The Lowdown on Tobacco—A Series
By Michelle Logsdon - February 1, 2002Big Tobacco is synonymous with Big Money. Whether the funds are flowing into the hands of cigarette manufacturers or flowing out of their hands; the amounts are staggering. Long a staple of America’s economy, tobacco products have a history of igniting polarizing opinions.
Making History
Tobacco, in some form or another, has been ingested by humans since before Columbus discovered America, but an early version of the modern-day cigarette wasn’t introduced until around 1910. This user-friendly “mild” cigarette’s meteoric rise to popularity could be contributed to the image proliferated by marketers. Cigarettes were portrayed as sexy, even sophisticated, but the companies did not publicize the details about health dangers associated with smoking.
That’s not to say the public had no idea. As early as 1914, Thomas A. Edison, wrote a widely publicized letter to Henry Ford alleging that smoke from a paper-wrapped cigarette “has a violent action in the nerve centers, producing degeneration of the cells of the brain, which is quite rapid among boys. Unlike most narcotics, this degeneration is permanent and uncontrollable. I employ no person who smokes cigarettes.” Plus, citing the health issues, fourteen states enacted cigarette prohibition in the early 1920s.
What most people didn’t know was that nicotine was addictive. Many people who started smoking thought they would try it for a while and then quit, but they couldn’t.
Extensive research was done during the 1950s and 1960s on the dangers of cigarette smoking. On January 11, 1964, the Report of the Surgeon General’s Advisory Committee on Smoking and Health was published. It stated that cigarette smoking shortens human life, causes lung cancer and other types of cancer, and greatly increases a person’s risk of dying from heart disease, emphysema, bronchitis, and several other illnesses.
But the report did not address nicotine addiction; therefore, although smoking consumption dropped drastically after the report was published, it returned to pre-1964 levels within a few months. That report was followed by the first warning label on cigarette packages in 1965. Since then, three more warnings have been added, the most recent in 1981.
Still none of those warnings state that nicotine is addictive, although that fact is now common knowledge supported by research. The statements about addiction, or lack thereof, are the basis of many of today’s lawsuits. Courts are having to decipher how long tobacco companies knew that nicotine was addictive before they informed the public.
The following series looks at the current cases swirling around that question. It also looks at the money issues surrounding the tobacco industry and the liabilities faced by those who choose to produce such a controversial product. California is the epicenter of tobacco’s most recent legal quakes. Actions taken here could let cigarette-makers off the hook or put them under the gun in this state.
Is This the End for Big Tobacco, or Just the Beginning?
The eyes of the nation are on California as the state squares up to face Big Tobacco.
Two California Supreme Court decisions expected this year could decide the fate of hundreds of future tobacco industry lawsuits.
The Court is considering the cases of Betty Jean Myers and Edwin Brigham. Both cases require the Court to interpret an amended law dubbed the “immunity clause,” that lived for ten years on the California law books.
The “immunity clause,” in effect from 1988 to 1998, protected tobacco companies from product liability lawsuits based on the fact that consumers had been warned and were aware of the dangers of cigarettes.
Dozens of cases were dismissed when the amendment was passed in 1988. Ten years later, the Legislature reversed its decision and removed the “immunity clause” from the books.
The California Supreme Court must decipher the clause in order to understand the Lawmakers’ intent when writing it. The bill does state that the “immunity clause” is not a brand new law but a clarification of an existing law. Tobacco companies are banking on the theory that the existing law provided them immunity all along.
If that is found to be true, incriminating evidence used to win several past cases against Big Tobacco would no longer be admissible in court. Namely, a slew of damaging documents circulated within certain tobacco companies decades ago confirming the fact that employees knew cigarettes were addictive and dangerous but kept that knowledge from the public.
For example, a 1960s memo written by a Philip Morris Co., Inc. clinical psychologist instructed colleagues to “think of the cigarette pack as a storage container for a day’s supply of nicotine.” Plus, several other documents that outlined marketing strategies directed specifically at teens.
The Supreme Court’s Challenge
Myers’ case will be the first case under the California Supreme Court microscope. She sued Philip Morris, Brown & Williamson Tobacco Corp. and R.J. Reynolds Tobacco Co. after she was diagnosed with cancer. Myers’ case was filed after 1998 but the evidence submitted focuses on prior behavior of the tobacco companies. The case was dismissed but was later picked up by the U.S. 9th Circuit Court of Appeals. That court wants guidance from the Supreme Court on the “immunity clause.”
Brigham’s is the second case under consideration. His case was filed after 1998 but Brigham had been diagnosed with cancer before that. Citing that the tobacco companies were immune when Brigham got sick, the trial court dismissed the case. Brigham has since passed away. The Supreme Court must decide whether to reinstate his case based on their interpretation of the “immunity clause.”
The Aftermath
The Court’s decisions will significantly affect the number of legal battles brought against tobacco companies in California. Cases could literally disappear or multiply based on the rulings.
If the “immunity clause” is considered retroactive, the actions of tobacco companies and their employees would be protected for several past decades, despite the fact secret documents exist about their knowledge of cigarette dangers.
Three high-profile, high-dollar cases could be affected by the Supreme Court’s precedent-setting rulings in the Myers and Brigham lawsuits.
The first case is that of Richard Boeken, a California man who won the largest settlement to date against a tobacco company.
In June 2001, Boeken and his lawyer, Michael J. Piuze, made history when a jury awarded Boeken $3 billion in punitive damages against Philip Morris. A Superior Court judge later dropped the award to a still unprecedented amount of $100 million.
A smoker since the age of 13, Boeken testified during his trial that Philip Morris lured him to smoke at such a young age by presenting cigarettes as “cool.” Boeken claimed he was a victim of a campaign that did not explain the dangers of smoking.
His suit alleged misrepresentation, negligence, fraud and selling a defective product.
Piuze said the jury’s decision to award such a large amount in punitive damages was a bad sign for tobacco companies. He told the Associated Press, “People of our state [California]…have a willingness to put this company and its executives and the industry and its executives up against the wall.”
Boeken, at the age of 57, succumbed to lung cancer at his home in Topanga, CA, Jan 16.
Philip Morris is appealing the case.
Another ruling at the mercy of the Supreme Court’s decisions is that of Patricia Henley. In early November 2001, a state appeals court affirmed a San Francisco jury’s ruling in favor of Henley for $26.5 million in damages against Philip Morris.
Henley’s case was similar to Boeken’s. She claimed the tobacco company pitched cigarettes to young people and concealed their dangers. “The record reflects that (Philip Morris) touted to children what it knew to be an addictive and cumulatively toxic product while doing everything it could to prevent addicts and prospective addicts from appreciating the true nature and effects of that product,” wrote Justice Patricia Sepulveda.
Henley, 54, started smoking at the age of 15. At that time, cigarette cartons did not have warning labels. Although Henley quit smoking when she was 50 the damage was already done. Not long after she quit, Henley was diagnosed with small-cell lung cancer. Her cancer is currently in remission.
The jury awarded Henley $1.5 million in compensation and $50 million in punitive damages. A superior court judge later cut the punitive damages in half.
The final case in the crosshairs is that of Leslie J. Whiteley of Ojai. Whiteley used the same lawyer as Henley—Madelyn Chaber. Chaber helped Whiteley win judgments against both Philip Morris and R.J. Reynolds.
She was awarded $21.7 million. The jury held each company 50 percent responsible for Whiteley’s situation and charged that they each committed fraud, acted with malice, and deliberately misled the public about the dangers of smoking.
Shortly after the verdict, at the age of 40, Whiteley died from lung and brain cancer. Her case is on appeal.
For more information on the secret documents from the tobacco industry files go to http://legacy.library.ucsf.edu. More than 20 million documents have been posted by the Library and Center for Knowledge Management at the University of California-San Francisco.
The Tobacco Mother Lode
At the beginning of each year Big Tobacco faces a large stack of bills but none of them are for raw materials or operating expenses. For the past three years, Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., and Lorillard Tobacco Co. have been making substantial payments to 46 states and territories across the country.
The payments are a result of a contract signed by the companies stating that they agree to pay the states and territories $206 billion over the next 25 years and even more for as long as they are manufacturing and selling cigarettes.
When it was signed in November 1998, the Master Settlement Agreement (MSA), as it is called, was the largest civil settlement in U.S. history. And the stipulations, as well as future implications, of the settlement are historical too.
During the mid-1990s, the tobacco industry faced a plethora of lawsuits from dozens of U.S. states. They were being sued for violating antitrust and consumer protection laws, being deceptive about the dangers of tobacco, and trying to increase smoking addiction by manipulating nicotine levels in cigarettes.
In the name of time and efficiency, the four previously mentioned companies entered into an encompassing contractual agreement to make perpetuity payments to the states.
According to a U.S. General Accounting Office (GAO) report from June 2001, allocations for each state were based on several factors including population and smoking prevalence. California’s percentage was computed at 12.8. New York also received 12.8 percent and the other states were given five percent or less.
The money is meant to be a reimbursement for state or county funds spent on treating residents for smoking-related illnesses but the MSA does not tell the states specifically where to spend the money.
The GAO report looked at 42 states and found that two-thirds had enacted laws governing the use of the money while others, such as California, used voter-approved initiatives to decide what to do with the funds.
Most states are spending the majority of the money on health-related programs. California is the only state that allocated 100 percent of its money to health programs.
Norma Camacho, the program management analyst for Ventura County’s executive office, told adjustercom.com, “The counties have taken on a lot of expense over the years to care for residents with diseases related to smoking from bronchitis to pulmonary disease. Most of the people we help are the uninsured poor and the mentally ill.”
Camacho said the settlement sends a good message to Big Tobacco.
California devised its own memorandum of understanding (MOU) about the settlement with its 58 counties and four major cities. The MOU allows a 50/50 split of the money between state and local governments. The local entities then split up their share among the counties and cities.
California will use its MSA payments to expand public health insurance programs. It will provide more Medicaid coverage for working families and pay more to providers who join public health insurance programs including Medicaid. Some of the funds will also be spent on the State Children’s Health Insurance Program (SCHIP).
Camacho said Ventura County receives approximately $10 million each year from the settlement. The Sept. 11 attacks had some bearing on where county officials decided to spend the money. This year one community group in particular, the Terrorism Working Group, was awarded $36,000 to beef up its organization.
“The Sept. 11 attacks were a wake-up call that this county should look at our [emergency] preparedness,” said Camacho.
The working group is in the process of creating a video on the symptoms and treatments of biological agents like anthrax. They are also buying decontamination tents for the fire department to transport victims of bioterrorism more quickly.
Future MSA payments are subject to adjustments based on cigarette shipping volume, inflation, and cigarette consumption. The payments are likely to decrease because cigarette consumption has fallen nearly seven percent since the agreement was signed. In the future, analysts expect that number to continue to decline approximately two percent each year.
Low-Tar and “Light” Cigarettes
The labeling of cigarettes has been a controversial issue for decades. First, health organizations fought to have warning labels put on all cigarette packs stating the health hazards. Now tobacco companies are under the gun for labeling cigarettes “light.”
According to a study by the National Cancer Institute, the designation of cigarettes as low-tar or “light” might be misleading to consumers. The institute announced Nov. 28, 2001 that those types of cigarettes are not healthier nor are they safer than their full-strength counterparts.
These low-tar or low-nicotine products have been marketed heavily by tobacco companies, possibly contributing to the fact that more than 80 percent of cigarettes sold in the U.S. are low-tar said the institute.
But the problem, according to the study, is that smokers compensate for the low levels of nicotine or tar by dragging more heavily and more often on the cigarette. “There appears to be complete compensation for nicotine delivery, reflecting more intensive smoking of lower-yield cigarettes.”
Seth Moskowitz, a spokesman for R.J. Reynolds Tobacco, said that his company never claimed low-tar cigarettes were safer than regular cigarettes. He said the only way to avoid health risks associated with smoking is not to smoke. But Mary Carnovale, a spokeswoman for Philip Morris U.S.A., said the designations help smokers compare products.
Several public health organizations are asking the tobacco industry to stop using the terms “light,” “ultra-light” and “low-tar.” They are also asking Congress to allow the Food and Drug Administration to regulate tobacco products.
One tobacco company executive said the Cancer Institute’s report did not provide conclusive evidence. Sharon Boyse, director of applied research for Brown & Williamson Tobacco Co. told the Los Angeles Times, “We agree they (low-tar cigarettes) might not be safer than full-flavored cigarettes, but you can’t rule it out.”
Tobacco Industry Takes Home at Least One Victory
The tobacco industry has succeeded in avoiding one lawsuit that could have cost it much more than any individual settlement thus far.
A West Virginia class action lawsuit filed in the names of 250,000 healthy smokers sought to require tobacco companies to underwrite regular medical testing for their consumers.
The four major tobacco companies named in the suit, R.J. Reynolds Tobacco, Lorillard Tobacco Co., Philip Morris U.S.A. and Brown & Williamson Tobacco Co., would have had to pay for annual CT scans for smokers from the age of 50 on.
A six-member jury rejected the lawsuit, Nov. 14, 2001. The landmark case was the first in the U.S. that was presented as a product liability case with medical monitoring as the solution.
The jury made it clear that smoking did pose a risk of lung cancer and emphysema but the tobacco companies were not negligent, nor did they market defective products, or breach a promise to develop safer cigarettes.
Jeff Furr, a lawyer for R.J. Reynolds said the jury made it clear that smokers worried about health risks “should quit—not sue and continue to smoke.” | 
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