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

October 19, 2001

BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC., ET AL., PLAINTIFFS,
v.
PHILIP MORRIS, INCORPORATED, R.J. REYNOLDS TOBACCO COMPANY, BROWN & WILLIAMSON TOBACCO CORPORATION, LIGGETT GROUP, INC., LORILLARD TOBACCO COMPANY, BRITISH AMERICAN TOBACCO, LTD. DEFENDANTS.



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

        AMENDED MEMORANDUM & ORDER

Table Of Contents

I. Introduction ................................................................ 206
II. The Jury .................................................................... 208
III. Rule 50(b) Motion to Set Aside the Verdict .................................. 209
IV. Evidence .................................................................... 210
A. Evidence of Medical Causation ........................................... 210
1. Smoking causes cancer and other disease ............................. 210
2. Smoking aggravates medical costs .................................... 214
B. Evidence of Deceptive Practices ......................................... 214
1. Defendants denied causation despite contrary evidence in internal documents ......................................................... 215
a. Public statements from the 1950s to the present ................. 216
b. Knowledge from the 1950s to the present ......................... 219
2. Defendants funded scientific studies to discredit scholarship demonstrating causation ........................................... 221
3. Defendants suppressed the development of new safer products to intercept quitters and to dispel appearance that their products were unsafe ....................................................... 222
4. Defendants covered-up ............................................... 224
C. Evidence that Deceptive Practices Caused Consumers and Plaintiff Damages ............................................................... 224
1. Evidence that defendants knew the public would act upon deceptive practices ............................................... 225
2. Evidence that defendants' misrepresentations caused consumers and plaintiff damages ............................................. 225
a. Expert testimony ................................................ 226
i. Dr. Jon Krosnick .......................................... 226
ii. Dr. Jeffery Harris and others ............................. 227
b. Videotaped depositions .......................................... 228
c. Surveys, medical and psychological literature, and other documents ..................................................... 230
 
V. Remoteness Under New York's Consumer Protection Act ......................... 230
A. Language ................................................................ 230
B. Legislative Design and History of New York General Business Law Section 349 ........................................................... 231
C. General History of Consumer Protection Statutes ......................... 237
1. Modern consumer protection acts ..................................... 239
2. State consumer statutes permitting indirect injuries ................ 240
D. Application ............................................................. 242
1. "Remoteness" does not bar plaintiff's claims under section 349 ...... 243
2. Plaintiff has standing to sue under section 349 ..................... 245
VI. Subrogation Under Section 349 ............................................... 245
VII. Individualized Proof of Causation and Damages ............................... 247
A. Federal Rules of Civil Procedure and Evidence ........................... 249
B. Appropriateness of Sampling and Survey Techniques ....................... 250
1. Due process ......................................................... 253
2. Seventh amendment jury trial rights ................................. 255
3. Erie ................................................................ 259
VIII. Preemption .................................................................. 262
A. Preemption Under Federal Law ............................................ 262
B. State Regulatory Compliance Defense ..................................... 265
IX. Evidence Sufficient to Support Low Tar Fraud ................................ 266

A. Evidence Admissible to Support General Deception ......................... 267

B. Evidence Admissible to Support Damages ................................... 268

X. Evidence of Post-1980 Deceptive Acts and Practices .......................... 268
A. Law ..................................................................... 268
B. Application ............................................................. 269
XI. Statute of Limitations ...................................................... 271
A. Law ..................................................................... 271
B. Application ............................................................. 273
XII. Sufficiency of Damages ...................................................... 273
 
A. Law ..................................................................... 274

B. Application .............................................................. 274

XIII. Conclusion .................................................................. 275

I. Introduction

This is one of the many suits designed to make cigarette companies pay for the enormous medical problems created by their product. Plaintiff has developed a new road to recovery via New York's Consumer Protection statute. The primary question now posed is one of law: Does section 349 of New York's General Business Law, designed to protect consumers against fraud, support a recovery by a health insurer whose costs were increased by the fraud. For the reasons set out below, section 349:(1) makes defendants liable for frauds the jury has found they committed against smokers; and (2) permits plaintiff to recover for the extra medical costs that it absorbed on behalf of its clients caused by their fraud induced smoking.

A jury verdict found defendants liable for a violation of section 349 of New York's General Business Law, causing some $17,000,000 in damages to plaintiff. Plaintiff seeks a judgment for the jury award, post verdict interest, costs and disbursements under the Federal Rules of Civil Procedure and attorney's fees under section 349. Defendants move to dismiss on the ground that no cause of action was proved.

Plaintiff is entitled to retain its jury award and to obtain interest from the day of that award. Plaintiff's motion for statutory attorney's fees under section 349 and costs and disbursements under Rule 54(d) of the Federal Rules of Civil Procedure will be covered in a separate memorandum. Defendants' motion for judgment is denied.

The series of related litigations in this court against defendants have been extensively described; the rulings in these matters are made a part of this memorandum. See Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris, Inc., 2001 WL 811930 (E.D.N.Y. May, 22, 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 141 F. Supp.2d 320 (E.D.N.Y. 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 138 F. Supp.2d 357 (E.D.N.Y. 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 133 F. Supp.2d 162, 167; Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 199 F.R.D. 487 (E.D.N.Y. 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 199 F.R.D. 484 (E.D.N.Y. 2001); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 113 F. Supp.2d 345 (E.D.N.Y. 2000); Blue Cross & Blue Shield of N.J. v. Philip Morris Inc., 53 F. Supp.2d 338 (E.D.N.Y. 1999); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., 36 F. Supp.2d 560 (E.D.N.Y. 1999); Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris Inc., No. 98 CV 3287, 1999 WL 104815 (E.D.N Y Feb. 25, 1999); see also Simon v. Philip Morris Inc., 200 F.R.D. 21 (E.D.N.Y. 2001); Simon v. Philip Morris Inc., 124 F. Supp.2d 46 (E.D.N.Y. 2000); Simon v. Philip Morris Inc., No. 99 CV 1988, 2000 WL 1658337 (E.D.N.Y. Nov.6, 2000); Simon v. Philip Morris Inc., 194 F.R.D. 73 (E.D.N.Y. 2000); Simon v. Philip Morris, Inc., 86 F. Supp.2d 95 (E.D.N.Y. 2000); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 2001 WL 477256 (E.D.N.Y. Feb.27, 2001); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., No. 98 CV 1492, 2000 WL 1424931 (E.D.N.Y. Sept.26, 2000); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., No. 98 CV 1492, 2000 WL 1364358 (E.D.N.Y. Sept.20, 2000); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., No. 98 CV 1492, 2000 WL 777834 (E.D.N Y June 13, 2000); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 86 F. Supp.2d 137 (E.D.N.Y. 2000); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 71 F. Supp.2d 139 (E.D.N.Y. 1999); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 74 F. Supp.2d 221 (E.D.N.Y. 1999); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 74 F. Supp.2d 213 (E.D.N.Y. 1999); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., 23 F. Supp.2d 321 (E.D.N.Y. 1998); Nat'l Asbestos Workers Med. Fund v. Philip Morris Inc., No. 97 CV 1492, 1998 WL 372410 (E.D.N.Y. 1998); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1880303 (E.D.N.Y. Dec.27, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1880305 (E.D.N.Y. Dec.27, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1804542 (E.D.N.Y., Dec.4, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1804602 (E.D.N.Y. Nov.30, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1737941 (E.D.N Y Nov.21, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1370437 (E.D.N.Y.,Sept.21, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1336697 (E.D.N.Y. Sept.15, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1292671 (E.D.N Y Sept.8, 2000); Falise v. Am. Tobacco Co., 107 F. Supp.2d 200 (E.D.N.Y. 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1144697 (E.D.N.Y. July 25, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1010982 (E.D.N.Y. July 19, 2000); Falise v. Am. Tobacco Co., No. CV 99-7392, 2000 WL 1010978 (E.D.N.Y. July 18, 2000); Falise v. Am. Tobacco Co., 94 F. Supp.2d 316 (E.D.N.Y. 2000); Falise v. Am. Tobacco Co., No. 99 CV 7392, 2000 WL 433097 (E.D.N.Y. Apr 18, 2000); Falise v. Am. Tobacco Co., 91 F. Supp.2d 525 (E.D.N.Y. 2000); Falise v. Am. Tobacco Co., No. 99 CV 7392, 2000 WL 264332 (E.D.N.Y. Jan. 24, 2000) (No. CV-98-1492, CV-97-7658, CV-98-3287, CV-98-675); Falise v. Am. Tobacco Co., 193 F.R.D. 73 (E.D.N.Y. 2000); Falise v. American Tobacco Co., 241 B.R. 63 (E.D.N.Y. 1999); Falise v. Am. Tobacco Co., 241 B.R. 48 (E.D.N.Y. 1999); Falise v. Am. Tobacco Co., No. 99 CV 7392, 1999 WL 98626 (E.D.N.Y. Feb. 18, 1999) (No. 97 CV 7640, 97 CV 7658, 98 CV 675); Falise v. Am. Tobacco Co., No. 97-CV-7640, 1998 WL 372401 (E.D.N.Y. July 2, 1998); Bergeron v. Philip Morris Inc., 100 F. Supp.2d 164 (E.D.N.Y. 2000); Bergeron v. Philip Morris Inc., No. 99 CV 6142, 2000 WL 748144 (E.D.N.Y. June 8, 2000); H.K. Porter Co., Inc. v. Am. Tobacco Co., 71 F. Supp.2d 73 (E.D.N.Y. 1999); In re Tobacco Litig., E. Dist. of New York, 193 F.R.D. 92 (E.D.N Y 2000); In re Tobacco Litig., 192 F.R.D. 90 (E.D.N.Y. 2000); In re Simon (II) Litig., No. 00 CV 5332, 2000 WL 1252182 (E.D.N Y Sept.6, 2000) (98 CV 0675, 99 CV 6142, 98 CV 1492, 97 CV 7658, 99 CV 1988, 98 CV 3287, 99 CV 7392, 00 CV 4632).

Numerous oral motions and rulings were made during the course of this and a related trial on hearings respecting admissibility of testimony, expert opinions and reports, scientific books and papers and other documents, extensive television and other depositions, and methods of presentation to the jury using modern audio-visual equipment and techniques. There is no point in revisiting these rulings and decisions since briefing and argument on each one was comprehensive; no reason to modify them has been demonstrated. The advanced courtroom technology utilized by all counsel was helpful to the court and jury; it conformed to standards for fair and effective trials. See Federal Judicial Center, Effective Use of Courtroom Technology (2001).

It is enough to find that the jury had ample ground to conclude that defendants individually and as a group violated the New York Consumer Protection Act, section 349 of the Business Law, by deliberately misleading people who became clients of plaintiff, causing them to smoke earlier, more, and to quit later, than they would have absent the consumer fraud practiced on them by defendants; that this smoking causes specific diseases and makes treatment of other diseases more expensive; and that plaintiff incurred the extra costs of treating its clients who are or were smokers. Appropriate statistical and expert evidence proved the monetary costs of defendants' violation of Section 349 that were borne by plaintiff. The fact that the jury chose to take the most conservative view of damages suffered by plaintiff is no basis for finding lack of support for its verdict. In short, plaintiff proved that defendants' deliberate distortion of public knowledge about smoking directly resulted in increased medical costs to plaintiff in the amount found by the jury.

II. The Jury

The jury sat for 44 trial days. It heard 34 witnesses, 10 of whom were Daubert screened experts. It had 1,632 demonstratives and exhibits. It viewed over 100 depositions, many of which were of smokers who were clients of the plaintiff. It utilized numerous charts and diagrams that assisted in visualizing the parties' contentions and in understanding the statistical and other evidence.

An extensive questionnaire was used in selecting the jury from the 200 citizens who were called for the case. Jury members were unbiased and intelligent. Members were diverse. Ages ranged from 25 to 68. Some were born and raised in the New York area, while others had immigrated. Most were covered under a health care plan. Some never smoked; others were former or are current smokers. None knew about prior tobacco litigation. None had seen movies or read books related to the tobacco industry. Most jurors were paid by their employers for their time. All of the jury members were both professionally and personally successful. Brief descriptions of the member's varied backgrounds are set out below:

Juror number 1 was a 44 year old male from Suffolk County who was raised in Holbrook, New York. He has a college degree and studied computer programming. As a report analyst, he compiles and distributes statistical reports for management. He spends his spare time with his wife and two children.

Juror number 2 was a 59 year old male from Queens County who was raised in Karnataka, India. He has a post graduate degree and handles complicated financial matters at a major bank. He has been married for 24 years and has two children.

Juror number 3 was a 44 year old male from Suffolk County who was raised in Floral Park, New York. He has a bachelor's degree in Psychology with a minor in Business. He has worked as a postal worker for twenty years and spends his spare time with his immediate family.

Juror number 4 was a 44 year old female who was raised and lives in Brooklyn, New York. She has a high school diploma. She was previously employed as an office manager, and is currently working as a clerk at a quasi-public institution. She has three grandchildren; her daughter works for a law firm.

Juror number 5 was a 49 year old male from Nassau County who was raised in Freeport, New York. He studied architecture in college. He is a postal worker. He has two children and three grandchildren. In his spare time, he bowls and skis.

Juror number 6 was a 62 year old male who was raised and lives in Brooklyn, New York. He has a high school diploma. He is currently retired. He owns a home, has been married for 35 years, and has three college educated children.

Juror number 7 was a 25 year old female from Queens County who was raised in Phelps, New York. She has a bachelor's degree in English. Her position in a film company requires her to read manuscripts and correspond with writers. She has been married for two years, writes screenplays and fiction, and contributes her spare time to a well known community service organization.

Juror number 8 was a 34 year old female who was raised and currently resides in Queens, New York. She received post graduate training and is a physical therapist at a medical center, where she runs clinics for children and treats individuals with neuromuscular diseases and disabilities. She is single, plays the guitar and enjoys karate.

Juror number 9 was a 51 year old female who was raised and currently resides in Queens, New York. She has a high school diploma and is a customer care technology support employee at a major telephone company. She has been married for 27 years and assists her community with kitchen duty for the poor.

Juror number 10 was a 45 year old male who grew up in Brooklyn, New York. He attended college and is an operations specialist for an international securities firm.

Juror number 11 was a 44 year old male from Nassau County who was born in South Carolina. He graduated from college with a degree in Marketing and currently works for a large railroad. He has been married for 19 years and has two children.

Juror number 12 was a 68 year old male from Nassau County who was raised in Naples, Italy. He is a retired machine assembler. One of his children is an accountant and the other is an engineer. He enjoys spending time with his three grandchildren.

The jury was remarkably focused, always on time, always concentrating on the evidence, arguments and instructions. A number of its members took extensive notes. It read and studied the court's written charge as it was delivered and took the charge into the jury room. During its deliberations the jury had all the admitted documents as well as the key depositions. It appeared to take a critical view of much of the expert testimony which would have supported a verdict of hundreds of millions of dollars. After days of deliberations the jury asked for an adding machine. In coming to a conclusion on damages, it obviously made its own analysis of the deposition testimony of witnesses who were smoking clients of the plaintiff, other testimony and the documents. If the law respecting section 349 was properly presented to this jury, its verdict should be sustained.

III. Rule 50(b) Motion to Set Aside the Verdict

Defendants move to dismiss pursuant to Rule 50 of the Federal Rules of Civil Procedure. Granting a Rule 50 motion for judgment as a matter of law after verdict is rarely appropriate. George Basch Co. v. Blue Coral Inc., 968 F.2d 1532, 1536 (2d Cir. 1992). Judgment as a matter of law "may not properly be granted under Rule 50 unless the evidence, viewed in the light most favorable to the opposing party, is insufficient to permit a reasonable juror to find in [the opposing party's] favor." Galdieri-Ambrosini v. Nat'l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998). Ruling on such a motion, the court must "draw[] all reasonable inferences regarding the weight of the evidence and the credibility of witnesses in favor of the non-movant. . . ." Kim v. Hurston, 182 F.3d 113, 117 (2d Cir. 1999) (internal quotations omitted). Thus, a motion for judgment as a matter of law should not be granted unless:

(1) there is such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or (2) there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [persons] could not arrive at a verdict against [the movant].

DiSanto v. McGraw-Hill, Inc./Platt's Div., 220 F.3d 61, 64 (2d Cir. 2000) (quoting Galdieri-Ambrosini v. Nat'l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998)).

Here, plaintiff adduced sufficient evidence for a jury to find that defendants engaged in a successful scheme to distort the body of public knowledge; that they did so knowing the public, including plaintiff's members, would act upon defendants' statements and omissions; with the foreseeable result that plaintiff and other third-party payors would and did absorb the costs of increased medical services due to smoking resulting from defendants' actionable fraud. The evidence requires denial of defendants' motion for judgment as a matter of law if section 349 supports the verdict.

IV. Evidence

Whatever the viability of plaintiff's claims under federal law and New York state common law, the jury has spoken, finding them unsupported; that decision was supportable and not inconsistent with a finding favoring plaintiff on another theory. The one claim that the jury found was supported by the evidence was that under section 349. Under the rule of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), that New York substantive law governs and supports the verdict. Federal procedure and rules of evidence were appropriately applied during the trial. As demonstrated below, the evidence including that at trial in the form of expert testimony and analysis as well as the deposition testimony of plaintiff's members establishes that plaintiff met its burden of proving that defendants' deceptive practices caused it injury.

A. Evidence of Medical Causation

1. Smoking causes cancer and other disease

Plaintiff's evidence demonstrated smoking-related illnesses account for almost one of every five deaths each year in the United States, making cigarette smoking the leading cause of premature death in the United States. Trial Tr. 1150-52; see Attachment A below.

  There were some relatively small changes between 1990 and 2001. See Burns Demo 6 below.

Annually, smoking-related illnesses kill hundreds of thousands of Americans, exceeding the combined deaths caused by automobile accidents, AIDS, alcohol use, illegal drug use, homicide, suicide and fires. Samet Demo 25 below (There were relatively small relative changes between 1990 and 2001. Burns Demo 6 supra); see also Trial Tr. 1090; Trial Tr. 1050-52.

At trial, plaintiff's experts Dr. David Burns and Dr. Jonathan Samet testified that tobacco use is responsible for:

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

Trial Tr. at 683-948 (Burns); Trial Tr. at 1104-1241 (Samet).

Dr. Samet testified as to known carcinogens identified in tobacco smoke to date. The 43 carcinogenic agents in cigarette smoke include: arsenic, benzine, cadmium, chromium VI, vinyl chloride, and nickel. See Samet Demo 3. Compared to those people who never smoke, current smokers are almost 15 times more likely to develop lung cancer, 12.7 times more likely to develop chronic obstructive pulmonary disease, 7.5 times more likely to develop esophageal cancer, 4.1 times more likely to suffer Ischaemic Heart Disease, 2.2 times more likely to develop pancreatic cancer, and 1.4 times more likely to suffer a cerebral hemorrhage. See Samet Demos 11 & 22; see also Doll, et. al., Mortality in Relation To Smoking: 40 Years Observations On Male British Doctors, 309 British Medical J. 901-11 (1994). All told, carcinogenic chemicals inhaled by persons smoking defendants' products have been linked to 85% of all lung cancer, 80% of deaths from all pulmonary diseases, and 30% of all deaths from other cancers. See Samet Demo 25; see also J.M. McGinnis & W.H. Foege, Actual Causes of Death in the United States, J. of Am. Med. Assoc. 2707-12 (1993).

In addition to causing disease and illness, smoking cigarettes can lead to nicotine addiction. Nicotine is the chemical substance in cigarettes that creates the "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. Trial Tr. at 1335-36. It also activates the transmission of a natural chemical, dopamine, that generates pleasurable body sensations, and ultimately causes a craving for nicotine delivered by cigarette smoke. Id.

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. Trial Tr. at 1343. Nicotine addicts in much the same way as does heroin and cocaine. Trial Tr. at 1329-30 (citing Health Consequences of Smoking, Surgeon General Report (1988)). 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.

2. Smoking aggravates medical costs

Econometric and other models introduced at trial demonstrated that the health care costs to treat illness associated with smoking are astronomical. According to plaintiff's witness Dr. Wendy Max, plaintiff spent approximately $756 million to treat smoking caused disease since 1994. See Max Demo 10. Dr. Glenn Harrison testified that the figure is even higher when the costs associated with treating smokers for non-smoking caused illness were taken into account. Using an econometric model, he testified that the total economic damages to the plaintiff since 1994 were over $985 million dollars. See Harrison Demo 12. His calculations showed that a person whose respiratory or cardiovascular system is weakened by smoking would, in general, respond less readily to treatment for other diseases. The fact that a particular smoker might heal more readily than a particular nonsmoker is not decisive; the law of large numbers eliminates the effect of such discrepancies or anomalies. See Part VII, infra; see also K.E. Warner, T.A. Hodgson, & C.E. Caroll, Medical Costs of Smoking in the United States: Estimates, Their Validity, and Their Implications, 9 Tobacco Control, 290-300 (1999) (applying econometric model); J.C. Bartlett, L.S. Miller, D.P. Rice, W. Max, Medical Care Expenditures Attributable To Smoking: United States, 43 Morbidity and Mortality Wkly. Rep. 469-72 (1994) (applying econometric model).

The introduction of both models was proper. See Blue Cross & Blue Shield of N.J. v. Philip Morris Inc., No. 98 CV 3287, 2000 WL 1738338 (E.D.N.Y. Nov.1, 2000) (finding both models comply with Daubert); cf. Girden v. Sandals Int'l., 262 F.3d 195 (2d Cir. 2001) ("For purposes of admissibility it is not required that a witness's account of an event be consistent with the same witness's other accounts of the same event."). The evidence supports the conclusion that extra costs result from treating smokers for diseases not caused directly by smoking. While there is no indication that the jury relied upon these damage calculations, the testimony was based on the records of the plaintiff. Both experts were highly qualified to testify; their models were subject to extensive Daubert hearings and determined to be consistent with sound scientific norms. See Part VII, infra (discussing appropriateness of statistical evidence for trial).

B. Evidence of Deceptive Practices

Evidence demonstrated that defendants took a variety of deliberate and calculated steps over many decades to misrepresent the health effects of smoking cigarettes.

1. Defendants denied causation despite contrary evidence in internal documents

When significant medical research indicated a statistical relationship between smoking and cancer in the early 1940s and 1950s, defendants embarked on a campaign to discredit this research and reassure the public that their products were safe. Defendants recognized that the publication in the early 1950s of retrospective epidemiological studies showing a link between smoking and lung cancer, as well as mouse skin painting studies that confirmed the results of earlier research, threatened cigarette sales and tobacco stock prices. Trial Tr. at 686-88; 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); D. Mical Freedman, Leon Gordis & Michael D. Green, Reference Guide on Epidemiology, in Federal Judicial Ctr., Reference Manual on Scientific Evidence 333 (2d ed. 2000) (hereinafter Reference Manual); Bernard D. Goldstein and Mary Sue Henifin, Reference Guide on Toxicology, in Reference Manual, supra, at 181. Documents prepared by Hill & Knowlton, a representative of the tobacco industry, reveal:

As another indication of how serious the problem is, the officials stated that salesmen in the industry are frantically alarmed and that the decline in tobacco stocks on the stock market has caused grave concern . . .

PTX 6023; Trial Tr. at 1251-52.

This is, of course, the most challenging problem our organization has ever faced — and perhaps the most challenging problem that ever faced a great industry, one with annual sales of almost 5 billions [sic] at retail, and with economic roots that reach clear back to the farm.

PTX 2148; Trial Tr. at 1253.

Due to the "grave nature" of this threat, the evidence demonstrated that the defendants developed a joint plan to rebut the mounting proof indicating that cigarettes were dangerous and to reassure the American public that the defendants would assume responsibility for researching whether smoking was dangerous to health:

The underlying purpose of any activity at this stage should be reassurance of the public through wider communication of facts to the public. It is important that the public recognize the existence of weighty scientific views which hold there is no proof that smoking causes cancer.

PTX 2421; Trial Tr. 1256-57.

Defendants jointly formed the Tobacco Industry Research Committee (TIRC), later named the Council For Tobacco Research — USA (CTR) and issued "A Frank Statement to Cigarette Smokers." The "Frank Statement" was published on January 4, 1954 "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." PTX 2426; Trial Tr. at 1260. Signed by the presidents of the defendant tobacco manufacturers, it denied that cigarette smoking was hazardous to health and promised that the tobacco industry would conduct independent research to address questions surrounding smoking and disease. It read in relevant part:

— "Recent reports on experiments with mice have given wide publicity to a theory that cigarette smoking is in some way linked with lung cancer in human beings. Although conducted by doctors of professional standing these experiments are not regarded as conclusive in the field of cancer research."
— "[T]here is no proof that cigarette smoking is one of the causes of lung cancer."
— "[Tobacco] always h[as] and always will cooperate closely with those whose task it is to safeguard the public health."
— "[Tobacco is] pledging aid and assistance to the research effort into all phases of tobacco [product] use and health."
— "For this purpose [Tobacco is] establishing a joint industry group. . . . This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE." (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."

PTX 2362; Trial Tr. at 1257-60.

This statement of good faith was belied by internal documents from the defendants' own scientists suggesting that they possessed significant proof of the causal relationship between smoking and disease. See, e.g., PTX 18 ("In view of the facts presented in this report, it is recommended that management take cognizance of the problem and its implications to our industry and that positive research action be planned without delay.") (1953); PTX 46 ("If we can eliminate and reduce the carcinogenic agent in smoke we will have made real progress.") (1954). The incongruity between defendants' public statements and internal documents lasted from the 1950s into the late 1990s.

a. Public statements from the 1950s to the present

Plaintiff's evidence demonstrated that in public speeches, press releases, stockholder reports, television interviews, scientific studies, and letters to consumers and potential consumers, the defendants consistently denied the causal relationship between smoking and disease and argued to the public that more research was needed before a finding of danger was justified. In May 1957, George Weissman, vice president of Philip Morris, stated:

Being as close to the picture as we are, we know that most of the attack is a lot of sound and fury. Without rehashing the arguments I'll merely assert that there's not one shred of conclusive evidence to support the link between cigarette smoking and lung cancer, certainly a lot less than the evidence concerning the inhalation of exhaust fumes from the automobiles driven around New York City and the smog fumes in Los Angeles.

PTX 9254; Trial Tr. at 4693.

The Tobacco Information Committee, an arm of the TIRC issued bi-monthly news-letters and press-releases to doctors, public health officials and members of the public. Early resulting headlines in the 1950s and 1960s included statements that cast doubt on ties between smoking and cancer. See, e.g., PTX 5461 ("Six experts state doubts on smoking-cancer theory . . .") (1957); PTX 5462 ("Study suggests that bronchitis may be the prime factor in lung cancer . . ."); (January-February 1958); PTX 5470 ("Many Scientific Reports Show Uncertainties, Doubts About Causation of Lung Cancer . . .") (November-December 1959); PTX 5474 ("Smoker's Personality Key To Cancer . . .") (October 1960); PTX 5484 ("Lung Cancer Rare in Bald Men . . .") (March-April 1964); PTX 5489 ("Genetic Factors Affect Heart, Lung Syndromes. Smoking Is Probably Not Associated With Coronary Disease . . .") (Winter 1967-68).

Evidence demonstrated that these types of materials appeared all over the country in various forms. In a 1964 press release, George Allen on behalf of the defendants, stated:

If there is something in tobacco that is causally related to cancer or any other disease, the tobacco industry wants to find out, what it is and the sooner the better . . .
Research to date has not established whether smoking is or is not causally involved in such diseases as lung cancer and heart disease, despite efforts to make it seem otherwise. The matter remains an open question — for resolution by scientists.

PTX 0408.

In 1969, the American Tobacco Company mailed to more than 140,000 of its share holders a booklet entitled The Cigarette Controversy. The accompanying press release concluded:

Despite the volume and virulence of any tobacco propaganda, the cold fact remains that no clinical or biological evidence has been produced which demonstrates how cigarettes relate to cancer or any other disease in human beings.

PTX 1998.

In 1969, representatives of the defendants published "The Cigarette Controversy Eight Questions and Answers," which stated in part:

For many adults, cigarette smoking is one of life's pleasures. Does it cause a difference — even death. No one knows.
The case against smoking is based almost entirely on inferences drawn from statistics and no causal relationship has actually been established. Many respected scientists find that cigarette smoking has not been shown to cause any human disease.
From these developments have come many public warnings:
"Don't smoke." "Stop smoking." A concerned public needs the truth about smoking and health. This requires that both sides of the controversy must be known. Statistics are not enough. If smoking does cause disease, why has it not been proved, after 15 years of intensive research, how this occurs?
Does smoking cause disease? That question is still an open one.

PTX 565; Trial Tr. at 2860-61.

That same year, representatives of Brown & Williamson stated in the advertising copy for "Project Truth:"

Ten years ago, there was a cancer scare over the wax in milk cartons. And over using iodine to get a suntan. These theories are about as valid as the one that says toads cause warts.
And they're about as valid as today's scare tactics surrounding cigarettes. Because no one has been able to produce conclusive proof that cigarette smoking causes cancer. Scientific, biological, clinical or any other kind.

PTX 0636; Trial Tr. at 2859-60.

According to an internal document produced from the files of defendant Liggett Group that discusses the defendants' response to the 1964 Surgeon General report, the approach of the tobacco industry was to speak on these issues in a united voice:

It is considered to be of prime importance that the industry maintain a united front and that if one or more companies were to conduct themselves as a matter of self interest, particularly in advertising, obvious vulnerability would be the result.

PTX 0329; Trial Tr. at 3426-27.

Evidence demonstrated these kinds of public pronouncements continued into the 1970s, 1980s, and 1990s. In anticipation of the 1979 Surgeon General Report on Smoking and Health, which defendants knew would be adverse to them, representatives of the defendants released, "Smoking and Health: The Continuing Controversy." The 168 page text included the following statements:

Indeed, many scientists are becoming concerned that the preoccupation with smoking may be both unfounded and dangerous. Unfounded because evidence on many critical points is conflicting. Dangerous because it diverts attention from other suspected hazards . . . Despite claims to the contrary, no one in government or industry can explain the reported associations of smoking with lung cancer, heart disease, emphysema, low infant birth weight, and yes, even cancer of the pancreas . . .
Scientists have not proven that cigarette smoke or any of the thousands of constituents as found in cigarette smoke cause human disease . . .

PTX 6266. Examples of such post 1980 denials also included statements widely disseminated through television, conferences, and letter campaigns. Among them are the following:

— On October 20, 1983, Tobacco Institute spokesperson, Anne Browder, referring to smoking causation, told a national audience on the ABC program "20/20": "The case is still open. The jury has not come in." PTX 1444.
— The next year, the Tobacco Institute published a pamphlet, entitled, "The Cigarette Controversy: Why More Research Is Needed," which stated: "There is a cigarette controversy. The causal theory — that cigarette smoking causes or is the cause of the various diseases with which it is reported to be related statistically — is just that, a theory." PTX 1444.
— On May 16, 1988, the Tobacco Institute published a press release titled, "Claims That Cigarettes Are Addictive Contradict Common Sense," which stated: "Smoking is a truly personal choice which can be stopped if and when a person decides to do so." PTX 1645.
— In a January 11, 1989 interview on the ABC program, "Good Morning America," Tobacco Institute representative Brennan Dawson stated the following on behalf of the tobacco industry: "[T]he causative relationship has not been established . . . I can't allow the claim that smoking is addictive to go unchallenged. . . . It's a matter of willpower." PTX 9508.
— Walker Merryman, Vice President of Tobacco Institute, wrote the following in an article published on April 27, 1989, in the Washington Times: "The difference between cigarette smoking and true addictions to hard drugs is stark and compelling." PTX 9791.
— In 1992, Philip Morris published a pamphlet entitled, "Tobacco Issues and Answers," that stated: "Those who term smoking an addiction do so for ideological, not scientific reasons." PTX 5786.
— On April 15, 1994, the day after its and other CEOs from the industry testified before Congress that smoking was not addictive, Philip Morris placed an advertisement in the New York Times that stated: "Fact: Philip Morris does not believe smoking is addictive." PTX 1814.

Letters were sent to consumers all across the country, including many New York residents. Articles like the "Continuing Controversy" written in the 1970s denying causal connection between smoking and cancer were re-circulated in mailings after 1980. Letters included the following statements:

— "Despite all the research going on, medical science has not found any conclusive evidence that any element in cigarettes, tobacco, or ...

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