Tobacco Industry Misled `Light' Smokers, Suits Say (Update1)
By William McQuillen
Edwardsville, Illinois, Jan. 18 (Bloomberg) -- Philip Morris Cos. and other tobacco makers are accused in a new wave of product- liability lawsuits of lying about the health effects of ``light'' cigarettes.
Philip Morris goes on trial next week in a state court in Illinois in a class-action lawsuit by smokers who claim the world's largest tobacco company deceived them about the dangers of Marlboro Lights and Cambridge Lights. R.J. Reynolds Tobacco Holdings Inc. and British American Tobacco Plc's Brown & Williamson unit face similar suits elsewhere.
The claims raise the possibility of damages in the billions of dollars for the tobacco makers. In the last three years, juries in California and Florida have returned multibillion-dollar verdicts against Philip Morris in cases involving full-strength cigarettes.
``Nobody should be stunned'' by a huge verdict in the Illinois case, said William Schroeder, a law professor at Southern Illinois University. ``But it will be many different levels and many years until that is paid out.''
The cigarette companies say they haven't lied, noting that each pack carries a health warning. That defense proved unsuccessful in a Portland, Oregon, case about a year ago. A jury told Philip Morris to pay $150 million -- later reduced by a judge to $100 million -- to the family of a deceased smoker who used the low-tar products.
New Warnings
With the light-cigarette trials on the horizon, Philip Morris said in November it would put inserts into about 130 million packs of light, medium, mild and ultra-light cigarettes saying they aren't safer than full-strength brands.
The companies may point to the warnings as evidence they are mending their ways, industry critics suggested.
``I don't know how much it will save them,'' said Richard Daynard, a Northeastern University law professor and anti-smoking activist. ``But it will give them something to say'' in court.
Philip Morris denied the warnings are part of a litigation strategy. The inserts are a response to a U.S. National Cancer Institute report in November 2001 that said low tar or light cigarettes didn't reduce the chances of getting smoking-related diseases, said Brendan McCormick, a company spokesman.
``We're continuing to make an effort to deal with people's concerns,'' he said.
Legitimizing Low-Tar Brands
The report indicated smokers had been led by advertising to believe the cigarettes were safer. Public-health advocates have since urged a ban on using words like ``light'' and ``ultra light'' on packaging.
Litigation hasn't been the only factor hurting Philip Morris shares. Philip Morris and rival R.J. Reynolds Tobacco Holdings Inc. have increased promotions on their premium-priced brands in the past year to maintain sales amid competition from cheap imports and counterfeits. Discounts on Marlboro haven't been able to stem a decline in market share for the world's best-selling cigarette.
Philip Morris abandoned its profit forecast for this year in November because of the increased competition and higher promotional spending. Shares of Philip Morris rose 18 cents to $41.90 on Friday. They've dropped 14 percent in the past year.
Attorney Chuck Tauman, who won the $150 million light- cigarette case in Portland, said the inserts are ``an attempt to legitimize'' the products and improve the company's legal position.
``Their emphasis is on trying to keep the punitive damages down, emphasizing all the things they are doing to stay clean, without ever saying that they were dirty,'' he said. Tauman filed a class-action suit in November against Philip Morris.
More Tar and Nicotine
Documents in lawsuits brought by smokers and states in the 1990s showed the tobacco industry knew smokers using lower- nicotine brands compensated by covering up ventilation holes, inhaling more deeply and puffing more. That gave them a higher amount of tar and nicotine than estimated in government tests.
The European Union has voted for a ban on the ``light' or ``ultra light'' labels beginning next month, and a panel in Canada has recommended that country do the same.
Star Scientific Inc., which began selling cigarettes directly to the public in 1994 and makes the Mainstreet brand, began putting inserts about light and ultra-light products in its packages two years ago. Brown & Williamson Tobacco Corp. continued to include the messages when it bought Star's Advance brand in April 2001.
The tobacco industry, generally successful in defending itself against smokers' suits, has lost big cases in Florida and on the West coast. Two California juries have awarded plaintiffs multibillion-dollar verdicts, later reduced by judges. In 2000, a Miami jury told Philip Morris to pay $145 billion to hundreds of thousands of Florida smokers.
Juries of Madison County
Separately, the tobacco companies are defending themselves in a New Orleans courtroom next week in a class-action lawsuit that seeks to force the companies to pay for Louisiana smokers' medical checkups. The suit seeks to force tobacco companies to finance a 25-year program of medical monitoring tests and pay to help Louisiana smokers quit.
Philip Morris may have a difficult time in defending itself in the Illinois trial that is about to get under way. The Madison County courthouse where the case will unfold attracts more class- action lawsuits per capita than any other in the country because of its reputation for favoring plaintiffs.
Philip Morris was sued by Susan Miles of Granite City, Illinois, who claims she was misled about the health risks of smoking low-tar cigarettes. The suit seeks punitive damages and refunds for all those who bought the light cigarettes.
``They believed what was on the package: lower tar and nicotine,'' said Stephen Tillery, the East St. Louis attorney representing the smokers. ``That's overt fraud.''
Philip Morris argues the allegations of the plaintiffs are too different to be treated collectively. In addition, every light cigarette sold in the U.S. has contained a warning label, which should exempt the company from litigation, Philip Morris says.
``I worry about all litigation,'' said Bonnie Herzog, a Salomon Smith Barney tobacco analyst. ``But I believe the industry has a pretty strong defense.'' |
