Texas has become the most recent state to file a law suit against the tobacco industry seeking to recover money the state and its taxpayers unnecessarily were forced to pay as a result of the diseases caused by smoking.
The suit by Texas seems to be the most complete and far- reaching, and includes claims against the Tobacco Institute as well as the Counsel for Tobacco Research.
It also seeks damages under the Federal Racketeer Influenced and Corrupt Organizations Act. It charges that the Defendants' engaged in "knowing and concerted actions from the 1950s to date, [which] constitute a pattern of public fraud, via mail and wire fraud on a nationwide scale, with callous disregard to the health and lives of millions of people."
The State of Texas is being represented by six very successful plaintiffs' attorney firms who are bringing the action on a contingency-fee basis. This means that, if no money is ever collected, the State of Texas will not have to pay any attorney fees.
On the other hand, if money is won, the State's private attorneys will receive 15%: substantially less than is usual in other contingency fee situations, but perhaps still somewhat large considering the huge amount of potential damages.
WHY NOT URGE YOUR STATE'S ATTORNEY GENERAL TO FILE A SIMILAR SUIT?
UNDER AN AGREEMENT ALREADY SIGNED BETWEEN LIGGETT AND SEVERAL OF THE OTHER STATES, STATES FILING SIMILAR SUITS MAY BE AUTOMATICALLY INCLUDED IN THE SETTLEMENT, AND BEGIN RECEIVING MONEY UNDER THAT AGREEMENT.
MOREOVER, UNDER A SIMILAR CONTINGENCY-FEE ARRANGEMENT, THE STATE WOULD HAVE NOTHING TO LOSE AND EVERYTHING TO GAIN.
FINALLY, YOUR STATE COULD USE VIRTUALLY THE SAME COMPLAINT. INDEED, YOU ARE WELCOME TO DOWNLOAD A COPY AND MAKE IT AVAILABLE TO YOUR STATE'S ATTORNEY GENERAL.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TEXARKANA DIVISION
THE STATE OF TEXAS, Plaintiff
VS.
THE AMERICAN TOBACCO COMPANY;
R.J. REYNOLDS TOBACCO
COMPANY; BROWN & WILLIAMSON
TOBACCO CORPORATION; B.A.T
INDUSTRIES, P.L.C; PHILIP
MORRIS, INC.; LIGGETT GROUP,
INC.; LORILLARD TOBACCO
COMPANY, INC.; UNITED STATES
TOBACCO COMPANY; HILL &
KNOWLTON, INC.; THE COUNCIL
FOR TOBACCO RESEARCH-USA,
INC. (Successor to Tobacco
Institute Research Committee);
and THE TOBACCO INSTITUTE, INC., Defendants
*************************************************************
ORIGINAL COMPLAINT
The State of Texas, by Dan Morales, Attorney General of the
State of Texas ("The State"), complains against the
Defendants as follows:
PRELIMINARY STATEMENT
The health, welfare and property of Texas citizens have been
damaged by the tobacco industry's unlawful conduct and injurious
and unreasonably dangerous products. The tobacco companies have
placed corporate profits above any concern for the health and
property of the consumers of their products. The toll of human
misery from the mass addiction, disease and death caused by their
products has not been sufficient to
deter the tobacco companies from their unified campaign of
disinformation and denials regarding the dangerousness of
their products. The tobacco companies have unlawfully shifted the
financial responsibility for their tortious and illegal conduct and
for their unreasonably dangerous products, to the business of state
and federal governments that provide for the general welfare of
their citizens.
This lawsuit seeks to have the tobacco companies'
liability to the State judicially recognized and to restore to the
State's treasury those funds spent for tobacco-
attributable costs to the Medicaid Program, the State Employee
Retirement System, the State Employee Group Insurance Program,
charity care, tobacco cessation programs and related wellness and
health care programs and other damages to be determined by a jury.
This lawsuit also seeks to protect the future health of our
children. Marketing strategies of the tobacco companies target our
children to induce them to start using tobacco
products. Dr. David Kessler, Commissioner of the U.S. Food and
Drug Administration, classifies the nicotine addiction of teenagers
as a pediatric disease.
According to a 1994 U.S. Surgeon General's Report, more than
three million American children currently smoke
cigarettes and an additional one million adolescent males use
smokeless tobacco. Everyday, 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. For those 3,000 children who do become current regular
users of tobacco products, projections of current trends
indicate 1,000 will die prematurely as a result of their
tobacco use.
The tobacco industry has been successful in planning,
implementing and executing the largest and most destructive
campaign of corporate misinformation in U.S. business history. The
Executive Officers and Board of Trustees of the American Medical
Association (AMA) have stated that recently disclosed internal
tobacco industry documents "...show us how this
industry has managed to spread confusion by suppressing,
manipulating, and distorting the scientific record.... The
evidence is unequivocal - the U.S. public has been duped by the
tobacco industry. No right- thinking individual can
ignore the evidence."
It is the duty and obligation of the Attorney General as the
chief law enforcement officer for the State of Texas, to bring this
suit to seek reimbursement to the public, those
funds expended because of the tobacco companies' illegal
conduct and unreasonably dangerous products, to halt tobacco
marketing aimed at children, to restrain the tobacco
companies' unlawful conduct and to dispel any illusion of a
scientific controversy regarding tobacco and health.
NATURE OF THE CASE
1. This action arises out of the State's participation in the
Medicaid program created by Title XIX of the Social
Security Act. The Medicaid program is a cooperative
endeavor in which the Federal Government provides
financial assistance to participating States to aid them
in furnishing health care to needy persons. For every
dollar spent on Medicaid assistance by the State, the
Federal Government provides approximately two dollars in
matching funds. The State of Texas participation in this
federal program is one of many programs conducted by the
State to promote the general welfare of its citizens and
meet its specific objective to insure that adequate and
high quality health care is available to its citizens who
cannot afford it.
2. The State is required to take all reasonable measures to
ascertain the legal liability of third parties to pay for
care and services available under the Medicaid Act, and
to seek reimbursement to the public fund to the extent of
such legal liability. The State has discovered that the
Defendants have been engaged in a protracted and willful
course of corporate misconduct and misrepresentation in
violating numerous federal and state laws, and in the
actionable breach of the duties owed to the State and its
citizens.
3. The Defendants are cigarette and tobacco product
manufacturers and/or their trade associations that
control virtually the entire cigarette industry in Texas
and the Nation. For decades, the State has incurred
significant expenses associated with the provision of
necessary health care and other such necessary assistance
under various State programs to citizens who suffer, or
who have suffered, from tobacco-related injuries,
diseases or sickness.
4. This action is based on the deliberate and willful
misconduct by Defendants toward the Nation, the State and
its citizens. Defendants' misconduct and offenses came
to light as the result of congressional hearings in 1994
and subsequent investigation by private and public
entities. The Defendants' misconduct, actions and
statements are violations of the following areas of law:
A. Federal Racketeer Influenced and Corrupt
Organizations Act: The Defendants' knowing and concerted
actions from the 1950s to date, constitute a pattern of
public fraud, via mail and wire fraud on a nationwide
scale, with callous disregard to the health and lives of
millions of people. Attorney Generals' lawsuits brought
by Mississippi, Minnesota, West Virginia, Florida,
Massachusetts, and Louisiana and a Prosecution Memorandum
by Massachusetts Congressman Martin Meehan (Exhibit 1)
uniformly characterize the Defendants' acts as public
fraud. The duration, scope and devastating impact on the
health and lives of Americans from the pattern of
fraudulent conduct of Defendants, violates federal
corrupt organization statutes. The intended victims of
the public fraud are the industry's own customers,
perspective customers, and for purposes of this action,
the public fund of the State of Texas. The public fraud
was perpetrated by a pattern of conduct violative of mail
fraud, 18 U.S.C. 1341, and wire fraud statutes, 18
U.S.C. 1343.
B. Federal and State Antitrust Acts: Beginning at
least as early as the 1950s, and continuing to the
present, Defendants entered into a combination and
conspiracy to control the sale and maintain the
market for cigarettes and other tobacco products in
the United States and Texas, and to restrain and
suppress competition in that market in order to
sell nicotine-laden cigarettes and nicotine
delivery devices to consumers. The Defendants'
conspiracy had the purpose and effect of
stabilizing and otherwise fixing the price of
cigarettes and other tobacco products, and
standardizing the tobacco products manufactured and
sold in the U.S. by retarding the research,
development, production, and sale of alternative
products.
The conspiracy to control and maintain the
market was accomplished by anti-competitive patent
accumulation practices and other conduct causing
restraint and suppression of research on the
harmful effects of smoking; restraining and
suppressing alternative, higher quality and safer
competitive cigarette and other tobacco products.
In furtherance of their conspiracy, Defendants also
engaged in a comprehensive campaign of
misrepresentation, obfuscation, and public fraud in
their actions and statements before the U.S.
Congress, state legislatures, federal and state
officials and regulators, and the public, which
included deceptive advertisements, promotions,
marketing and public relations schemes.
Defendants' conspiracy was motivated by their
desire to maintain the status quo in the tobacco
industry -- to perpetuate the unregulated and
unfettered sale of nicotine in their products --
thereby creating and maintaining a stabilized
market demand through nicotine dependency in
consumers.
C. Federal and State common law: The recovery of
damages under the common law doctrines of fraud,
negligent misrepresentation, restitution-unjust
enrichment, equitable estoppel, equitable
indemnity, negligence, and public nuisance are
applicable to Defendants' manufacture, promotion
and sale of tobacco products to Texas
citizens/consumers while knowing, but denying and
concealing, that their tobacco products caused
injury and sickness, including cancer, emphysema,
heart disease and other illnesses causing
disability and death. Their tobacco products
contain the highly addictive drug nicotine. The
Defendants have concealed from the public the fact
that they have controlled and manipulated the
amount of nicotine and/or its bioavailability in
their tobacco products for the purpose and with the
intent of creating and sustaining addictions to
these products.
D. Product Liability Law: The Defendant manufacturers
and/or their trade organizations, at all pertinent
times, manufactured, tested, designed, promoted,
marketed, packaged, sold, distributed, and/or
placed into the stream of commerce in and into the
State, numerous brands of defective, unreasonably
dangerous and hazardous cigarettes, or other
tobacco products, or, in the course of business,
materially participated with, conspired with and/or
otherwise, abetted and assisted others in so doing,
thereby causing damage for which Defendants are
responsible under product liability doctrines of
strict liability and breach of express and implied
warranty.
JURISDICTION AND VENUE
5. This Court has jurisdiction over this action pursuant to 28
U.S.C. 1331, 1367; 15 U.S.C. 15 and 18 U.S.C.
1964.
6. Venue is proper in this District pursuant to 28 U.S.C. 1391.
Defendants advertised in this District, received
substantial compensation and profits from the sales of
tobacco products in this District, and made material
misrepresentations and breached warranties in this
District. Further, significant health care services were
provided in this District to qualified citizens under the
Medicaid Act whose necessary health care services and the
expense therefore were attributable to smoking-related
disease and illness.
PARTIES
PLAINTIFF
7. Dan Morales, Attorney General for the State of Texas, is
authorized to bring this action on behalf of the State by
the Texas Constitution, Art. 4 22; the Texas Government
Code, Section 402.021, et seq.; the Texas Free Enterprise
and Antitrust Act of 1983, Business and Commerce Code,
Chapter 15; 42 U.S.C. 1396, et seq., also known as the
Social Security Act, Chapter 7, subchapter XIX, Grants to
States for Medical Assistance Programs; the Texas Medical
Assistance Act, Texas Human Resources Code 32.001, et
seq.; the Sherman Antitrust Act, 15 U.S.C. 15; and,
the Racketeer Influenced and Corrupt Organizations Act,
18 U.S.C. 1964.
DEFENDANTS
8. The American Tobacco Company is a Delaware corporation whose
principal place of business is located at 6
Stamford Forum, Stamford, Connecticut 06904, and upon
whom process may be served. The American Tobacco Company
(ATC) manufactured, advertised and sold Lucky Strike,
Pall Mall, Tareyton, Malibu, American, Montclair,
Newport, Misty, Barkeley, Iceberg, Silk Cut, Silva Thins,
Sobrania, Bull Durham and Carolton cigarettes throughout
the United States. On information and belief, the
American Tobacco Company was purchased by Brown &
Williamson who has succeeded to the liabilities of ATC by
operation of law or as a matter of fact.
9. R.J. Reynolds Tobacco Company is a corporation organized and
existing under and by virtue of the laws of the State
of New Jersey, with an agent for service in the State of
Texas, to-wit: Prentice-Hall Corporation System, 400
North St. Paul Street, Dallas, Texas 75201. R. J.
Reynolds is a wholly-owned subsidiary of RJR Nabisco
Holdings Corp. R.J. Reynolds Tobacco Company
manufactures, advertises and sells Camel, Vantage, Now,
Doral, Winston, Sterling Magna, More, Century, Bright
Rite and Salem cigarettes throughout the United States.
10. Brown & Williamson Tobacco Corporation is a corporation
organized and existing under and by virtue of the laws of
the State of Delaware, with an agent for service in the
State of Texas, to-wit: C.T. Corporation Systems, 350
North St. Paul Street, Dallas, Texas 75201. Brown &
Williamson Tobacco Corporation is a subsidiary division
of Batus, Inc. Brown & Williamson Tobacco Corporation
manufactures, advertises and sells Kool, Barclay, Belair,
Capri, Raleigh, Richland, Laredo, Eli Cutter and Viceroy
cigarettes throughout the United States.
11. B.A.T. Industries P.L.C. ("B.A.T. Industries") is a
British corporation with its principal place of business
at Windsor House, 50 Victoria St., 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
Texas. 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 in Texas.
12. Philip Morris, Inc. (Philip Morris U.S.A.), a subsidiary of
Philip Morris Companies, Inc., is a corporation
organized and existing under and by virtue of the laws of
the State of Virginia, with an agent for service in the
State of Texas, to-wit: C.T. Corporation Systems, 350
North St. Paul Street, Dallas, Texas 75201. Philip
Morris, Inc. manufactures, advertises and sells Philip
Morris, Merit, Cambridge, Marlboro, Benson & Hedges,
Virginia Slims, Alpine, Dunhill, English Ovals, Galaxy,
Players, Saratoga and Parliament cigarettes throughout
the United States.
13. Liggett Group, Inc., a subsidiary of the Brooke Group, Ltd.
and operating successor of Liggett & Myers Tobacco
Co.(Liggett & Myers), is a corporation organized and
existing under and by virtue of the laws of the State of
Delaware, with an agent for service in the State of
Texas, to-wit: Corporations Service Company, 100
Congress, Suite 1100, Austin, Texas 78701. Liggett
Group, Inc. manufactures, advertises and sells
Chesterfield, Decade, L&M, Pyramid, Dorado, Eve, Stride,
Generic and Lark cigarettes throughout the United States.
14. Lorillard Tobacco Company, Inc. is a corporation
organized and existing under and by virtue of the laws of
the State of Delaware, with an agent for service in the
State of Texas, to-wit: Prentice-Hall Corporation
System, 400 North St. Paul Street, Dallas, Texas 75201.
Lorillard Tobacco Company, Inc. is a subsidiary of Loews
Corporation. Lorillard Tobacco Company, Inc.
manufactures, advertises and sells Old Gold, Kent,
Triumph, Satin, Max, Spring, Newport and True throughout
the United States.
15. United States Tobacco Company is a Delaware corporation whose
principal place of business is located at 100 West
Putnam Avenue, Greenwich, Connecticut, and upon whom
process may be served. United States Tobacco Company
manufactures, advertises and sells Sano cigarettes and
smokeless tobacco products throughout the United States.
16. Hill & Knowlton, Inc. is a corporation organized and
existing under and by virtue of the laws of the State of
New Jersey, with an agent for service in the State of
Texas, to-wit: United Corporation Services, Inc., 400 E.
Anderson Lane, Austin, Texas 78752. Defendant, Hill &
Knowlton, Inc. is an international public relations firm.
Defendant Hill & Knowlton, Inc. played an active and
knowing role in the conspiracy complained of, aiding the
circulation and/or publication of many false statements
of the tobacco industry attributable to the Tobacco
Institute Research Committee (TIRC) and the Council for
Tobacco Research. Hill & Knowlton, Inc. 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, Inc. and the Tobacco
Companies.
17. The Council for Tobacco Research -- U.S.A., Inc.
(successor in interest to the Tobacco Institute Research
Committee) is a non-profit corporation organized under
the laws of the State of New York with its principal
place of business located at 900 3rd Avenue, New York,
New York 10022, and upon whom process may be served.
18. The Tobacco Institute, Inc. is a non-profit corporation
organized under the laws of the State of New York whose
agent for service of process in New York is C.T.
Corporation, 1633 Broadway, New York, New York 10019,
with its principal place of business located at 1876 "I"
Street N.W., Suite 800, Washington, D.C. 20006.
19. The American Tobacco Company, R.J. Reynolds Tobacco
Company; B.A.T. Industries, P.L.C.; Brown & Williamson
Tobacco Corporation; Philip Morris, Inc.(Philip Morris
U.S.A.); Liggett Group, Inc.; Lorillard Tobacco Company,
Inc.; and United States Tobacco Company are referred to
hereinafter as the "Tobacco Companies."
20. The Council for Tobacco Research-U.S.A., Inc., (successor to
the Tobacco Institute Research Committee) and the
Tobacco Institute, Inc., collectively, are referred to
hereinafter as the "Tobacco Trade Associations."
21. At all pertinent times, Defendants acted through their duly
authorized agents, servants, and employees who were
then acting in the course and scope of their employment,
and in furtherance of the business of said Defendants.
At all pertinent times, the Tobacco Trade Associations
and Hill & Knowlton, Inc. were the agents, servants,
and/or employees of the Tobacco Companies and acted
within the scope of said agency, servitude and/or
employment.
22. The Defendants listed above, and/or their predecessors and
successors in interest, did business in the State of
Texas; made contracts to be performed in whole or in part
in Texas; 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, tobacco products which the Defendants
knew to be defective, unreasonably dangerous and
hazardous, and which the 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 Texas and
to the State, and as described herein, committed and
continue to commit tortious and other unlawful acts in
the State of Texas.
23. The Defendants, and/or their predecessors and successors in
interest, performed such acts as were intended to, and
did, result in the sale and distribution of tobacco
products in the State of Texas.
24. 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.
FACTUAL BACKGROUND: EVENTS LEADING TO
DECEMBER 15, 1953 CONSPIRACY MEETING
25. Although tobacco in various forms has been consumed by
Americans for many centuries, it was not until the 19th
century that an easily inhalable tobacco product, the
cigarette, became widely popular. With the introduction
of the Bonsack mechanized cigarette-rolling machine in
1884 by W. Duke and Sons, cigarettes were mass-produced
and distributed and sold nationwide.
26. In 1881, Duke's factory produced 9.8 million cigarettes, 1-1/2
percent of the total market. But five years later,
W. Duke and Sons were able to manufacture 744 million
cigarettes, more than the national total in 1883. By
1890, Duke's competitors, who themselves had now become
mechanized, joined forces with him to establish the
American Tobacco Company. By the turn of the century, 9
out of every 10 cigarettes carried the Duke label.
Shortly after the American Tobacco Company was formed,
the State of North Carolina started an antitrust suit
against it -- and other such litigation followed. In May
1911, the American Tobacco Company was dissolved by order
of the Supreme Court, to be succeeded by four large firms
-- Liggett and Myers, Reynolds, Lorillard, and American
-- plus many smaller ones.
27. The increased availability and consumption of cigarettes at
the end of the 19th century corresponded with an
increased incidence of lung disease and cancer.
28. The modern period of investigation into the question of
smoking and health began about 1900 when an increase in
what was by then recognized as cancer of the lungs was
noted by vital statisticians.
29. Cigarette smoking increased dramatically in the first
half of the 20th century. With the increase of cigarette
smoking came an increase in lung cancer. Dr. Alton
Ochsner, a New Orleans surgeon and regional medical
director of the American Cancer Society, told an audience
at Duke University on October 23, 1945, that "there is a
distinct parallelism between the incidence of cancer of
the lung and the sale of cigarettes...the increase is due
to the increased incidence of smoking and that smoking is
a factor because of the chronic irritation it produces."
30. In 1946, Tobacco Company chemists themselves reported
concern for the health of smokers. A 1946 letter from a
Lorillard chemist to its manufacturing committee states
that "Certain scientists and medical authorities have
claimed for many years that the use of tobacco
contributes to cancer development in susceptible people.
Just enough evidence has been presented to justify the
possibility of such a presumption."
31. Despite the evidence showing their cigarettes caused lung
disease and cancer, the Tobacco Companies failed to
conduct any investigation of the smoking and health
relationship for the safety of their customers. Instead,
the Tobacco Companies chose sales over public health and
safety. In the 1930s through the 1950s, in response to
what industry spokesmen referred to as "the health
scare", the Tobacco Companies made express claims and
warranties as to the healthiness of their products with
reckless disregard to the falsity of their claims and the
consequential adverse impact on consumers. Examples of
these health warranties include the following: Old Gold
- "Not a cough in a Carload"; Camel - "Not a single case
of throat irritation due to smoking Camels"; Philip
Morris - "The Throat-tested cigarette."
32. In 1942, Brown and Williamson claimed that Kools would keep
the head clear and/or give extra protection against
colds.
33. In 1952, Liggett & Myers conducted a test for advertising
purposes to demonstrate the absence of harmful effects of
smoking Chesterfields on the nose, throat, and affected
organs. The test was conducted by Arthur D. Little, Inc.
and was designed so as to have no real scientific value.
Nonetheless, its conclusion that smoking Chesterfields
had no harmful effect on the organs in question was
widely publicized and the purported results used to
assure the general public that Chesterfields were
harmless.
34. During the 1950s, Liggett & Myers sponsored the
nationally popular Arthur Godfrey radio and television
show wherein health claims were made based on the alleged
scientific studies assuring "smoking Chesterfields would
have no adverse effects on the throat, sinuses or
affected organs." Arthur Godfrey subsequently died from
lung cancer caused by smoking cigarettes.
35. Earlier consumer-oriented 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 steady-nerved circus
stars. Similar ads even appeared in medical journals,
where ads were directed solely at physicians. One, for
example, touted the Camel cigarettes booth at the
American Medical Association's 1942 Annual Meeting.
36. In the New York State Journal of Medicine, Chesterfield ads
began running in 1933. They often carried claims
such as, "Just as pure as the water you drink...and
practically untouched by human hands."
37. The Tobacco Companies sponsored cigarette ads in the New
England Journal of Medicine, Journal of the American
Medical Association ("JAMA"), and The Lancet from the
1930s through the 1950s.
38. For 15 years, Philip Morris used various claims,
including one it ran in JAMA in 1949: "Why many leading
nose and throat specialists suggest, 'Change to Philip
Morris'..." In 1935, Philip Morris ran an ad in the New
York State Medical Journal touting studies that
purportedly showed Philip Morris 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 for
yourself?"
39. Other companies added different angles for physicians. Camel
cigarettes paid tribute to medical pioneers and
concluded: "Experience is the best teacher....experience
is the best teacher in cigarettes, too." Old Gold
reacted to early negative medical studies with the
slogan: "If pleasure's your aim, not medical claims..."
Some companies hired attractive women to deliver
cigarette samples to physicians and the patients in their
waiting rooms.
40. The appearance of landmark studies such as the 1952 JAMA
article on smoking and bronchial carcinoma, by Alton
Ochsner, M.D., and others prompted JAMA's decision to ban
cigarette ads from their journal.
41. The health-claim advertising campaigns by Defendants were
patently false, misleading, deceptive and/or fraudulent.
These campaigns were disseminated nationally in popular
magazines, press, radio and television and were
calculated to induce non-smokers to commence smoking and
to induce smokers to continue in their addiction to their
harm and injury and to the damage of the State.
42. During the 1950s the Tobacco Companies employed yet
another method of deception in manufacturing and
advertising to boost sales to counter the "health scare"
-- "The Filter Derby" and "Tar Wars". The Tobacco
Companies manufactured filtered cigarettes that were
advertised with explicit and/or implicit warranties of
tar/nicotine content and health claims. The Tobacco
Companies' health claims and claims as to the
effectiveness of the filters in removing tar and nicotine
were knowingly deceptive when made, and/or were made with
reckless disregard for the health risks to the cigarette
smokers.
43. In addition to conducting an industry-wide campaign of false
health claim advertising during the 1930s and
1940s, certain Tobacco Companies engaged in antitrust
violations that set the pattern for current violations.
44. American Tobacco Company, Liggett & Myers Tobacco
Company, and R. J. Reynolds Tobacco Company are convicted
violators of the Sherman Antitrust Act, 15 U.S.C.A. 1
and 2. In the 1930s and 1940s, ATC, Liggett & Myers and
R. J. Reynolds, at that time the so-called "Big Three,"
had combined to restrain competition in order to control
prices of leaf tobacco. The methods employed were 1)
limitations and restrictions on the prices their buyers
were permitted to pay for tobacco; 2) maintenance of
price ceiling agreements among them; 3) stabilization and
fixing of prices through percentage buying; 4)
formulation of certain grades of tobacco so as to
construct barriers to competition; and, 5) combining to
manipulate and raise the price of lower-grade tobaccos in
order to eliminate competition from manufacturers of low-
priced
cigarettes.
45. By the 1950s, the Defendants had known for decades of the
lethal dangers of smoking their cigarettes and consuming
their smokeless tobacco products.
46. The course of history for the tobacco industry was
forever changed in 1953. A 1953 report by Dr. Ernst L.
Wynder disclosed to the scientific community and to the
Tobacco Companies, a definitive link between smoking and
cancer. In these tests, researchers painted condensed
cigarette smoke onto the backs of mice. As a result, the
mice grew cancerous tumors. While previous statistical
and epidemiologic studies indicated a relationship
between smoking and cancer, Dr. Wynder's study
demonstrated a direct biological link between smoking and
cancer. (Although Defendants have sought to discredit
the Wynder findings, recently disclosed documents include
a 1962 letter from Lorillard to Dr. Wynder, regarding his
work establishing smoking to be a carcinogen and the
principal cause of lung cancer, and stating that
Lorillard "considered [Dr. Wynder's] work above reproach,
as usual.")
THE MODERN CONSPIRACY ERA:
DECEMBER 15, 1953 TO PRESENT
47. In response to the publication of Dr. Wynder's study in 1953,
the presidents of the leading tobacco
manufacturers, including American Tobacco Co., R.J.
Reynolds, Philip Morris, U.S. Tobacco Co., Lorillard, and
Brown & Williamson Tobacco Corporation, conspired with
the public relations firm of Hill and Knowlton, Inc. to
form a monopolistic trust to deal with the "health scare"
presented by smoking. Acting in concert, at an industry
strategy meeting on December 15, 1953 at the Plaza Hotel
in New York, the participants agreed to form a committee
to orchestrate a public relations campaign to protect
their cigarette market from the perceived threat posed by
the adverse medical reports. This committee was designed
to promote an offensive, pro-cigarettes stance to counter
reports of health dangers caused by cigarettes. As a
result of these efforts, the Tobacco Institute Research
Committee (TIRC), an entity later known as the Council
for Tobacco Research (CTR), was established.
48. Hill & Knowlton notes from the December 15, 1953 meeting show
that ATC executive Paul Hahn served as chairman.
Defendants knowingly conspired to conceal illegal
antitrust activity by avoiding the incorporation of a
formal association; instead, they would work in informal
committees within a front organization to be established
and designated the Tobacco Institute Research Committee
(later the CTR). The purpose of their meeting and
conspiracy was to protect the cigarette market structure
along the same lines and utilizing the same methods
employed in their last such meeting in 1939, which
resulted in the conviction of the "Big Three" under the
Sherman Antitrust Act.
49. Although Liggett & Myers did not become a signatory
member of the CTR until 1965, Liggett & Myers helped
organize, support, aid and abet the conspiracy and
illegal acts of the TIRC/CTR from the latter's inception
through the present.
50. The TIRC immediately ran a full-page promotion in more than
400 newspapers aimed at an estimated 43 million
Americans. That piece was entitled "A Frank Statement To
Cigarette Smokers" and contained the following language:
RECENT REPORTS on experiments with
mice have given wide publicity to a
theory that cigarette smoking is in
some way linked to 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 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 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 group
consisting initially of the
undersigned. This group will be
known as the TOBACCO INDUSTRY
RESEARCH COMMITTEE.
3. In charge of the research
activities of the Committee will be
a scientist of unimpeachable
integrity and national repute. In
addition there will be an Advisory
Board of scientists disinterested in
the cigarette industry. A group of
distinguished men from medicine,
science and education will be
invited to serve on this Board.
These scientists will advise the
Committee on its research
activities.
This statement is being issued
because we believe the people are
entitled to know where we stand on
this matter and what we intend to do
about it.
51. In this advertisement, the participating tobacco
companies recognized their "special responsibility" to
the public, and promised to learn the facts about smoking
and health. The participating 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 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. In fact, these promises so
publicly and dramatically made to the public, the
citizens of Texas and government regulators, have been
breached over and over again.
52. 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 with public health, the TIRC failed
to make the public health a concern. Rather the TIRC, at
the direction of the Tobacco Companies, acted to protect
tobacco industry profits and failed to protect the public
health. A coordinated, industry-wide strategy was
designed to actively mislead and confuse the public about
the true dangers associated with smoking cigarettes.
Rather than work for the good of the public health and
sponsor independent research, as it had promised, the
Tobacco Companies, acting through the TIRC/CTR,
concealed, undermined and distorted information coming
from the scientific and medical community.
53. The Defendants, in their December 15, 1953 and subsequent
meetings in forming, operating and maintaining the
TIRC/CTR, knowingly replicated the framework of the "Big
Three" combination in restraint of trade from the 1930s
and 1940s by conspiring, agreeing and attempting to
stabilize and protect their commodity's pricing structure
from the "health scare" threat by, inter alia, 1)
limiting and restricting scientific research and public
dissemination of adverse product information or data from
within the industry; 2) forming Ad Hoc Committees
comprised of company lawyers to control jointly sponsored
scientific research funded by and based upon market share
percentages, in order to further conspiratorial
objectives and self-policing; 3) conducting an extensive
disinformation campaign to contradict or neutralize
legitimate science and health reports linking smoking or
tobacco use with cancer and disease, in order to
stabilize and protect the tobacco market demand
structure; 4) formulating combined and monopolistic
opposition to any development and/or marketing of safer
and/or alternative non-tobacco, non-nicotine, smoking
devices by the conspirators or outsiders/non-conspirators; and 5)
conspiring and combining to manipulate public and
governmental
awareness and responses to science adverse to the tobacco
industry by a knowing, extensive and combined course of
misrepresentation, deception and disinformation conducted
via mail, wire, press, radio and television mediums,
among others.
54. For purposes of this action, the sale of cigarettes and other
tobacco products is the relevant product market.
The Tobacco Companies manufacture, ship and sell tobacco
products throughout the United States. Relevant
geographic markets are the United States and the State of
Texas.
55. The tobacco industry is highly concentrated, and has been one
of the most concentrated industries in the United
States throughout this century. Six tobacco companies
dominate and control the market for cigarettes and other
tobacco products in the United States and Texas. These
six tobacco companies -- American Tobacco, R.J. Reynolds,
Brown & Williamson, Philip Morris, Liggett, and Lorillard
-- have a combined market share of nearly 100% of the
market.
56. This market concentration and lack of significant price
competition has long enabled the tobacco industry to be
one of the most profitable businesses in the United
States.
57. The concentration in the industry has also benefitted the
Tobacco Companies and the Tobacco Trade Associations in
their combination and conspiracy to control and maintain
the market for cigarettes and other tobacco products.
58. All of the Defendants herein have acted pursuant to their
conspiracy and agreement from 1953 without interruption
until the present. The most recent example of
Defendants' acts in furtherance of their conspiracy is
the combined response of Brown and Williamson, Liggett,
Lorillard, Philip Morris, and the Tobacco Institute in
their January 1996 joint submission of twelve volumes in
opposition to the 1995 proposed regulations of cigarettes
and nicotine by the FDA. In this joint submission,
Defendants perpetuate their disinformation campaign by
denying that nicotine is a drug, by denying that
cigarettes or smokeless tobacco are drug delivery
devices, and by denying that nicotine in tobacco products
is addictive.
59. The public disinformation strategy employed by the
Tobacco Companies and the Tobacco Trade Associations was
a strategy best described as "see no evil, hear no evil,
and speak no evil" concerning the health effects of
cigarette smoking. A publication called Tobacco and
Health (later, Tobacco and Health Research) was created
by the Tobacco Companies and the Tobacco Trade
Associations and was used by them to disseminate false
information and create confusion over the causal
connection between cigarette smoking and disease. It was
distributed to the press, doctors, and health officials.
The "Criteria For Selection" of articles for publication
included an example of "a report in which smoking-associated
diseases are questioned."
60. 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 "Statistics 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 said by Brown and 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 professional
working for Brown and Williamson. Brown and Williamson
reimbursed Field for that amount.
61. Other public statements by the Defendants over the years have
repeated the misrepresentations that the industry
was dedicated to the pursuit and dissemination of the
scientific truth regarding smoking and health.
62. For example, the Tobacco Institute in 1970 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."
63. 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 non-restrictive
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."
64. 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."
65. In direct contrast to what the Defendants were telling the
public, a memo from Tobacco Institute vice president
Fred Panzer to president Horace Kornegay dated May 1,
1972, acknowledges that the industry had employed a
single strategy for nearly 20 years to defend itself on
three major fronts: litigation, politics, and public
opinion. This strategy consisted of "creating doubt
about the health charge without actually denying it--
advocating the public's right to smoke, without actually
urging them to take up the practice--encouraging
objective scientific research as the only way to resolve
the question of health hazard." Panzer said this
strategy had been successful on the litigation front and
had "helped make possible an orderly retreat" on the
political front, but that the situation had deteriorated
on the public-opinion front. To remedy the public-
opinion problem, he proposed that the industry supply the
public with "ready-made credible alternatives" to the
prevalent view that smoking causes cancer, such as
genetic and environmental explanations for smoking-related
diseases.
66. The Tobacco Companies, through the Tobacco Trade
Associations, intentionally breached their promises to
the American public, to the citizens of Texas and to the
State, to study and report independently and honestly on
the health effects of smoking and the use of smokeless
tobacco products. Defendants caused the cancellation of
press conferences where their scientists sought to inform
the public, actively and wrongfully suppressed the
publishing of reports concerning the health dangers
presented by cigarette smoking, attacked research linking
smoking to disease, and threatened professionally the
researchers themselves. Their scientists were not
allowed to "freely publish what they find as they choose"
as a CTR director once claimed.
67. Numerous scientists formerly employed by the Tobacco
Companies and the Tobacco Trade Associations have spoken
out against the suppression of scientific data and the
practice of deception known to exist in the tobacco
industry generally. For example, in April of 1994, Dr.
Victor DeNoble, a former research scientist for Philip
Morris, Inc., testified before the United States House of
Representatives Health & Environment Subcommittee that
the Philip Morris Company, in 1983, suppressed and
refused to allow him or his colleague, Dr. Paul Mele, to
publish or to talk publicly about the research that they
had conducted with respect to nicotine tolerance in rats,
the potentially addictive nature of nicotine in rats, and
research with respect to synthetic nicotine substances.
Dr. DeNoble testified that his research demonstrated that
the animals would administer nicotine to themselves and
that this fact indicated that nicotine had the potential
to be addictive. Dr. DeNoble testified that the focus of
his research was nicotine's effect on the brain, not
nicotine's effect on the flavor of tobacco in cigarettes.
He further testified that his laboratory was closed and
his research was terminated following the filing of a
lawsuit by Rose Cipollone against Philip Morris and other
tobacco companies.
68. In a similar vein, Liggett & Myers, while publicly
refusing to acknowledge the validity of Dr. Wynder's
tests, hired the consulting firm of Arthur D. Little,
Inc. to duplicate Dr. Wynder's tests. Defendant
Lorillard Corporation also duplicated Dr. Wynder's mouse
tests. The results of the duplicated tests were
essentially the same as Dr. Wynder's, and both Liggett &
Myers and Arthur D. Little became aware by 1954 of the
cancer-causing propensity of cigarettes. A Liggett &
Myers researcher requested that the results of this
testing be published, but Liggett & Myers would not allow
it. In furtherance of the conspiracy objectives of the
TIRC, the results of these additional tests were never
made public.
69. The vast body of credible medical and scientific evidence
identifies smoking as the leading cause of lung cancer.
Tobacco industry scientific consultants also have
accepted the causal association between smoking and
disease.
SAFER CIGARETTES SUPPRESSED
70. The Tobacco Companies 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. The Tobacco Companies artificially add
chemicals and flavorings to their products that increase
toxicity and/or carcinogenicity.
71. At Liggett & Myers, Dr. James Mold 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, designated 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.
72. Liggett & Myers instructed its researchers that any
meetings held that pertained to the "safer" cigarette
project were to be attended by a lawyer and that all
reports, notes or memoranda should go to the Liggett &
Myers legal department. The "safer" cigarette was never
marketed.
73. Liggett abandoned its XA Project for two apparent
reasons. One was that Liggett feared that the marketing
of a "safer" cigarette would be, in essence, a concession
that its -- and the industry's -- other cigarettes were
not safe. Second, industry leader Philip Morris
threatened to retaliate against Liggett if it broke ranks
with the industry conspiracy.
74. Dr. Mold, who was assistant director of research at
Liggett during the development of the safer cigarette,
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, "We 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 didn't 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."
75. A memorandum authored by an attorney at the firm of
Shook, Hardy & Bacon, long-time lawyers for the cigarette
industry, confirmed the industry-wide position regarding
the issue of a safer cigarette.
76. The 1987 memorandum was written in the context of the
marketing by R.J. Reynolds of a smokeless cigarette,
Premier, that heated rather than burned tobacco. The
Shook, Hardy attorney wrote that the smokeless cigarette
could "have significant effects on the tobacco industry's
joint defense efforts" and "(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."
TOBACCO, NICOTINE AND DEPENDENCY
77. The tobacco products manufactured and sold by the Tobacco
Companies contain nicotine, a highly addictive substance.
The Defendants know 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. The Defendants exploit
this weakness and capitalize upon the known addictive
nature of nicotine. An internal tobacco industry memo
acknowledged in 1972: "(w)ithout nicotine...there would
be no smoking...the cigarette (is) a dispenser for a dose
unit of nicotine." Nicotine addiction guarantees a
market for cigarettes. The addictive nature of the
nicotine in cigarettes virtually eliminates personal
choice in those who become addicted.
78. 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:
As with eating and copulating, so it
is with smoking. The physiological
effect serves as the primary
incentive; all other incentives are
secondary. The majority of the
conferees would go even further and
accept the proposition that nicotine
is the active constituent of
cigarette smoke. Without nicotine,
the argument goes, there would be no
smoking."
***
Why then is there not a market for
nicotine per se, eaten, sucked,
drunk, injected, inserted or inhaled
as a pure aerosol? The answer, and
I feel quite strongly about this, is
that the cigarette is in fact among
the most awe-inspiring examples of
the ingenuity of man. Let me
explain my conviction.
The cigarette should be conceived
not as a product but as a package.
The product is nicotine.
***
Think of the cigarette pack as a
storage container for a day's supply
of nicotine...Think of the cigarette
as a dispenser for a dose unit of
nicotine.
79. Accordingly, the industry has developed sophisticated
technology to control the levels of nicotine in
cigarettes in order to maintain its market. David A.
Kessler, M.D., Commissioner of Food and Drugs, recently
testified before a congressional committee that cigarette
manufacturers can manipulate precisely nicotine levels in
cigarettes, manipulate precisely the rate at which the
nicotine is delivered in cigarettes, and add nicotine to
any part of cigarettes.
80. Dr. Kessler testified that "the cigarette industry has
attempted to frame the debate on smoking as the right of
each American to choose. The question we must ask is
whether smokers really have that choice." Dr. Kessler
stated:
Accumulating evidence suggests that
cigarette manufacturers may intend
this result -- that they may be
controlling the levels of nicotine
in their products in a manner that
creates and sustains an addiction in
the vast majority of smokers.
***
We have information strongly
suggesting that the amount of
nicotine in a cigarette is there by
design.
***
[T]he public thinks of cigarettes as
simply blended tobacco rolled in
paper. But they are much more than
that. Some of today's cigarettes
may, in fact, qualify as high
technology nicotine delivery systems
that deliver nicotine in precisely
calculated quantities -- quantities
that are more than sufficient to
create and to sustain addiction in
the vast majority of individuals who
smoke regularly.
***
[T]he history of the tobacco
industry is a story of how a product
that may at one time have been a
simple agricultural commodity
appears to have become a nicotine
delivery system.
***
[T]he cigarette industry has
developed enormously sophisticated
methods for manipulating nicotine
levels in cigarettes.
***
In many cigarettes today, the amount
of nicotine present is a result of
choice, not chance.
***
[S]ince the technology apparently
exists to reduce nicotine in
cigarettes to insignificant levels,
why, one is led to ask, does the
industry keep nicotine in cigarettes
at all?
***
81. In a subsequent appearance before Congress, Dr. Kessler
testified that one manufacturer, Brown & Williamson, had
developed a tobacco plant, code-named Y-1, with perhaps
twice the nicotine content of regular tobacco. Brown &
Williamson manufactured and marketed cigarettes with Y-1
tobacco in the United States in 1993.
82. The story of Brown & Williamson's development of Y-1 is one of
the more egregious examples of the cigarette
industry's concealment of its control and manipulation of
the nicotine levels in its products.
83. On June 21, 1994, Dr. Kessler told the Waxman
Subcommittee that FDA investigators had discovered that
Brown & Williamson had developed a high nicotine tobacco
plant, which the company called Y-1. This discovery
followed Brown & Williamson's flat denial to the FDA on
May 2, 1994, that it had engaged in "any breeding of
tobacco for high or low nicotine levels."
84. When four FDA investigators visited the Brown &
Williamson plant in Macon, Georgia on May 3, 1994, Brown
& Williamson officials denied that the company was
involved in breeding tobacco for specific nicotine
levels. Only after the FDA had learned of the
development of Y-1 in its investigation and confronted
company officials with the evidence, did the company
admit that it was growing and using the high-nicotine
plant.
85. 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 Texas, including three labeled "light." When the
company's deception was uncovered, company officials
admitted that close to four million pounds of Y-1 were
stored in company warehouses in the United States.
86. 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 half-million pounds" of Y-1 tobacco had been
shipped to Brown & Williamson on September 21, 1992, did
the company admit that it had developed the high-nicotine
tobacco.
87. Y-1 is one example of an overall trend in the tobacco
industry to increase the nicotine content and/or impact
of tobaccos.
88. As a result of the industry's actions, as many as 74% to 90%
of smokers are addicted. Eight out of ten smokers
say they wish they had never started smoking. Two-thirds
of adults who smoke say they wish they could quit.
Seventeen million try to quit each year, but fewer than
one out of ten succeed. A high percentage of the smokers
who have had surgery for lung cancer or heart attacks
return to smoking, as do 40% of smokers who have had
their larynxes removed.
89. Beyond its addictive qualities, nicotine is believed to
contribute to cardiovascular disease and death -- a fact
known to the cigarette industry for many years.
DECEIT AND FRAUD-A CONTINUING CONSPIRACY
AND COMBINATION IN RESTRAINT OF TRADE
90. The general counsel of the major cigarette manufacturers,
through joint meetings to review and direct proposals for
scientific research for the entire industry, aided in the
conspiracy of the tobacco industry to defraud the public
on the issue of tobacco and health.
91. The tobacco industry's combination in restraint of trade was
also referred to as the "gentlemen's agreement." The
"gentlemen's agreement" among the manufacturers was to
suppress independent research on smoking and health.
This agreement was referenced in a 1968 internal Philip
Morris draft memo, which states, "We have reason to
believe that in spite of gentlemens (sic) 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."
92. The industry believed that individual companies were
performing certain research on their own in addition to
the joint industry research. But the fundamental
understanding and agreement remained intact; 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.
93. The Defendants designed a litigation strategy over the years
to conceal, delay, and to run up consumers'
expenses in a war of attrition. For example, a memo
written by J. Michael Jordan, an attorney for Defendant
R.J. Reynolds Tobacco Company, noted:
"(T)he aggressive posture we 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' money, but by making that
other son of a bitch spend all his."
94. Additionally, corporate officials of the Tobacco
Companies and the Tobacco Trade Associations have
attempted wrongfully to create a privilege for various
documents that they wish to conceal by sending such
documents through their legal departments and law firms
in order that they might claim the documents to be
protected by the attorney-client or attorney work-product
privileges. A "Special Projects" division within CTR was
set up 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
attorneys and are now claimed by the Defendants to be
privileged.
95. 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
they had handled the "emergency" (of the Wynder report)
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. OneDefendant's executive called the CTR the best,
cheapest insurance the tobacco industry can buy, noting that
without it the Tobacco Companies would have to invent CTR
or would be dead.
96. Not content with the holding strategy employed by the
TIRC and the CTR, the Tobacco Companies advocated a more
offensive role through their lobbying arm, the Tobacco
Institute (TI). 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 illness. Another, the "multi-factorial
hypothesis," asserted that multiple factors should be
blamed, i.e., food additives, viruses, occupational
hazards, air pollution or stress, for causing cancer.
The tobacco industry financed, supported and encouraged
the manufacture of fraudulent science.
97. However, evidence began to surface concerning the
Defendants' illegal scheme. 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:
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.
As a result of this finding, Judge Sarokin went on to
note:
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.
98. Undaunted by Judge Sarokin's findings, in April,
1994,
Tobacco Company executives asserted, under oath, that
tobacco does not cause cancer, that nicotine is not
addictive and that tobacco advertising does not target
new smokers. Judge Sarokin's earlier written opinion in
Haines is still valid for describing the Defendants:
"...despite some rising pretenders, the tobacco industry
may be the king of concealment and disinformation."
Recently, the fight to uncover the truth has been joined
by the Food and Drug Administration (FDA).
99. On February 25, 1994, David A. Kessler, M.D.,
Commissioner of the FDA, sent a letter to Scott D.
Ballin, Esq., Chairman of the Coalition on Smoking OR
Health, asserting:
Evidence brought to our attention is
accumulating that suggests that
cigarette manufacturers may intend
that their products contain nicotine
to satisfy an addiction on the part
of some of their customers. The
possible inference that cigarette
vendors intend cigarettes to achieve
drug effects in some smokers is
based on mounting evidence we have
received that: (1) the nicotine
ingredient in cigarettes is a
powerfully addictive agent and
(2) cigarette vendors control the
levels of nicotine that satisfy this
addiction.
100. In response to Kessler's letter, on March 15, 1994, in a
letter to The New York Times, James W. Johnston, Chairman
and Chief Executive Officer of R.J. Reynolds, continued
to assert that nicotine was not addictive. Johnston
based his assertion upon the success rate of American
adults who had quit smoking.
101. The Chief Executive Officers of The American Tobacco
Company, R.J. Reynolds Tobacco Company, Brown &
Williamson Tobacco Corporation, Philip Morris, Inc.,
Lorillard and Liggett Group, Inc. all testified under
oath before the same Subcommittee in April of 1994 that
they believed nicotine is not addictive.
102. The recent disclosures of the sworn testimony of a former
research chief for Brown & Williamson Tobacco
Corporation, Dr. Jeffrey S. Wigand, and former Philip
Morris scientists, Jerome Rivers, Dr. Ian L. Uydess and
Dr. William A. Farone, directly contradict the Tobacco
Companies' CEOs' testimony regarding addiction, as well
as the industry's denial of nicotine manipulation.
TARGETING CHILDREN
103. For many years, the Defendants have engaged in a vast and
misleading promotional, public relations, and sham
lobbying blitz that had as its goal increasing the
numbers of people addicted to nicotine in cigarettes
and/or smokeless tobacco products and decreasing the
number of people who attempt or succeed in quitting.
Their efforts 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, the Defendants spend billions of dollars
every year misleading the public and promoting the myth
that smoking cigarettes and using smokeless tobacco
products does not cause cardiovascular disease, lung and
other cancers, 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.
104. Every day, more than 1,200 cigarette smokers die of
cigarette-related diseases. Others manage to break their
addiction to nicotine and quit. In order to prevent a
precipitous decline in cigarette sales, the cigarette
companies must attract more than 3,000 new smokers each
day. Children and teenagers have become the main target;
and as a result of the Tobacco Companies' fraudulent and
false advertising, more than 3,000 of them begin the
habit every day.
105. The Defendants specifically target children. By way of
example, the Joe Camel campaign waged by Defendant R.J.
Reynolds Tobacco Company is intended to and has had great
appeal to children. More than one million new underage
smokers become addicted in the United States each year.
Such efforts by the Defendants create more sales for the
tobacco industry, and more resulting health care costs
for the State.
106. As previously alleged, the Defendants have engaged in a
concerted effort to circumvent and violate the laws of
the State of Texas by targeting children with
sophisticated promotional schemes designed to create
successive generations of addicted customers. As a
result of Defendants' campaigns, it is virtually
impossible for parents or law enforcement resources to
control the efforts of the Defendants to make children
the users of tobacco products.
107. Despite the best efforts of parents, educators and the medical
profession, smoking among young people has
remained alarmingly constant since the late 1970s.
Tobacco Companies use 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. Results of
a Texas state-wide vending machine survey show children
are successful in their attempts 90% of the time. 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, create doubt and confusion, which are used by
smokers as an excuse to avoid the pain and discomfort of
attempting to break their addiction to nicotine.
108. The advertising imagery used to promote smoking among
young people particularly appeals to those with low self-
esteem
and emotional insecurity. Once the young person
has been predisposed toward smoking, a variety of factors
can precipitate actual experimentation. For many young
people, the precipitating factor is being given a free
pack of cigarettes by a tobacco company representative,
or purchasing cigarettes in order to obtain an attractive
t-shirt, baseball cap, or other gimmick used to promote
cigarette smoking.
109. 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 wild spirit of the Marlboro man captured
the adolescent imagination. 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.
110. 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
macho 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.
111. 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.
112. 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,
fun-loving party animals, 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."
113. 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 and sense of
inferiority experienced by adolescents, by portraying the
cigarette as a crutch and a symbol of superiority.
Perhaps the most acute psychological need of adolescence
is to fit in, to be accepted, 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.
114. 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 a 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. In cigarette ads, the air is fresh and clear;
magical things happen. The reality is that cigarette
smoking causes addiction, disease and death.
115. 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 like hang gliding,
motorcycle racing, mountain climbing, etc. 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 like hang-gliding,
mountain climbing, and stunt motorcycle riding in tobacco
advertising, R.J. Reynolds minimizes the dangers of
smoking in adolescent minds.
116. The great success that R.J. Reynolds had in its effort to
overtake Philip Morris in the youth market is 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 like "Joe Camel"
guaranteed to be attractive to young people at high risk
of becoming smokers.
117. 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.
118. 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 implicit
health promises concerning tar and nicotine rather than
glamorous images.
119. The cigarette 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.
120. 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 the 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, the Institute and Tobacco Companies
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 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 reason given children
for not smoking is that -like getting married or driving
a car - smoking is for grown ups. Of course, that
message really makes the smoking more desirable to kids.
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.
121. Perhaps the most vicious element of this advertising
campaign has been advertising aimed at young girls.
Nearly every issue of magazines for young girls, like
Teen and Young Miss, includes an advertisement by
Reynolds urging children not to smoke. But the reasons
given for refraining are not that smoking is addictive,
that it can harm or kill the infants of pregnant women,
or that it causes cancer and other lethal diseases;
rather, the reason given is that it is an "adult
decision."
122. The likely effect of these ads is that, rather than
discouraging children from smoking, they plant in
impressionable young girls' minds the notion that smoking
is something to do to show one's independence, 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.
123. This despicable 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 directed 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.
124. 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
kills the industry's customers by the hundreds of
thousands.
125. The reckless disregard by the Defendants for the health risks
for the youth and minorities of America, is
reflected in the response of an R. J. Reynolds executive
to the question of a former "Winston Man", David
Goerlitz, when he asked why the R.J. Reynolds executives
did not smoke: "We don't smoke the s---, we just sell
it. We reserve that for the young, the black, the poor
and the stupid."
FRAUDULENT ADVERTISING OF
TAR/NICOTINE CONTENT
126. The campaign of deception in advertising by the
Defendants regarding filters and tar/nicotine content
that began in the 1950s, has continued unabated through
the present. Although an "FTC Method" has been developed
that measures the amount of tar and nicotine in a
cigarette with a "smoking machine" (measurements the
Tobacco Companies advertise for their brands), the FTC
method is not a valid or reliable method to measure
tar/nicotine intake by "human smokers". In fact, the
Tobacco Companies have specifically designed their
products to deceive the public into thinking they are
getting a low tar/nicotine cigarette, when in fact they
are getting significantly higher deliveries of
tar/nicotine in their smoke.
127. In 1982, The New York Times noted that Brown and
Williamson had complained to the FTC that American
Brands, Inc., Philip Morris, U.S.A. and R.J. Reynolds
were engaging in deceptive advertising. While promoting
very low-tar cigarettes packaged in flip-top boxes, the
three were also marketing cigarettes containing 10 to 100
times more tar -- in look-alike soft packages. The Times
also reported that Brown and Williamson's much publicized
low-tar Barclay was designed to fool the FTC's smoking
machines. The machines preserve Barclay filter -- but
the human lips probably destroy it, giving smokers heavy
doses of just what they were trying to avoid. In January
1983, Consumer Reports noted that while the Barclay ads
claimed "1 mg. of tar," smokers actually got 3 to 7 times
as much.
128. In the 1980s and 1990s, the Tobacco Companies have
continued the "tar/nicotine reduction" deception by
increasing bioavailability of nicotine through pH
manipulation and use of additives, such as acetaldehyde
to boost the reinforcer pharmacological impact of
nicotine, while still publishing "FTC Method"
measurements and advertising their products as "Light" or
"Ultra-light".
OTHER TOBACCO PRODUCTS
129. The Defendants Brown & Williamson and R.J. Reynolds also
manufacture and distribute loose tobacco used in the
"roll your own" process of cigarette-making.
130. The "roll your own" tobacco products distributed in Texas by
these Defendants are unreasonably dangerous to the
consumer.
131. Even though the medical evidence regarding the hazards of
cigarette smoking and addiction have been known to these
Defendants for many years, the packages and containers of
the "roll your own" tobacco bear no warning regarding
such hazards.
132. The fact that nicotine delivered by tobacco products is highly
addictive was carefully and comprehensily
documented in the 1988 Surgeon General's Report, "The
Health Consequences of Smoking: Nicotine Addiction."
The major conclusions contained in this report are:
(1) "Cigarettes and other forms of tobacco are
addicting"; (2) "Nicotine is the drug in tobacco that
causes addiction"; and (3) "The pharmacologic and
behavioral processes that determine tobacco addiction are
similar to those that determine addiction to drugs such
as heroin and cocaine."
Likewise, in a 1988 report addressing the health
effects of smokeless tobacco, the World Health
Organization concluded:
"There is ample evidence that the
blood nicotine levels of smokeless
tobacco users were as high as or
even higher than those found in many
cigarette smokers. Its continued
use therefore, does cause addiction
and dependence in humans."
133. Nicotine in cigarettes and smokeless tobacco is now
recognized as an addictive substance by such major
medical organizations as the Office of U.S. Surgeon
General, the World Health Organization, the American
Medical Association, the American Psychiatric
Association, the American Psychological Association, the
American Society of Addiction Medicine, the American
Public Health Association, and the Medical Research
Counsel in the United Kingdom. The National Institute on
Drug Abuse ("NIDA") has called cigarette smoking the most
common example of drug dependence in the United States.
134. Despite their knowledge that cigarette smoking and the use of
smokeless tobacco is, as a result of nicotine,
extremely addictive, the Tobacco Companies to this day
deny that smoking, "dipping," or "chewing" tobacco is
addictive. Through their individual advertising and
public relations campaigns, and collectively, through the
Tobacco Institute, the Tobacco Companies have
successfully promoted and sold tobacco products by
concealing and misrepresenting the highly addictive
nature of cigarettes and smokeless tobacco.
135. Defendant United States Tobacco Company makes
approximately 90 percent of the oral snuff and chewing
tobacco sold in the United States. As alleged above,
smokeless tobacco delivers a similar amount of nicotine
as cigarettes and is equally as addictive. Plaintiff is
informed and believes that smokeless tobacco
manufacturers intend to cause nicotine dependence among
consumers through a strategy that involves promoting the
use 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 switching to brands that are more full-bodied
and have more concentrated tobacco taste, with more
nicotine, than the entry brand. This graduation strategy
is supported by the manufacturers' advertising practices
which indicate the manufacturers' intent to have
consumers experiment with low-nicotine brands and
graduate to higher-nicotine brands over time.
RECENT DEVELOPMENTS AND DISCLOSURES
136. After an extensive investigation, in August, 1995, the FDA
published its report and proposed regulations of
cigarettes and nicotine. The results of that inquiry and
analysis support a finding that nicotine in cigarettes
and smokeless tobacco is a drug, and that these tobacco
products are drug delivery devices within the meaning of
the Federal Food, Drug, and Cosmetic Act.
137. The August 1995 FDA report included findings on the
statements, research and actions by the Tobacco
Companies. The factual findings of the FDA investigation
cover the following subjects:
A. Industry Statements on Nicotine Drug Effects.
B. Industry Research on the Drug Effects of Nicotine.
C. Industry Research on the Consumers' Need for an
Adequate Dose of Nicotine.
D. Industry Product Development Research to Ensure an
Adequate Dose of Nicotine.
E. Industry Manipulation and Control of Nicotine
Delivery in Marketed Tobacco Products.
F. Industry Knowledge that Nicotine's Sensory Effects
are Secondary to its Pharmacological Effects.
G. Industry Failure to Remove Nicotine from Tobacco
Despite Available Technology.
The above-referenced FDA findings are set forth in pages
121-318 of the August 1995 report that are attached
hereto as Exhibit 2.
138. On May 12, 1994, Stanton A. Glantz, Ph.D., a professor of
medicine in the Division of Cardiology at the University
of California, San Francisco (UCSF) and a scholar
interested in the field of tobacco and the public health,
received from an unknown source, "Mr. Butts,"
approximately 4000 pages of memoranda, reports, and
letters, covering a 30-year period, from the Brown and
Williamson Tobacco Corporation (B&W) and its parent
company, the British American Tobacco Company (now BAT
Industries). In the subsequent months, Glantz received
several thousand additional pages of documents from
Congressman Henry Waxman's House Subcommittee on Health
and the Environment and another few hundred pages of
documents from the estate of the chief scientist of BAT.
Glantz ultimately put all the documents into the library
at UCSF. The July 19, 1995 Journal of the American
Medical Association is largely devoted to an analysis by
Glantz and his colleagues of these three sets of
documents.
139. As reported in JAMA, the documents show:
1) that research conducted by Tobacco Companies into the
deleterious health effects of tobacco was often more
advanced and sophisticated than studies by the medical
community; 2) that executives at B&W knew early on that
tobacco use was harmful and that nicotine was addictive
and debated whether to make the research public; 3) that
the industry decided to conceal the truth from the
public; 4) that the industry hid its research from the
courts by sending the data through its legal departments,
and that its lawyers asserted that the results were
immune to disclosure in litigation because they were the
privileged product of the lawyer-client relationship;
and, 5) that despite knowledge to the contrary, the
industry's public position was (and continues to be) that
the link between smoking and ill-health was not proven,
that they were dedicated to determining whether there was
such a link and revealing this to the public, and that
nicotine was not addictive.
140. The pertinent articles of the July 19, 1995 JAMA are as
follows:
1) "Looking Through a Keyhole at The Tobacco Industry:
The Brown and Williamson Documents," pages 219-224,
JAMA, July 19, 1995-Vol. 274, No. 3, Glantz, et
al.;
2) "Lawyer Control of the Tobacco Industry's External
Research Program: The Brown and Williamson
Documents," pages 241-247, JAMA, July 19, 1995-Vol.
274, No. 3, Bero, et al.;
3) "Lawyer Control of Internal Scientific Research to
Protect Against Products Liability Lawsuits: The
Brown and Williamson Documents," pages 234-240,
JAMA, July 19, 1995, Vol. 274, No. 3, Hanauer, et
al.; and
4) "Nicotine and Addiction: The Brown and Williamson
Documents," pages 225-233, JAMA, July 19, 1995,
Vol. 274, No. 3, Slade, et al.
Copies of the above referenced JAMA Articles are attached
as Exhibits 3, 4, 5 and 6, respectively.
141. Factual details of how the tobacco industry and Hill &
Knowlton initiated its public fraud campaign are set
forth in a Staff Report dated May 26, 1994, prepared for
the Subcommittee on Health and the Environment, U.S.
House of Representatives. A copy of this report is
attached as Exhibit 7.
142. Factual details of nicotine manipulation by the American
Tobacco Company are set forth in a Staff Report dated
December 20, 1994, prepared by the Majority Staff for the
Subcommittee on Health and the Environment, entitled
"Evidence of Nicotine Manipulation by the American
Tobacco Company." A copy of this report is attached as
Exhibit 8.
THE IMPACT OF DEFENDANTS'
ACTIONS ON THE STATE OF TEXAS
143. Tobacco-caused disease has killed, and continues to kill,
millions of Americans. The Centers for Disease Control
(CDC) has estimated that, currently, more than 400,000
Americans die each year from smoking; that is 26 times
more deaths than result from illegal drugs and indicates
that approximately one in five deaths is attributable to
smoking. Thousands of Texas citizens die each year as a
result of smoking cigarettes. According to the Texas
Bureau of Vital Statistics, 25,900 Texans died in 1993 as
a result of tobacco use.
144. The economic consequences of smoking cigarettes are
equally staggering. In May of 1993, the Office of
Technology Assessment advised the United States Congress
that in 1990, smoking-related illnesses cost United
States taxpayers a total of approximately $50 billion in
direct health care costs; $68 billion in indirect costs
for morbidity; and $40.3 billion in direct costs for
mortality.
145. The State spends millions of dollars each year to provide or
pay for health care and other necessary facilities and
services on behalf of indigents and other eligible
citizens whose health care costs are directly caused by
tobacco-induced cardiovascular disease, lung and other
cancers, emphysema, other respiratory diseases as well as
the complications of pregnancy and childbirth including,
but not limited to, low-weight babies.
146. The State of Texas has suffered damages from the
Defendants' illegal and tortious conduct and as a result
of their unreasonably dangerous products. Those damages
include, but are not limited to, costs and expenditures
from the public fund in the following areas: the
Medicaid Program, the State Employee Group Insurance
Program, the State Employee Retirement System, charity
care and related health and wellness programs.
147. The State of Texas, as an employer which provides health
coverage for its approximately 250,000 employees and
retirees pursuant to statutory and contractual
obligations, is mandated by law to offer comprehensive
and major medical health coverage and benefits that
include coverage for treatment of smoking-caused
diseases. The State of Texas has entered into
contractual agreements with certain health care service
providers and plans in order to make available to its
employees health coverage that includes these mandated
benefits. In fiscal year 1995, the State paid more than
$820 million in claims and premium payments to insurance
carriers for such benefits. The State of Texas has paid
and will pay substantial sums of money pursuant to these
statutory and contractual obligations due to the
increased cost of providing health care services for
treatment of smoking-caused diseases. These increased
expenditures have been caused by the unlawful actions of
the Defendants.
148. The State of Texas operates a number of health care
facilities, including state hospitals and university
health science centers, that provide medical care to
qualifying persons who are not eligible for Medicaid.
The State of Texas pays for all or part of this care.
The State of Texas has expended and will expend
substantial sums of money due to the increased cost of
providing health care services for treatment of
smoking-related diseases. These increased expenditures have been
caused by the unlawful actions of the Defendants.
149. The State of Texas has expended and will expend
substantial sums of money to fund and promote wellness
and healthy lifestyle programs in order to reduce health
care costs, including smoking cessation. In addition,
the State of Texas operates a program of preventive
health services for state employees. These expenditures
have been and will be increased by the unlawful actions
of the Defendants.
CONSPIRACY AND CONCERT OF ACTION
150. From the 1950s and continuing through the filing of this suit,
the Tobacco Companies have entered into agreements
to suppress, distort and/or obfuscate scientific and
medical information relating to the use of tobacco
products and the resulting diseases.
151. The Tobacco Companies participated in and cooperated with each
other in the above conspiracy enabling each and
every manufacturer and distributor of tobacco products to
take the position that the association between using
tobacco products and disease had not been established.
152. In order to carry out their conspiracy, the Tobacco
Companies and Hill and Knowlton, Inc. formed the Tobacco
Institute and the Council for Tobacco Research.
153. The TI and the CTR actively participated in the
conspiracy to conceal and suppress the hazards of
cigarette smoking and use of smokeless tobacco products.
154. The TI and the CTR, acting on behalf of the Tobacco
Companies, monitored research and literature in the
scientific and medical communities regarding cigarette
smoking and/or smokeless tobacco products, and actively
attempted to suppress any negative reports.
155. When TI and CTR were unsuccessful in suppressing negative
reports regarding cigarette smoking, the two
organizations acted to challenge, dilute and diminish the
influence of such reports.
156. As a result of the conspiracy, the Tobacco Companies were able
to continue selling tobacco products to an
unsuspecting and confused public, including the Texas
citizens who had relied on their misrepresentation to
their detriment.
157. As a result of the conspiracy, government regulators were
mislead and deceived; thereby distorting perceptions and
understanding of regulators whose task was to properly
assess and control the hazards presented by cigarette use
and/or smokeless tobacco products.
158. As a direct and proximate result of the Defendants'
actions, the consumers of tobacco products became ill and
required medical care paid for by the State.
AIDING AND ABETTING LIABILITY
159. The actions of the Defendants, individually and
collectively, provided substantial support and
encouragement and aid to the Tobacco Companies in the
sale of cigarettes and other tobacco products.
160. All of the Defendants, individually and collectively,
aided and abetted the fraud perpetuated on the State of
Texas, government regulators and the citizens of Texas.
161. All of the Defendants, individually and collectively,
aided and abetted the sale of tobacco products that they
knew to be hazardous and defective.
CAUSES OF ACTION
COUNT ONE
FEDERAL RACKETEER INFLUENCED
AND CORRUPT ORGANIZATION ACT
162. The State of Texas incorporates and adopts by reference the
allegations contained in this Complaint.
163. In implementing the fraudulent objectives of the TIRC/CTR and
the advertising/marketing campaigns as set forth
above, the Defendants repeatedly have committed acts
prohibited by Federal law, including 18 U.S.C. 1341
and 1342, which constitute predicate acts of mail and
wire fraud, respectively, within the meaning of 18 U.S.C.
1961(1). These acts were related in their common
objective, or were consistently repeated, and are capable
of further repetition. This conduct constitutes a
pattern of racketeering activity within the meaning of 18
U.S.C. 1961(5).
164. The Defendants' schemes or artifices to defraud the
public regarding their tobacco products and health issues
have involved fraudulent misrepresentations and/or
omissions reasonably calculated to deceive persons of
ordinary prudence and comprehension.
165. The Defendants engaged in schemes outlined supra to
defraud members of the public and used the U.S. mails for
the purpose of executing or attempting to execute such
schemes in violation of 18 U.S.C. 1341, which states:
"Whoever, having devised or
intending to devise any scheme or
artifice to defraud, or for
obtaining money or property by means
of false or fraudulent pretenses,
representations, or promises, or to
sell, dispose of, loan, exchange,
alter, give away, distribute,
supply, or furnish or procure for
unlawful use any counterfeit or
spurious coin, obligation, security,
or other article, or anything
represented to be or intimated or
held out to be such counterfeit or
spurious article, for the purpose of
executing such scheme or artifice or
attempting to do so, places in any
post office or authorized depository
for mail matter, any matter or thing
whatever to be sent or delivered by
the Postal Service, or takes or
receives therefrom, any such matter
or thing, or knowingly causes to be
delivered by mail according to the
direction thereon, or at the place
at which it is directed to be
delivered by the person to whom it
is addressed, any such matter or
thing, shall be fined not more than
$1,000 or imprisoned not more than
five years, or both."
166. The Defendants' engaged in the above-described schemes to
defraud members of the public by transmitting
fraudulently deceptive and misleading information and
advertisements by means of wire, radio and television
communication in interstate commerce, and making
misrepresentations of material fact, resulting in passage
of money to these same companies in response to their
misrepresentations in violation of 18 U.S.C. 1343,
which states:
"Whoever, having devised or
intending to devise any scheme or
artifice to defraud, or for
obtaining money or property by means
of false or fraudulent pretenses,
representations, or promises,
transmits or causes to be
transmitted by means of wire, radio,
or television communication in
interstate or foreign commerce, any
writings, signs, signals, pictures,
or sounds for the purpose of
executing such scheme or artifice,
shall be fined not more than $1,000
or imprisoned not more than five
years, or both."
167. The Tobacco Companies' representatives, acting in their
official capacities, have violated the prohibitions set
forth at 18 U.S.C. 1962(Racketeer Influenced and
Corrupt Organizations) by participating in a commercial
enterprise or an enterprise affecting commerce through a
pattern of specific racketeering activity. Section 1962
states in part:
"(c) It shall be unlawful for any
person employed by or associated
with any enterprise engaged in, or
the activities of which affect,
interstate or foreign commerce, to
conduct or participate, directly or
indirectly, in the conduct of such
enterprise's affairs through a
pattern of racketeering activity
...
"(d) It shall be unlawful for any
person to conspire to violate any of
the provisions of subsection (a),
(b), or (c) of this section.
168. The Defendants' knowing and concerted actions from
December 15, 1953 through the present, constitute a
pattern of racketeering activity as defined by 18
U.S.C.A., 1961.
169. The State of Texas has been injured in its business and
property by reason of Defendants' violation of 18
U.S.C.A., 1962, i.e., as a direct result of the public
fraud perpetrated by a pattern of conduct violative of 18
U.S.C.A., 1341 and 1343, millions of Texas citizens
have commenced and continue to smoke cigarettes or
consume smokeless tobacco products requiring the State to
incur significant costs and expenses in administering the
State's health-related programs.
COUNT TWO
FEDERAL ANTITRUST LAW; SHERMAN ACT SECTION 1
CONSPIRACY TO RESTRAIN TOBACCO MARKET
170. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
171. Beginning at a time uncertain, but at least as early as the
1950s, and continuing to the present, Defendants have
entered into a contract, combination, or conspiracy in
unreasonable restraint of trade and commerce in the
market for cigarettes and other tobacco products in the
United States, including the State of Texas, in willful
and/or flagrant violation of 15 U.S.C. 1. The market
for cigarettes and tobacco products is directly related
to and inextricably intertwined with health care.
172. This contract, combination, or conspiracy had the purpose and
effect of restraining competition in the market for
cigarettes and other tobacco products in the United
States, including the State of Texas, and controlling the
market for cigarettes and other tobacco products in the
United States, including the State of Texas, by anti-
competitive patent accumulation practices and other
conduct restraining and suppressing the competition,
research, development, production and marketing of a
higher quality and safer cigarette and tobacco product.
Defendants' restraint of trade and commerce has resulted
in millions of persons beginning and continuing to smoke,
causing the cost of medical care for Texans to increase
dramatically and impacting Federal and State Medicaid
expenditures and related programs as set forth above.
173. Defendants' anti-competitive activity affected the price of
cigarettes and other tobacco products in the U.S.;
restrained and suppressed competition in the research,
development, production, and sale of alternative
products, and resulted in artificially-inflated demand
for Defendants' cigarettes and other tobacco products.
174. The Defendants, through their funding and control of
certain studies concerning the effects of the use of
tobacco products on human health, their control over
trade publications, promoting, marketing, and/or through
other agreements, understandings and joint undertakings
and enterprises, conspired with, cooperated with and/or
assisted each other in the wrongful suppression, active
and fraudulent concealment and/or misrepresentation of
the true relationship between tobacco products and
various diseases, all to the detriment of the public
health, safety and welfare and thereby causing harm to
the State and diminution of the State's assets.
175. As a direct result of Defendants' unlawful activity, the State
will continue to suffer substantial injuries to its
business and property.
176. Unless enjoined from doing so, Defendants will continue to
violate the federal antitrust laws.
COUNT THREE
TEXAS FREE ENTERPRISE AND ANTITRUST ACT OF 1983,
SECTION 15.05(a)
CONSPIRACY TO RESTRAIN TOBACCO MARKET
177. The State of Texas incorporates and adopts by reference the
allegations contained in this Complaint.
178. Beginning at a time uncertain, but at least as early as the
1950s, and continuing to the present, Defendants have
entered into a contract, combination, or conspiracy in
unreasonable restraint of trade and commerce in the
market for cigarettes and other tobacco products in the
United States, including the State of Texas, in willful
and/or flagrant violation of TEX. BUS. & COM. CODE
15.05(a). The market for cigarettes and tobacco
products is directly related to and inextricably
intertwined with health care.
179. This contract, combination, or conspiracy had the purpose and
effect of restraining competition in the market for
cigarettes and other tobacco products in the United
States, including the State of Texas, and controlling the
market for cigarettes and other tobacco products in the
United States, including the State of Texas,
by anti-competitive patent accumulation practices and other conduct
restraining and suppressing research on the
harmful effects of smoking; restraining and suppressing
the dissemination of information on the harmful effects
of smoking and the use of smokeless tobacco; and
restraining and suppressing the competition, research,
development, production and marketing of a higher quality
and safer cigarette and tobacco product. Defendants'
restraint of trade and commerce has resulted in millions
of persons beginning and continuing to smoke, causing the
cost of medical care for Texans to increase dramatically
and impacting Federal and State Medicaid expenditures and
related programs as set forth above.
180. Defendants' anti-competitive activity affected the price of
cigarettes and other tobacco products in the State of
Texas; restrained and suppressed competition in the
research, development, production, and sale of
alternative products; and resulted in
artificially-inflated demand for Defendants' cigarettes
and other tobacco products.
181. As a direct result of Defendants' unlawful activity, the State
will continue to suffer substantial injuries to
their business and property.
182. Unless enjoined from doing so, Defendants will continue to
violate the Texas antitrust laws.
COUNT FOUR
NEGLIGENCE
183. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
184. The Defendants had a duty to exercise reasonable care in the
manufacture, sale and/or distribution of Defendants'
cigarettes and/or smokeless tobacco products.
185. The Defendants breached that duty by the conduct alleged
above.
186. As a result of Defendants' breach, citizens of the State of
Texas became nicotine dependent and contracted
diseases as a result. The State was required to provide
medical and other assistance to these tobacco consumers.
COUNT FIVE
STRICT LIABILITY FOR DEFECTIVE AND
UNREASONABLY DANGEROUS PRODUCT
187. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
188. The Defendants collectively sold or aided and abetted in the
sale of cigarettes, "roll your own" tobacco and
smokeless tobacco products, which products were and are
defective and unreasonably dangerous.
189. The Tobacco Companies' tobacco products are designed,
manufactured, marketed and/or sold by the Defendants to
be smoked, chewed or dipped by the consuming public.
190. The smoking of cigarettes and/or the chewing or dipping of
tobacco products was not only a foreseeable use, it
was the very purpose for which these Defendants
manufactured, sold or distributed their tobacco products.
191. At all pertinent times, the Defendants knew, or should have
known, that the smoking of cigarettes and/or use of
smokeless tobacco products was and is hazardous to human
health.
192. Cigarettes and smokeless tobacco products are abnormally and
unreasonably dangerous. The health risks and costs
of cigarette smoking and using smokeless tobacco products
to the citizens of the State and to the State, greatly
outweigh any claimed utility of the tobacco products. The
Defendants knew, or should have known, of the dangers
inherent in the use of their tobacco products and that
the public and the State's fund and its citizens'
property would be directly harmed and diminished by the
intended and foreseeable use of their tobacco products.
193. For many years, the Defendants have been engaged in the
business of manufacturing, testing, designing, promoting,
marketing, packaging, selling, distributing, and/or
placing into the stream of commerce into the State,
numerous defective, unreasonably dangerous and hazardous
tobacco products or, in the course of their business,
materially have participated with, conspired with and/or
otherwise aided, abetted and assisted other Defendants in
doing so.
194. As a direct and proximate result of the defective design,
testing, manufacturing, marketing, and assembly choices
and practices of the Tobacco Companies, the Tobacco
Companies' cigarettes, "roll your own" tobacco and
smokeless tobacco products were and are themselves
defective and unreasonably dangerous.
195. The Tobacco Companies' tobacco products reached the
users, consumers and bystanders thereof in substantially
the same condition that they were in when originally
manufactured, distributed and sold by the Tobacco
Companies. At the time the Tobacco Companies' tobacco
products were sold or placed on the market, they were in
a defective condition, unreasonably dangerous to users
and consumers.
196. The defective condition of the Tobacco Companies'
tobacco products directly and proximately caused
thousands of Texans to suffer various tobacco-related
diseases, injuries and sicknesses, and directly and
proximately caused the State to expend millions of
dollars in order to provide necessary health care to
these citizens, thereby damaging the State.
197. At all pertinent times, it was foreseeable by the Tobacco
Companies that certain of the Texas residents who used
the Tobacco Companies' tobacco products would become ill
and suffer injury, disease and sickness as a direct
result of using the tobacco products as the Tobacco
Companies intended. It was further foreseeable by the
Tobacco Companies that the State would be required, in
the past and in the future, to expend millions of dollars
each year to provide necessary medical treatment and
facilities to those citizens so injured.
198. The residents of the State of Texas used the Tobacco
Companies' tobacco products in the manner in which the
tobacco products were intended to be used, without any
substantive alteration or change in the product.
199. The Tobacco Companies' tobacco products were delivered to the
residents of the State of Texas in a condition that
was unreasonably dangerous to the user. The Tobacco
Companies expected and intended for the products to be
used by residents of the State of Texas without
substantial change affecting the unreasonably dangerous
condition.
200. The Tobacco Companies' tobacco products were unreasonably
dangerous due to their design in that:
a. The tobacco products failed to perform as safely as
an ordinary consumer would expect when used as
intended;
b. The risk of danger in the design of the tobacco
products outweighed any benefits associated with
the use of the tobacco products; and
c. The manufacturers of "roll your own" tobacco failed
to provide any warnings of the dangerousness of
their tobacco products.
201. In breaching their duties to the consumers, as described
above, the Tobacco Companies acted intentionally,
recklessly, maliciously and wantonly in that each Tobacco
Company knew or should have known, through information
available exclusively to them, that their tobacco
products were defective and unreasonably dangerous. The
Tobacco Companies further knew or should have known that
their breach of duty would result in the injuries
complained of herein.
COUNT SIX
BREACH OF EXPRESS AND/OR IMPLIED WARRANTIES
202. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
203. The Tobacco Companies made affirmations or promises
regarding the health effects of their products to the
public. The Tobacco Companies affirmed or promised
through their "Frank Statement" in 1954 and subsequent
representations through the present, to study the health
effects of their products and fully disclose the results
of this research to the residents of the State of Texas.
204. These affirmations, as well as the extensive advertising of
the industry, became the basis of the bargain for many
individuals, both in beginning to use tobacco or
continuing to use tobacco. The residents of the State of
Texas, including Medicaid recipients, relied on these
continuing affirmations in buying and using the Tobacco
Companies' products. The residents of Texas relied on
the Tobacco Companies' skill or judgment in manufacturing
a product fit for human consumption.
205. The Tobacco Companies' products are unmerchantable and are
unfit for safe use when sold and consumed as
intended. The Tobacco Companies have breached their
implied warranty of merchantability because their
products are not fit for their intended purposes. The
Tobacco Companies had reason to know that the particular
purposes for which their products are intended are
unreasonably dangerous.
206. The Tobacco Companies have breached both the express and
implied warranties described above.
207. As a direct result of the Defendants' breach of express and
implied warranties of merchantability, the State has
been damaged because it has incurred medical expenses
under the Medicaid Program and other programs in the
treatment of sickness, disease or injury caused by the
Defendants' conduct.
COUNT SEVEN
RESTITUTION-UNJUST ENRICHMENT
208. The State of Texas alleges and incorporates herein the
foregoing allegations of this Complaint.
209. Many of the State's citizens who are afflicted with
tobacco-related diseases are poor and unable to provide
for their own medical care, and must rely upon the State
to provide for their care. This 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. Texas taxpayers have expended hundreds of
millions of dollars in caring for their fellow citizens
who have suffered from tobacco-related illness.
210. 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.
211. The Defendants have been unjustly enriched as a result.
212. While the State and its various agencies and institutions are
struggling to pay for the health care costs of
tobacco, the tobacco industry and its co-conspirators
continue to reap billions of dollars in profits from the
sale of cigarettes and other tobacco products.
213. The Defendants have avoided regulations and have promoted the
sale of their tobacco products to the citizens of
Texas by continuing to misinform the federal and State
authorities about the true carcinogenic, pathologic and
addictive qualities of cigarettes and other tobacco
products.
214. The Defendants have spent billions of dollars on targeted
marketing programs designed to encourage children to
purchase and smoke cigarettes and use other tobacco
products, which is prohibited by the laws of Texas.
215. The Defendants, not the taxpayers of Texas, should bear the
costs of tobacco-related diseases. By avoiding their
own duties to stand financially responsible for the harm
done by their cigarettes and other tobacco products, the
Defendants wrongfully have forced the State of Texas to
perform such duties and to pay the health care costs of
tobacco related disease. As a result, the Defendants
have been unjustly enriched to the extent that the State
of Texas has had to pay these costs.
COUNT EIGHT
COMMON LAW PUBLIC NUISANCE
216. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
217. The Defendants have intentionally interfered with the
public's right to be free from unwarranted injury,
disease and sickness and have caused damage to the public
health, the public safety and the general welfare of the
citizens of Texas, and have thereby wrongfully caused the
State to expend millions of dollars in support of the
public health and welfare.
COUNT NINE
NEGLIGENT PERFORMANCE OF A
VOLUNTARY UNDERTAKING
218. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
219. The Defendants voluntarily assumed the duty and
responsibility to report honestly and completely on all
research regarding cigarette smoking and/or use of
smokeless tobacco products and health, based upon their
public pronouncements to do so.
220. The Defendants breached this duty by not only failing to
report on such research, but also knowingly and actively
publishing and publicizing fraudulent science.
221. The Defendants further breached this duty by suppressing
negative research data regarding cigarettes and health.
222. The Defendants knew or should have known that the State,
government regulators and others would rely on their
pronouncements.
223. The Defendants knew or should have known that such
reliance would result in injury.
COUNT TEN
FRAUD, INTENTIONAL
MISREPRESENTATION
224. The State of Texas realleges and incorporates herein the
foregoing allegations of this Complaint.
225. The Tobacco Companies and the Tobacco Trade Associations, have
conspired together, sometimes acting through a
clandestine "Special Projects" program of the Tobacco
Institute Research Committee, later called the Council
for Tobacco Research-U.S.A. Inc., for the purpose of
fraudulently misleading the public, including Texas
citizens, the State and government regulators, with
regard to the health risks of smoking, all for the
purpose of enhancing the Defendants' profits from the
sale of their cigarettes.
226. Specifically, and in addition to the allegations above, the
Tobacco Companies and Tobacco Trade Associations knew
of the hazards of using tobacco products. The Defendants
affirmatively and actively concealed information that
clearly demonstrated the dangers of using tobacco
products and affirmatively misled the public with regard
to the material and clear risks of using tobacco
products. The Defendants knowingly engaged in these
activities with the intent that the public would continue
to purchase the Defendants' tobacco products. The
Defendants knew that the public, particularly children,
would not be in a position reasonably to discover and
understand the true risks of the use of tobacco products,
and the public relied upon the misleading information
that the Defendants promulgated to their detriment.
227. At all pertinent times, the Defendants purposefully and
intentionally engaged in these activities, and continue
to do so, knowing full well that when the State's
citizens use their tobacco products as those products are
intended to be used, that the State's citizens would
suffer disease, injury and sickness and that the State
would be injured thereby.
228. At all pertinent times, the Defendants purposefully and
intentionally engaged in these activities, and continue
to do so, with knowledge that the State would be
obligated to, and would, provide health care and other
necessary facilities and service