1. At the same time that Tobacco Companies were assuring smokers of health benefits from filters, the tobacco industry's research organization (CTR) funded a secret 1974 research project that concluded:

1. The promotional activities of the tobacco industry after the conspiracy was agreed to and implemented (which is described below), can only be understood in the context of the claims they had engaged in prior to the conspiracy regarding cigarette smoking and other tobacco use and health. Until the mid-1950s, explicit or implied health claims and/or medical endorsements for smoking were major areas of competition for many cigarette brands and in the public statements issued by the Tobacco Industry.
   
2. Cigarette smoking increased dramatically in the first half of the 20th century. With the increase of cigarette smoking came an increase in lung cancer. Dr. Alton Ochsner, a New Orleans surgeon and regional medical director of the American Cancer Society, told an audience at Duke University on October 23, 1945, that "there is a distinct parallelism between the incidence of cancer of the lung and the sale of cigarettes . . . the increase is due to the increased incidence of smoking and that smoking is a factor because of the chronic irritation it produces."
   
3. In 1946, Tobacco Company chemists themselves reported concern for the health of smokers. A 1946 letter from a Lorillard chemist to its manufacturing committee states that "Certain scientists and medical authorities have claimed for many years that the use of tobacco contributes to cancer development in susceptible people. Just enough evidence has been presented to justify the possibility of such a presumption."
   
4. Despite the evidence showing their cigarettes caused lung disease and cancer, the Tobacco Companies chose sales over public health and safety. In the 1930s through the 1950s, in response to what industry spokesmen referred to as "the health scare," the Tobacco Companies made express claims regarding the healthiness of their products with reckless disregard to the falsity of the claims and the consequential adverse impact on consumers. Examples of these health representations include the following: Old Gold ­ "Not a cough in a Carload"; Camel ­ "Not a single case of throat irritation due to smoking Camels"; Philip Morris ­ "The Throat-tested cigarette."
   
5. One of the key themes used to promote cigarette smoking between 1930 and 1954 was a promise the individual cigarette brands were either "less irritating" or that "harmful irritants" had been removed. At one point or another during this period, every major cigarette brand made a claim regarding health and/or irritation. These pre-1954 advertisements and representations demonstrate defendants' understanding that consumers wanted "safer" products. As a result, defendants engaged in the tobacco companies engaged in vigorous competition on the basis of claims of health and safety.
   
6. For example, during the 1950s, Viceroy cigarettes were promoted with the "health guard filter." Some of the claims included:

Prominent physician tells patients -- smoke Viceroy filter-tipped cigarettes. The nicotine and tar is trapped by the Viceroy filter and cannot reach mouth, throat, or lungs. You can see the health guard filter discolor from nicotine and tars which might otherwise be drawn into your mouth, throat, and lungs.

1. In 1952, the Lorillard Tobacco Company introduced Kent cigarettes with the micronite filter. It was represented that the micronite filter removed seven times more tar and nicotine than any other cigarette. Lorillard stated that the material in the Kent filter was developed for gas masks during the war, and was at that time being used to remove radioactive particles from the air at atomic power plants. In an ad, Lorillard purportedly cited an article in the Journal of the American Medical Association:

1. In the first weeks after it was introduced, sales of Kent cigarettes greatly exceeded Lorillard's original expectations. In the early months, the biggest problem faced by the company was keeping dealers supplied. Other Kent ads claimed "don't be mislead by conflicting claims . . . Today as before you get less tars and nicotine in Kent than any other leading cigarette." Other companies competed on the same basis at the same time. For example, Philip Morris ads claimed "no other popular filter cigarette delivers less nicotine and tar."
   
2. Between 1952 and 1957, more than a dozen different filter cigarettes were introduced. In 1952, filter cigarettes accounted for less than one percent of the market. The companies were competing on the basis of health through filter introductions. After 1953, the companies stopped making health claims, but continued to market filter cigarettes which the public perceived as safer or healthier than unfiltered cigarettes. By 1958, there were filters on more than 40 percent of cigarettes sold due to consumer demand for "safer" products. Advertising promoting the supposed "health benefits" of cigarette filters, though largely abandoned, had the desired effect. The decline in cigarette sales of 1953 and 1954 was reversed, and by 1957 cigarette sales exceeded the 1952 record.
   
3. By the mid-1950s, the major cigarette companies had become more adept at making implicit health claims for their cigarettes. One technique was to imply that years of research had gone into developing cigarettes with lower tar or nicotine content and that health benefits were associated with reduced tar/nicotine intake from smoking. At the time that these ads were run (and to this day), there was no evidence that low tar-nicotine cigarettes provide a significant health benefit or are materially less addicting. At best, low tar/nicotine cigarettes may reduce the risk of lung cancer by 20 percent (meaning that a low tar two-pack smoker would still be more than 15 times likely as a nonsmoker to die of lung cancer). However, in most instances, current low tar/nicotine cigarettes actually increase the risk of emphysema and heart disease and other diseases caused by smoking, and are just as addictive as ordinary cigarettes. This is because smokers of low tar/nicotine cigarettes tend to smoke more, inhale more deeply, and hold the smoke in their lungs longer in order to maximize their intake of nicotine. Thus, these low tar and low nicotine cigarettes are still highly addictive and harmful to health.
   
4. Evidence of the tobacco cartel's agreement not to develop a "safer cigarette," and to restrain competition based on health, is the uniform shift in the nature of tobacco advertising starting in 1954 and continuing through the present. Prior to 1954, as set forth above, the tobacco industry responded to consumer demand by advertising and robustly competing based on claims related to health. After 1954, although the companies competed on issues such as filters, tar and nicotine, no further health claims were made nor was there any advertising on less harmful products. By the 1970's and 1980's, all advertising switched to portraying smoking as being associated with manliness or femininity, with athletic achievement, economic and/or professional success, social skills and acceptance, sexual attractiveness, etc.
   
5. Another common form of misrepresentation has been to imply government endorsement of certain cigarette brands. In particular, American Tobacco (makers of Carlton cigarettes) and Reynolds (makers of Now cigarettes) have regularly implied government endorsement for their low tar cigarettes. Carlton ads combined implied governmental endorsement, confusing numbers, and the promise of "lowest" (meaning "safest") in ads. To this day, the claim that "Carlton is lowest" is splashed across each ad to imply that the brand is "safest." But at the same time that American Tobacco was claiming Carlton to be lowest, Reynolds claimed that "Now is lowest." And others made the same claim. Another technique that was used to encourage smokers to refrain from quitting was soothing reassurances like the one in a True ad: "I'd heard enough to make me decide one of two things: quit or smoke True. I smoke True." This was one of a whole genre of ads in which men and women who were portrayed as concerned smokers explained the reasons why they had switched to True, Vantage, or other brands as an alternative to quitting.
   
6. Thus, prior to 1954, it is clear that the industry competed in a robust fashion on the basis of explicit health claims.

1. In the early 1950's, scientists published two significant scientific studies warning of the health hazards of cigarettes. The first was published in 1952 by Dr. Richard Doll, a British researcher, who found that lung cancer was more common among people who smoked and that the risk of lung cancer was directly proportional to the number of cigarettes smoked. A second study was published in December 1953 by Dr. Ernest Wynder and others of the Sloan-Kettering Institute, whose experiments with mice confirmed the cancer-causing properties of cigarettes. The reporting of these studies caused what tobacco company officials called the "Big Scare."
   
2. The tobacco industry responded quickly to the "Big Scare," which by late 1953 had caused a decrease in consumption of tobacco products and in the stock prices of many tobacco companies. Thus, on December 14, 1953, in the direct aftermath of the Wynder study and the public concern over it, Brown & Williamson President Timothy V. Hartnett circulated a memorandum to his counterparts at other tobacco companies and set out his proposals on how the industry should collectively deal with the "health issue."
   
3. Hartnett urged "[e]xcessive caution . . . in the methods we adopt to counteract these claims" by investigators of "unquestioned integrity." (Emphasis added.)
   
4. Hartnett then proposed a two-pronged collective response to his competitors "to get the industry out of this hole": (a) "unstinted assistance to scientific research," with the most difficult part of this effort being the group deciding "how to handle significantly negative research results if, as, and when they develop"; and (b) "the best obtainable" public relations counsel since none "has ever been handed so real and yet so delicate a multimillion dollar problem." (Emphasis added; italics in original.)
   
5. Hartnett's proposal was an invitation to his competitors to collude to restrain independent actions in the economic self-interest of the individual companies in favor of collusion. As set forth below, the invitation was accepted.
   
6. The next day, December 15, 1953, accepting Hartnett's offer to conspire, the presidents of the leading tobacco companies met at an extraordinary gathering in the Plaza Hotel in New York City. Present were the presidents of American Tobacco, Brown & Williamson, Lorillard, Philip Morris, Reynolds and U.S. Tobacco. This gathering was unprecedented: it was the first time the Tobacco Companies had met together outside occasional dinners. Also in attendance was Hill & Knowlton. Hill & Knowlton coordinated the meeting and later prepared a memorandum summarizing the discussions of that day.
   
7. According to the Hill & Knowlton memorandum, at the meeting, the companies exchanged proprietary information and "voluntarily admitted" that "their own advertising and competitive practices have been a principal factor in creating a health problem," and acknowledged that they had "informally talked over the problem and will try and do something about it." (Emphasis added.) In doing so, however, the competitors realized that the subject [doing something about competitive advertising practices] "is one of the important public relations activities that might very clearly fall within the purview of the antitrust act." Accordingly, they concluded, "it is doubtful that we will be able to make any formal recommendation with regard to the advertising or selling practices and claims." (Emphasis added.)
   
8. At the time of the December 15, 1953 meeting, the tobacco industry did not have a trade association, and cigarette manufacturers had never before met in a formal business meeting or discussed business, because, according to the Hill & Knowlton memo, the Tobacco Companies were prevented by a 1911 dissolution decree and criminal convictions for price fixing in 1939 from carrying on many group activities.
   
9. Despite the dangers, the competitors met because they viewed the current problem "as being extremely serious and worthy of drastic action." An indication of the seriousness of the problem was "that salesmen in the industry are frantically alarmed and that the decline in tobacco stocks on the stock exchange market has caused grave concern."
   
10. The agreement reached at the Plaza Hotel to conceal adverse information and not compete on the basis of health, was to be and still is, a fixture of defendants' future relationship. According to the Hill & Knowlton memorandum, "[e]ach of the company presidents attending emphasized the fact that they consider the program to be a long term one," and the meeting participants were "emphatic in saying that the entire activity is a long-term, continuing program, since they feel the problem is one of promoting cigarettes and protecting them from these and other attacks that may be expected in the future." (Emphasis added.)
    
11. Thus, at the December 15, 1953 meeting the course of conduct agreed to included but was not limited to:

1. In furtherance of the conspiracy, nine days later, Hill & Knowlton presented a detailed recommendation to the cigarette manufacturers and others. The recommendation recognized the importance of gaining public trust, and avoiding the appearance of bias, if the industry's "pro-cigarette" public relations strategy was to succeed. According to the memorandum:

1. John Hill of Hill & Knowlton, suggested that the word "research" be included in the name of the Committee. Thus, an organization designed to pursue a very delicate "public relations function" was given the intentionally misleading name of the "Tobacco Industry Research Committee" ("TIRC").
   
2. Five of the Big Six cigarette manufacturers and UST were original members of TIRC. Liggett did not join until 1964. In 1964, TIRC changed its named to the Council for Tobacco Research ("CTR"). The world tobacco industry formed equivalent organizations in other countries, as well, including the Tobacco Advisory Committee, formerly Tobacco Research Council, in the United Kingdom, and Verbrand der Cigarettenindustrie in Germany. The U.S. companies, either directly or through affiliates are members of the other organizations.
   
3. The result of these meetings was an agreement that the industry would not compete based on claims of health and a conspiracy then went forward on that basis. This agreement is reflected in a June 21, 1954 Hill & Knowlton memorandum:

The principle has been and will continue to be carefully adhered to in the work carried on for the committee. [Emphasis added.]

1. The "every effort" was, among other things, an agreement not to compete on the basis of health claims for fear of stirring up any controversy regarding health and safety.
   
2. A July 31, 1954 Hill & Knowlton "Confidential Memorandum" acknowledges that the formation of the TIRC was the result of a decision that "joint action" was imperative.
   
3. The Industry was keenly aware that the agreement creating TIRC was a restraint on competition. As Philip Morris noted, similar agreements in other countries restrained competition: "On the Continent individual companies and monopolies have agreed to pool research on the health question, thereby reducing it as a basis for competition." (Emphasis added.)
   
4. British research conducted by the Tobacco Manufacturers' Standing Committee [TMSC], an equivalent organization to TIRC (and including companies, such as British American Tobacco [BAT] who were affiliated with U.S. companies) had known competitive impacts. BAT's Chairman, Sir Charles Ellis said, "The Board has decided that if this Company [BAT] makes any significant scientific discovery clearly relevant to health it will share its knowledge with its co-members of TMSC and not seek to obtain competitive commercial advantage." (Emphasis added.)
   
5. At least one of the defendants, American Tobacco, did nothing on its own to evaluate the risks of use of its products: "The Council for Tobacco Research was the source of expertise on that."
   
6. Another trade group, the Tobacco Institute, was formed by tobacco manufacturers in 1958. It performs a variety of functions and provides opportunities for the combination and conspiracy to exchange information, to police the illegal agreement, and otherwise to coordinate activities.

1. The cigarette industry announced the formation of TIRC on January 4, 1954, with newspaper advertisements placed in virtually every city with a population of 50,000 or more, including Seattle, reaching a circulation of more than 43 million Americans. The advertisement was captioned "A Frank Statement to Cigarette Smokers" and was run under the auspices of TIRC with, inter alia, five of the Big Six manufacturers listed by name. The advertisement stated as follows:

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. However, we do not believe that any serious medical research, even though its results are inconclusive should be disregarded or lightly dismissed.

At the same time, we feel it is in the public interest to call attention to the fact that eminent doctors and research scientists have publicly questioned the claimed significance of these experiments.
Distinguished authorities point out:

1. That medical research of recent years indicates many possible causes of lung cancer.

2. That there is no agreement among the authorities regarding what the cause is.

3. That there is no proof that cigarette smoking is one of the causes.

4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed the validity of the statistics themselves is questioned by numerous scientists.

We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business.

We believe the products we make are not injurious to health.

We always have and always will cooperate closely with those whose task it is to safeguard the public health.

For more than 300 years tobacco has given solace, relaxation and enjoyment to mankind. At one time or another during these years critics have held it responsible for practically every disease of the human body. One by one of these charges have been abandoned for lack of evidence.

Regardless of the record of the past, the fact that cigarette smoking today should even be suspected as a cause of a serious disease is a matter of deep concern to us.

Many people have asked us what we are doing to meet the public's concern aroused by the recent reports. Here is the answer:

1. We are pledging aid and assistance to the research effort into all phases of tobacco use and health. This joint financial aid will of course be in addition to what is already being contributed by individual companies.

2. For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE.

3. 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. A group of distinguished men from medicine, science, and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities.

This statement is being issued because we believe the people are entitled to know where we stand on this matter and what we intend to do about it. [Emphasis added.]
Listed as sponsors of this announcement were American Tobacco, Brown & Williamson, Lorillard, Philip Morris, Reynolds and U.S. Tobacco.

1. By issuing this publication and others that followed, the industry undertook a special and continuing duty to protect the public health by representing that it would conduct and disclose unbiased and authenticated research on the health risks of tobacco use. The issuance of this publication was an integral step in the conspiracy to suppress and conceal information that might reduce the cartel's sale of tobacco products and/or subject the cartel to increased government regulation.
   
2. Other public statements issued by the tobacco industry through the TIRC/CTR or the TI, repeated several themes: (1) that the industry was working to report the full and complete truth concerning tobacco and health, (2) that those working on reporting the truth were "independent" scientists and (3) that the results of this independent research cast grave doubt on any study linking tobacco use with health problems. These statements include but are not limited to the following:
   
   1. On June 4, 1955, the TIRC issued a release entitled "Anti-smoking Theories Not Based on Scientific Knowledge." The release represented that according to the TIRC's associate scientific director, "little is established scientifically about tobacco effects on the heart"; tobacco has "even been reported as killing various harmful bacteria." The release represented that the TIRC "is supporting scientific investigation into many phases of tobacco use and human health in order to get the facts." (Emphasis added.)
      
   2. On December 16, 1957, the TIRC issued a release representing that "Extensive scientific research now underway into tobacco use does not substantiate generalized charges against smoking as a cause of cancer." Reporting on the findings of Dr. Clarence Cook Little, "Scientific Director" of the TIRC, the release represented that "no substance has been found in tobacco smoke known to cause cancer." According to Dr. Little, the research program was designed "solely to obtain new information and to advance human knowledge in every possible phase of the tobacco and health relationship." (Emphasis added.)
      
   3. On or about December 27, 1958 the TIRC issued a release representing that "during the past year many scientists of high professional standing have produced additional evidence and opinions that challenge the validity of broad charges made against tobacco use." According to the TIRC, its research had developed several "essential facts," including the fact that "the cause or causes of lung cancer remain undetermined" and that "compelling doubts have been raised about statistics and their interpretations involving smoking and health." The release concluded with the following promise:

That statement and pledge are reaffirmed today by members of the Tobacco Industry Research Committee. [Emphasis added.]

1. On March 28, 1960, the TIRC issued a release challenging any link between smoking and lung cancer. In the release the TIRC repeated that "we have frankly accepted a responsibility for financing independent research into health problems, including lung cancer, in an effort to get needed facts and evidence." (Emphasis added.)
   
2. George Allen, President of the Tobacco Institute issued a report pledging that the TI, for the benefit of the "public interest" would "encourage the kind of research that will provide the necessary facts." Further, Allen promised that this type of research "is what the industry has tried to do in the past" and "is what we shall do in the future, until enough facts are known to provide solutions to the health questions involved." (Emphasis added.)
   
3. In 1962, the TIRC issued a release announcing it was in its ninth year of supporting research by independent scientists relevant to questions about tobacco and health. The release represented that "the tobacco industry continues its support of the search for truth and knowledge." (Emphasis added.)
   
4. On May 28, 1962, the TIRC in a release confirmed that its purpose "was to make the facts known to the public." (Emphasis added.)
   
5. In 1964, the TIRC issued a "year end statement" representing that its research "will intensify," that $7.25 million had been apportioned to date involving 125 grants and that the TIRC "is dedicated to support its program of research by independent scientists until all the answers are known." (Emphasis added.)
   
6. In 1979 the TI issued a document entitled "Tobacco Industry Research on Smoking and Health." In it, the TI represented that "[t]here are still eminent scientists who question whether a causal relationship has been proven between cigarette smoking and human disease." The report went on to claim the industry had a great desire to "learn the truth":

The industry has committed itself to this task in the most objective and scientific way possible.
The report describes how the industry spent $82 million in research "into all phases of tobacco use and health." Further the report proclaimed that "the findings are not secret" and reaffirmed the commitment to the tobacco industry:
From the beginning the tobacco industry has believed the American people deserve objective, scientific answers.

With this credo in mind, the tobacco industry stands ready today to make new commitments for additional valid scientific research that may shed light on the question of smoking and health. [Emphasis added.]

1. The tobacco industry promised full public disclosure of relevant research through a CTR statement captioned "A Statement About Tobacco and Health" distributed throughout the U.S.

1. A Hill & Knowlton April 28, 1955 Report to the TIRC admitted the special responsibility of TIRC and the tobacco industry:

This brings with it a greater responsibility to the press and the public. The TIRC will have to live up to the expectations it has created on two fronts:

First, by pushing ahead soundly but steadily to get at the facts . . . .

Second, to report to the public where it stands in the search for the desired information about cancer . . . .

This calls for a more active and outspoken position. [Emphasis added.]

1. After attempting to lull the public into a false sense of security concerning tobacco and health, the TIRC acted to further the tobacco industry conspiracy. Despite the initial public statements and posturing, and the repeated assertions that the industry was committed to full disclosure and vitally concerned with public health, the TIRC failed to make public health a concern. Rather than work for the good of the public health and sponsor independent research, as it had promised, the Tobacco Companies, acting through the TIRC/CTR, concealed, undermined and distorted information coming from the scientific and medical community and caused the TIRC to publish information criticizing any research linking tobacco use with adverse health concerns while internally the industry's own research confirmed that tobacco use was both addictive and harmful to those who used it.

1. The true nature of the TIRC is revealed by a series of Hill & Knowlton reports to the TIRC. An early report to the TIRC chairman is entitled, "Confidential Report of Activities Through 1954." The cover letter indicates that the report is "highly confidential" and warns that "no additional copies be made and that this copy not be placed in the files."
   
2. The confidential report makes it clear that Hill & Knowlton -- not the independent scientists -- actually ran the Tobacco Industry Research Committee. According to the report:

1. The report further states that Hill and Knowlton "provided assistance in selecting" the Scientific Advisory Board, "proposed" Dr. Little for the Scientific Director, and "handled liaison, agendas, organizational plans, business affairs, reports, and materials for meetings of the TIRC [and] the Scientific Advisory Board, . . . in addition to developing operating procedures for the research program."
   
2. The report describes how the TIRC would transfer an obscure scientific report favorable to the industry into national headline news. According to the report, "advance checking" by TIRC revealed that a Dr. Hueper was scheduled to give an unpublicized report "concerning the lack of a proven link between lung cancer and smoking" in July in Sao Paulo, Brazil. TIRC reproduced the report and two pages of highlights and established a "special liaison" in Sao Paulo "to give word of Dr. Hueper's delivery as quickly as possible, so as to enable distribution of the talk while it was still newsworthy." As soon as the talk was given, "personal delivery of the Hueper release was made to important newspapers and services as well as distribution to science writers, editorial writers and feature writers." In the end:

1. The report describes many other efforts of the TIRC to influence media, including "special personal contacts" with Time, Newsweek, U.S. News and World Report, and Business Week; preparation of editorials entitled "The Same Old Culprit" and "Truth Makes a Slow Crop" that were "widely used in 'home town' dailies and weeklies throughout the country"; and "assistance . . . provided to the New York Times for a Sunday Magazine piece . . . on "Why People Smoke," which discussed some of the now-abandoned old charges against cigarettes."
   
2. According to the report, in many instances TIRC worked behind the scenes to influence the content of individual articles. In one case, the intervention of the TIRC resulted in "seven revisions and five qualifying additions" to a story in Cosmopolitan magazine that "was already in type."
   
3. In other cases, it was quicker and more effective simply to hire free-lance authors to write favorable articles for the Tobacco Industry Research Committee:

1. Another important function of the Tobacco Industry Research Council was to infiltrate anti-smoking organizations to obtain "advance information." According to the report:

1. A Hill & Knowlton July 31, 1954 "Confidential" report was proud to acknowledge that the efforts of the conspiracy had been successful:

The progress of the Tobacco Industry Research Committee's program is bringing greater acceptance of the industry's sincere efforts. The publicity accompanying each step taken so far by the Tobacco Industry Research Committee, particularly since the selection of the Scientific Director and the Scientific Advisory Board, has helped bring understanding that the charges against tobacco are not proven and are not joined in by a large body of scientific opinion. The bulk of editorial comment now appearing approves and, at times, applauds the action of the industry. [Emphasis added.]

1. In 1954, the TIRC's first year of operation, 35 staff members of Hill & Knowlton worked full or part time for TIRC. In that year, TIRC spent $477,955 on payments to Hill & Knowlton, over 50% of TIRC's entire budget.
   
2. Further evidencing the true nature of the TIRC, Hill & Knowlton wrote a "confidential memorandum" describing "Tobacco Industry Research Committee Information Activities" in August and September 1954.
   
3. This memorandum describes "recent major public relations projects" from August through September 1954. According to the memorandum, the Scientific Director and Chairman of the Tobacco Industry Research Committee met with the following publishers to "explain the industry's long-range intention to support a research program devoted primarily to the public interest": Arthur Hays Sulzberger, the president and publisher of the New York Times; Helen Rogers Reid, chairman of the board of the New York Herald Tribune; Jack Howard, president of Scripps-Howard Newspapers; William Randolph Hearst, Jr., president and publisher of the Hearst Consolidated Publications; and Roy E. Larsen, president of Luce Publications.
   
4. The memorandum describes how the Tobacco Industry Research Council influenced the content of the Edward R. Murrow Television Show:

1. The memorandum also describes how an article being prepared by Leonard Engle for Harper's Magazine "use[s] TIRC as a source of information" and "should lend weight to the industry's contention that there is no proof of the charges and that there are many other factors that enter strongly into the increasing incidence of lung cancer." It also reports that in the Washington Post "a feature story by Nate Haseltine us[es] long excerpts from [the] paper by Dr. Hueper, which was supplied him in personal contact through Hill & Knowlton, Inc., Washington office."
   
2. Finally, the memorandum describes the tactic of hiring free-lance authors to write ostensibly independent articles favorable to the industry, reporting that "C.B. Colby, free-lance popularizer of science, was retained for research and possible writing of article concerning all the hazards of modern life which people are cautioned against and leading to the conclusion that in spite of all the death scares, "You Still Live Longer."
   
3. On April 28, 1955, Hill & Knowlton wrote a confidential "Public Relations Report" to the TIRC. The report finds that after a year of intensive public relations activities, "progress has been made." Specifically:

1. In July of 1957, Dr. Clarence Cook Little, Chairman of the "science advisory board" of the TIRC, publicly stated:

1. On June 25, 1964, Bowman Gray, Chairman of the Board of R.J. Reynolds and spokesperson for the tobacco industry, testified before a House Committee and affirmed the industry's special duty to the public. In addition to his testimony, the following exchange took place between him and the Members of the Committee (Mr. MacDonald and Mr. Curtin):

If that body did come up with the same findings as the Surgeon General did, what would the attitude of the tobacco people be about the present legislation?

MR. GRAY. To begin with the grantees who receive money under the scientific advisory board; that is, the vehicle which handles these grants, are perfectly free and certainly requested to publish whatever findings they may arrive at in the course of their investigations. These, however, are scientifically and medically oriented and directed research programs and are not concerned with surveys and statistical reports.

MR. MACDONALD. If they did?

MR. GRAY. If they did they would bring it out. Then what do we do?

MR. MACDONALD. Yes, sir.

MR. GRAY. We get awfully fast to work to see what we can do about it.

1. As part of the conspiracy the Tobacco Institute ran an advertisement in 1970 captioned, "The question about smoking and health is still a question." In this advertisement, the Tobacco Institute stated:

And the industry has committed itself to this task in the most objective and scientific way possible. . . .

Completely autonomous, CTR's research is directed by a board of ten scientists and physicians. . . . This board has full authority and responsibility for policy, development and direction of the research effort. [Emphasis added.]

1. Again, in 1970, the Tobacco Institute stated, "The Tobacco Institute believes that the American public is entitled to complete, authenticated information about cigarette smoking and health." The Tobacco Institute further stated that, "The tobacco industry recognizes and accepts a responsibility to promote the progress of independent scientific research in the field of tobacco and health."
   
2. The tobacco industry repeatedly emphasized its commitment to full public disclosure of CTR-sponsored research: "We are cooperating in efforts to learn and to make known all the facts." The CTR often repeated its representation that it promoted the disclosure of all relevant facts: "The Tobacco Institute believes that the American public is entitled to complete, authenticated information about cigarette smoking and health." At the same time, the tobacco industry widely represented the "independent" and "objective" nature of the CTR, disclaiming any affiliation with or influence of the tobacco industry in the workings of the CTR. These statements extended to representations of independent decision-making regarding the funding of research proposals.
   
3. Robert C. Hochett, Ph.D., acting Scientific Director for the Council for Tobacco Research publicly stated:

1. On February 13, 1978, Horace Kornegay, then the President of the Tobacco Institute publicly stated:

1. In 1982, Edward A. Horrigan, Jr., then the Chairman of the Executive Committee of the Tobacco Institute, publicly stated:

Mr. Horrigan added:

I am saying that science to date after much research including over $100 million funded by our industry, indicates that no causal link has been shown.

1. In 1978, Sheldon Sommers, M.D., a former Scientific Director of the Council for Tobacco Research, described the CTR as a "funding agency for bio-medical research in the area of smoking and health, funded by tobacco manufacturers." Dr. Sommers stated that the CTR "exerts no influence upon the grantees" who Dr. Sommers stated "may freely publish what they find as they choose."
   
2. One year later, Dr. Sommers publicly stated:

1. In 1984, Reynolds falsely represented in The New York Times: "Studies which conclude that smoking causes disease have regularly ignored significant evidence to the contrary. These scientific findings come from research completely independent of the tobacco industry."
   
2. In 1988, a CTR report stated:

The Scientific Advisory Board to The Council meets regularly to evaluate applications for research support, judging them solely on the basis of scientific merit and relevance.

The Council awards research grants to independent scientists who are assured complete scientific freedom in conducting their studies. Grantees alone are responsible for reporting or publishing their findings in the accepted scientific manner ­ through medical and scientific journals and societies.
F. THE CAMPAIGN OF DECEIT AND MISREPRESENTATIONS

1. In 1964, the year of the first Surgeon General's report on smoking, CTR formed a "special projects division" to assist the industry in concealing unfavorable information. A series of research grants designated as CTR "Special Projects" were developed by defendants in a manner so as to appear to receive the protection of the attorney-client or attorney work product privilege. The "Special Projects" division was under the auspices of the CTR.
   
2. The true purpose of the "Special Projects" division was to select research projects regarding the links between tobacco use and disease in order to develop expert witnesses for defense purposes in tort suits against the tobacco industry. Consistent with this purpose, the tobacco industry's counsel were substantially involved in strategic and specific decision-making within the "Special Projects" division, to secrete dangerous evidence from the public. For example, the notes of one CTR meeting, written in 1981, state, "When we started the CTR Special Projects, the idea was that the scientific director of CTR would review a project. If he liked it, it was a CTR special project. If he did not like it, then it became a lawyers' special project." Another memorandum from 1981 explained, "Difference between CTR and Special Four (lawyers' projects). Director of CTR reviews special projects -- if project was problem for CTR, use Special Four."
   
3. The industry has been successful in using the CTR special projects division to conceal harmful information. Research from the special projects division remains shielded from public scrutiny. Individual companies furthered the conspiracy by shielding company documents with claims of attorney-client privilege and through tactics such as that undertaken by Brown & Williamson, which over the years has transferred documents described as "deadwood" to its British parent company, BAT Industries, so that they would not be discovered in legal proceedings in the United States.
   
4. Other internal industry documents also shed light on the true nature of the trade associations, as the following examples demonstrate:

b. "CTR is best & cheapest insurance the tobacco industry can buy and without it the Industry would have to invent CTR or would be dead."

c. "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."

d. "Historically, it would seem that the 1954 emergency was handled effectively. From this experience there arose a realization by the tobacco industry of a public relations problem that must be solved for the self-preservation of the industry."

e. "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."

f. "When the products of an industry are accused of causing harm to users, certainly it is the obligation of that industry to endeavor to determine whether such accusations are true or false. Money spent for such purpose should not be regarded as a charitable contribution but as a business expense -- an expense necessary to keep that industry alive. In view of the billions of dollars of annual sales of our industry our expenditures for health research has been of a minimal order."

g. "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. . . ."

h. In the cigarette controversy, the public -- "especially those who are present and potential supporters (e.g. tobacco state congressmen and heavy smokers) -- must perceive, understand, and believe in evidence to sustain their opinions that smoking may not be the causal factor."

1. Despite overwhelming scientific evidence, and the confirmation of this evidence by their own internal research, the cigarette manufacturers and their trade associations continue to deny uniformly that there is a causal connection between cigarette smoking and adverse health effects, or that nicotine is addictive. As one industry representative testified: "[A company can't represent that] smoking doesn't cause cancer. You can't say that. But you can say is it is a risk factor, and scientifically it hasn't been established. And that's what the research is for (emphasis added.) . . . I don't agree [that nicotine is addictive]. From what I've read on nicotine is that it contributes to the flavor, the taste of the product." These representations are intentionally misleading, unfair and deceptive. They are moreover a result of the industry's ongoing conspiracy and combination, and are done to maintain its market and profits from a deadly and addictive product.
   
2. Special Projects was not the only instance where the industry used lawyers to shield the truth. For example, in 1984, BAT, though the BAT legal department, also began internally plotting how to shield documents produced by scientists at BAT and B&W from discovery by plaintiff's lawyers, particularly in U.S. Products liability litigation. This plan included having BAT's "scientific literature review publication . . . set up as a Law Department function." BAT internally noted that "Direct lawyer involvement is needed in all BAT activities pertaining to smoking and health from conception through every step of the activity. This is a direct admission of BAT's efforts to shield adverse scientific information at both BAT and B&W from seeing the light of day. This goal was being frustrated because "[t]he problem posed by BAT scientists and frequently used consultants who believe cause is proven is difficult."

1. The industry's 1953 combination and conspiracy was supplemented and aided by a commitment jointly to conduct research because of "a general feeling that an industry approach as opposed to an individual company approach was highly desirable." This approach was desirable to prevent, among other things, competition on the basis of health risk comparisons.
   
2. As part, and in furtherance of the agreement not to compete to develop a "safer" cigarette, there was a "gentlemen's agreement" among the manufacturers to suppress independent research on the issue of tobacco use and health. This agreement was referenced in a 1968 internal Philip Morris draft memo, which stated, "We have reason to believe that in spite of gentlemans (sic) agreement from the tobacco industry in previous years that at least some of the major companies have been increasing biological studies within their own facilities." This memo also acknowledged that cigarettes are inextricably intertwined with the health field, stating, "Most Philip Morris products both tobacco and non-tobacco are directly related to the health field."
   
3. As indicated by this memo, it was believed within the industry that individual companies were performing certain research on their own, in addition to the joint industry research. Some companies viewed the strengthening demand for safer and alternative products as a potential future marketing opportunity. But the fundamental understanding and agreement remained: That information and competition activities deemed harmful to the unified, defensive posture of the industry would be restrained, suppressed, and/or concealed. No company or industry trade organization stood behind the "promise" the defendants had made. As American Tobacco's CEO testified, "[If the health studies are correct], consumers have the right to know whatever is affecting their health. I think that's what, the public health agencies and the government have that responsibility." (Emphasis added.)
   
4. The agreement not to compete was also in place in Great Britain, and discussed directly with Philip Morris. An October 1964 memorandum entitled "Reports on Policy Aspects of the Smoking and Health Situation in U.S.A." stated:

1. Defendants' activities in furtherance of the combination included restraining, suppressing, and concealing research on the health effects of smoking, including the addictive properties of tobacco, and restraining, concealing, and suppressing the research and marketing of "safer cigarettes." Despite the ability to produce "safer cigarettes," the defendants did not market such products, except in limited test markets, because it was understood among the conspirators that no company would characterize or promote a product as biologically "safer."
   
2. Like all classic cartels, defendants policed the conspiracy internally and externally. For example, one member of the conspiracy, US Tobacco, went so far as to terminate an employee and apologize to the Big six cigarette companies when the employee was quoted in a New York Post article, referring to smokeless tobacco as less dangerous than smoking. Ernest Pepples of Brown & Williamson reported this in a memo, where he wrote that he had been called by UST's General Counsel, Jim Chapin. Pepples stated, "Chapin says the statements quoted were unauthorized and do not represent his company's views. He has asked me to extend U.S. Tobacco's apology to each of the cigarette companies and advised me that the individual quoted in the article is no longer employed at U.S. Tobacco. Chapin says U.S. Tobacco has instituted smoking and health seminars throughout the company."
   
3. Several companies researched the possibility of marketing "safer cigarettes." The defendants acted in concert to exclude such products from the market and further excluded potential new entrants, in part, by patenting the processes for these less harmful products, which they neither marketed nor licensed to any other actual or potential competitor.

1. Liggett was one of the defendants who was successful in researching and actually developing a "safer cigarette."

1. Liggett initiated its "safer cigarette" project, called XA, in 1968. After a minimal expenditure of only $14 million, Liggett internally proclaimed the project a success in 1979. Liggett found that "[c]igarette tar has been neutralized" and that there was "[n]o evidence for new or increased hazard . . ."
   
2. Using its process, Liggett was able to produce cigarettes "which are believed to be of commercial quality." These cigarettes, however, were never marketed.
   
3. Liggett abandoned the project in furtherance of the conspiracy. Liggett feared that the marketing of a "safer cigarette" would be, in essence, a confession that its, and the industry's other cigarettes, were not safe. Thus, one Liggett executive wrote that, "Any domestic activity will increase risk of cancer litigation on existing products." In addition, there was a threat of retaliation from industry leader Philip Morris if Liggett broke ranks.
   
4. James Mold, who was assistant director of research at Liggett during the development of the "safer cigarette," the XA project, has provided testimony including the following overview of the XA project and its abandonment:

1. Brown & Williamson also developed a "safer cigarette," which it did not market despite promising test results. Jeffrey Wigand, a former Vice President for Research and Development for Brown & Williamson, states that he was instructed by the President of the company to abandon all efforts to develop a "safer product". He has testified that he was told, generally, "That there can be no research on a safer cigarette. Any research on a safer cigarette would clearly expose every other product as being unsafe and, therefore, present a liability issue in terms of any type of litigation." Brown & Williamson's Project "Ariel" used a heating, as opposed to burning system. Its Project "Janus" was intended to identify hazardous components of cigarette smoke so they could be removed. By the end of the 1970's, in a pattern that was repeated throughout the industry, Brown & Williamson closed its research labs and halted work on a safer cigarette.
   
2. Brown & Williamson also conducted research on tobacco substitutes or analogues, as did a number of the other companies. These substitutes were sought as a means to duplicate some of the effects of nicotine without toxic or harmful effects. For example, Brown & Williamson's affiliate BATCO developed "Batflake," a tobacco substitute. Laboratory tests showed that use of "Batflake" reduced a number of the harmful effects of smoking in direct proportion to the amount used in a cigarette. So far as is known, none of the substitute products was ever marketed in the United States. In 1980, BATCO, and Brown & Williamson abandoned the "safer" product search: "Dangerous area [research into irritation and smoke inhalation]. Please do not publish or circulate. No more work is needed on biological side." (Emphasis added.)
   
3. Such innovative products were not marketed because no member of the conspiracy has broken ranks by competitively marketing "safer" products. "Within B & W, we have rarely attempted to develop new products specifically designed to deliver low CO [carbon monoxide], except perhaps a prototype of FACT that was kept ready on a turn-key basis in the event of a marketing need for such product. This was done through a combination of filter ventilation, cigarette paper permeability, and appropriate cigarette paper additive. Needless to say, such need did not arise." (Emphasis added.)

1. Philip Morris also explored research to develop a "safer cigarette," or, in the words of one memorandum to the board of directors, cigarettes with "superior physiological performance." This memorandum noted competitive pressures to produce "less harmful" cigarettes. However, the memorandum was careful to state that, "[o]ur philosophy is not to start a war, but if war comes, we aim to fight well and to win." Philip Morris never broadly marketed such a "safer cigarette." Its documents state that "after much discussion we decided not to tell the physiological story which might have appealed to a health conscious segment of the market. The product as test marketed didn't have good 'taste' and consequently was unacceptable to the public ignorant of its physiological superiority." Subsequently, taste was improved and Philip Morris attempted to promote the product. However, "The imposition of FTC rules and the industry advertising code took the starch out of the program . . . ." (Emphasis added.)
   
2. The industry was aware that consumer demand would support "safer" products. Prior to adoption of the Advertising Code, companies made claims of reduced tar and nicotine content for their products, which the public perceived as offering reduced health risks. However, "the smoker of a filter cigarette [claiming reduced tar] was getting as much or more nicotine and tar as he would have gotten from a regular cigarette. He had abandoned the regular cigarette, however, on the ground of reduced risk to health." The industry recognized a difference between "health-oriented" cigarettes, which were never marketed on a wide basis, and "health-image" cigarettes, such as low-tar, low-nicotine products. The latter were a marketing tool, intended to give the illusion of a "safer" product.
   
3. The Federal Trade Commission Cigarette Advertising Guides, adopted September 22, 1955 and modified March 25, 1966, did not allow claims based on unsubstantiated health effects. However, it was clear in the industry that the Guides could be modified if justification was shown. Indeed, the 1966 modification of the Guides was based on development of a method, albeit not without difficulties of its own, of measuring tar and nicotine content. In the context of development of a potentially less hazardous product, a Brown & Williamson document by Addison Yeaman states, "I would submit that the FTC in the face of 1) the industry's research effort, 2) the truth of our claims, and 3) the "public interest' in our filter, cannot successfully deny us the right to inform the public." In truth, the defendants used the FTC Guides as a shield behind which it concealed its agreement not to compete. The voluntary agreement with the FTC was characterized by the Consumers Union as being "to the industry's advantage and to the public's disadvantage. . . ."
   
4. The Cigarette Advertising Code, adopted by the defendants, was another mechanism used to enforce the illegal agreement not to compete on the basis of safety or health characteristics of tobacco products. Among other provisions, it prohibits health claims in industry advertisements unless the "Code Administrator," to whom all cigarette advertisements are required to be submitted, approves of the advertisement. The Code provided a mechanism to monitor and police defendants' illegal agreement.

1. Reynolds also developed a "safer cigarette". Except for a brief test in several cities, Reynolds did not market its "safer" product, "Premier."

1. A memorandum authored by an attorney at the firm of Shook, Hardy & Bacon, long-time lawyers for the cigarette industry, confirmed that there was an industry-wide position regarding the issue of a "safer cigarette."
   
2. The 1987 memorandum was written in the context of the marketing by Reynolds of its smokeless cigarette, Premier, which heated rather than burned tobacco. The Shook, Hardy attorney wrote that the smokeless cigarette could "have significant effects on the tobacco industry's joint defense efforts" and that "[t]he industry position has always been that there is no alternative design for a cigarette as we know them." The attorney also noted that, "Unfortunately, the Reynolds announcement. . . seriously undercuts this component of industry's defense."
   
3. This fundamental position of the "industry" defense had been identified much earlier. In 1970, David Hardy of the Shook, Hardy firm wrote to DeBaun Bryant, General Counsel at Brown & Williamson, expressing concerns about some of the industry research into alternative products. In critiquing the minutes of a conference, he stated: "It is our opinion that statements such as [references to research into safer products, products which are less biologically active, and to 'healthy cigarettes'] constitute a real threat to the continued success in the defense of smoking and health litigation. Of course, we would make every effort to 'explain' such statements if we were confronted with them during a trial, but I seriously doubt that the average juror would follow or accept the subtle distinctions and explanations we would be forced to urge....[E]mployees in both companies [Brown and Williamson and British American Tobacco] should be informed of the possible consequences of careless statements on this subject."
   
4. All defendants were keenly aware of the risk to the industry if any of them sought a competitive advantage by developing and marketing a "safer" product. The risk was avoided by agreeing to not compete on that basis. As one industry representative testified: ". . . as a company, we cannot position our products as being healthy. We've already agreed that they are a risk factor [the 'agreement' referenced is the industry's acceptance of the warning labels on cigarette packages]....we wouldn't run any advertising that positions any of our products as being healthier than others."

1. For a period of time in the late 1960's, Reynolds had a state-of-the-art laboratory in Winston-Salem, nicknamed "the mouse house." Here, scientists conducted research with mice, rats, and rabbits and began to uncover promising avenues of investigation into the mechanisms of smoking-related diseases. In 1970, this entire research division was disbanded in one day, and all 26 scientists were fired without notice. Company attorneys had collected dozens of research notebooks, still undisclosed, from the biochemists several months before the firings.

1. In the early 1980's, researchers working at a Philip Morris laboratory in Richmond confirmed the addictive nature of nicotine and worked to develop a synthetic form of nicotine that would avoid its cardiovascular complications. However, in April 1984, the company abruptly closed the laboratory. The researchers were fired and threatened with legal action if they published their work.
   
2. The research was conducted by Victor J. DeNoble and his colleague Paul C. Mele, who remained silent about their work under confidentiality agreements imposed by Philip Morris until testifying in 1994 before a congressional committee in Washington.
   
3. The research was so secretive that laboratory animals were brought in at night, under cover. The researchers discovered that nicotine demonstrated addictive qualities and that the animals self-administered the substance, pressing levers to obtain nicotine. The researchers also discovered nicotine analogues; i.e., artificial versions of nicotine. These analogues affected the brain much like nicotine, but did not seem to produce the harmful cardiovascular effects of nicotine. Thus, rats using the analogue behaved as if they had a nicotine "high" but did not show signs of heart distress such as rapid heart beat.
   
4. By 1983, the research was becoming particularly problematic. A number of personal injury cases had been filed against the industry, with nicotine dependence a critical issue. In June 1983, DeNoble was called to the Philip Morris headquarters in New York to brief top executives. Following the meeting, company lawyers visited the lab and reviewed research notebooks. There were discussions of shifting the research out of the company, perhaps to DeNoble and Mele as outside contractors or to a lab in Switzerland, to distance Philip Morris from the results.
   
5. Finally, in April 1984, the researchers were abruptly told to halt their work, kill all rats, and turn in their security badges. The researchers also were forced to withdraw a paper on the addictive qualities of nicotine, even after it had been accepted for publication by a scientific journal.

1. In addition to ensuring a captive market through the addiction of its customers, the tobacco industry maintained its sales and replaced the hundreds of thousands of tobacco users who die each year by targeting marketing and promotional efforts at minors.
   
2. Despite the best efforts of parents, educators, and the medical profession, tobacco among young people has remained alarmingly constant since the 1970's, and, in fact, is currently on the rise. Tobacco company advertising creates a mental image associating tobacco use with healthy, glamorous and athletic lifestyles, with success and sexual attractiveness and success. This increases demand for tobacco products among young people. Within a short period of time, a young tobacco user becomes physiologically and emotionally dependent, i.e., addicted to tobacco. Later, as the maturing tobacco user begins to wish he or she could quit, advertising reinforces the practice and seeks to minimize health concerns, creates doubt, confusion and mistake, which are used by tobacco users as an excuse to avoid the pain and discomfort of attempting to break their addiction to nicotine. This is the vicious cycle of deceptive and misleading tobacco industry advertising of their products.
   
3. The tobacco companies sell more than one billion packs of cigarettes per year to minors under the age of 18. In 1988, these sales accounted for about $1.25 billion in sales. Approximately 3% of the total tobacco industry profits ($221 million in 1988) are derived directly from the sale of cigarettes to children under the age of 18, an activity that is illegal in 43 states. Marlboro and Camel cigarettes, produced by Philip Morris and Reynolds, respectively, dominate the minor smoking market.

1. The use of tobacco by minors continues to rise. The Centers for Disease Control and Prevention ("CDC") announced on May 24, 1996, that a study of high school students showed a higher prevalence of tobacco use among high school students in 1995 than in 1993 and 1991, up 35% from 1993 and 28% from 1991.
   
2. The advertising imagery used to promote tobacco use among young people particularly appeals to those with low self esteem and emotional insecurity. Once the young person has been predisposed toward tobacco use, a variety of factors can precipitate actual experimentation. For many young people, the precipitating factor is being given a free pack of cigarettes or a free sample of chewing tobacco by a tobacco company representative, or purchasing tobacco products in order to obtain an attractive tee shirt, baseball cap, or other gimmick used to promote cigarette smoking.
   
3. One of the best examples of this was the transformation of Marlboro Cigarettes from a red-tipped cigarette for women to the cigarette for the macho cowboy. By changing advertising imagery, Philip Morris was able to tap into a wholly new and different market. In 1950, Reynolds was the king of the cigarette business. It sold more cigarettes than any other company. Philip Morris, though doing well on the basis of its fraudulent health-oriented advertising, was still far behind. In 1981, Philip Morris passed Reynolds in market share and each year has extended its lead by developing an effective marketing campaign for recruiting young new smokers to its brands. The wild spirit of the Marlboro man captured the adolescent imagination. Also, Philip Morris' representatives fanned out to colleges across the country, giving free cigarettes to incoming freshmen to get them hooked. The children and teenagers who started smoking Marlboro became tenaciously loyal customers. Soon, Marlboro became the dominant brand of cigarettes among teenagers. Up until 1988, nearly three-fourths of teenage smokers used Marlboro.
   
4. At about the time it lost market leadership to Philip Morris, Reynolds dedicated itself to an advertising campaign encouraging children and teenagers to smoke. One of the key elements of Reynolds' strategy for attracting minors was to reposition many of its cigarette brands to younger audiences.
   
5. Reynolds' Vantage cigarettes entered the 1980's as a brand targeted at the health conscious adult smoker. Advertisements were intended to assuage fears of lung cancer and other diseases, and give the concerned smoker arguments for rationalizing the continuation of the addiction. Through multiple advertising transmogrifications, Vantage cigarettes have been progressively repositioned to ever-younger audiences. During the mid-1980's this advertising campaign featured young successful professionals (including architects, fashion designers, lawyers, etc.) with the slogan "The taste of success." These ads promoted the implication that smoking is helpful ­- if not essential -­ to social success or prominence. In the late 1980's the advertising theme for Vantage cigarettes began to feature professional-caliber athletes like wind surfers, aerobic dancers, downhill ski-racers, and auto-racers. These advertisements depict physical activity requiring strength or stamina beyond those of everyday activity, i.e., smoking does not harm you.
   
6. During the 1980's, advertising for Salem cigarettes also became more youth-oriented. Whereas the dominant advertising theme for Salem cigarettes used to be clean fresh country air, during the 1980's Salem ads were populated by muscular surfers and beach bunnies, fun-loving party animals, and other attractive adolescent role models. Another successful advertising campaign targeted at young people is the Lorillard campaign promoting Newport cigarettes. Newport ads frequently show men and women in sexually suggestive positions always having fun using the slogan "Alive with pleasure."
   
7. Another successful advertising campaign has been the "You've come a long way baby" campaign promoting Virginia Slims cigarettes. One of the most important psychological needs of most adolescent girls is to become independent from their parents. By associating smoking with women's liberation, Philip Morris hopes to create in the minds of these teenage girls the vision of smoking as a symbol of autonomy and independence. Ads for Virginia Slims and other "feminine" cigarettes prey upon the natural and almost universal insecurity and sense of inferiority experienced by adolescents by portraying the cigarette as a crutch and a symbol of superiority. Perhaps the most acute psychological need of adolescence is to fit in, to be accepted, to be popular. Ads for Philip Morris' Benson & Hedges cigarettes thus developed an image of smoking as a happy pleasure to be shared in the company of others, and the easy road to instant acceptance within a group.
   
8. The ultimate status symbol and secret desire of almost every teenage boy is a powerful motorcycle. It is for this reason that so many cigarette brands have used motorcycle imagery to encourage teenage boys to smoke. Many tobacco ads that target young boys glamorize high risk activities like hang gliding, motorcycle racing, mountain climbing, etc. The tobacco companies do this deliberately to undermine awareness that tobacco use is dangerous. In its campaign to attract adolescent boys to become smokers, Reynolds has made extensive use of risk-taking and danger in its advertising. By glorifying risk-taking, these ads have a more insidious purpose. How a person estimates the magnitude and likelihood of a risk can be significantly affected by what it is compared against. By portraying extremely dangerous activities like hang-gliding, mountain climbing, and stunt motorcycle riding, Reynolds minimizes the dangers of smoking in adolescent minds.
   
9. The greatest success that Reynolds had in its effort to gain on Philip Morris in the youth market is the "Joe Camel" cartoon character. This campaign was inaugurated in the United States in 1987 to commemorate the 75th anniversary of Camel cigarettes. In the first ads, a camel leered out over the pack saying, "75 years and still smoking." The implication is obvious. It soon became evident that "Joe Camel" would strike a responsive cord among children and teenagers, and has been used by Reynolds to target young persons ­ even children ­ to get them to start smoking at as early an age as possible. Reynolds has more than tripled its advertising expenditures for Camel cigarettes after 1988, utilizing themes like "Joe Camel" guaranteed to be attractive to young people at high risk of becoming smokers.

1. It is not just the themes within tobacco advertising that betray the real target, it is also the location of those ads. During the decade of the 1980s there was a steady migration of tobacco advertising into youth-oriented publications. Magazines with sexually oriented themes, and those concerning entertainment and sporting activities, had the highest concentration of tobacco ads. For many of these magazines, teenagers comprise a quarter or more of the total readership. Tobacco ads in these youth-oriented magazines were frequently multi-page, pop-up ads. News magazines like Time and Newsweek, which have older audiences, had few tobacco ads, and those tended to emphasize implicit health promises concerning tar and nicotine rather than glamorous images.
   
2. In tests all across the country, it has been demonstrated that children as young as 12 years old can buy cigarettes in three out of four retail outlets. A study by the Inspector General's Office of the Department of Health and Human Services concluded that while there are laws prohibiting the sale of tobacco to minors in almost all states, these are almost uniformly unenforced. The risk of a merchant being punished for selling cigarettes to minors is about one in 33 million.
   
3. Perhaps the most vicious element of this advertising campaign has been advertising aimed at young girls. Nearly every issue of magazines for young girls like Teen and Young Miss includes an advertisement by Reynolds urging children not to smoke. But the reasons given for refraining are not that smoking is addictive, that it can harm or kill the infants of pregnant women, or that it causes cancer and other awful diseases. Rather, the reason given is that it is an "adult custom."
   
4. The likely effect of these ads is that, rather than discouraging children from smoking, they plant in impressionable young girls' minds the notion that smoking is something to do to show one's independence, to act grown-up. This notion is, of course, reinforced by the ubiquitous cigarette ads depicting glamorous young adult women smoking as a way of demonstrating their independence. The Surgeon General summarized the problem in her 1994 report:

1. The most notorious recent example of the industry targeting of minors is the "Joe Camel" advertising campaign conducted by Reynolds, in observance of the Camel brand's 75th anniversary. As part of the initiation of the promotion, Reynolds included singing birthday cards in Rolling Stone magazine, a publication particularly popular with young people, and offered premiums such as T-shirts, party mugs and wall posters. When Reynolds began this cartoon campaign in 1988, Camel's share of the children's (under 18 years of age) market was only 0.5%. In just a few years, Camel's share of this illegal market has increased to 32.8%, representing sales estimated at $476 million per year. Another indication of the phenomenal success of this marketing campaign is the fact that in a recent survey of six year-olds, 91% of the children could correctly match "Old Joe" with a picture of a cigarette, and both the silhouette of Mickey Mouse and the face of Old Joe were nearly equally well recognized by almost all children.
   
2. All defendants are aware of the fact that tobacco use begins primarily among youth who are not yet 18 years of age. Among minors, the three most used brands of cigarettes are the most advertised. Reynolds studied the attributes of an advertising campaign which would most appeal to the group it carefully identified as "21 and under." Those attributes directly coincide with the "Joe Camel" campaign. Several years later, again addressing those attributes, this startling statement was made: "Young people will continue to become smokers at or above the present rates during the projection period. The brands which these beginning smokers accept and use will become the dominant brands in future years. Evidence is now available to indicate that the 14 to 18 year old group is an increasing segment of the smoking population. RJR must soon establish a successful new brand in the market if our position in the industry is to be maintained over the long term" [emphasis in original].
   
3. Reynolds continues to use the "Old Joe" character in conjunction with other offers attractive to minors. Recently, for example, it began an advertising campaign offering concert tickets in return for redemption of a number of Camel coupons, again in Rolling Stone magazine.
   
4. Reynolds has made other premiums available in exchange for coupons included in packages of Camel cigarettes. These premiums are deliberately designed to appeal primarily to minors.
   
5. Reynolds has encouraged minors to circumvent laws related to tobacco use by minors. For example, in one coupon offer for a free package of Camels, "Joe Camel" advised individuals that it would be a "smooth move" to have someone else redeem the coupon, thus suggesting the means to overcome prohibitions of sales to minors of tobacco products. Other Reynolds campaigns have targeted stores and advertising locations close to high schools and other areas frequented by minors, and Reynolds concentrates advertising in publications read by large numbers of minors.

1. U.S. Tobacco has engaged in an ongoing campaign to induce individuals to become users of smokeless tobacco, and its efforts find particular success among minors.
   
2. U.S. Tobacco designs its products to introduce the "new user" to smokeless tobacco products, and as addiction grows, "graduate" users to higher nicotine content products: "Skoal Bandits [a mild, low-nicotine product, packaged in individual use `tea bags'] is the introductory product, and then we look towards establishing a normal graduation process [to higher nicotine content products]." The introductory products are aimed at new users, mainly cigarette smokers, between ages 15 and 35.
   
3. A U.S. Tobacco employee, Bill Falk, who was apparently terminated for some other comments in the article told a New York Post reporter' "A lot of young people are getting into it [smokeless tobacco use]..It's become a status thing. When a kid gets a new pair of jeans, he puts the snuff can in the back pocket and rubs it till the outline shows. It shows he's old enough to chew."

1. All defendants promote and market their products primarily to minors and, incidentally, other "new" users of tobacco. At least one company, Philip Morris, tracked hyperactive children in grade school to research whether they would become smokers. Philip Morris apparently conducted market research concerning minors who smoke or are apt to smoke: In a 1969 presentation to the Board of Directors by the Philip Morris Research Center, W.L. Dunn, Jr. and F.J. Ryan talked about the future of the "psychology department," noting that more attention was being paid to "Why do people smoke....There is general agreement on the answer to [why people begin to smoke]. The 16 to 20 year old begins smoking for psychosocial reasons. The act of smoking is symbolic; it signifies adulthood, he smokes to enhance his image in the eyes of his peers." Philip Morris, having apparently studied the minor market for tobacco has recently begun a program characterized as "Marlboro Unlimited," which is a program offering premiums for coupons from cigarette packages. This program is a direct response to Reynolds success in the minor market, is designed to appeal to minors, and is an effort by Philip Morris to maintain Marlboro's dominance of that illegal market.
   
2. Each tobacco company defendant engages in various advertising and promotional activities in an effort to develop a "minor" market. These activities include pervasive sponsorship of various sporting events, concerts and other events likely to attract extensive youth interest. Another means of appealing to youth used by the companies is paying for promotional appearances, such as in movies which, because of the subject matter, or the actors in the films are most likely to appeal to youth. For example, Brown & Williamson agreed with the actor Sylvester Stallone that he would use the former's products in at least five feature films, in exchange for $500,000. Philip Morris paid for the promotion of Marlboro in "Superman II," "Risky Business," and "Crocodile Dundee" and for promotion of Lark in "License to Kill." It paid for or otherwise provided promotional material for 56 films in 1987-1988. Liggett paid for promotion of Eve [its brand designed especially to appeal to young women] in "Supergirl." American Tobacco promoted Lucky Strike in "Beverly Hills Cop." Reynolds paid for the promotion of Camel in "Who Framed Roger Rabbit," "Desperately Seeking Susan," and "Honey, I Shrunk the Kids."

1. The tobacco industry is currently under intense scrutiny from state and federal officials. In an attempt to stave off FDA regulations, Philip Morris has proposed a series of changes to its marketing practices. In a recent letter to the Attorney General of Washington, Phillip Morris proposed that it has announced a "blue print which directly addresses the issue of youth smoking." Among the proposals are the following:

€ Prohibit tobacco brand names, logos and characters on promotional items like t-shirts and caps;

€ Ban cigarette vending machines;

€ Limit tobacco brand name sponsorship to events with primarily adult audiences;

€ Ban tobacco advertising in video arcades and family oriented centers.

1. These proposals constitute an admission that the industry has attempted to attract minors, when it: (1) places tobacco ads near schools, playgrounds, and in youth oriented publications; (2) uses logos and characters that are intended to appeal to minors; (3) sponsors events that have primarily youth audiences; (4) places ads in places likely to reach minors such as video and family oriented centers. These admissions are powerful evidence that the tobacco industry has knowingly and intentionally targeted minors.

1. Recently, a series of Brown & Williamson documents was publicly disclosed which set forth the far-ranging deceptions of that company in particular, and of the industry in general.
   
2. Brown & Williamson, like the other manufacturers, was aware early on of the dangers of cigarettes. Indeed, a Brown & Williamson review of published statistical research, including the 1952 report by Dr. Doll, noted that the studies offered "frightening testimony from epidemiological studies."
   
3. By 1957, one of Brown & Williamson's British affiliates, which conducted much of the health research for the U.S. company -- was using the code name "zephyr" for cancer. For example, in a March 1957 report, the British affiliate stated, "As a result of several statistical surveys, the idea has arisen that there is a causal relation between zephyr and tobacco smoking, particularly cigarette smoking."
   
4. In 1962, Brown & Williamson's London-based parent company (BAT Industries, plc) conducted a meeting of its worldwide subsidiaries in Southampton, England. A transcript of the meeting reveals the following remarks:

1. The next year, 1963, Brown & Williamson engaged in an internal debate over whether to disclose what it knew about the adverse effects of smoking to the Surgeon General, who was preparing his first official report on cigarettes. It was decided that its information would not be disclosed. Some of the documents generated by Brown & Williamson as part of this process were shared with its London-based parent company, as well as other cigarette manufacturers and TIRC/CTR. Addison Yeaman, who was then general counsel at Brown & Williamson and who authored some of the most critical memoranda from this time, subsequently became a director of CTR.
   
2. Yeaman wrote in a 1963 analysis that:

1. Yeaman suggested that Brown & Williamson "accept its responsibility" and disclose the hazards of cigarettes to the Surgeon General. He noted that this would allow the company to openly research and develop a "safer cigarette."
   
2. Yeaman warned, however, that one danger of candid disclosure was that jurors would learn that the cigarette companies knew of the hazards of their products and had the means to make "safer cigarettes" -- but didn't. Yeaman noted that this might cause an "emotional reaction" in jurors. Ultimately, Yeaman's suggestion for full disclosure was rejected.
   
3. Subsequently, Brown & Williamson continued to conduct and conceal biological research. Some of these research projects confirmed causation.
   
4. The more sensitive research was often undertaken by Brown & Williamson's British affiliates, BAT Industries plc or BATCO, acting on behalf of both companies. Much of the work was performed at a British laboratory called Harrogate, which performed work for a number of cigarette manufacturers, and some of this research was shared with these other companies and the Tobacco Institute.

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. Let me explain my conviction.

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. . . . Think of the cigarette as a dispenser for a dose unit of nicotine."

1. The industry has developed sophisticated technology to control the levels of nicotine in order to maintain its market. David A. Kessler, M.D., commissioner of Food and Drugs, recently testified before a congressional committee that cigarette manufacturers can manipulate precisely nicotine levels in cigarettes, manipulate precisely the rate at which the nicotine is delivered in cigarettes, and add nicotine to any part of cigarettes.
   
2. Dr. Kessler testified that "the cigarette industry has attempted to frame the debate on smoking as the right of each American to choose. The question we must ask is whether smokers really have that choice." Dr. Kessler stated:

1. In a subsequent appearance before Congress, Dr. Kessler testified that one manufacturer, Brown & Williamson, had developed a tobacco plant code-named Y-1 with perhaps twice the nicotine content of regular tobacco. Brown & Williamson manufactured and marketed cigarettes with Y-1 tobacco in the United States in 1993.
   
2. In general, the tobacco industry has used techniques such as adding chemicals to increase nicotine potency. In general, by increasing the alkalinity, or smoke pH, of tobacco blends, the industry can deliver an enhanced "nicotine kick."
   
3. Particularly instructive on the issue of nicotine manipulation was the following FDA finding published in the FDA's August 1995 report Nicotine In Cigarettes and Smokeless Tobacco Products:

FDA's investigation has also disclosed that the tobacco industry uses a number of methods to boost nicotine delivery in low-yield cigarettes. The cigarette industry has successfully used these methods to maintain adequate nicotine delivery from low-yield products. Without the independent manipulation of nicotine, many of the techniques used to reduce tar would also substantially reduce nicotine. Instead, regardless of differences in labeled/advertised FTC nicotine yields and manufacturers' claims of low-nicotine delivery for certain brands, all cigarettes contain approximately the same amount of nicotine in the rod, and deliver about 1 mg of nicotine, enough to produce pharmacological effects. Moreover, studies by FDA and others have demonstrated that the lowest-yield cigarettes have the highest concentrations of nicotine, demonstrating that nicotine delivery has been independently manipulated.

The tobacco industry's control and manipulation of nicotine delivery from cigarettes provides additional evidence of the industry's intent to deliver pharmacologically satisfying levels of nicotine too smokers. [Emphasis added.]

1. In particular, the FDA based its findings, in part, on the following:
   
2. The first manufacturing step in nicotine control is the development and selection of raw materials. The tobacco industry has, through breeding and cultivation practices, developed high-nicotine tobacco plants that provide higher-potency raw material, giving manufacturers greater flexibility in blending and in providing uniform and sufficient nicotine deliveries.
   
3. Even without the selective breeding and cultivation of plants for nicotine content, careful tobacco leaf purchasing plans permit the manufacturers to control nicotine content in their products. For example, nicotine content varies among types of tobacco and from one crop year to the next. Awareness of these basic differences and monitoring of the nicotine levels in purchased tobacco allows the companies to produce cigarettes with nicotine deliveries consistent to a tenth of one percent, despite variations as high as 25% in the nicotine content of the raw material originating in the same area, from year to year.
   
4. The primary control of nicotine delivery (the amount received by the smoker), however, is in the design and careful, sophisticated manufacture of the cigarette, to ensure that the smoker obtains the precise amount of nicotine intended by the manufacturer. According to the FDA's investigation, despite reductions in the amount of tar delivered by cigarettes over the past several decades, nicotine delivery in low-yield cigarettes has not fallen proportionately with the

1. The industry's control and manipulation of nicotine in the production of cigarettes begins long before the cured tobacco leaf reaches the manufacturing plant. The characteristics of leaf tobacco, including nicotine content, are established by the genetic makeup of the plant, developed during growing, and fixed by post-harvest handling. Like other raw agricultural commodities, the physical and chemical properties of tobacco, including nicotine, can vary widely, depending on genetic differences, growing season conditions, and soil type. The tobacco industry uses these differences to control and manipulate nicotine through careful genetic breeding and agronomic practices.
   
2. Modern types of cultivated tobacco (Nicotiana tabacum L) have been selected for a relatively high level of nicotine. Five major types of tobacco make up nearly all tobacco products marketed in the United States: Burley, flue-cured, Maryland, the Dark tobaccos, and Oriental. These tobaccos vary both in nicotine levels and in pH. The pH of a tobacco can have a significant influence on the amount of, and rate at which, nicotine is absorbed into the bloodstream of the tobacco user and delivered to the brain.
   
3. American tobaccos of all types have undergone cumulative increases in total nicotine levels since the 1950's. Nicotine levels in the most widely grown American tobaccos increased almost 10% for Burley and more than 50% for flue-cured between 1955 and 1980.
   
4. According to the FDA, two tobacco industry activities over the last several decades appear to be responsible for this increase: (1) the industry's active and controlling participation in the Minimum Standards Program, which ensures that nicotine levels of U.S.-grown and marketed tobacco are maintained within specified ranges; and (2) the industry maintains control over which varieties are suitable for growing in the United States and thereby eligible for price support.
   
5. One key objective of the tobacco industry's involvement in the Minimum Standards Program appears to be to ensure that nicotine levels in marketed tobacco do not fall below specified levels. The program was initiated in response to the emergence, in the 1950's, of several so-called "discount" varieties of tobacco (e.g., "Coker 139," "Coker 187-Golden Wilt," "Coker 282," "Coker 140," "Coker 316," and "Reams 64") that failed to meet current industry specifications established, among other things, to control the amount of nicotine delivery when used in manufacturing filtered cigarettes. To insure the elimination of "discount" or low-nicotine varieties from the market, the industry obtained the necessary cooperation from USDA to eliminate these varieties from the price-support program. In fact, to be eligible under this program, growers must certify, even to this day, that "discount" varieties are not being grown.
   
6. While the Minimum Standards Program ensured that nicotine levels in marketed tobaccos did not fall, breeding and cultivation initiatives undertaken by the industry caused nicotine levels to increase. In the 1960's and 70's, the industry turned to tobacco breeders to develop tobacco varieties that produced less tar. Breeders found that without intervention in the breeding of these varieties, nicotine levels were reduced along with tars. Thus, the industry has long been able to grow low-tar and low-nicotine varieties of tobacco for use in manufacturing cigarettes.
   
7. By 1978, however, the industry had abandoned its interest in the development of low-tar/low-nicotine varieties of tobacco for manufacturing low-yield cigarettes, and instead turned to the development of higher nicotine varieties.
   
8. In addition to breeding high-nicotine tobacco varieties, the tobacco industry engages in a number of agronomic practices that increase nicotine levels in tobacco. Heavy application of nitrogen fertilizers, early topping, and tight "sucker" (i.e., bud growth at the junction of stalk and leaves) control have all acted in concert to push nicotine levels upward. In addition, tobacco varieties have been selected for tolerance to brown spot, a leaf disease that makes early harvest necessary. Leaves of disease-resistant varieties tend to remain in the field longer, resulting in maximum nicotine accumulation. Since the introduction in 1965 of the acreage-poundage control system, farmers have reduced the number of harvestable leaves per plant and have tended to increase plant spacing. Both of these practices tend to increase nicotine content in the leaf. Finally, tobacco growers are transplanting tobacco crops earlier, which, coupled with the widespread use of pesticides in the soil, often results in slow early season growth, and also tends to increase nicotine content in the leaves.
   
9. The foregoing facts has led the FDA to conclude that:

1. Another method of manipulation occurs as follows: The key factor related to nicotine in leaf purchasing is stalk position. The concentration of nicotine is lowest at the bottom of the plant and highest in the top leaves of flue-cured tobacco. Thus, the position of the leaf on the stalk determines how much nicotine the leaf will contain. In fact, "stalk position" is an industry euphemism for nicotine content. The stalk position of a leaf can be determined by its appearance, shape, color, and thickness, even after harvest. Therefore, an experienced buyer, whose instructions are dictated by the manufacturer's chemists, need only be concerned with these physical characteristics in identifying leaves of varying nicotine content.
   
2. Representatives of the tobacco industry described to FDA investigators the significant role that nicotine plays in the purchase of tobacco leaf. Brown and Williamson informed the FDA that stalk position is the "first thing" they look for during leaf purchasing.

1. After purchase, tobacco leaves are blended to attain target levels of nicotine and tar in the smoke. The FDA's investigation noted particular attention on the part of manufacturers to the nicotine content of the leaf in the blending operation. As noted above, blending practices by manufacturers are designed to: (1) control the naturally occurring variations in nicotine and other components caused by genetics, growing season conditions, and soil type within a given type and grade; and (2) particularly for low-tar cigarettes, to increase nicotine concentrations and thereby maintain an acceptable nicotine level in the cigarettes.
   
2. The pH of cigarette smoke directly affects the delivery of nicotine because it alters the amount of nicotine that is absorbed in the mouth or lungs. PH is controlled by the manufacturer in the selection of the type of tobacco used and blended. For example, smoke-condensate pH is higher from certain tobacco varieties as well as from leaves at upper stalk positions.
   
3. According to the FDA, blending techniques have been used to finely control nicotine concentrations in marketed cigarettes.
   
4. The foregoing led the FDA to conclude that:

1. The Defendants Brown & Williamson and R.J. Reynolds also manufacture and distribute loose tobacco used in the "roll your own" process of cigarette-making.
   
2. Even though the medical evidence regarding the hazards of cigarette smoking and addiction have been known to the defendants for many years, the packages and containers of the "roll your own" tobacco bear no warning regarding such hazards.
   
3. Despite their knowledge that the use of cigarette and of smokeless tobacco is, as a result of nicotine, extremely addictive, the Tobacco Companies to this day deny that smoking, "dipping," or "chewing" tobacco is addictive. Through their individual advertising and public relations campaigns, and collectively, through the Tobacco Institute, the Tobacco Companies have successfully promoted and sold tobacco products by concealing and misrepresenting the highly addictive nature of cigarettes and smokeless tobacco.

1. Despite the nature of the defendants' conduct and the human and economic injuries caused by the tobacco manufacturers and their trade associations, the industry has been largely unregulated and successful in defending itself in litigation, often by engaging in tactics designed to severely burden its opponents.
   
2. In the courts, the industry has not paid any significant damages, despite 40 years of litigation on tobacco use and health. In large part, the success of the industry has been founded on the industry's heretofore sanctioned litigation tactics. As one tobacco industry lawyer wrote in 1988:

1. The industry's litigation record also is attributable to its success in fraudulently suppressing harmful information. For example, Joseph A. Califano, Secretary of Health, Education and Welfare during the Carter Administration, stated recently that had he known in 1979 what the tobacco companies knew and been privy to their research on addiction and their ability to manipulate the amount of nicotine in cigarettes, "the 1979 surgeon general's report would have found cigarettes addictive, and we would have moved to regulate them. Unfortunately, the president of the United States, the secretary of HEW and the surgeon general were all victims of the concealment campaign of the tobacco companies."
   
2. The defendants' campaign of concealment continues, and tobacco has remained virtually unregulated, avoiding regulation under the federal Food, Drug and Cosmetic Act, the Consumer Product Safety Act, the Hazardous Substances Act, the Fair Labeling and Packaging Act, and the Toxic Substances Act, as well as state statutes.

1. Plaintiff was without knowledge of defendants' combination or conspiracy, or of any facts from which it might reasonably be concluded that defendants were illegally conspiring, or which would have led to the discovery thereof until early 1994. Plaintiff could not have discovered such facts or the alleged violations at an earlier time because defendants fraudulently concealed their course of conduct.
   
2. Plaintiff is not aware of the methods used by defendants to conceal their activities, but believes that the methods used by defendants in furtherance of their combination and conspiracy were by nature self-concealing and not of a type which could have reasonably been apparent to plaintiff.
   
3. One method of concealment was to hide relevant documents. In 1985, a Brown & Williamson attorney recommended that much of its medical research be declared "deadwood" and shipped to England. The attorney stated that, "I have marked with an X documents which I suggested were deadwood in the behavioral and biological studies area. I said that the B series are Janus series studies and should also be considered deadwood." The attorney further suggested that the research, development, and engineering department also "should undertake to remove the deadwood from its files."
   
4. Brown & Williamson attempted to control other documents such that it could later claim an attorney-client privilege or work product protection for documents which its attorneys thought might later cause difficulties in products liability actions. Such documents included scientific reports which the company sought to protect from discovery: "[Scientific] material should come to you [corporate counsel] under a policy statement between you and Southampton [BAT] which describes the purpose of developing the documents for B & W and sending them to you as use for defense of potential litigation. It is possible that a system can be devised which would exempt the Engineering reports because it might be difficult to maintain a privilege for covering such reports under the potential litigation theory. [C]ontinued Law Department control is essential for the best argument for privilege. At the same time, control should be exercised with flexibility to allow access of the R & D staff to the documents."
   
5. The Brown & Williamson assertions of privilege are false and in bad faith. Other defendants have used similar tactics to conceal the activities of the conspiracy. The joint actions of the conspiracy through CTR and Tobacco Institute have been similarly shielded from scrutiny. Part of the document review undertaken by Brown & Williamson was an effort to conceal documents showing the true nature of the associations: "[In conducting document review] pay special attention to documents suggesting that TI [Tobacco Institute] was used as a vehicle for the industry's alleged conspiracy to promote cigarettes through the 'open controversy' PR program...."
   
6. CTR had a number of categories of research projects. Of particular significance is the category "special projects." Special projects were reviewed and selected for funding by the general counsel of the member companies. It may be reasonably inferred that lawyers controlled this research so as to protect it from discovery and also to further the ends of the conspiracy.
   
7. Plaintiff's claim of CTR manipulation through the siphoning of relevant projects is further supported by the notes of the September 10, 1981 Committee of General Counsel, transmitted via a September 18, 1981 letter from Webster & Sheffield, which states:

Jacob: 'When we started the CTR Special Projects, the idea was that the scientific director of CTR would review a project. If he liked it, it was a CTR special project. If he did not like it, then it became a lawyers' special project.'

Stevens: 'He took offense re scientific embarrassment to us, but not to CTR.'
Jacob: 'With Spielberger, we were afraid of discovery for FTC and Aviado, we wanted to protect it under the lawyers. We did not want it out in the open.'
These minutes explicitly acknowledge that the supposedly "independent" scientific director of CTR channeled research into "special projects" for defendants' litigation efforts. But even more disturbing is defendants' announced practice of using the "special projects" division in order to shield damaging research results from the public and the FTC. A document captioned "Notes from the September 10, 1981 Meeting of Company Counsel and Ad Hoc Committee Members" is even more explicit. Page one of the "Notes" states as follows:
skeptical scientists. . . . The staff at CTR also needed to be more tobacco oriented with a skeptical view.
This document pertains not only to the special projects division but also to defendants' intentional manipulation of the CTR as a whole.

1. Defendants' conspiracy and illegal conduct is ongoing and continues to the present.

1. The State of Washington repeats and realleges each allegation as set forth above.
   
2. The Washington State Legislature has declared that it is the public policy of this state to prohibit minors' access to tobacco products. For example, RCW 26.28.080 makes it a gross misdemeanor to give or sell tobacco products to minors. Further, Chap. 70.155 RCW outlines various restrictions on minors' access to tobacco, including, inter alia, the placement of cigarette machines, and regulations on the sampling of tobacco products.
   
3. Defendants have engaged, and continue to engage, in a course of conduct designed to deceptively, unfairly and unlawfully encourage minors to violate the declared public policy of the State of Washington.
   
4. More specifically, defendants have unfairly encouraged the sale of their products to minors. As part of their course of conduct, defendants have (i) concealed that their marketing is designed to encourage minors to use tobacco in violation of State law; and (ii) concealed information on the true nature of their products. Further, defendants' conduct is made even more unfair or deceptive by virtue of the fact they have publicly proclaimed that they are against encouraging minors to use tobacco while secretly they have launched a course of conduct designed to accomplish exactly the opposite.
   
5. Defendants' marketing efforts and course of conduct unfairly encourage minors to violate the declared public policy of the State of Washington.
   
6. Tobacco sales to minors and/or use by minors of tobacco products has remained steady or increased in Washington State as a result of the defendants' practices.
   
7. The targeting of minors and defendants' course of conduct as described in this Complaint violates the expressed public policy of the State of Washington, and as such, is an unfair practice and an unfair method of competition in violation of RCW 19.86.020.

1. The State of Washington repeats and realleges each allegation set forth above.
   
2. In the regular course of business, defendants engage in misrepresentations, or misrepresentation by omission, of material facts, including but not limited to:
   
3. Defendants, directly or by implication, misrepresent their ability to manipulate, and misrepresent their manipulation of, nicotine levels in tobacco products;
   
4. Defendants, directly or by implication, promised to provide governmental authorities and the public with scientific information regarding their studies of tobacco products. In fact, defendants went to great lengths to misrepresent or prevent dissemination of their findings;
   
5. Defendants, directly or by implication, misrepresent the addictive nature of nicotine and the adverse health consequences of tobacco use; and
   
6. The conduct described above and in this Complaint, constitutes unfair and deceptive acts or practices, and an unfair method of competition in violation of RCW 19.86.020.

1. The State of Washington repeats and realleges each allegation set forth above.
   
2. The conduct described above constitutes a contract, combination or conspiracy in restraint of trade.
   
3. As described above, beginning at least as early as 1953, the exact date being unknown to the State of Washington, and continuing until the present date, defendants combined, conspired and colluded to eliminate and suppress competition on the basis of health claims and in the innovation market for "safer cigarettes."
   
4. Pursuant to such contract, combination or conspiracy, the defendants engaged in the following underlying activity, all as set forth in considerably more detail above:
   
5. They restrained and suppressed research on the health consequences of smoking;
   
6. They restrained and suppressed the dissemination of truthful information on the health consequences of smoking in Washington, including information as to the addictive properties of nicotine;
   
7. They disseminated false information in Washington about the health consequences of smoking and about their commitment to make public scientific information regarding such consequences;
   
8. They restrained, controlled, limited and suppressed research in and the development, manufacture and marketing of a "safer" cigarette and other tobacco products that would have resulted in reduced health costs for the State of Washington; and
   
9. In general, they declined to compete in Washington in any manner relating to the health claims of cigarettes.
   
10. This conspiracy had the purpose and effect of restraining competition in the markets for cigarettes and innovative, "safer cigarettes" in Washington.
    
11. Defendants recognized the clear consumer demand for innovative, "safer cigarettes," and though they didn't market such products, they secretly developed them in anticipation of bringing these products to market should the conspiracy fail.
    
12. Defendants' restraint of trade was accomplished, in part, by shifting the direct and foreseeable health care costs of cigarettes to Washington and others.
    
13. Defendants' conspiracy has had and continues to have a direct and foreseeable effect on Washington's medical costs, and Washington was in the target area of defendants' illegal agreement. Defendants have reaped and continue to reap enormous profits by suppressing "safer cigarettes" in part to shift the health care costs of smoking-related diseases to third parties, including the State of Washington.
    
14. Increased medical costs borne by the State of Washington are one of the direct means by which defendants profit from the suppression of "safer cigarettes." Washington's injury is inextricably intertwined with and a necessary step in effecting the ends of defendants' restraint of trade.
    
15. Said conduct constitutes a combination or conspiracy in restraint of trade in violation of RCW 19.86.030, and is an unfair method of competition in violation of RCW 19.86.020.
    
16. Defendants' unlawful conduct will continue unless the relief prayed for in this Complaint is granted.

1. The State of Washington repeats and realleges each allegation as set forth in the paragraphs above.
   
2. Beginning as early as 1954 with the publication of "A Frank Statement to Cigarette Smokers" and continuing to the present date, the defendants assumed a general and special duty to protect the public health, a duty to those who advance the public health, including the State of Washington and its political subdivisions, and a duty to the public.
   
3. Defendants publicly represented that they were undertaking to act on behalf of the public's health (¶¶ 103, 105-106); to aid and assist the research effort into all phases of tobacco use and health (¶¶ 103, 105-106); to cooperate closely with those who safeguard the public health (¶ 103); to continue research and all possible efforts until all the facts were known (¶ 103); and to provide complete and authenticated information about cigarette smoking and health (¶¶ 103, 105-106).
   
4. Defendants did not make these representations gratuitously. Rather, they were intentionally made to combat emerging concerns about tobacco use, to protect the Tobacco Cartels' enormous profits and to avoid government regulation. The "Frank Statement" and subsequent statements proclaiming the industries' "responsibility" were intended to affect the State of Washington: defendants directly pledged to cooperate with "those responsible for public health." (¶ 103)
   
5. Defendants further pledged to support research by independent scientists and to share results. (¶¶ 103, 105-106)
   
6. Defendants also stated that public health was their preeminent concern, of greater concern than their own profits. (¶ 103)
   
7. Each of these undertakings was designed and undertaken, among other purposes, to cause Washington governmental officials, among others, to believe that immediate action on their part to curb tobacco use was not needed. As the evidence mounted as to the hazards of tobacco use, governmental entities considered and/or began to legislate various controls on tobacco use and advertising. Defendants resisted these efforts and the "Frank Statement" and its progeny were designed to lull the State of Washington, among others, into avoiding the implementation and/or passage of such regulations.
   
8. In making the commitments set forth above in paragraphs 89-93, defendants assumed duties to both the State and to the public. As to the State, defendants specifically pledged to "cooperate closely with those whose task it is to safeguard the public health and to report fully and truthfully on tobacco and health." (¶ 103) As to the public, defendants specifically order a "special responsibility to the public and accept[ed] an interest in people's health as paramount to every other consideration in [their] business." (¶¶ 103, 105-106) In accepting these responsibilities, defendants undertook three specific duties. First, by committing themselves to making health their preeminent responsibility, the tobacco companies agreed that they would not sell or continue to sell products which they knew to cause death and disease when used as intended. The intentional/negligent violation of this duty is the direct cause of the costs incurred by the State in treating the illness that resulted from defendants' sales of tobacco products.
   
9. Second, defendants pledged to cooperate with public health and they intentionally or negligently did the opposite, thereby directly allowing continued and unfettered tobacco sales, which in turn directly injured the State.
   
10. Third, having undertaken to tell the truth about tobacco use and health, they were legally bound to speak the whole truth. Defendants intentionally or negligently breached this duty and such breach also damaged the State of Washington.
    
11. Defendants reasonably could have foreseen the risk of harm to the State of Washington. Physical injury to users of tobacco was not only foreseeable, it was contemplated as the inevitable consequence of defendants' undertakings. Defendants knew or should have known of the State's obligation to care for Medicaid recipients (and those persons prior to the Medicaid system who were cared for by the State), who have suffered the ill effects of physical injury due to tobacco use.
    
12. The defendants' breach of duty not only served to forestall increased government regulation but contributed to the State's increased health care costs because the breach caused tobacco users in the State of Washington to take up or continue tobacco use. Both of these consequences were intended by defendants. Had the defendants disclosed what they knew, had they not suppressed information about addiction and nicotine manipulation, had they not targeted minors, and had they in fact reported the truth, the amount of tobacco use in the State of Washington would be far less, which in turn would have reduced the State's Medicaid costs attributable to smoking related. The very purpose of defendants' assumption of a duty was to promote the use of tobacco products and thus directly increase the risk of harm to the State of Washington.
    
13. Defendant's breach of duty also influenced the State's course of conduct. Had defendant's not breached their assumed and general duty, they would have fully disclosed (1) that the companies' own studies showed links between tobacco use and adverse health effects, (2) that nicotine is highly addictive, (3) that the tobacco companies manipulate nicotine levels in tobacco products in order to increase and maintain addiction, and (4) that the tobacco companies were trying to induce minors to use tobacco to increase their long-term profits by replacing tobacco users who die. For years these facts have been concealed and many of the facts still remain concealed. Had those facts been disclosed earlier, the State would have taken action to restrain the companies' activities. Once the defendants' activities were partially revealed, this action was commenced.
    
14. As a direct, foreseeable, intended and proximate cause of defendants' breach, plaintiff suffered and will continue to suffer substantial injuries and damages.
    
15. The conduct described constitutes an intentional and negligent breach of a voluntarily assumed special and/or general duty for which defendants are liable.

1. The State of Washington repeats and realleges each allegation set forth above.
   
2. As a direct and proximate result of their wrongful conduct alleged above, defendants have unreasonably injured and endangered the comfort, repose, health and safety of the residents of the State of Washington. Defendants' acts have caused damage to the public, the public safety and the general welfare of citizens of Washington.
   
3. Defendants' conduct has created a health crisis which has required the State of Washington to assume the financial burden of smoking related medical costs, a burden which should have been borne by the tobacco companies. The State has thus borne the defendants' duty to the public and to individual tobacco users, which arises in part from defendants' assumed and general duty, and their duty to not sell products through the use of the unlawful acts set forth in the First, Second and Third Causes of Action above.
   
4. In assuming this burden belonging to defendants, the State was responding to a clear need to relieve the distress of those who were inflicted with smoking related illnesses and to prevent their condition from worsening. Since the defendants have eschewed any intention of accepting responsibility for their creation of this crisis, the State's actions cannot be termed "officious." Nor did the State intend to confer a gratuitous benefit upon defendants. Rather, the State's expenditures were aimed at averting a public health crisis.
   
5. As a result of defendants' conduct, the State of Washington has suffered and will continue to suffer substantial damages for which it is entitled to both monetary and injunctive relief.

1. The State of Washington repeats and realleges each allegation as set forth above.
   
2. Use of defendants' cigarettes as intended causes disease.
   
3. Many of the State of Washington's residents who are afflicted with tobacco-related diseases are poor, uneducated, and unable to provide for their own medical care. These residents rely upon the State of Washington to provide their medical care. The provision of and payment for such medical care results in an extreme burden on the taxpayers and the financial resources of this State. The State of Washington has expended millions of dollars in caring for residents who have and are suffering from lung cancer, cardiovascular disease, emphysema, chronic obstructive pulmonary disease and a variety of other cancers and diseases that were and are caused by defendants' tobacco products. The State of Washington has also expended millions in providing health care for its employees the cost of which has been increased as a result of defendants' conduct.
   
4. Defendants had a duty to the State and to the residents of the state: (1) to disclose all material facts about their products, (2) to refrain from any agreement that would restrain the development of a "safer" product, and (3) to refrain from targeting minors in order to induce their use of tobacco products in violation of State law. As set forth above, defendants intentionally breached these duties. As a result of this breach of duty and the suppression of evidence, defendants have successfully avoided the medical costs associated with use of their products and have passed those costs off to the State of Washington.
   
5. Defendants have knowledge of the benefit conferred on them by the State's payment of health care costs for diseases resulting from the use of tobacco products sold in the State of Washington by the defendants, which payments were foreseeable, given the defendants' knowledge of the health risks of their tobacco products.
   
6. While the State of Washington pays the health care costs that result from the use of tobacco products as intended, defendants continue to reap billions of dollars in profits from the sale of their tobacco products.
   
7. Defendants have avoided regulations and the costs of disease, injuries and deaths resulting from the normal use of their tobacco products. Defendants have been and are able legally to promote the sale of tobacco products to the residents of the State of Washington by continuing to misinform federal and state authorities about the true carcinogenic, pathologic and addictive qualities of their products.
   
8. In direct contradiction to and in spite of the State of Washington's specific statutory prohibitions, defendants have spent millions of dollars on targeted marketing programs designed to encourage minors to purchase and use their products.
   
9. In equity and fairness, the defendants and their agents, aiders and abettors and co-conspirators, not the State of Washington, should bear the costs of tobacco-related diseases. By avoiding their own duties to stand financially responsible for the harm done by their cigarettes, defendants wrongfully have forced the State of Washington to perform such duties and to pay the health care costs of tobacco-related disease. As a result, defendants have been unjustly enriched to the extent that taxpayers of the State of Washington have had to pay these costs, which rightfully should be borne by defendants.
   
10. As a result of defendants' conduct, the State of Washington has suffered and will continue to suffer substantial injuries and damages for which it is entitled to relief.

1. The State of Washington repeats and realleges each allegation as set forth above.
   
2. Article XII, § 22 of the Washington State Constitution makes it unlawful to directly or indirectly combine or make any contract in any manner for the purpose of limiting the production of a commodity or fixing the price of a commodity.
   
3. The defendants have combined and continue to combine for the purpose of limiting the production of "safer cigarettes." The defendants' combination has monopoly power in the markets for cigarettes and for "safer cigarettes."
   
4. Defendants' conspiracy has had a direct and foreseeable effect on Washington's medical costs, and Washington was in the target area of defendants' illegal agreement. Defendants continue to reap enormous profits from the suppression of "safer cigarettes" in large part because they shifted the health care costs of smoking-related diseases to third parties, including the State of Washington.
   
5. Increased medical costs borne by the State of Washington are one of the direct means by which defendants profit from the suppression of "safer cigarettes." Washington's antitrust injury is inextricably intertwined with and a necessary step in effecting the ends of defendants' restraint of trade.
   
6. Defendants' monopoly combination constitutes a combination in restraint of trade in violation of Article XII, § 22 of the Washington Constitution.
   
7. Defendants' unlawful conduct will continue unless the relief prayed for in this Complaint is granted.

1. The State of Washington realleges and incorporates herein the foregoing allegations of this Complaint.
   
2. Defendants entered into a conspiracy to: (1) suppress information concerning the adverse effects of tobacco use and the addictive effect of nicotine; (2) create doubt about the scientific studies linking tobacco use to adverse health consequences and/or the addictive nature of nicotine; (3) conceal their manipulation of the level of nicotine in tobacco products; and (4) unreasonably restrain trade based on health claims and "safer cigarettes."
   
3. A part of this conspiracy was a plan to cause governmental officials to believe that immediate action on their part to curb tobacco use was not needed. As the evidence mounted as to the hazards of smoking, governmental entities considered and/or began to legislate various controls on tobacco use and advertising. Defendants resisted these efforts, and the "Frank Statement" and its progeny, an integral part of the conspiracy, were designed to lull the State of Washington, among others, into avoiding the implementation and/or passage of such regulations.
   
4. The defendants' conspiracy not only served to forestall increased government regulation but contributed to the State's increased health care costs because the conspiracy caused tobacco users in the State of Washington to take up or continue smoking. Had the defendants not engaged in the conspiracy but instead disclosed what they knew, had they not suppressed information about addiction and nicotine manipulation, had they not targeted minors, and had they in fact reported the truth, the amount of tobacco use in the State of Washington would be far less, which in turn would have reduced the State's Medicaid costs attributable to tobacco use related. The very purpose of defendants' conspiracy was to promote and increase the use of tobacco products and thus directly increase the risk of harm to the State of Washington.
   
5. Defendants' conspiracy was designed to and did influence the State's course of conduct. Had defendants not engaged in the conspiracy, they would have fully disclosed (1) that the companies' own studies showed links between tobacco use and adverse health effects, (2) that nicotine is highly addictive, (3) that the tobacco companies manipulate nicotine levels in tobacco products in order to increase and maintain addiction, and (4) that the tobacco companies were trying to induce minors to use tobacco products despite the dangers outlined above, and despite their representations that they were not trying to encourage minors to use tobacco products. For years these facts have been concealed and many of the facts still remain concealed. Had the conspiracy not occurred, and had those facts been disclosed earlier, the State would have taken action to restrain the companies' activities.
   
6. Defendants combined to use unlawful means to deceive the State of Washington and its citizens as to the true nature of defendants' products, and to shift health costs associated with tobacco products to others.
   
7. By combining to use unlawful means, including without limitation misrepresentation, deception, and fraud to maintain their markets and profits, defendants engaged in a conspiracy in violation of the common law of Washington.
   
8. As a direct, foreseeable, intended and proximate cause of defendants' breach, the State suffered and will continue to suffer substantial injuries and damages.
   
9. As a result of this conspiracy, the State of Washington has been injured.

1. The State of Washington repeats and realleges each allegation set forth above.
   
2. In the regular course of business, defendants' have engaged in unfair or deceptive acts or practices including but not limited to:

1. Profits obtained by defendants in the State of Washington using the business practices outlined in this Complaint have been acquired by means or acts prohibited or declared unlawful by chapter 19.86 RCW, the Consumer Protection Act.
   
2. The activities described in paragraphs 314 and 315 constitute unfair or deceptive acts or practices in violation of RCW 19.86.020.
   
3. The Attorney General, as Chief Law Enforcement Officer of the State of Washington, seeks restitution and/or disgorgement of defendants' profits on behalf of consumers pursuant to RCW 19.86.080.

CHRISTINE O. GREGOIRE
Attorney General

JOHN W. HOUGH, WSBA #03267
Sr. Assistant Attorney General

JON P. FERGUSON, WSBA #05619
Senior Counsel

DONNA R. FISHER, WSBA #14342
WILLIAM P. NICHOLSON, WSBA #19794
Assistant Attorney General

Attorneys for Plaintiff
State of Washington

HAGENS & BERMAN, P.S.

Steve W. Berman, WSBA #12536
James P. Solimano, WSBA #12836
Jeniphr A.E. Breckenridge, WSBA #21410
Andrew M. Volk
Chris A. Jarvis, WSBA #20510
1301 Fifth Avenue, Suite 2929
Seattle, WA 98101
(206) 623-7292

LUVERA, BARNETT, BRINDLEY, BENINGER & CUNNINGHAM
Paul N. Luvera, WSBA #00843
Joel D. Cunningham, WSBA #05586
6700 Columbia Center
701 Fifth Avenue
Seattle, WA 98104-7016
(206) 467-6090

Special Assistant Attorneys General for Plaintiff State of Washington