The tobacco industry is a multibillion-dollar operation that has blatantly lied to the public for the last forty years about the addictive nature of nicotine and the deadly effects of smoking. Yet, despite low favorable ratings with the public and the common knowledge that smoking kills, the tobacco industry has still managed to more than stay afloat. By responding to the scientific community's challenges with aggressive and dishonest legal, public relations, and political strategies, the tobacco industry has been largely successful in protecting its profits. But, with the recent legal developments in the courtroom, the tobacco industry, for the first time in 40 years, is vulnerable to attack for precisely the reasons why it has been successful: its blatant fraud and deception of the public concerning the health effects of smoking. With these legal developments, the industry is finally willing to discuss settlement options with the government, not out of willingness to cooperate with the public health groups or government regulatory agencies, but out of instinct for survival.
How did the tobacco industry mobilize and develop its legal, public relations, and political strategies? Early reports directly linking smoking and cancer emerged in the 1950s in the forms of a wide array of publications: New York Times in May 1950; Reader's Digest in December 1952 - "Cancer by the Carton"; Life in December 1953. The tobacco industry's initial response to these reports was product innovation. They promoted new types of cigarettes, claiming that they were healthier than the older ones. New advertising strategies were employed to compete with other companies' cigarettes: implications of health benefits for a particular brand above other brands.
These competitive strategies were clearly self-defeating. Themes of health in advertising had the dangerous potential of bringing up thoughts of lung cancer. Plus, these new brands that were created didn't necessarily have any healthier benefit than the next cigarette; in fact, they were created for marketing and public relations in order to lull the public into a false sense of security regarding the health effects of smoking. Using the health scare as a competitive advantage was an obviously suicidal strategy and until late 1953, the six major cigarette companies were fighting each other for a market share.
Fourteen prominent tobacco firms mobilized together, and with the New York public relations firm of Hill and Knowlton formed the Tobacco Industry Research Committee (TIRC) in the winter of 1953-4. The TIRC's formation was announced in a full-page advertisement on January 4, 1954, "Frank Statement to Cigarette Smokers," in 448 newspapers in 258 cities, reaching an estimated readership of 43,245,0000. The "Frank Statement" advertisement announced the tobacco industry's intent to promote independent scientific research in order to ensure that health was not compromised, expressing the industry's paramount concern for the health of its customers. In actuality, the TIRC was "nothing but a hoax created for public relations purposes with no intention of seeking the truth or publishing it… The intensity of the advertising and public relations was sufficient to create the desired doubt in the minds of the consumer, and overwhelm or undermine pronouncements as to the dangers… The magazine Tobacco and Health (distributed by the TIRC) mailed free to practically every doctor in the country… was a blatant and biased account of the smoking "controversy"."
Tobacco industry lawyers were responsible for many of the funding decisions, even though in all the public statements that the industry has released over the years has staunchly maintained that the TIRC (later renamed Council for Tobacco Research [CTR]) was an independent research organization devoted to determining the health effects of tobacco. Lawyers encouraged scientific research to refute the scientific evidence about tobacco, and to provide the results that could be used to respond to adverse publicity. For this purpose, tobacco industry lawyers selected topics for research and manipulated the publication of research results through funding mechanisms run by lawyers rather than by scientists.
In 1958, the Tobacco Institute was formed, again in conjunction with the public relations firm of Hill and Knowlton. The Tobacco Institute was formed to take over the industry's lobbying and public relations needs and to "foster public understanding of the smoking and health controversy." To this end, the Tobacco Institute publishes the Tobacco Observer, a monthly newsletter, and a multitude of brochures, booklets, and articles that deny smoking is a major health hazard. The Institute also provides speakers on tobacco-related subjects for civic and service clubs, business and professional groups, college postgraduate audiences and TV and radio appearances.
Both the Tobacco Institute and TIRC are the progeny of the public relations efforts of the tobacco industry and Hill and Knowlton. Hill and Knowlton was integral in the formation of both, and its influence is obvious, indicated by the substantial overlap of staffs between Hill and Knowlton, the Tobacco Institute, and TIRC/CTR. The significance of the overlapping staffs was a research effort controlled by lawyers whose primary goal was to continue as a large commercial enterprise by protecting itself from litigation and government regulation, as well as all three acting as the arms of the tobacco industry's public relations efforts.
The tobacco industry's public relations efforts in the 1950s and 1960s consisted mainly of countering awareness of the dangers of smoking. Advertising strategies included "getting out the facts" and selling doubt through reprinting independent articles.
It was also during this period that virtually all legislative and regulatory activity that was tobacco-related took place at the federal and state levels. The tobacco industry combined its money and lobbying skills to maintain a virtual monopoly on political victories in the government. However, the tobacco industry did face challenges from the Federal Trade Commission (FTC), whose job is to take action against "unfair and deceptive practices" in business. The FTC declared that the evidence of the "grave hazards to life and health," and the failure of cigarette companies to warn consumers of the danger, constituted an unfair and deceptive practice within a week of the Surgeon General's Report in 1964. The industry responded by heavily lobbying Congress, through whom any regulation would have to be passed. The cigarette companies were successful, and instead of the original bill proposed, a warning of the cancer effects of smoking on each pack of cigarettes, the resulting bill was a mild health warning "Caution, Cigarette Smoking May be Hazardous to Your Health" on each pack and a pre-emption that neither the FTC nor the Federal Communications Commission (responsible for television advertising) would take any further action for the next three years.
By the early 1970s, however, evidence of the health dangers of smoking had accumulated to the point of causing serious legal problems for the tobacco industry. Mounting scientific evidence of the dangers of environmental tobacco smoke (ETS) spurred the emergence of the non-smokers' grassroots movement. The industry was challenged on many fronts and faced increasing government efforts to regulate tobacco. By the mid-1980s the industry was hit with a wave of products liability lawsuits, filed by plaintiffs who were encouraged by the new significance attached to products liability law regarding toxic substances.
Though there were earlier attempts to sue cigarette companies in the late 1950s and early 1960s, they were successfully resisted by the tobacco industry. The defense of "contributory negligence," now defunct in many places, was still accepted. According to "contributory negligence," if the plaintiff has any responsibility for her own injuries, she can not win the case. Hence, lawsuits that were filed on the premise that the tobacco companies failed to warn of cigarettes' danger by falsely implying that it was fit for consumption, were countered with the tobacco industry's "blame the victim" strategy: since it was common knowledge that smoking is damaging to the health, the victim voluntarily assumes the risk of physical harm; it is the victim's responsibility that she is sick.
In the 1980s, however, the legal environment had changed significantly, making lawsuits and state and local legislation for tobacco control more viable. The developments of the strong doctrine of "strict liability" (market a dangerous product, go to jail) has held tobacco companies responsible for their cigarettes. Additionally, the widespread knowledge of the dangers of second-hand smoke on passive non-smokers made smoking less socially acceptable. The public became less tolerant of smoking in public areas and the work place, and restrictions on smoking began to be implemented by both government and private businesses.
The significance of lawsuits for the tobacco industry is that if a single lawsuit succeeded, it would open the industry to a plethora of similar lawsuits that could potentially bankrupt the industry. Hence, the tobacco industry has worked hard in discrediting smokers with claims of "contributory negligence" and has been successful in over 400 lawsuits filed in the past 40 years.
Yet, in February 1994 a group of 64 private law firms called Castano Tobacco Litigation was formed and is responsible for bringing state class action lawsuits throughout the nation. The Castano Litigation strategy focuses primarily on nicotine addiction and the dependent behavior it causes, as opposed to previous efforts that focused on smoking as the cause of disease and death. This strategy was successful in 1996 when a Florida plaintiff was awarded $750,000 for tobacco as the cause of personal injuries.
As a result of the Castano group's work, the secrecy surrounding cigarette companies is now broken. Millions of documents and the testimonies of whistle-blowers have also helped dismantle the tobacco industry's stonewall of blatant fraud and deception. These documents and testimonies reveal the cigarette companies' knowledge that nicotine is addictive and their deliberate attempts at keeping this information away from authorities, health care professionals, and the entire consuming public. Furthermore, the cigarette companies conspired to keep the addictiveness of nicotine and the manipulation of nicotine potency secret in order to hook more and more people to make more and more money, while killing people without any accountability for a product that kills. Additionally, documents of the tobacco industry's intensive internal market research only recently surfaced show that smoking appeals to the young and the industry's consequent marketing strategies were deliberately developed to entice the young population.
The battle intensified as the states' Attorneys General began to enter the legal arena, suing the tobacco companies to recover Medicaid costs association with the health care of individuals suffering from tobacco-related illnesses. In May 1994, Mike Moore, the attorney general of Mississippi, in collaboration with Dickie Scruggs, a plaintiff's lawyer, recruited 41 states to file suit against the seven biggest tobacco companies. These state lawsuits are based on anti-trust and fraud, attempting to recover the costs that taxpayers have borne for smoking related diseases that are a result of the tobacco industry's fraudulent practices. Evidence for these new cases are based on statistics and epidemiology.
With the tobacco companies facing an even bigger legal battle than the Castano Group and potential loss that could be devastating through the legal system, the industry began to consider settlement. A group of powerful, unified companies who at one point would never have considered settling, when losing in court seemed an impossibility, and would never dream of admitting that their product was addictive and harmful than they cared to reveal, were finally willing to discuss settlement options.
The dismantling of the industry's united stand began with the Liggett Company's agreement to settle with five states' Attorneys General in 1996. The Liggett settlement was a crack in the stonewall that has protected the industry in the past 50 years, and was made possible with the help of whistle-blowers on the industry like Merrell Williams and Jeffrey Wigand, along with the release of internal company documents revealing deliberate fraud and deception of the consuming public.
The $368.5 billion global settlement on June 20,1997 was the climax of a steady escalation of pressure on the tobacco industry in an attempt to cap their potential losses against lawsuits from the state and class action suits. With this settlement, the industry received protection against lawsuits in exchange for federal cigarette regulation and marketing restrictions. Most of the money the cigarette companies would have to pay would be tax-deductible, forcing taxpayers to bear the brunt of the financial burden of the settlement. And, even though marketing would be heavily regulated against minors, it still left vulnerable, women, minority groups, and those aged 18-21 to be targeted by the industry.
The June 20th settlement was the result of a variety of political forces, as well as a confluence of various desires to keep the tobacco industry alive, attaining superficial victories on the industry, not attacking the industry where it would hurt. The White House needed a victory on the tobacco industry; whether or not it was real or apparent was inconsequential. The public health groups wanted the money from the settlement. Litigation lawyers, who wouldn't be able to collect their fees from a bankrupt industry, had a vested interest in capping the industry's liability fees. Trent Lott (Dickie Scruggs's brother-in-law) and the other Republicans learned Dole's political lesson in the 1996 election and wanted the tobacco issue off the table so that it wouldn't further damage them politically. Last, but not least, the tobacco industry wanted a settlement that would minimize the punitive damages from legal challenges so their expansion overseas could continue unabated.
The recent McCain Bill is characterized by much harsher provisions than the June 20th settlement. The bill would weaken the legal protections afforded the industry in the settlement. Tobacco companies would pay $10 billion immediately and $506 billion over 206 years to settle legal claims and finance anti-smoking efforts. There would be a $6.5 billion cap on annual payments for liability claims, with no other liability protections. Outdoor and internet ads and characters like Joe Camel would be banned; tobacco sponsorship of outdoor sporting events would be prohibited; and there would be prohibitions on using animal figures and color ads in magazines. There would be a $1.10 per pack tax on cigarettes. The Food and Drug Administration would have the authority to treat nicotine as a separate regulatory category. A goal would be set to reduce youth smoking by 60% over 10 years. A sliding scale of penalties would be capped at $3.5 billion a year. $28.5 billion in economic aid would be delegated to tobacco farmers and displaced farmers.
The tobacco industry responded by walking out of negotiations with Congress on the comprehensive tobacco settlement, vowing to fight any effort to raise cigarette prices and restrict tobacco ads with attacks on the McCain Bill proposal as a "big government, big tax, and a pro-crime bill" that is "just off the planet." On Monday, April 6th RJR Nabisco chief executive officer Steven F. Goldstone announced that the tobacco industry was abandoning negotiations with the White House and Congress and would fight on "Capital Hill, in the courts and in the court of public opinion."
For the past 40 years, the tobacco industry has been successful in stonewalling the public about the health effects of tobacco, through deception and fraud in the form of heavy public relations efforts run by industry lawyers. The accumulating evidence of the dangerous health effects of smoking on passive non-smokers in the form of ETS made smoking less socially acceptable and more vulnerable to tobacco control. Additionally, the legal environment of the 1980s changed significantly from earlier periods, making cigarette companies "strictly liable" for the damaging effects of smoking. The formation of the Castano Tobacco Litigation in 1994 also helped the case of victims of tobacco, focusing on new strategies emphasizing nicotine addiction and the resulting dependent behavior. There was also a stream of whistle-blowers, like Merrell Williams and Jeffrey Wigand, who gave damaging testimonies on the industry's deliberately fraudulent practices. Millions of internal company documents have also been uncovered, revealing the industry's previous knowledge of the damaging health effects of tobacco, the addictive nature of nicotine, and deliberate marketing toward young people. The states' Attorneys General have also joined in the battle against the industry, trying to recover costs in Medicaid, spent on tobacco-related illnesses. This all culminated in Liggett Company's settlement with five states' Attorney Generals in 1996, symbolic of the unraveling of the industry's power and secrecy. In 1997, the tobacco industry reached a $368.5 billion settlement to try to cap their losses from potential lawsuits. The McCain Bill in April 1998, however, was characterized by harsher provisions and the tobacco industry walked out, declaring that the process had turned into a "feeding frenzy that the industry could not possibly win." However, the bill would still rescue the tobacco industry from potential bankruptcy from state and class action lawsuits, allowing them to pursue growth opportunities in the Third World. It remains to be seen whether or not the industry's stomping out is simply posturing to get the bill passed (which the industry has done before) or actual stomping out. At this point, the tobacco industry plans on attacking the bill on grounds that it is an intrusion of "Big Brother" and by mobilizing smokers' rights groups and other similar front organizations (most of which the industry directly funds).
The tobacco industry markets a product that kills an estimated 400,000 people annually. Through their intensely researched marketing strategies, 3,000 young people pick up their first cigarette each day, a third of which will become addicted. The state and federal governments, insurance companies, the health care industry, and individuals have spent billions of dollars to take care of those afflicted with tobacco-related diseases; and millions more have been spent by attorneys and plaintiffs trying to get some relief through the legal system. Yet, the only costs the cigarette companies have borne have been the legal fees to fight lawsuits and the money they use to lobby and maintain the secrecy of the industry. The future of cigarette companies is ambiguous to say the least and the outcome of the McCain Bill depends on the future actions of the cigarette companies and their success in arguing first amendment rights to market a product that kills, and how uncompromising the positions on health Congress, the White House, and the public health groups will take.
In the meantime, every day 3,000 American children will become addicted to nicotine and another 1,300 smokers and nonsmokers will die.
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Written by Shirley Ye on April 21, 1998.
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