavorings to their products that increase toxicity and/or carcinogenicity.
158. Defendants have long understood that reducing or eliminating nicotine from their products would hurt sales. As one 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."
159. Instead, the industry attempted to develop ostensibly safer ways of delivering adequate doses of nicotine to create and sustain addiction in the smoker.
160. Some members of the industry studied artificial nicotine or nicotine analogues that would have the addictive and psychopharmacological 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.
161. Dr. DeNoble did discover such an analogue, but Philip Morris chose to halt its effort to determine whether the nicotine analogue could be used to make a safer cigarette.
162. Philip Morris also explored research to develop a safer cigarette, or, in the words of one memorandum to the Board of Directors, cigarettes with "superior physiological performance." This memorandum noted competitive pressures to produce "less harmful" cigarettes. However, the memorandum was careful to state that, "[o]ur philosophy is not to start a war, but if war comes, we aim to fight well and to win." Philip Morris never broadly marketed such a "safer" cigarette. Its documents state that "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." Subsequently, taste was improved and Philip Morris attempted to promote the product. However, "[t]he imposition of FTC rules and the industry advertising code took the starch out of the program. . . ."
163. Brown & Williamson also understood that nicotine was the essential ingredient in maintaining tobacco sales. The company attempted to develop a "safer" cigarette which internal documents described as "a nicotine delivery device," but did not market such a cigarette in spite of promising test results. Brown & Williamson's Project "Ariel" used a heating, as opposed to burning, system. Its Project "Janus" was intended to identify hazardous components of cigarette smoke so they could be removed.
164. By the end of the 1970s, however, Brown & Williamson, in a pattern that was repeated throughout the industry, closed its research labs and halted all work on a safer cigarette, and agreed not to market safer cigarettes.
165. Nonetheless, R.J. Reynolds conducted "secret" efforts to develop a safer cigarette focused upon delivering nicotine to the consumer without the harmful constituents of tobacco smoke. In the late 1980s, R.J. Reynolds developed "Premier," a smokeless and virtually tobacco-free cigarette which was, in essence, a nicotine delivery system.
166. At Liggett & Myers, Dr. James Mold, the assistant director of research at Liggett during the development of a safer cigarette, conducted tests to divide the components of cigarette smoke into separate entities and to interrupt the process that produces carcinogens by using a catalyst. Liggett & Myers researchers were able to produce a so-called "safer" cigarette, designed as the "XA Project," that eliminated the carcinogenic activity on mouse skin. However, Liggett & Myers did not want to be identified publicly as the source of the research behind this non-carcinogenic "safer" cigarette.
167. Dr. Mold has provided the following overview of the XA Project and its abandonment:
a. Dr. Mold stated that the XA Project produced a safer cigarette. He stated, "[w]e produced a cigarette which was, we felt, commercially acceptable as established by some consumer tests, which eliminated carcinogenic activity..."
b. Dr. Mold stated that after 1975, all meetings on the project were attended by lawyers. Lawyers collected notes after all meetings. All documents were directed to the law department to cloak the documents with the Attorney/Client privilege. He stated, "Whenever any problem came up on the project, the Legal Department would pounce upon that in an attempt to kill the project, and this happened time and time again."
c. Dr. Mold was asked why Liggett did not market a safer cigarette. He stated, "Well, I can't give you, you know, a positive statement because I wasn't in the management circles that made the decision, but I certainly had a pretty fair idea why ... [T]hey 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 ... [a]t a meeting we held in ... New Jersey at the Grand Met headquarters ... at which the various legal people involved and the management people involved and myself were present. At one point, Mr. Dey ... who at that time, and I guess still is the president of Liggett Tobacco, made the statement that he was told by someone in the Philip Morris Company that if we tried to market such a product that they would clobber us."
d. Dr. Mold testified that he was at a conference of scientists in Buenos Aires prepared to present his research regarding a less harmful cigarette when he received a "frantic call" from legal counsel and was told not to present the paper or issue the press release. He was instructed not to publish his results in the Journal of Preventive Medicine.
168. 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 mice 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."
169. At the time Liggett made this statement, Dr. Mold estimates that Liggett had spent a total of $10 million on research involving mice, in part to develop the safer XA cigarette. Liggett's internal reports on the benefit of the XA, and the absence of increased risk of harm from the additives used, specifically used animal studies as reliable indicators of the health effect of the product on humans.
170. Liggett abandoned the project in furtherance of the conspiracy. Liggett feared that the marketing of a "safer cigarette" would be, in essence, a confession that its, and the industry's other cigarettes, were not safe. Thus, one Liggett executive wrote that, "[a]ny domestic activity will increase risk of cancer litigation on existing products." In addition, there was a threat of retaliation from industry leader Philip Morris if Liggett broke ranks.
171. The industry was aware that consumer demand would support "safer" products. Prior to adoption of the "Advertising Code," companies made claims of reduced tar and nicotine content for their products, which the public perceived as offering reduced health risks. However, "the smoker of a filter cigarette [claiming reduced tar] was getting as much or more nicotine and tar as he would have gotten from a regular cigarette. He had abandoned the regular cigarette, however, on the ground of reduced risk to health." The industry recognized a difference between "health-oriented" cigarettes, which were never marketed on a wide basis, and "health-image" cigarettes, such as low-tar, low-nicotine products. The latter were a marketing tool, intended to give the illusion of a safer product.
172. The Federal Trade Commission Cigarette Advertising Guides, adopted September 22, 1955, and modified March 25, 1966 (the "Guides"), did not allow claims based on unsubstantiated health effects. However, it was clear in the industry that the Guides could be modified if justification was shown. Indeed, the 1966 modification of the Guides was based on development of a method, albeit not without difficulties of its own, of measuring tar and nicotine content. In the context of development of a potentially less hazardous product, a Brown & Williamson document by General Counsel Addison Yeaman states, "I would submit that the FTC in the face of 1) the industry's research effort, 2) the truth of our claims, and 3) the "public interest" in our filter, cannot successfully deny us the right to inform the public." In truth, the Defendants used the Guides as a shield behind which it concealed its agreement not to complete. The voluntary agreement with the FTC was characterized by the Consumers Union as being "to the industry's advantage and to the public's disadvantage...."
173. The Cigarette Advertising Code, adopted by Defendants, was another mechanism used to enforce the illegal agreement not to compete on the basis of safety or health characteristics of tobacco products. Among other provisions, it prohibits health claims in industry advertisements unless the "Code Administrator," to whom all cigarette advertisements are required to be submitted, approves of the advertisement. The Code provided a mechanism to monitor and police Defendants' illegal agreement.
174. R.J. Reynolds also developed a "safer cigarette." Except for a brief test in several cities, R.J. Reynolds did not market its safer product, "Premier."
175. A memorandum authored by a Tobacco Attorney confirmed that there was an industry-wide position regarding the manufacture and sale of a safer cigarette.
176. The 1987 memorandum was written in the context of the marketing by R.J. Reynolds of its smokeless cigarette, Premier, which heated rather than burned tobacco. The attorney wrote that the smokeless cigarette could "have significant effects on the tobacco industry's joint defense efforts" and that "[t]he industry position has always been that there is no alternative design for a cigarette as we know them." The attorney also noted that, "Unfortunately, the Reynolds announcement ... seriously undercuts this component of industry's defense."
177. This fundamental position of the "industry" defense had been identified much earlier. In 1970, a Tobacco Attorney wrote to DeBaun Bryant, General Counsel at Brown & Williamson, expressing concerns about some of the industry research into alternative products. In critiquing the minutes of a conference, he stated: "It is our opinion that statements such as [references to research into safer products, products which are less biologically active, and to 'healthy cigarettes'] constitute a real threat to the continued success in the defense of smoking and health litigation. Of course, we would make every effort to 'explain' such statements if we were confronted with them during a trial, but I seriously doubt that the average juror would follow or accept the subtle distinctions and explanations we would be forced to urge ... [E]mployees in both companies [Brown & Williamson and British American Tobacco] should be informed of the possible consequences of careless statements on this subject."
178. All Defendants were keenly aware of the risk to the industry if any of them sought a competitive advantage by developing and marketing a safer product. The risk was avoided by agreeing to not compete on that basis. As one industry representative testified: "...as a company, we cannot position our products as being healthy. We've already agreed that they are a risk factor [the 'agreement' referenced is the industry's acceptance of the warning labels on cigarette packages] ... we wouldn't run any advertising that positions any of our products as being healthier than others."
The Tobacco Industry's Knowledge of Nicotine's
Addictiveness
179. An advertisement placed by Philip Morris in newspapers across the country in April 1994, affirmatively represented that Philip Morris does not "manipulate" nicotine levels in its cigarettes, and that "Philip Morris does not believe that cigarette smoking is addictive."
180. R.J. Reynolds placed a similar advertisement in newspapers across the United States in 1994 stating that "we do not increase the level of nicotine in any of our products in order to addict smokers. Instead of increasing the nicotine levels in our products, we have in fact worked hard to decrease tar, and nicotine..." R.J. Reynolds' advertisement then touted its use of "various techniques that help us reduce the tar, (and consequently the nicotine) yields of our products."
181. In fact, Defendants have known of the difficulties smokers experience in quitting smoking and of the tendency of addicted individuals to focus on any rationalization to justify their continued smoking. Defendants exploit this weakness and capitalize upon the known addictive nature of nicotine. Nicotine addiction guarantees a market for cigarettes. The addictive nature of the nicotine in cigarettes substantially impairs personal choice in those who become addicted. Modern cigarettes as sold in Rhode Island are painstakingly designed and manufactured to control nicotine delivery to the smoker.
182. Defendants have secretly known, since at least the early 1960s, of the addictive properties of the nicotine contained in the cigarettes they manufacture and sell. Sworn statements of former Philip Morris scientists, Jerome Rivers, Dr. Ian L. Uydess and Dr. William Farone belie the industry's denials, and industry documents are replete with evidence of Defendants' historical knowledge of nicotine's addictiveness.
183. In 1962, Sir Charles Ellis, scientific advisor to the Board of Directors of British American Tobacco Company ("BATCO"), Brown & Williamson's parent company, stated at a meeting of BATCO's worldwide subsidiaries, that "smoking is a habit of addiction" and that [n]icotine is not only a very fine drug, but the technique of administration by smoking has considerable psychological advantages...." He subsequently described Brown & Williamson as being "in the nicotine rather than the tobacco industry."
184. A research report from 1963 commissioned by Brown & Williamson, states that when a chronic smoker is denied nicotine: "[a] body left in this unbalanced state craves for renewed drug intake in order to restore the physiological equilibrium. This unconscious desire explains the addiction of the individual to nicotine." No information from that research has ever been voluntarily disclosed to the public; in particular, it was not shared with the committee that was preparing the first Surgeon General report and hence was not reflected in that report.
185. Addison Yeaman, General Counsel at Brown & Williamson, summarized his view about nicotine in an internal memorandum, also in 1963: "[m]oreover, nicotine is addictive. We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms."
186. Internal reports prepared by Philip Morris in 1972 and the Philip Morris U.S.A. Research Center in March 1978, demonstrate Philip Morris' understanding of the role of nicotine in tobacco use: "We think that most smokers can be considered nicotine seekers, for the pharmacological effect of nicotine is one of the rewards that come from smoking. When the smoker quits, he forgoes his accustomed nicotine. The change is very noticeable, he misses the reward, and so he returns to smoking."
187. From 1940-1970, American Tobacco conducted its own nicotine research, funding over 90 studies on the pharmacological and other effects of nicotine on the body, 80% of all biological studies funded by the company over this period. In 1969, American Tobacco even test marketed a nicotine-enriched cigarette in Seattle, Washington.
188. In a 1972 document entitled "RJR confidential research planning memorandum on the nature of the tobacco business and the crucial role of nicotine therein," an R.J. Reynolds executive wrote: "[i]n 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."
189. The industry's recognition of the extent to which nicotine -- and not tobacco -- defines its product is illustrated in a 1972 Philip Morris report on a CTR conference, which stated:
a. "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."
b. "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."
c. "Think of the cigarette pack as a storage container for a day's supply of nicotine ... Think of the cigarette as a dispenser for a dose unit of nicotine."
190. Documents from a BATCO study called Project Hippo, uncovered only in May 1994, show that as far back as 1961, this cigarette company was actively studying the physiological and pharmacological effects of nicotine. Project Hippo reports were circulated to other U.S. cigarette manufacturers and to TIRC, demonstrating that at least some of the industry's nicotine research was shared. BATCO sent the reports to officials at Brown & Williamson and R.J. Reynolds, 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."
191. Similarly, an RJR-MacDonald Marketing Summary Report from 1983 concluded that the primary reason people smoke "is probably the physiological satisfaction provided by the nicotine level of the product."
192. As recently as December 1995, the Wall Street Journal reported on an internal Philip Morris draft document analyzing the competitive market for nicotine products for the years 1990-1992. The report describes the importance of nicotine: "[d]ifferent people smoke for different reasons. But the primary reason is to deliver nicotine into their bodies. ...It is a physiologically active, nitrogen containing substance. 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 smoke act, nicotine is inhaled into the lungs in smoke, enters the bloodstream and travels to the brain in about eight to ten seconds.
193. Recently disclosed handwritten notes dated 1965 from Ronald A. Tamol, who until 1993 was Philip Morris' director of research and brand development, refer to "minimum nicotine ... to keep the normal smoker hooked."
194. In fact, in a decade long project, Brown & Williamson secretly developed a genetically engineered tobacco plant with a nicotine content more than twice the average found naturally in flue-cured tobacco. Brown & Williamson took out a Brazilian patent for the new plant, which was printed in Portuguese. Brown & Williamson and a Brazilian sister company, Souza Cruz Overseas, grew Y-1 in Brazil and shipped it to the United States, where it was used in five Brown & Williamson cigarette brands sold in Rhode Island, including three labeled "light." When the company's deception was uncovered, company officials stated that close to four million pounds of Y-1 were stored in company warehouses in the United States.
195. As part of its cover-up, Brown & Williamson even went so far as to instruct the DNA Plant Technology Corporation of Oakland, California, which had developed Y-1, to tell FDA investigators that Y-1 had "never [been] commercialized." Only after the FDA discovered two United States Customs Service invoices indicating that "more than a 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.
196. In addition, cigarette manufacturers add several ammonia compounds during the manufacturing process which increase the delivery of nicotine and almost double the nicotine transfer efficiency of cigarettes.
197. Brown & Williamson publicly denies that the use of ammonia in the processing of tobacco increases the amount of nicotine absorbed by the smoker. Nevertheless, the company's own internal documents reveal that it and its rivals use ammonia compounds to increase nicotine delivery. As John Kreisher, a former associate scientific director for CTR, conceded, "[a]mmonia helped the industry lower the tar and allowed smokers to get more bang with less nicotine. It solved a couple of problems at the same time."
198. The cigarette industry's manipulation of nicotine is particularly harmful in view of its deceptive marketing of "light" or low-tar and low-nicotine cigarettes to retain the health conscious segment of the smoking market. Recent studies demonstrate that cigarettes advertised as low tar and low nicotine have higher concentrations of nicotine, by weight, than high-yield cigarettes. The Tobacco Companies manipulate nicotine delivery levels in supposedly reduced tar and reduced nicotine cigarettes through various strategies. For example:
a. Industry studies show that smokers tend to obtain close to the same amount of nicotine from each cigarette despite differences in yield as measured by the FTC smoking machine. Cigarette manufacturers have designed "light" cigarettes in a deliberate attempt to circumvent FTC methods of measuring tar and nicotine levels. By drilling nearly invisible holes in the filter paper, the cigarette manufacturers have prevented FTC smoking machines from accurately measuring the actual tar and nicotine delivery to smokers, who naturally block the tiny, laser-generated perforations with their fingers or lips, and thereby receive greater tar and nicotine yields than indicated by FTC measurements.
b. The FTC testing method does not distinguish between the slower acting salt-bound nicotine and the more potent "free" nicotine that ammonia helps release. An ammoniated cigarette that delivers more potent nicotine to smokers measures the same as a cigarette with no such additives.
199. The cigarette industry maintains that nicotine levels follow tar levels. In the words of Dr. Alexander Spears, Vice Chairman of Lorillard, in his 1994 testimony before the Waxman Subcommittee -- [n]icotine [level] follows the tar level," and the correlation between the two "is essentially perfect," and "shows that there is no manipulation of nicotine." Dr. Spears neglected to mention to Congress that in a 1981 study, not intended for public release, he stated explicitly that low-tar cigarettes use special blends of tobacco to keep the level of nicotine up while tar is reduced: "[T]he lowest tar segment [of product categories] is composed of cigarettes utilizing a tobacco blend which is significantly higher in nicotine."
200. R.J. Reynolds, Lorillard, American Tobacco, and the Tobacco Institute have similarly represented to the public and to the FDA that the nicotine levels in their products are purely a function of setting the tar levels of such products. Internal company documents show, however, that American Tobacco's experimentation with adding nicotine to its tobacco was extensive -- extensive enough for American Tobacco executive John T. Ashworth to instruct employees in a confidential memorandum: "In the future, our use of nicotine should be referred to as 'Compound W' in our experimental work, reports, and memorandums, either for distribution within the Department or for outside distribution."
201. Tobacco industry patents also show that the cigarette industry has 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 R.J. Reynolds patent application states that "processed tobacco can be manufactured under conditions suitable to provide products having various nicotine levels."
The Targeting of Children
202. Across the nation, the overwhelming majority of cigarette use and addiction begins when users are children or teenagers. Eighty-two (82%) percent of daily smokers had their first cigarette before age 18, sixty-two (62%) percent of daily smokers had their first cigarette before age 16, thirty-eight (38%) percent before the age of 14. Thus, a person who does not begin smoking in childhood or adolescence is unlikely ever to begin. The younger a person begins to smoke, the more likely he or she is to become a heavy smoker. Sixty-seven (67%) percent of children who start smoking in the sixth grade become regular adult smokers, and forty-six (46%) percent of teenagers who start smoking in the eleventh grade become regular adult smokers.
203. Smoking at an earlier age increases the risk of lung cancer and other diseases. Studies have shown that lung cancer mortality is highest among adults who began smoking before the age of 15.
204. Although young people frequently believe they will not become addicted to nicotine or become long-term users of tobacco products, they often find themselves unable to quit smoking. Among smokers aged 12 to 17 years, a 1992 Gallup survey found that 70% said if they had it to do over again, they would not start smoking and 66% said that they want to quit. Fifty-one (51%) percent of the teen smokers surveyed had made a serious effort to stop smoking -- but had failed.
205. Cigarette smoking among children and teens is on the rise. A 1995 National Institute of Drug Abuse study found that between 1991 and 1994, the proportional increase in smoking rates was greatest among eighth graders, rising by 30%.
206. For many years, Defendants have engaged in a vast and misleading promotional, public relations, and lobbying blitz which has as its goal increasing the numbers of people addicted to nicotine in cigarettes and decreasing the numbers of people who attempt or succeed in quitting. Much of their efforts in this regard have been, and continue to be, directed toward children. They have done so, and continue to do so, in contravention of their duty not to make false statements of material fact and their duty not to conceal such true facts from the public. At the cost of countless lives, Defendants spend billions of dollars every year misleading the public and promoting the myth that smoking cigarettes does not cause cardiovascular disease, lung cancer, emphysema and other diseases and that smokers live healthy and vital lives. The Defendants have at all pertinent times presented and promoted smoking as an attractive, glamorous, youthful, and relaxing pastime, associating it with movie stars, athletes, and successful professionals.
207. Cigarettes are among the most promoted consumer products in the United States. The Federal Trade Commission reported to Congress that domestic cigarette advertising and promotional expenditures rose from close to $4 billion in 1990 to more than $6 billion in 1993. Tobacco product brand names, logos, and advertising messages are all-pervasive, appearing on billboards, buses, trains, in magazines and newspapers, on clothing and other goods. The effect is to convey the message to young people that tobacco use is desirable, socially acceptable, safe, healthy, and prevalent in society. Additionally, young people buy the most heavily advertised cigarette brands, whereas many adults buy more generic or value-based cigarette brands which have little or no image-based advertising. Cigarette manufacturers, knowing that their advertising appeals to young people, continue to use these same marketing techniques to sell their products.
208. A July, 1995 report by the California Department of Health Services detailed the results of a survey of tobacco advertisements in or around stores. In looking at almost 6,000 stores, it was found that the total average tobacco advertisements and promotions per store was 25.26. Marlboro was the most frequently advertised and promoted cigarette brand with an average of 10.15 advertisements and promotions per store. Camel was the second most frequently advertised and promoted cigarette brand and had an average of 4.84 advertisements and promotions per store. These two brands were the most frequently advertised and promoted cigarette brands. Not surprisingly, Marlboro, Camel, and Newport, the most heavily advertised brands, are the leading brands smoked by children.
209. This same report also found that stores within 1,000 feet of a school had significantly more tobacco advertising and promotions than stores that were not near schools. Stores near schools were also more likely to have at least one tobacco advertisement placed next to candy or displayed at three feet or below. A significantly higher average number of tobacco advertisements also were found on the exterior of stores located in young neighborhoods -- communities in which at least one-third of the population in that zip code were 17 years of age or less.
210. R.J. Reynolds has even identified the stores in proximity to the youth market. R.J. Reynolds' Division Manager for Sales wrote all R.J. Reynolds sales representatives in 1990 regarding the "Young Adult Market" and asked them to identify what stores were in proximity to colleges or high schools. A follow-up letter by the sales division calls for a resubmitted list of Y.A.S. (Young Adult Smoker) accounts using new criteria, focusing on all accounts located across from, adjacent to, or in the general vicinity of, high schools or college campuses.
211. Despite these disturbing statistics, each of the Tobacco Companies maintain that the effect of its pervasive advertising and promotion of cigarettes is limited to maintaining brand loyalty and that is has no role in encouraging adolescents to experiment with smoking.
212. The Tobacco Companies know that they attract underage consumers to their products. For example, since 1988, R.J. Reynolds has used a cartoon character called Joe Camel in its advertising campaign. It has massively disseminated products such as matchbooks, signs, clothing, mugs, and drink can holders advertising Camel cigarettes. The advertising has been effective in attracting adolescents, and R.J. Reynolds has knowledge of this fact but still continues the Joe Camel advertising campaign. As a result of the campaign, the number of teenage smokers who smoke Camel cigarettes has risen dramatically. Studies found that Joe Camel is almost as familiar to six-year old children as Mickey Mouse, is enticing thousands of teens to smoke that brand, and has caused Camel's popularity with 12-17 year olds to surge dramatically. R.J. Reynolds knew, or willfully disregarded, the fact that cartoon characters attract children.
213. The model who portrayed the "Winston Man" for R.J. Reynolds' Winston brand cigarettes testified before Congress: "I was clearly told that young people were the market that we were going after." He further testified "it was made clear to us that this image was important because kids like to role play, and we were to provide the attractive role models for them to follow ... I was told I was a live version of the GI Joe. ..."
214. An R.J. Reynolds affiliate studied in detail the motivations of young smokers. A "Youth Target" study was the first of a planned series of research studies into the lifestyles and value systems of young men and women in the 15 to 24 age range, the stated purpose of which was to "provide marketers and policy makers with an enriched understanding of the mores and motives of this important emerging adult segment which can be applied to better decision making in regard to products and programs directed at youth." The study focused on the "primary elements of lifestyles and values among the youth of today," in learning how to market products to children and teens.
215. Defendants used this information in devising advertising to create a mental image associating smoking with health, glamorous and athletic lifestyles, and with success and sexual attractiveness. Their advertising and marketing campaigns increase demand for tobacco products among young people. The ease with which children and teenagers can obtain cigarettes from vending machines assures that there is a ready supply to meet this demand. It has been shown repeatedly that cigarette vending machines (even those located in bars and other supposedly adult locations) are readily available to children and teenagers. Within a short period of time, the young smoker becomes physiologically and emotionally dependent, i.e., addicted to tobacco. Later, as the maturing smoker begins to wish he or she could quit, advertising reinforces the practice and seeks to minimize health concerns and create doubt and confusion, which are then used by smokers as an excuse to avoid the pain and discomfort of attempting to break their addiction to nicotine.
216. One of the best examples of this was the transformation of Marlboro cigarettes, from a red-tipped cigarette for women to the cigarette for the "macho cowboy." By changing advertising imagery, Philip Morris was able to tap into a wholly new and different market. In 1950, R.J. Reynolds was the king of the cigarette business. It sold more cigarettes than any other company. Philip Morris, though doing well on the basis of its fraudulent health oriented advertising, was still far behind. In 1981, Philip Morris overtook R.J. Reynolds, and each year has extended its lead, by developing an effective marketing campaign for recruiting young new smokers to its brands. The image created by the Marlboro Man captured the adolescent imagination, leading to experimentation with that particular cigarette and eventual addiction, due to the manipulation by Philip Morris of the nicotine and other ingredients in the cigarettes. The children and teenagers who started smoking Marlboro became tenaciously loyal customers. Soon, Marlboro became the "gold standard" of cigarettes among teenagers. Through the year 1988, nearly three-fourths of teenage smokers used Marlboro.
217. At about the time it lost market leadership to Philip Morris, R.J. Reynolds dedicated itself to a ruthless advertising campaign encouraging children and teenagers to smoke. One of the key elements of the R.J. Reynolds' strategy for attracting children was to reposition many of its cigarette brands to younger audiences. Just as Marlboro was repositioned from the women's market to the male market, by a new advertising campaign, R.J. Reynolds has positioned its cigarette advertising campaigns to younger and younger audiences using a succession of advertising images of men engaged in extraordinary feats of physical and athletic achievements.
218. R.J. Reynolds' Vantage cigarettes entered the 1980s as a brand targeted at the health conscious adult smoker. Advertisements were intended to assuage fears of lung cancer and other diseases and give the concerned smoker arguments for rationalizing their continuation of the addiction. Through multiple-advertising transmogrifications, Vantage cigarettes have been progressively repositioned to ever-younger audiences. During the mid-1980s, this advertising campaign featured young, successful professionals (including architects, fashion designers, lawyers, etc.) with the slogan, "The Taste of Success." These ads promoted the implication that smoking is helpful -- if not essential -- to success or prominence. In the late 1980s, the advertising theme for Vantage cigarettes began to feature professional-caliber athletes and auto racers. These advertisements depict physical activity requiring strength or stamina beyond that of everyday activity. The obvious implication is that smoking does not harm you.
219. During the 1980s, advertising for Salem cigarettes also became more youth-oriented. Whereas the dominant advertising theme for Salem cigarettes used to be clean, fresh country air, during the 1980s, Salem ads were populated by muscular surfers and bikini-clad women, partyers, and other attractive, adolescent role models. Another successful advertising campaign targeted at young people is the Lorillard Tobacco Company campaign promoting Newport cigarettes. Newport ads frequently show men and women in sexually suggestive positions always having fun, using the slogan, "Alive With Pleasure."
220. Another successful advertising campaign has been the "You've Come A Long Way Baby" campaign, promoting Virginia Slims cigarettes. One of the most important psychological needs of most adolescent girls is to become independent from their parents. By associating smoking with women's liberation, Philip Morris intended to create, in the minds of teenage girls, the vision of smoking as a symbol of autonomy and independence. Ads for Virginia Slims and other "feminine" cigarettes prey upon the natural and common insecurity experienced by adolescents, by portraying the cigarette as a crutch and a symbol of superiority. Perhaps the most acute psychological needs of adolescence are to fit in, to be accepted, and to be popular. Ads for Philip Morris' Benson & Hedges cigarettes developed an image of smoking as a happy pleasure to be shared in the company of others and the easy road to instant acceptance within a group.
221. In today's culture, many teenage girls perceive that a prerequisite to popularity is to be thin. Philip Morris and other cigarette companies capitalize upon this perception by presenting cigarette smoking as a suitable alternative to diet for being thin. Virtually every "feminine" cigarette includes words like slim, light, super slim, ultra light, etc. The photographic imagery in cigarette advertising that targets young females universally portrays attractive young women in glamorous outfits. Smoking is thus associated with being sexy and beautiful.
222. Many teenage boys fantasize about owning a powerful motorcycle. For this reason, many cigarette brands have used motorcycle imagery to encourage teenage boys to smoke. Many cigarette ads that target young boys glamorize high-risk activities, such as hang gliding, motorcycle racing, and mountain climbing. Cigarette makers do this deliberately to undermine awareness that smoking is dangerous. In its campaign to attract adolescent boys to become smokers, the R.J. Reynolds Tobacco Company has made extensive use of risk-taking and danger in its advertising. By glorifying risk-taking, these ads have a more insidious purpose. How a person estimates the magnitude and likelihood of a risk can be significantly affected by what it is compared against. By portraying dangerous activities, such as hang gliding, mountain climbing, and stunt motorcycle riding in tobacco advertising, R.J. Reynolds minimizes the dangers of smoking in adolescent minds.
223. The great success that R.J. Reynolds has had in its effort to overtake Philip Morris in the youth market is principally due to the "Joe Camel" cartoon character. This campaign was inaugurated in the United States in 1987 to commemorate the 75th anniversary of Camel cigarettes. In the first ads, the camel leered out over the ad saying "75 Years and Still Smoking." The implication is obvious. It soon became evident that "Joe Camel" would strike a responsive chord among children and teenagers, and has been used by R.J. Reynolds to target children to get them to start smoking as early as possible, so they can become addicted to nicotine at the earliest age possible. R.J. Reynolds has more than tripled its advertising expenditures for Camel cigarettes since 1988, utilizing themes such as "Joe Camel" that are guaranteed to be attractive to young people at high risk of becoming smokers.
224. When R.J. Reynolds began the Joe Camel cartoon campaign, Camel's share of the children's market was only 0.5%. In just a few years, Camel's share of this illegal market has increased to 32.8%, representing sales estimated at $476 million per year. Another indication of the phenomenal success of this marketing campaign is the fact that in a recent survey of six-year olds, 91% of the children could correctly match Joe Camel with a picture of a cigarette, and both the silhouette of Mickey Mouse and the face of Joe Camel were nearly equally well-recognized by almost all children surveyed.
225. The themes within cigarette advertising are not the only feature of tobacco marketing that betray the real target. The location and placement of those ads further reveal that children are the intended target. During the decade of the 1980s, there was a steady migration of cigarette advertising into youth-oriented publications. Magazines with sexually-oriented themes and those concerning entertainment and sporting activities had the highest concentration of cigarette ads. For many of these magazines, teenagers comprise a quarter or more of the total readership. Cigarette ads in these youth-oriented magazines were frequently multi-page, pop-up ads which are significantly more costly, but also more attention-grabbing than conventional ads. News magazines, like Time and Newsweek, which have older audiences, had few cigarette ads, and those tended to emphasize health promises concerning tar and nicotine rather than promote glamorous images.
226. The Tobacco Companies sell more than one billion packs of cigarettes per year to children under the age of 18. In 1988, the tobacco industry reaped $221 million in profits from $1.25 billion in sales to children under the age of 18. Marlboro and Camel cigarettes dominate the teenage smoking market.
227. In late 1990, the Tobacco Institute, on behalf of the industry, inaugurated a public relations campaign designed to convince the public that the cigarette companies wished to discourage young people from smoking. Several Tobacco Companies began their own campaigns at the same time. In fact, these programs are just a continuation of Defendants' ongoing fraud and conspiracy. While these programs call for age 18 as the national standard for tobacco sales to children, and for requiring "adult supervision" of cigarette vending machines, in fact, Defendants hope to freeze the status quo with regard to children's access to tobacco, as most states already have a minimum age of 18 or older. Brochures, like "Tobacco: Helping Youth Say No," are being distributed by the Tobacco Institute and tobacco industry. In reality, this is a pro-smoking subterfuge. The brochure presents smoking as a permissible "adult" decision and smoking as something an "adult" can safely do. The only reasons given children for not smoking is that -- like getting married or driving a car -- smoking is for grown-ups. Of course, this message really makes smoking more desirable to children. An R.J. Reynolds brochure even tells parents to tell their children that the parents smoke "because they enjoy it." None of these brochures disclose that smoking is highly addictive and harmful to human life.
228. Perhaps the most vicious element of this advertising campaign has been advertising aimed at young girls. Nearly every issue of magazines for young girls, such as Teen and Young Miss, includes an advertisement by R.J. Reynolds urging children not to smoke. However, the reasons given for refraining are not that smoking is addictive, that it can harm or kill infants or pregnant women, or that it causes cancer and other lethal diseases; rather, the reason given is that it is an "adult decision."
229. The likely effect of these ads is that, rather than to discourage children from smoking, they plant the notion that smoking is something to do to show one's independence or to act grown-up. This notion is, of course, reinforced by the ubiquitous cigarette ads depicting glamorous young adult women smoking, as a way of demonstrating their independence.
230. This conduct has gone on for 40 years and continues into this decade. In January, 1990, the Manager of Public Relations of R.J. Reynolds wrote the principal of a public school that:
The tobacco industry is also concerned about the charges being made that smoking is responsible for so many serious diseases. Long before the present criticism began the tobacco industry in a sincere
attempt to determine the harmful effects, if any, smoking might have on human health, established the Council for Tobacco Research-USA. The industry has also supported research grants by the American Medical Association. Over the years, the tobacco industry has given in excess of $162 million to independent research on the controversies surrounding smoking -- more than all voluntary health associations combined.
Despite all the research going on, the simple and unfortunate fact is that scientists do not know the cause or causes of the chronic diseases reported to be
associated with smoking. The answers to many unanswered controversies surrounding smoking -- and the fundamental causes of the diseases often statistically associated with smoking -- we do believe can only be determined through much more scientific research. Our company intends, therefore, to continue to support such research in a continuing search for answers.
We would appreciate your passing this information along to your students...
231. The targeting of children, while unquestionably wanton, reckless, and unethical, and cynically denied by the industry, was, and continues to be, vitally important to the tobacco industry. Children enticed into smoking provide a guaranteed future market for a product that each year kills the industry's best customers by the hundreds of thousands.
Concentration in the Tobacco Industry
232. Cigarette manufacturing has been one of the most concentrated industries in the United States throughout this century. Together, Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard, American Tobacco, and Liggett comprise the six largest cigarette manufacturers, and control virtually 100% of the market in the United States and Rhode Island. Philip Morris and R.J. Reynolds are the industry leaders, with national market shares of approximately 42% and 29%, respectively. The approximate market shares of the other major manufacturers are: Brown & Williamson, 12%; Lorillard, 7%; American Tobacco Company, 7%; and Liggett, 3%.
233. In part because of its concentration, the cigarette industry has long been one of America's most profitable businesses, with profit margins estimated in at least the 30% range. The industry continues to take in billions of dollars in profits each year from domestic sales alone.
234. In addition, the concentration of the industry has allowed the manufacturers and the Tobacco Trade Associations to engage in a decades-long conspiracy relating to the suppression of accurate information related to the issues surrounding smoking and its health effects and to direct their considerable profits to further that end.
235. The industry's combination and conspiracy included a commitment jointly to conduct research because of "a general feeling that an industry approach as opposed to an individual company approach was highly desirable."
Discovery of Violations by Attorney General
236. Defendants have fraudulently concealed the existence of the violations alleged below. The Attorney General has exercised due diligence to learn of the state's legal rights, and despite such diligence, failed to uncover the existence of the violations alleged below until very recently. Defendants affirmatively concealed the existence of the violations alleged below through the following actions, among others:
a. Testifying falsely under oath before the United States Congress.
b. Providing false explanations to customers and to governmental entities regarding the health hazards of tobacco and the addictive qualities of nicotine.
c. Conducting activities in furtherance of the conspiracy in secret, including clandestine meetings, using tobacco company attorneys to secure documents that
might reveal the dangers of cigarettes and the addictive nature of nicotine, closing down research projects and moving research facilities and information to locations outside the United States.
d. Requiring employees to keep secret all information about the dangers of cigarette smoking and the addictive nature of nicotine under threats of severe consequences.
Smokeless Tobacco Products: Addiction
Through the "Graduation Process"
237. U.S. Tobacco has engaged in an ongoing campaign to induce individuals to become users of smokeless tobacco, and its efforts find particular success among minors, as intended by the company.
238. U.S. Tobacco makes approximately 90% of the oral snuff and chewing tobacco sold in the United States. Smokeless tobacco delivers a similar amount of nicotine as cigarettes, and is equally as addictive. Smokeless tobacco manufacturers intend to cause nicotine dependence among consumers through a strategy that involves promoting the user of lower nicotine brands with the intent of moving users up to higher, more addictive brands over time. The "graduation" strategy calls for three different brands of low, medium, and high nicotine content. The strategy is based on the premise that new users of smokeless tobacco are most likely to begin with products that are milder tasting, more flavored and lighter in nicotine content. After a period of time, there is a natural progression to products that are more full-bodied and have more concentrated tobacco taste, with more nicotine, than the entry brand. This graduation strategy is supported by U.S. Tobacco's advertising practices which indicate its intent to have consumers experiment with low-nicotine brands and graduate to higher-nicotine brands over time. The FDA's 1995 investigation into nicotine and tobacco products found, that with respect to smokeless products, "tobacco manufacturers control the delivery of nicotine" so that products that deliver lower doses of nicotine are provided to "new users" who are then encouraged by tobacco marketing to "graduate" to products that deliver "higher doses of nicotine."
The Human Toll of Cigarette Smoking
Health Effects of Cigarette Smoking
239. Over 400,000 Americans die each year from smoking-related illnesses. This equates to more than one of every five deaths in the United States. Smoking is responsible for about 90% of all lung cancer deaths; 87% of deaths from chronic obstructive pulmonary diseases; 21% of deaths from coronary heart disease; and 18% of deaths from stroke. Further, a causal relationship exists between cigarette smoking and cancers of the larynx, mouth, esophagus, and bladder; and atherosclerotic peripheral vascular disease, cerebrovascular disease (stroke), and low-birth weight babies. Cigarette smoking is also a probable cause of infertility and peptic
ulcer disease and contributes to, or is associated with, cancers of the pancreas, kidney, cervix, and stomach.
240. If an adolescent's tobacco use continues for a lifetime, there is a 50% chance that the person will die prematurely as a direct result of smoking. Moreover, the earlier a young person's smoking habit begins, the more likely he or she will become a heavy smoker and therefore suffer a greater risk of smoking-related diseases. Smoking's detrimental effect on lung structure and function appear within a few years after cigarette smoking begins. Children who smoke are more likely to suffer from respiratory illnesses than children who do not smoke. Adolescents who smoke may experience inflammatory changes in the lung, reduced lung growth, and may not achieve normal lung function as an adult.
Health Effects of Smokeless Tobacco Products
241. Smokeless tobacco use increases the risk of oral cancer, and cancers of the esophagus, gums, pharynx and larynx. Snuff and chewing tobacco contain potent carcinogens, including nitrosamines, polynuclear aromatic hydrocarbons and radioactive polonium. Smokeless tobacco use can cause oral leukoplakia, a pre-cancerous lesion of the soft tissue that consists of a white patch or plaque that cannot be scraped off. Snuff use also causes gum recession and is associated with discoloration of teeth and fillings, dental cavities and abrasion of the teeth.
Public Nuisance
242. The Rhode Island General Assembly has declared two important public policies which are highly relevant to this action. First, no person under the age of eighteen years shall purchase any tobacco product. Second, no person shall cause, encourage or contribute to the delinquency of a minor by encouraging the minor to violate any established laws. The aforementioned conduct is punishable, the latter as a felony, under the Rhode Island General Laws §§ 11-9-13 and 11-9-4, respectively.
243. As alleged herein, the Tobacco Companies have used deceptive acts and practices, misrepresentations, concealment and failures to disclose material facts to market their tobacco products to minors in Rhode Island, to encourage the unlawful purchase of tobacco by minors, and to encourage and contribute to the delinquency of minors in the State of Rhode Island.
244. More specifically, and as set forth herein, the Tobacco Companies have contributed to the delinquency of minors in Rhode Island by inducing, aiding or encouraging minors to violate the State laws prohibiting the purchase of tobacco products by persons under eighteen years of age. The Tobacco Companies' conduct has been accomplished, in part, by: a) concealing that their products are addictive and harmful, and suppressing information on these subjects, while at the same time portraying tobacco products as glamorous and in a fashion that is designed to minimize the risks associated with tobacco use; b) designing their marketing campaigns with the intent that minors rely on the Tobacco Companies' advertisements; and thereby c) engaging in conduct causing or encouraging minors to purchase and smoke tobacco products, in violation of State law. The Tobacco Companies' conduct is even more aggravated given their public proclamations that they object to minors smoking, while they have continued a course of conduct specifically designed to encourage minors to smoke.
245. Tobacco sales to minors have increased in Rhode Island as a direct, foreseeable and intended result of the Tobacco Companies' business practices.
246. By their skillful and aggressive marketing of tobacco products to minors, the Tobacco Companies have contributed, and continue to contribute, to the delinquency of minors in Rhode Island, as set forth at R.I. Gen. Laws § 11-9-4, by inducing, aiding or encouraging a child (anyone under the age of eighteen years) to violate a state law (R.I. Gen. Laws § 11-9-13 prohibiting minors from purchasing tobacco products). The Tobacco Companies' conduct constitutes a public nuisance, pursuant to R.I. Gen. Laws § 10-1-1, et seq., in that such conduct constitutes the maintaining of a business or activity prohibited by a statute of the State of Rhode Island. Furthermore, the proceeds derived by the Tobacco Companies are traceable to their conduct contributing to the delinquency of minors in the State of Rhode Island and constituting a public nuisance, pursuant to R.I. Gen. Laws § 10-1-1, et seq., thereby subjecting such proceeds to forfeiture and distribution.
Racketeering Enterprise
247. During the times relevant to this Complaint, the Tobacco Companies and tobacco trade associations constituted a group of corporations associated in fact, although not a legal entity, which formed a racketeering "enterprise" within the meaning of R.I. Gen. Laws § 7-15-1(a). In addition to the Tobacco Companies' association with each other as an enterprise, they conducted and participated in a racketeering enterprise for the purpose of marketing and selling tobacco products in Rhode Island through a pattern of racketeering activity described below.
Pattern of Racketeering Activity
248. During the relevant times, and continuing presently throughout the State of Rhode Island, the racketeering enterprise referred to above did engage in a "pattern of racketeering activity," within the meaning of R.I. Gen. Laws § 7-15-1(c).
249. The pattern of racketeering activity involved numerous acts of "racketeering activity," within the meaning of R.I. Gen. Laws § 7-15-1(c).
250. More specifically, the Tobacco Companies' racketeering activities involve:
a. devising schemes or artifices to defraud the public or schemes or artifices for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, as described throughout this Complaint and by using the U.S. Postal Service to mail materials or matter in furtherance of, or for the
purpose of executing such scheme or artifice, including mailing advertisements and other materials about their tobacco products; and
b. devising schemes or artifices to defraud the public or to obtain money or property by means of false pretenses, representations or promises as described throughout this Complaint, and transmitting or causing
to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, writings, signs, signals, pictures or sounds about their tobacco products for the purpose of executing their scheme or artifice.
251. The Tobacco Companies' conduct began as early as the 1950's and continued after July 1, 1979 (the effective date of R.I. Gen. Laws §§ 7-15-1 through 11). Numerous acts of racketeering activity referred to herein have occurred in the past ten years. The last of such acts occurred in Rhode Island as recently as 1997.
252. The Tobacco Companies' racketeering activity described herein has been continuous and systematic for a period of at least 43 years, and has involved numerous separate criminal offenses, each similar in design and purpose -- to unlawfully acquire money and economic benefit from the State of Rhode Island and from the consuming public.
253. The Tobacco Companies have acquired millions of dollars derived from their pattern of racketeering activity in violation of R.I. Gen. Laws §§ 7-15-1 through 11.
The Injury to the State of Rhode Island is a Direct and
Foreseeable Consequence of the Tobacco Companies' Unlawful Conduct
254. In addition to the human toll, the economic costs of tobacco use, and, in particular, health-care expenditures from tobacco-attributable diseases, amount to a huge burden on society and the State of Rhode Island.
255. The State spends millions of dollars each year to provide or pay for health care and other necessary facilities and services on behalf of state employees, the needy, indigents and other eligible residents.
256. In fulfilling its statutory duties, the State of Rhode Island has expended and will expend substantial sums of money, due to the increased cost of providing health care services for treatment of tobacco-caused diseases. These increased expenditures have been caused by the unlawful actions of the Tobacco Companies.
257. Rhode Island expends funds in several areas which include significantly-increased charges attributable to tobacco usage and exposure. These include, but are not limited to:
a. Medical Payments: Pursuant to R.I. Gen. Laws § 40-6-9 and 42 U.S.C. 1396a(a)(25) makes payments for medical care services provided to recipients of public assistance. The amount paid for Medicaid is higher than it would be otherwise due to payment for tobacco-related illnesses; and
b. Health Care: purchases health care insurance for public employees and dependents. The premiums paid for all employees and dependents are higher than they would be otherwise due to the potential of payments for tobacco-related illnesses for some employees and dependents.
258. The Centers for Disease Control have developed information on smoking-attributable deaths and diseases and the economic impact of smoking. Their study demonstrates that there is a direct and substantial cost to Rhode Island State taxpayers of increased health care attributable to use of tobacco. Nationwide, the CDC data shows that the estimated health-care costs for smoking-attributable diseases are approximately $50 billion. These costs have been increasing at a precipitous rate, more than doubling in the period from 1987 to 1993. The present value of Rhode Island's Medicaid expenses attributable to smoking is millions of dollars.
Fraudulent Concealment
259. The State was without knowledge of the Tobacco Companies' combination or conspiracy, or of any facts from which it might reasonably be concluded that the Tobacco Companies were illegally conspiring, or which would have led to the discovery thereof, until recently. Rhode Island could not have reasonably discovered such facts or the alleged violations at an earlier time, because the Tobacco Industry fraudulently concealed, and continues to conceal, its course of conduct.
260. Rhode Island is not fully aware of the methods used by the Tobacco Industry to conceal its activities, but believes that the methods used in furtherance of its combination and conspiracy were inherently self-concealing, and could not have reasonably been apparent to plaintiff.
261. The Tobacco Industry's conspiracy and concealment of its fraudulent conduct is ongoing and continues to this day. The Tobacco Companies continue to deny that (a) nicotine is addictive; (b) smoking causes cancer and other health problems; (c) that they are targeting marketing to minors; and (d) that they manipulate the level of nicotine in tobacco products.
CAUSES OF ACTION
COUNT ONE
VIOLATION OF RHODE ISLAND UNFAIR TRADE PRACTICE
AND CONSUMER PROTECTION ACT
262. The State realleges and incorporates herein each of the foregoing Paragraphs of its Complaint.
263. This Court has jurisdiction and the Attorney General has standing under R.I. Gen. Laws § 6-13.1-5 of the Unfair Trade Practice and Consumer Protection Act ("The Consumer Protection Act").
264. The Consumer Protection Act authorizes the Attorney General, if he has reason to believe that any person is using, has used, or is about to use, any method, act, or practice declared by R.I. Gen. Laws § 6-13.1-2 to be unlawful, and that proceedings would be in the public interest, to bring "an action in the name of the State against the person to restrain by temporary to permanent injunction the use of the method, act, or practice."
265. The Attorney General also has common-law authority to act on behalf of the people of the State of Rhode Island.
266. R.I. Gen. Laws § 6-13.1-5 authorizes the Attorney General to seek an injunction against persons who have engaged in or are engaging in violations of the Consumer Protection Act.
267. By engaging in the conduct described above, Defendants have violated and continue to violate R.I. Gen. Laws § 6-13.1-5 by, among other things:
a. Engaging in unfair or deceptive trade practices, as defined in the Consumer Protection Act by making false and misleading oral and written statements that had, and have, the capacity, tendency or effect of deceiving or misleading Rhode Island consumers, including, but not limited to, statements concerning Defendants' knowledge of the harmful health effects of smoking and the addictive properties of nicotine;
b. Engaging in unfair or deceptive trade
practices, as defined in the Consumer Protection Act by making representations that their products have an approval, characteristic, ingredient, use or benefit
which they do not have, including, but not limited to, their statements concerning the harmful health effects of smoking and the addictive properties of nicotine;
c. Engaging in unfair or deceptive trade practices, as defined in the Consumer Protection Act, by failing to state material facts the omission of which deceived or tended to deceive, including, but not limited to, facts relating to the harmful health effects of smoking and the addictive properties of nicotine;
d. Engaging in unfair or deceptive trade practices, as defined in the Consumer Protection Act, through their deception, fraud, misrepresentation, and
knowing concealment, suppression, and omission of material facts with the intent that Rhode Island consumers rely upon the same in connection with the promotion or sale of tobacco products, including, but not limited to, facts relating to the harmful health effects of smoking and the addictive properties of nicotine;
e. Engaging in unfair trade practices, including, but not limited to, promoting and selling tobacco products to minors, promoting and selling harmful tobacco products that addict consumers, and misleading the public as to Defendants' concern and knowledge about the harmful health effects and addictive nature of their products, and the purpose and independence of the
Tobacco Industry Research Committee/Council for Tobacco Research.
268. To remedy these violations of the Consumer Protection Act, the State requests that the Court award damages in an amount to be proven at trial and enter an order for general restitution, for civil penalties, disgorgement of profits, and for the costs of the action, including, but not limited to attorneys fees.
COUNT TWO
VIOLATION OF RHODE ISLAND ANTITRUST ACT
269. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
270. This Court has jurisdiction and the Attorney General may institute proceedings under R.I. Gen. Laws
§6-36-10 of the Antitrust Act.
271. R.I. Gen. Laws § 6-36-10 of the Antitrust Act authorizes the Attorney General to institute proceedings to prevent and restrain antitrust violations and seek civil penalties, injunctive and other equitable relief, as appropriate, damages, interest on the damages, cost of suit, and a reasonable attorney's fee.
272. Beginning at least as early as the 1950s, and continuing until the present date, Defendants entered into a contract, combination and conspiracy in unreasonable restraint of trade and commerce in the market for cigarettes in Rhode Island in violation of the Rhode Island Antitrust Act, R.I. Gen. Laws § 6-36-1 et seq.
273. This contract, combination or conspiracy had the purpose and effect of:
a. Restraining competition in the market for cigarettes in the United States, including Rhode Island;
b. Restraining and suppressing research on the health effects of smoking;
c. Restraining and suppressing the dissemination of information on the harmful effects of smoking;
d. Restraining and suppressing the research, development, production and marketing of so-called "safer" cigarettes that resulted in reduced harmful biological activity in humans;
e. Preventing loss of sales revenues that would have resulted if information on the harmful effects of cigarettes and the addictive effects of nicotine had been made public; and
f. Preventing expensive and costly competition among the Defendant Tobacco Companies for sales and marketing of so-called "safer" cigarettes.
274. In furtherance of their conspiracy, Defendants did those things that they conspired to do including, without limitation:
a. Creation by the Defendant Tobacco Companies of the Tobacco Industry Research Committee (later known as the Council for Tobacco Research), charged with the task of disseminating false and misleading information regarding the health risks of cigarette smoking;
b. Agreement among Defendants to suppress independent research regarding the health risks of cigarette smoking and the addictive nature of nicotine;
c. Destruction and concealment of evidence by Defendant Tobacco Companies of research and information revealing the health dangers of cigarette smoking and the addictive nature of nicotine;
d. Joint sponsorship by Defendant Tobacco Companies of mass media articles and advertisements intended to deceive governmental entities and the public about the health risks of cigarette smoking;
e. False representations concerning the commitment of Defendant Tobacco Companies to sponsoring and making public "objective" scientific information regarding these risks;
f. The joint and collective making of false and misleading representations to Congress, other governmental entities and the public regarding the addictive nature of nicotine and the manipulation of nicotine levels in cigarettes by Defendant Tobacco Companies; and
g. Agreements, some obtained by coercion, among Defendant Tobacco Companies to halt research, development, marketing and sales of so-called "safer" cigarettes.
275. The aforesaid combination and conspiracy consisted of an agreement, understanding and concert of action among Defendants, the substantial terms of which were:
a. Withholding of information to governmental entities and the citizens of Rhode Island about the harmful effects of cigarettes and the addictive effects of nicotine;
b. Support of public relations campaigns that falsely promoted cigarettes as harmless;
c. Suppression of sponsorship of independent research on the issues of smoking and health;
d. Destruction or concealment of documents relating to the health effects of cigarettes and the addictive nature of nicotine;
e. Intimidation of persons with information about the health effects of cigarettes, and the addictive qualities of nicotine;
f. Termination of research and development programs seeking to develop so-called "safer" cigarettes;
g. Restraining and suppressing research on the health consequences of smoking, despite strong consumer demand for less harmful products;
h. Restraining, controlling, limitng and suppressing research in and the development, manufacture, and marketing of a "safer" cigarette and other tobacco products that would have reduced the harmful effects of tobacco use and, consequently, reduced health costs for the State of Rhode Island;
i. In general, declining to compete in Rhode Island in any manner relating to the health claims of cigarettes, despite the strong consumer demand for less harmful products; and
j. Apart from maintaining the demand for their tobacco products, knowing that their conduct would cause tobacco-related diseases in Rhode Island, as well as cause the State of Rhode Island to incur substantial health care costs in treating such diseases.
276. This unlawful conspiracy and the effects thereof are continuing, and will continue, unless the injunctive relief sought by the State is granted. Plaintiff has no adequate remedy at law.
277. For purposes of the Rhode Island Antitrust Act, the State has been injured and has suffered damages as a result of the unlawful conspiracy. Cigarette smoking and health are inextricably intertwined. Defendants' actions have resulted in substantially higher illness and death than would have occurred absent their unlawful conduct. Defendants knew and expected that their actions would require the State to pay higher health care costs for citizens of Rhode Island requiring public assistance. These increased costs, which were paid by the State, flow directly from Defendants' unlawful conduct.
278. The Tobacco Companies' conduct has had a direct and foreseeable effect on the State's medical insurance costs. The Tobacco Companies continue to reap enormous profits by virtue of their wrongful contract, combination or conspiracy in restraint of trade at the expense of the State. In addition, they have effectively shifted these insurance costs to third parties, including the State of Rhode Island.
COUNT THREE
UNJUST ENRICHMENT
279. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
280. Many of the State's citizens who are afflicted with tobacco-related diseases are poor, undereducated, and unable to provide for their own medical care. These citizens rely upon the State to provide their medical care, which reliance results in an extreme burden on the taxpayers and the financial resources of this State. Yet, these very citizens, along with our youth, are targeted by tobacco promotional techniques. Rhode Island taxpayers have thus expended millions of dollars in caring for their fellow citizens who have suffered, and are suffering, from lung cancer, cardiovascular disease, emphysema, chronic obstructive pulmonary disease, and a variety of other cancers and diseases that were and are caused by cigarettes.
281. While the State and its various agencies and institutions are struggling to avoid a health care crisis and to pay for the health care costs of tobacco, the Tobacco Cartel continues to reap millions of dollars in profits from the sale of cigarettes.
282. The Defendants are able legally to promote the sale of their cigarettes to the citizens of Rhode Island by continuing to misinform the Federal and State authorities about the true carcinogenic, pathologic and addictive qualities of cigarettes. Instead of honestly disclosing the genuine health risks of smoking cigarettes, the tobacco companies have spent billions of dollars in slick, sophisticated marketing tactics designed to make smoking appear to be glamorous to our youngsters.
283. In equity and fairness, it is Defendants, not the taxpayers of Rhode Island, who should bear the costs of tobacco-inflicted diseases. By avoiding their own duties to stand financially responsible for the harm done by their cigarettes, Defendants wrongfully have forced the State to perform such duties and to pay the health care costs of tobacco-related diseases. As a result, Defendants have been unjustly enriched to the extent that Rhode Island's taxpayers have had to pay these costs.
284. Defendants knew of and appreciated the benefits that the State's payment of increased health care costs conferred on them.
.285 Defendants' fraudulent and wrongful conduct, and its perpetuation, make it inequitable, unjust, and unconscionable for Defendants to retain the benefits conferred upon them by the State of Rhode Island.
286. The State of Rhode Island is therefore entitled to restitution from Defendants for the benefits the State of Rhode Island conferred upon Defendants, and to the extent required by equity, to prevent Defendants' unjust enrichment as a result of their fraudulent and wrongful conduct.
COUNT FOUR
INDEMNITY AGAINST ALL DEFENDANTS
287. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
288. As a direct and proximate result of the breaches of duty and omissions of Defendants as alleged above, the State was obligated to pay, and has paid, millions of dollars for the provision of necessary medical care, facilities and services for certain of those aforementioned Rhode Island residents and citizens injured by Defendants' cigarettes who were and are unable to afford and otherwise obtain such necessary medical care, facilities and services.
289. The State was legally obligated to pay the aforementioned sums and did not conduct itself in any wrongful manner in being so obligated to pay, and in paying, the aforementioned sums.
290. In all fairness and justice, and to prevent an unjust enrichment, Defendants should indemnify the State for the provision of necessary medical care, facilities and services for those aforementioned Rhode Island residents and citizens injured by Defendants' cigarettes.
COUNT FIVE
BREACH OF DUTY VOLUNTARILY UNDERTAKEN
291. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
292. Defendants represented that they would undertake a special responsibility and duty to citizens of the State of Rhode Island, and those who advance and protect the public health, including, among others, the State and the Rhode Island Department of Health, to accept an interest in the public's health as a basic and paramount responsibility; to cooperate closely with those who safeguard the public health; to aid and assist the research effort into all aspects of tobacco use and human health; to continue to research and otherwise undertake all possible efforts to learn all the facts and to discover the truth about smoking and health; and finally, to disclose to the State of Rhode Island and its citizens complete and accurate information about the effects of cigarette smoking on human health.
293. Defendants undertook to render such services recognizing that they were necessary for the protection of the public health, including the health of millions of Rhode Island citizens.
294. Defendants have breached, and continue to breach, their special responsibility and duty by failing to exercise reasonable care to perform and to conduct their undertaking. Defendants' failure to use due care in performing the duty that they voluntarily undertook to perform increased the risk of harm to the public, including the risk that Rhode Island citizens would become addicted to smoking and suffer illness and death from smoking-related causes, and thereby increase the costs of health care paid by the State of Rhode Island above and beyond what it would have been had Defendants not publicly represented that they were going to engage in the undertaking at all.
295. As a direct and proximate result of Defendants' wrongful conduct, the State has suffered, and will continue to suffer, substantial injuries and damages for which the State is entitled to recovery.
COUNT SIX
INJUNCTIVE RELIEF TO PROTECT CHILDREN
296. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
297. Defendants have, for many years, engaged in, encouraged, and aided and abetted each other in an intentional and unconscionable campaign to promote the distribution and sale of cigarettes to children, thereby creating successive generations of addicted customers who ultimately become the victims of smoking-related illnesses. Such conduct is a violation of the laws of the State of Rhode Island which prohibit the sale of cigarettes to minors, imposes untold human suffering on the citizens of the State of Rhode Island, and has created a health care burden for the State totaling millions of dollars.
298. It is necessary and essential to stop Defendants from promoting the sale of their cigarettes to minors, a remedy which can only be effectively accomplished by enjoining Defendants from not only promoting the sale of their cigarettes to minors, but additionally from engaging in the aiding, abetting or encouraging others to engage in the sale or distribution of cigarettes to minors.
299. Enjoining Defendants from promoting the sale of their cigarettes to minors is necessary to prevent substantial injury to the affected minors, such substantial injury being the danger that the minors would become addicted to cigarettes and thereby have their health and their lives placed in danger from smoking cigarettes.
300. If such injunction enjoining Defendants from promoting the sale of their cigarettes to minors is not granted, the minors who are allowed to and who will continue to purchase cigarettes will be irreparably harmed in that they will likely become addicted to cigarettes and they will be substantially certain to suffer adverse health consequences.
301. It is in the public interest to enjoin Defendants from promoting the sale of their cigarettes to minors.
COUNT SEVEN
ABATEMENT OF PUBLIC NUISANCE
302. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
303. Defendants' activities described herein constitute contributing to the delinquency of minors, as provided by R.I. Gen. Laws § 11-9-4, by inducing, aiding or encouraging children (persons under the age of eighteen years) to violate the state law prohibiting minors from purchasing tobacco products (R.I. Gen. Laws § 11-9-13).
304. Defendants' violation of R.I. Gen. Laws § 10-1-1 constitutes a public nuisance.
305. By means of the above-described public nuisance, Defendants have unlawfully acquired money from numerous Rhode Island consumers and have caused monetary damages to the State of Rhode Island.
COUNT EIGHT
FORFEITURE OF MONIES DUE TO DEFENDANTS'
MAINTAINING A PUBLIC NUISANCE
306. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
307. Defendants' activities described herein, and in particular, their conduct contributing to the delinquency of minors in violation of R.I. Gen. Laws § 11-9-9, constitute a public nuisance act pursuant to R.I. Gen. Laws
§ 10-1-1 et seq. and common law.
308. By means of their numerous and repeated public nuisance acts described above, Defendants have derived considerable monetary proceeds. Such proceeds, directly traceable to the Defendants' public nuisance acts, constitute a public nuisance pursuant to Rhode Island law, and are subject to forfeiture and distribution.
COUNT NINE
ASSOCIATION WITH RACKETEERING ENTERPRISE
309. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
310. During the relevant times, each Defendant named herein was associated with the racketeering enterprise herein, and did knowingly conduct or participate, directly or indirectly, in the enterprise through the pattern of racketeering activity in violation of R.I. Gen. Laws § 7-15-1 et seq.
311. Defendants knowingly and intentionally participated in a scheme or artifice to defraud in order to obtain money or property by means of false or fraudulent pretenses, representations or promises, in that Defendants:
(a) Directly or by implication, misrepresented their ability to manipulate, and misrepresented their manipulation of, nicotine levels in tobacco products;
(b) Directly or by implication, promised to provide governmental authorities and the public with scientific information regarding their studies of tobacco products. In fact, Defendants went to great lengths to misrepresent or prohibit dissemination of their findings;
(c) Directly or by implication, misrepresented the addictive nature of nicotine and the adverse health consequences of smoking; and
(d) Publicly represented that they were undertaking to act on behalf of the public's health; to aid and assist the research effort into all phases of tobacco use and health; to cooperate closely with those who safeguard the public health; to continue research and all possible efforts until all the facts were known; and to provide complete and authenticated information about cigarette smoking and health. Defendants ostensibly undertook performance of their assumed duty, and awarded highly-publicized grants to supposedly "independent researchers." Throughout the years and continuing to the present date, Defendants' spokespersons have repeatedly announced that research was underway, but the results are always "inconclusive" and the health questions "unresolved." These actions are part of Defendants' elaborate disinformation campaign designed to obscure the overwhelming and conclusive evidence that smoking causes lung cancer, heart disease and a host of other health problems.
(e) Directly or by implication, concealing and/or misrepresenting their intent to recruit minor smokers in violation of State law.
312. As a result of Defendants' racketeering, the State of Rhode Island has been injured.
COUNT TEN
RACKETEERING CONSPIRACY
313. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
314. During the relevant times, each Defendant named herein conspired to knowingly receive proceeds derived, directly or indirectly, in the conduct of the affairs of the racketeering enterprise, in violation of R.I. Gen. Laws
§ 7-15-1 et seq.
COUNT ELEVEN
MEDICAID SUBROGATION
315. The State realleges and incorporates herein the foregoing Paragraphs of its Complaint.
316. To receive federal funding for Medicaid, the State must seek reimbursement from liable parties whenever possible. 42 U.S.C. section 1396a(a)(25).
317. The State has the right to an automatic assignment of medical support rights for Medicaid recipients, set forth in the Medicaid subrogation statute, R.I. Gen. Laws § 40-6-9.
318. Defendants' fraudulent and wrongful conduct harmed many State citizens who participate in the Medicaid program, causing untold tobacco-related diseases which the government has paid the costs for these tobacco-related illnesses.
319. Defendants knew or should have known that their conduct harmed Medicaid recipients with tobacco-related diseases and resulted in associated increased medical costs.
320. The State of Rhode Island is entitle to reimbursement from the Defendants for the medical costs due to tobacco-related illnesses of Medicaid recipients.
RELIEF REQUESTED
WHEREFORE, the State of Rhode Island requests that this Honorable Court issue an order and judgment against Defendants, jointly and severally, as follows:
1. An order finding that the Tobacco Companies have engaged in violations of the Rhode Island Consumer Protection Act, as alleged herein.
2. An order finding that the Tobacco Companies have engaged in unlawful combinations and conspiracies in restraint of trade and commerce in violation of the Rhode Island Antitrust Act, R.I. Gen. Laws § 6-36-4.
3. An order permanently enjoining the Tobacco Companies, their officers, directors, successors, assigns, agents, employees, and anyone in active concert or participation with the Tobacco Companies with notice of such injunctive orders from:
a. engaging in any deceptive trade practices, as defined by the Rhode Island Consumer Protection Act, § 6-13.1-5, and as set forth in this Complaint;
b. continuing or renewing the combinations or conspiracies alleged herein, and from engaging in any other combination, conspiracy, contract, agreement, understanding, or concert of action having similar purpose or effect;
c. engaging in any public nuisance or public nuisance act defined by the Abatement of Public Nuisance Act R.I. Gen. Laws §§ 10-1-1 and § 11-9-4, as set forth in this Complaint; and
d. engaging in any racketeering activities, as defined by the Rhode Island Organized Crime Control Act, R.I. Gen. Laws § 7-15-2, as set forth in this Complaint.
e. engaging in marketing tobacco products to minors.
4. An order requiring the Tobacco Companies to pay restitution to the State of Rhode Island for their violations of the Rhode Island Consumer Protection Act, the Rhode Island Antitrust Act, and the Rhode Island Organized Crime Control Act, as set forth in this Complaint.
5. An order requiring the Tobacco Companies to pay civil penalties to the State of Rhode Island in an amount not to exceed $100,000 per violation of the Rhode Island Antitrust Act.
6. An order requiring the Tobacco Companies to pay treble damages, and the cost of the suit, including reasonable attorneys' fees, to the State of Rhode Island for violations of the Rhode Island Antitrust Act.
7. An order declaring the Tobacco Companies' monetary proceeds from their sales of tobacco products to minors in the State of Rhode Island to be a public nuisance and ordering these proceeds forfeited to the State of Rhode Island pursuant to R.I. Gen. Laws § 10-1-1, and entering a money judgment of forfeiture for said proceeds pursuant to R.I. Gen. Laws § 10-1-7.
8. An order requiring the Tobacco Companies to disgorge all unjust profits from tobacco sales to minors and from all other tobacco sales in the State of Rhode Island which the Tobacco Companies should not be allowed to retain.
9. An order awarding damages, including treble damages, to the State of Rhode Island in the amount of increased health care costs paid by the State as a result of the Tobacco Companies' unlawful conduct as alleged herein.
10. An order requiring the Defendants to compensate the State of Rhode Island for its costs of investigating and prosecuting this lawsuit, including, but not limited to, its reasonable attorney fees and costs of experts.
11. An order requiring Defendants to disclose, disseminate, and publish all research previously conducted directly or indirectly by themselves and their respective agents, affiliates, servants, officers, directors, employees, and all persons acting in concert with them, that relates to the public health issues of smoking and nicotine addiction;
12. An order requiring Defendants to fund a corrective public education campaign relating to the public health issues of smoking and nicotine addiction, administered and controlled by an independent third party;
13. An order requiring Defendants to make corrective statements regarding the health risks of smoking and the addictive properties of nicotine in their cigarettes and enjoining them from continuing to make false, misleading or deceptive statements or representations concerning their cigarettes;
14. An order requiring Defendants to fund smoking cessation programs including the provision of medically approved nicotine replacement therapy for dependent smokers;
15. A declaration that Defendants use now, and did use in the past, marketing and advertising campaigns that unlawfully target and/or encourage children to purchase and consume tobacco products in violation of Rhode Island law;
16. An order awarding the State such other extraordinary, declaratory and/or injunctive relief as permitted by law as necessary to assure the State has an effective remedy; and
17. For such other and further relief, as the Court deems equitable, just and proper, that the State is entitled to receive.
PLAINTIFF DEMANDS TRIAL BY JURY.
STATE OF RHODE ISLAND
BY ITS ATTORNEY,
Back to Rhode Island STIC Library