Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

BLUE CROSS & BLUE SHIELD OF N.J. v. PHILIP MORRIS

September 19, 2000

BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC., ET AL., PLAINTIFFS,
V.
PHILIP MORRIS, INCORPORATED, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Weinstein, Senior District Judge.

        MEMORANDUM & ORDER

TABLE OF CONTENTS

I INTRODUCTION .................................................. 352

II FACTS ......................................................... 354 A. Blues ...................................................... 354 B. Tobacco .................................................... 355 1. Health Effects .......................................... 355 2. Industry Conspiracy ..................................... 356 a. Formation and Execution .............................. 356 b. Knowledge ............................................ 358 c. Coverup .............................................. 359 d. Other Deceptive Conduct .............................. 360

III SUMMARY JUDGMENT STANDARD ..................................... 363

IV RICO .......................................................... 364 A. Racketeering ............................................... 364 1. Scheme Components ....................................... 364 2. Application to B.A.T. ................................... 367 B. Section 1962(c) ............................................ 368 1. Direct Claims ........................................... 368 a. Causation-In-Fact: Reliance .......................... 369 b. Proximate Causation .................................. 371 2. Subrogated Claims ....................................... 372 a. Constitutional Challenges ............................ 372 i. Due Process ...................................... 373 ii. Jury Right ....................................... 375 b. State Law Challenges ................................. 376 i. Federal Common Law v. New York Law .............. 376 ii. Treble Recovery ................................. 378 iii. Aggregate Adjudication .......................... 379 iv. N.Y. CPLR 4545(c) ............................... 380 3. Statute of Limitations .................................. 380 4. Future Damages .......................................... 382 C. Section 1962(a) ............................................ 383 D. Section 1962(d) ............................................ 384

V STATE FRAUD-BASED ACTIONS ..................................... 385

VI PREEMPTION .................................................... 386

VII CONCLUSION .................................................... 388

The defendants have moved for summary judgment on various grounds. See Fed.R.Civ.P. 56. For the reasons indicated below, summary judgment is granted as to some causes of action and denied as to others. The action is ordered to proceed to trial.

I INTRODUCTION

Plaintiffs, various Blue Cross and Blue Shield Plans ("Blues") from around the Nation, seek recovery against the major tobacco product manufacturers and related entities ("Tobacco") for alleged misrepresentations and omissions of material facts and for similar deceptive conduct regarding the deleterious effects of tobacco use on their clients' ("Plan members") health that has resulted in increased costs for the Blues.

Three of the Blues' theories of recovery are based on alleged racketeering activity pursuant to the Federal Racketeer Influenced Corrupt Organization Act ("RICO"). See 18 U.S.C. § 1962, 1964. Summarily stated, these theories are:

1) Tobacco engaged in a fraudulent scheme of misinformation directed at Plan members (and the population at large) to encourage them to smoke (and not to cease smoking) and to use smokeless tobacco products, thus causing them to suffer tobacco-related injuries and illnesses that they otherwise would not have suffered, and in turn forcing the Blues to pay substantially higher amounts for treatment of these maladies than otherwise would have been required, see id. § 1962(c) ("RICO Payment Action") (This action is also pled in the alternative based upon equitable subrogation ("Subrogated RICO Payment Action"));
2) Tobacco engaged in a fraudulent scheme of misinformation directed at the Blues to cover-up, minimize, and create the appearance of an "open controversy" as to the deleterious health effects of tobacco resulting in the Blues detrimentally relying on this information in failing to institute smoking cessation programs, to adopt differential health-insurance premiums for smokers and non-smokers, and to discourage tobacco use among Plan members, see id. § 1962(c) ("RICO Smoking Reduction Action");
3) Tobacco reinvested racketeering income and proceeds from a RICO enterprise directed at the population generally and Plan members and the Blues particularly, see id. § 1962(a) ("RICO Investment Action"). The RICO enterprise sought to control and influence the information distributed to the public concerning the health effects of smoking, to suppress and conceal scientific and medical information regarding the adverse health effects of smoking and the alternatives of safer or less-addictive cigarettes, to manipulate nicotine to create and sustain user addiction, and to avoid and shift tobacco-related health care costs to others including the Blues. See Plfs' Fourth Amended Compl. ¶ 295 (hereinafter "Compl."). The funds generated were reinvested into the RICO enterprise to prepetuate the fraudulent and deceptive conduct. See Compl. ¶ 296.

A fourth theory is based on fraud under state common law. Plaintiffs contend Tobacco engaged in a fraudulent scheme with the specific intent to mislead the Blues into "not taking actions to discourage and reduce tobacco use by the [Blues] Plan[] members," see Compl. ¶¶ 332, 334; see also id. ¶ 353, resulting in an increased incidence of tobacco-related illnesses among Plan members and, in turn, substantially higher health care expenditures by the Blues ("Direct Fraud Action").

A sixth theory is based on claims under the New York Consumer Protection Act. See N.Y.Gen.Bus.Law §§ 349 (deceptive acts and practices), 350 (false advertising). This action is advanced both as a direct action and as a subrogated action to recover tobacco-related health care outlays made by the Blues on behalf of Plan members.

Finally, plaintiffs have pled a multitude of state law claims specific to the various state Blues.

Plaintiffs' state law claims were earlier stayed. See Blue Cross & Blue Shield of N.J. v. Philip Morris, 36 F. Supp.2d 560, 588 (E.D.N.Y. 1999).

As noted by this court in addressing summary judgment motions in a related tobacco case, "[t]he unique character of the massive, nationwide, longstanding, and ongoing fraudulent schemes alleged, and the enormous damages claimed to have resulted, require flexibility in approaching the novel factual and legal issues presented by this extraordinary case." Falise v. American Tobacco, 91 F. Supp.2d 525, 527 (E.D.N.Y. 2000) (preliminary summary judgment order). Though the court remains skeptical of plaintiffs' ability to fully support their allegations, a sufficient showing has been made — subject to a Daubert hearing on the validity of the proposed statistical models relied upon by plaintiffs — to warrant a jury trial.

The parties have engaged in extensive discovery, supplied the court with volumes of documentation and argued opposing contentions at length. Based on these proceedings (and upon all other proceedings in the related tobacco cases pending in this court), and in shaping the case for jury trial and in resolving defendants' various summary judgment motions, it is ordered:

I Claims of plaintiff Empire Blue Cross & Blue Shield of New York ("Empire") shall be tried together prior to trial of the remaining Blues plaintiffs. The summary judgment motions relating to the other Blues plaintiffs are denied with leave to renew at the completion of trial of Empire's claims.
II Summary judgment is denied with respect to Empire's RICO Payment Action. See supra ¶ 1. With respect to the limitations period, Empire may seek recovery of payments for tobacco-related health claims filed with it on or after April 29, 1994 (four years before the filing of the original complaint) to the date of trial. The filing of a claim with Empire is to be deemed the date on which that particular injury to it accrued for purposes of the statue of limitations. Empire may not seek damages for projected claims to be filed in the future in the present action.
III Summary judgment is denied with respect to Empire's Subrogated RICO Payment Action. See supra ¶ 1.
IV Summary judgment is granted with respect to Empire's RICO Smoking Reduction Action. See supra ¶ 2.
V Summary judgment is granted with respect to Empire's RICO Investment Action. See supra ¶ 3.
VI Defendants' motion for partial summary judgment arguing that certain alleged wire fraud and mail fraud RICO predicate violations are preempted by the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. § 1331 et seq., is denied,
VII Defendant B.A.T.'s motion for summary judgment as to claims against it is denied.
VIII The stay of Empire's state law claims is lifted with respect to the Subrogated Fraud Action and the New York Consumer Protection Act claims. These claims, all of which sound in fraud, involve substantially the same factual allegations as the RICO actions, thus requiring minimal additional discovery. Resolution of these claims with Empire's RICO Payment Action would not prove unduly confusing or burdensome for the parties, court, or the jury, nor would it delay the commencement of trial. The parties should endeavor to make any substantive motions with respect to the Subrogated Fraud Action and the New York Consumer Protection Act claims in an expeditious manner. The earlier stay shall remain in effect as to the other causes of action.
VIII Summary judgment is granted with respect to the Direct Fraud Action.

The explanation for these orders is provided below. See Parts IV, V, & VI, infra.

II FACTS

A. Blues

The plaintiffs ("Blues") are twenty-one medical provider-insurer Blue Cross and Blue Shield plans from across the United States. They and their predecessors have been providing health care insurance coverage and related services to their members since the beginning of the Twentieth Century. See id. ¶ 12. Tens of millions of Americans have depended upon them for a broad range of health care benefits and related services as the largest non-governmental provider of health insurance coverage and related services in the country. See Fourth Amended Compl. ¶¶ 1, 12 (hereinafter "Compl."). Presently almost seventy million people look to them for medical protection.

Originally established as "insurers of last resort" in their respective states, the Blues have historically provided health care protection to any individual regardless of that person's medical condition. See id. ¶ 14. Even today, most of the Blues continue to act as insurer of last resort, covering sicker and lower income Americans. See Mem. of Law in Opp. to Summ. Judg. for Lack of Direct Injury and Failure to Offer Individ. Proof as to Subrog. Claims, at 13-15 (hereinafter "Opp. Mem. on Direct Injury").

The Blues are independent licensees of the Blue Cross and Blue Shield Association, through which the various Blue Cross and Blue Shield plans license the right to use the Blue Cross ® and Blue Shield ® names and symbols. They operate within defined geographic regions, in most cases based on state lines. See id. ¶ 13.

On the demand side of the health insurance equation, the Blues contract with individuals, governments (at the federal, state and local level), employee and labor groups, businesses, associations and other institutions to provide health plan benefits and related services. Regardless of the costs of care, the Blues are responsible for payment. See id. ¶ 18. On the supply side, the Blues directly contract with thousands of medical care providers, including doctors, clinics, hospitals, and others for services to be rendered to Plan members. See id. ¶ 17; see also Opp. Mem. on Direct Injury, at 11; see generally George J. Annas, Sylvia A. Law, Rand E. Rosenblatt, & Kenneth R. Wing, American Health Law ch. 2, at 121-64 (1990).

As plaintiffs, the Blues seek recovery of their expenditures for Plan members in treating tobacco-related diseases and nicotine addiction. See id. at 19. The Blues contend that a substantial portion of these costs are due to a massive and sustained fraudulent conspiracy designed and carried out by Tobacco to mislead the American public about the dangers of tobacco use and nicotine addiction, to prevent the introduction of less harmful or addictive tobacco products, and to shift the health care costs of treating tobacco-related illness onto the Blues and others. See Compl. ¶¶ 76, 77, 99, 102.

B. Tobacco

1. Health Effects

The toll from smoking-related diseases is enormous. Other mass health disasters such as those attributable to asbestos are relatively insignificant compared to the calamity brought about by tobacco use. Cf. In re Joint Eastern and Southern District Asbestos Litig., 129 B.R. 710, 736 (E.D.N.Y. 1991). Smoking-related illnesses account for one of every five deaths each year in the United States, making cigarette smoking the leading cause of premature death in the United States. See Compl. ¶ 62. Based on statistics from the Federal Centers for Disease Control and Prevention, annually smoking-related illnesses kill more than 400,000 Americans, exceeding the combined deaths caused by automobile accidents, AIDS, alcohol use, illegal drug use, homicide, suicide and fires. See id. ¶ 62.

Tobacco use is responsible for:

• cancers of the lung, mouth, larynx, esophagus, stomach, pancreas, uterus, cervix, kidney and colon (see id.);
• pulmonary diseases such as emphysema and bronchitis (see id.);
• cardiovascular diseases such as strokes, heart attacks, peripheral vascular disease, and aortic aneurysms (see id.); and
• reproduction problems such as reduced fertility, increased rates of miscarriages and stillbirths, retarded uterine fetal growth and lowered infant birth weight (see id. ¶ 64).

All told, the 43 carcinogenic chemicals inhaled by persons smoking defendants' products have been linked to 85% of all lung cancer, 30% of all deaths from other cancers, and 80% of deaths from pulmonary diseases. See id. ¶ 63.

In addition to disease and illness, smoking cigarettes can lead to nicotine addiction. Nicotine is the chemical substance in cigarettes that creates the "smoking high" smokers experience. Once in the blood stream, nicotine is carried almost immediately to the brain where it sets off a series of chemical reactions that alter mood and produce feelings of both sedation and stimulation. It also activates the transmission of a natural chemical, dopamine, that generates pleasurable body sensations, which ultimately causes a craving for nicotine delivered by cigarette smoking. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 120 S.Ct. 1291, 1319-20, 146 L.Ed.2d 121 (2000) (Breyer, J., dissenting) (describing physiological reactions resulting from nicotine use).

So powerful is the addictive force of nicotine that, in "the absence of nicotine, the addicted smoker suffers symptoms of physical withdrawal, including headaches, constipation, insomnia, depression, inability to concentrate and anxiety." Compl. ¶ 66. According to the Surgeon General of the United States, nicotine addicts in much the same way as heroin and cocaine. See id. ¶ 67. Many smokers are unable to quit until they suffer a heart attack or contract lung cancer, and even then, of those who survive the ordeal approximately one-half will return to smoking. See id.

The deleterious health effects of smokeless tobacco products, such as snuff and chewing tobacco, are nearly as staggering as those caused by smoking cigarettes. See id. ¶ 69-71. Smokeless tobacco contains potent carcinogens that can increase the risk of cheek and gum cancers nearly fifty fold. See id. ¶ 69. Use of smokeless tobacco can also lead to oral leukoplakia, cancer of the gum, mouth, pharynx and larynx, the development of precancerous lesions of the soft tissue around the mouth, and an increased risk of cancer of the esophagus. See id. ¶ 70-71. The use of snuff in particular can cause gum recession, the discoloration of teeth and fillings, dental cavities and abrasions of the teeth.

2. Industry Conspiracy

a. Formation and Execution

Plaintiffs allege that, beginning with a clandestine meeting in December 1953 at the Plaza Hotel in New York City among the presidents of Philip Morris, R.J. Reynolds, American Tobacco, Brown & Williamson, Lorillard and U.S. Tobacco, Tobacco embarked on a systematic, half-century long scheme to:

"(a) stop competing with each other in making or developing less harmful cigarettes; (b) continue knowingly and willfully to engage in misrepresentations and deceptive acts by, among other things, denying knowledge that cigarettes caused disease and death and agreeing not to disseminate harmful information showing the destructive effects of nicotine and tobacco consumption; (c) shut down research efforts and suppress medical information that appeared to be adverse to the Tobacco Companies' position that tobacco was not harmful; (d) not compete with respect to making any claims relating to the relative health-superiority of specific tobacco products; and (e) to confuse the public about, and otherwise distort, whatever accurate information about the harmful effects of their products became known despite their [efforts to conceal such information.]"

Compl. ¶ 104; see also Falise v. American Tobacco Co., 94 F. Supp.2d 316, 329-33 (E.D.N.Y. 2000).

This meeting was a response to a series of epidemiological and toxicological reports linking tobacco consumption with lung cancer. See Compl. ¶¶ 99-101; see also Kenneth R. Foster, David E. Bernstein, & Peter W. Huber, Phantom Risk: Scientific Inference and the Law 4 (1994) ("Epidemiological studies by Doll and Hill (1952) conducted in the early 1950s strongly indicated that a pack-a-day smoker has a tenfold higher chance of developing lung cancer than a nonuser."); see generally David L. Faigman, David H. Kaye, Michael J. Saks, & Joseph Sanders, 2 Modern Scientific Evidence: The Law and Science of Expert Testimony §§ 27-1.0 to 28-2.4 (1997) (epidemiological studies and toxicological studies); Linda A. Bailey, Leon Gordis and Michael Green, Reference Guide on Epidemiology, in Federal Judicial Ctr., Reference Manual on Scientific Evidence 121 (1994) (hereinafter Reference Manual); Bernard D. Goldstein and Mary Sue Henifin, Reference Guide on Toxicology, in Reference Manual, supra, at 181. These studies threatened dramatic reduction in tobacco product sales and industry stock prices. See Compl. ¶ 101.

To carry out the conspiracy, Philip Morris, R.J. Reynolds, Brown & Williamson, American Tobacco, Lorillard and U.S. Tobacco — with the assistance of the New York-based public relations firm of Hill and Knowlton — formed the Tobacco Industry Research Committee ("TIRC") in January 1954. See id. ¶ 109. Renamed the Council for Tobacco Research ("CTR") in 1964 when Liggett became a member, it was to create the false appearance that Tobacco was carrying out "objective, independent, and unbiased" research into the health effects of tobacco consumption, all the while actually "conduct[ing] a campaign of deceit, misrepresentation and misinformation . . . about the [real] health risks of smoking." See id. ¶ 147.

To support their claims that the TIRC, and later the CTR, were integral to Tobacco's alleged conspiracy to deceive the public, plaintiffs rely heavily on the "Frank Statement to Cigarette Smokers," a joint statement by five of the tobacco manufacturers. It was published "in newspapers in virtually every city with a population of 50,000 or more, reaching more than 43 million Americans out of a population at the time of approximately 150 million." Id. at ¶ 110. It explicitly announced that:

• "[T]here is no proof that cigarette smoking is one of the causes of lung cancer." (Id. ¶ 110(c));
• "[Tobacco] always h[as] and always will cooperate closely with those whose task it is to safeguard the public health." (Id. ¶ 110(f));
• "[Tobacco is] pledging aid and assistance to the research effort into all phases of tobacco [product] use and health." (Id. ¶ 110(g));
• "For this purpose [Tobacco is] establishing a joint industry group. . . . This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE." (Id. ¶ 110(g) (capital letters in original)); and
• "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." (Id. ¶ 110(i)).

It is plaintiffs' contention that Tobacco intended the public as well as health care payers, including the Blues, to rely upon the reports, research, and communications of the TIRC — and the companies generally — in assessing the dangers of tobacco use. See id. ¶ 111. As support for their allegation that the TIRC was never intended as the objective research council advertised, plaintiffs rely on disclosures in internal Tobacco documents such as the following:

• "[TIRC] was set up as an industry shield in 1954. That was the year statistical accusations relating smoking to diseases were leveled at the Industry; litigation began; and the Wynder/Graham reports were issued. [TIRC] has helped out legal counsel by giving advice and technical information, which was needed at trials. . . . [T]he public relations value of [TIRC] must be considered and continued. . . . It is very important the industry continue to spend their [sic] dollars on research to show that we don't agree that the case against smoking is closed." (Compl. ¶ 154(a));
• "Historically, the joint industry funded smoking and health research programs have not been selected against specific scientific goals, but rather for various purposes such as public relations, political relations, position for litigation, etc. . . . In general, these programs have provided some buffer to public and political attack of the industry, as well as background for litigious [sic] strategy." (Id. ¶ 154(c));
• "To date, the TIRC program has carried its fair share of the public relations load in providing materials to stamp out brush fires as they arose. While effective in the past, this whole approach requires both revision and expansion. The public relations program . . . was like the early symptoms of diabetes — certain dietary controls kept public opinion reasonably healthy. When some new symptom appeared, a shot of insulin in the way of a news release . . . kept the patient going." (Id. ¶ 154(e)); and
• "For nearly twenty years, this industry has employed a single strategy to defend itself on three major fronts — litigation, politics, and public opinion. While the strategy was brilliantly conceived and executed over the years helping us win important battles, it is only fair to say that it is not — nor was it intended to be — a vehicle for victory. On the contrary, it has always been a holding strategy, consisting of creating doubt about the health charge without actually denying it." (Id. ¶ 154(g)).

To complement the fraudulent efforts of the TIRC and CTR, Tobacco in 1958 formed The Tobacco Institute ("TI") — a New York non-profit corporation that operated in Washington, D.C. — as a lobbying arm for the industry. See id. ¶ 57. In 1969, U.S. Tobacco, the largest manufacturer of smokeless tobacco products in the United States, formed a third organization, The Smokeless Tobacco Council, Inc. ("STC"), as a propaganda and lobbying agent. See id. ¶ 59. Though ostensibly focused on protecting the interests of smokeless tobacco manufacturers, plaintiffs allege that STC operated in conjunction with the industry generally, receiving financial support from Brown & Williamson, Lorillard and R.J. Reynolds. See id.

b. Knowledge

Although the TIRC, CTR, and TI continued to release public statements and reports indicating smoking neither caused adverse health effects nor was addictive — as well as to finance research to support these claims — the Blues contend that all the while Tobacco in fact knew the contrary to be true: that smoking is both lethal and addictive. See Compl. ¶¶ 122-146

Internal documents from defendants indicate that through independent company research and the sharing of this research through the TIRC and CTR, each of the major tobacco product manufacturers was aware early on that Tobacco contributed to lung cancer. For example, a 1956 confidential memorandum from a Philip Morris Vice President of Research and Development to top executives at the company regarding the advantages of "ventilated cigarettes" stated: "Decreased carbon monoxide and nicotine are related to decreased harm to the circulatory system as a result of smoking. . . . [D]ecreased irritation is desirable . . . as a partial elimination of a potential cancer hazard." Id. ¶ 130 (emphasis added). Similarly, a BATCO document produced in 1958 following a series of meetings between BATCO representatives and twenty American scientists and researchers — including at least nine representatives of the tobacco companies and the Scientific Advisory Board of TIRC — states that all of the tobacco company researchers with whom they met (and all but one of the outside people) "believed that smoking causes lung cancer" and notes that there was "general acceptance [among the group] that the most likely means of causation is that tobacco smoke contains carcinogenic substances present in sufficient quantity to promote lung cancer when acting for a long time in a sensitive individual." Id. ¶¶ 123-124. That same year, a Philip Morris Vice President of Research, who later joined its Board of Directors, stated in a confidential internal memorandum that "the evidence . . . is building up that heavy cigarette smoking contributes to lung cancer either alone or in association with physical and physiological factors." Id. ¶ 132. A 1963 confidential internal memorandum from Liggett's research consulting firm admitted: "Basically we accept the inference of a causal relationship between the chemical properties of ingested tobacco smoke and the development of carcinoma. . . ." Id. ¶ 135.

In addition to knowing early on that smoking is linked to lung cancer, the Blues allege that Tobacco was aware of other major deleterious health effects caused by smoking, including bronchitis, emphysema, and cardiovascular disease. To support this contention, plaintiffs identify the following excerpts from internal company documents:

• A 1963 confidential memorandum to Philip Morris's President and CEO describes components of cigarette smoke as "known carcinogens" and states: "Irritation problems are now receiving greater attention because of the general medical belief that irritation leads to chronic bronchitis and emphysema. Emphysema is often fatal either directly or through other respiratory complications. A number of experts have predicted that the cigarette industry ultimately may be in greater trouble in this area than in the lung cancer field." (Id. ¶ 137); and
• An internal memo produced for a B.A.T. Group Conference (e.g., BATCo, Brown & Williamson, and other subsidiaries of B.A.T. Industries) in November 1970 that states "nicotine may be implicated in the aetiology of cardiovascular disease." (Id. ¶ 138).

The Blues also allege that Tobacco has understood at least for the past four decades that smokers continue to smoke not by choice, but because of nicotine addiction. See id. ¶ 125. As support, the Blues identify confidential BATCo documents related to BATCo's "Project Hippo" that indicate that at least as early as 1961 Tobacco was aware of the physiological and pharmacological effects of nicotine. Copies of Project Hippo reports were circulated to TIRC, BATCo, Brown & Williamson, and R.J. Reynolds.

A 1963 memorandum written by Addison Yeaman, General Counsel at Brown & Williamson, concludes: Tobacco is "in the business of selling nicotine, an addictive drug." Id. ¶ 126. Similarly a 1978 internal Brown & Williamson memorandum acknowledges that "very few consumers are aware of the effects of nicotine, i.e., its addictive nature and that nicotine is a poison." Id. ¶ 145 (emphases added). Overwhelming evidence that Tobacco was aware of nicotine's addictive properties is a 1972 report by Philip Morris presented at a CTR conference; it states:

• "[N]icotine is the active constituent of cigarette smoke";
• "Without nicotine . . . there would be no smoking.";
• "Why then is there not a market for nicotine per se, to be 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.";
• "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. . . ."; and
• "Think of the cigarette as a dispenser for a dose unit of nicotine." (Id. ¶¶ 128-29).

c. Coverup

The Blues contend that despite knowing that tobacco use is injurious and addictive, Tobacco — in part through the efforts of the TIRC, CTR, TI and STI — intentionally engaged in "a campaign of deceit, misrepresentation and misinformation directed at misleading the public about the health risks" and addictiveness of smoking. Id. ¶ 147.

Efforts allegedly undertaken by Tobacco to hide this information include the termination and destruction of Philip Morris research regarding nicotine's addictive properties. For example, in the early 1980s researchers working at a Philip Morris laboratory in Richmond confirmed that nicotine demonstrated addictive qualities and that the laboratory research animals self-administered the substance by pressing levers to obtain nicotine. Less than a year after a briefing to top Philip Morris executives on these findings by the director of the research, Dr. Victor J. DeNoble, Philip Morris representatives instructed the researchers to stop work, to kill all the laboratory animals, to turn in their security badges, and to withdraw a paper on the addictive qualities of nicotine that had been accepted for publication by a scientific journal. Philip Morris then closed the laboratory, fired the researchers, forced them to agree to remain quiet about their work, and threatened them with legal action if they published their findings. See id. ¶ 161.

Plaintiffs also point to confidential research conducted by Brown & Williamson's British affiliate on behalf of Brown & Williamson. In the course of this research, Brown & Williamson allegedly suppressed confidential findings of a "causal relation" between "ZEPHYR [Brown & Williamson's code name for cancer] and tobacco smoking." Id. ¶ 156.

As evidence of the central role the TIRC and CTR in Tobacco's alleged deceptive coverup, the Blues point to TIRC's establishment of a "Special Projects" division where research revealing the dangers and addictiveness of smoking "was secreted from the public and concealed from discovery in litigation[.]" Id. ΒΆ 163. Plaintiffs also identify a 1970 advertisement placed in newspapers around the nation by the TIRC at the direction of Tobacco claiming that there was no known link between cigarettes and disease despite, according to the advertisement, decades of "totally independent research." ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.