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Report from the Reynolds American, Inc. Annual Shareholders Meeting -– May 7, 2010 – Winston-Salem, North Carolina
Wednesday, June 2nd, 2010
By Edward L. Sweda, Jr., Senior Attorney – PHAI
NEW RULES REGARDING ADMITTANCE TO THE MEETING.
The Reynolds American Inc. (RAI) Annual Shareholders Meeting took place in Winston-Salem, North Carolina on Friday morning, May 7, 2010. According to a March 22, 2010 “Dear Shareholder” letter from President and CEO Susan M. Ivey, those shareholders who planned to attend the meeting “MUST pre-register for the meeting and request an admittance ticket no later than Wednesday, April 28, 2010.”
- Reynolds American, Inc. Headquarters – Winston-Salem, NC. May 7, 2010
However, that letter, which was part of the company’s proxy materials, was not mailed to shareholders unless the shareholder specifically requested that the material be sent. Unfortunately, both I and shareholder Anne Morrow Donley of Virginia GASP missed the deadline for requesting an admission ticket by one day. Strictly adhering to the terms of this new rule, RAI’s Assistant Secretary, Dean E. Tsipis, informed me that the company was “unable” to fulfill my April 29, 2010 request for an admission ticket. “Unwilling” would have been a more accurate adjective.
Similarly, a new attendance rule by RAI kept out Keith T. Barber, a reporter for the Greensboro, North Carolina-based “Yes Weekly.” On April 28, 2010, RAI “announced” – via a release via PR Newswire but not by directly contacting local reporters – that members of the media had to request an admittance ticket by April 30, 2010. Mr. Barber, who arrived at the meeting on May 7, 2010, was barred from the meeting.
SECURITY
Winston-Salem’s taxpayers financially supported the heavy presence by the Winston-Salem Police Department (WSPD) at the Reynolds American meeting. Shortly after the 9:00 A.M. start of the meeting, there were four police officers standing in front of the building while four marked police cruisers were parked near the building’s main entrance. At the side of the building were another two parked police cruisers. As the FLOC demonstration was winding down at about 11:25 A.M., one of the WSPD officers told organizers of the demonstration that Reynolds management would like the demonstrators to leave the front of the building by 11:30 A.M.
FLOC
- Demonstrators outside Reynolds American Inc. headquarters, May 7, 2010
The major controversy at the RAI meeting was management’s unwillingness to meet with members of FLOC (Farm Labor Organizing Committee), AFL-CIO. (See this for details of FLOC’s campaign regarding Reynolds American. FLOC has also described desperate conditions in North Carolina’s tobacco fields, noting that nine workers have recently died in the fields, most due to heat stroke.
According to the Winston-Salem Journal, FLOC believes that “it has to be more vocal and demanding to persuade Reynolds to use its clout to pressure its suppliers to improve conditions for the state’s 30,000 tobacco farmworkers.” The company insists that its supplier list is proprietary and has refused to reveal who they are. Baldemar Velasquez, president of the Ministers
- Picket sign denouncing GTS – Green Tobacco Sickness, which occurs when the skin absorbs nicotine from touching tobacco plants
Conference of Winston-Salem and Vicinity, said that “We believe it is Reynolds’ role, and under its sphere of influence, to require its suppliers to treat the farm workers with dignity and proper work and living conditions.”
SHAREHOLDER RESOLUTIONS
Two of the shareholder resolutions considered at the meeting addressed issue of smoking and health and the company’s conduct. The first resolution was filed by proponents who noted that in 2009 RAI had challenged some provisions of the new law which allows the Food and Drug Administration (FDA) to regulate tobacco products, arguing that the law violated the company’s First Amendment rights. RAI also contended that FDA restrictions had limited the company’s ability to “convey ‘truthful information’ about its tobacco products.” Therefore, “shareholders request the RAI Board of Directors to oversee the inclusion in all RAI product advertising, promotion
- FLOC’s rolling billboard, denouncing “corporate criminals.”
and marketing (including inserts in tobacco packages themselves) truthful information regarding the devastating health consequences identified with using such products.” The proponents suggested that this truthful information cover the health hazards to smokers from smoking and to nonsmokers from breathing secondhand smoke; the decline in tobacco-related diseases when increased taxes on tobacco are combined with smoking restrictions; and the “human rights violations connected with undocumented workers in the U.S.A. and forced child labor in key ‘developing’ countries who pick tobacco leaf used by RAI.”
Not surprisingly, RAI management opposed the resolution calling on it to provide its customers with truthful information. It claimed that “Our Guiding principles and Beliefs” are sufficient.
The resolution received less than 2 percent of the shares voted and, thus, will not be eligible to be refiled for next year’s Shareholders Meeting.
The next resolution, on Human Rights Protocols for the Company and Its Suppliers, received over 10 percent of the shares voted and will be eligible for refilling for the 2011 meeting. The resolution requests that RAI’s Board of Directors “to commit itself to create effective procedures to implement the internationally agreed-upon human rights conventions in the countries from which it gets its tobacco and to find ways to ensure, through truly independent monitoring, that its varied suppliers are enforcing these as well as pertinent laws of the nations in which its suppliers operate.” The proponents specifically cited the African nation of Malawi, where “countless children are being forced into slave-like situations to provide leaf for RAI products,” and that “forced child labor persists to the degree that the U.S. Department of Labor lists Malawi’s tobacco production as particularly egregious.”
RAI management opposed this resolution as well, claiming that respecting universally recognized human rights “is one of the foundations of how we conduct our businesses.” Nonetheless, RAI opposed the resolution, stating that “we do not believe it is within our sphere of influence to assume the regulatory and enforcement role of the federal, state and local governments” in the United States. Of course, the resolution had not called on the company to assume those roles; rather, the “truly independent monitoring” would be key to ensuring that the suppliers were adhering to these laws in countries such as Malawi. The proponents noted that “RAI cannot dismiss the above problems by saying its suppliers ‘report’ they comply with codes covering farm workers’ basic rights and that no forced child labor takes place in tobacco fields supplying RAI product.” If RAI feels it cannot enforce these basic codes, it could stop doing business with suppliers that abuse workers’ human rights. It has never done so.
More Florida Verdicts against Cigarette Companies – Buonomo
Friday, May 21st, 2010
On May 20, 2010 after a three-week trial, a six-person Fort Lauderdale, Florida jury returned a verdict in favor of Connie Buonomo, the widow of Matthew Buonomo, who died from chronic obstructive lung disease in 2008 at the age of 80.Mr. Buonomo had started smoking as a teenager.
The defendant, R.J. Reynolds Tobacco Co. was ordered to pay $5 million in compensatory damages and $25 million in punitive damages. After deliberating for five hours, the jury unanimously determined that R.J. Reynolds was 77.5 percent responsible for Mr. Buonomo’s death, compared with 22.5 percent responsibility for the deceased. Of the 19 “Engle Progeny” cases that have reached a jury verdict since February 2009, 16 of the verdicts have been for the plaintiffs.
See the Sun-Sentinel’s account.
Florida Jury Returns Multi-Million Dollar Verdict for Family of Smoker against Liggett Group, Philip Morris and R.J. Reynolds
Monday, April 26th, 2010
FOR IMMEDIATE RELEASE
Contact: Edward L. Sweda or Mark Gottlieb
(617) 373-8462 or (617) 373-2026
APRIL 26, 2010
A Fort Lauderdale, Florida state court jury on Monday awarded $15 million in compensatory damages to the family of Margot Putney, a longtime smoker who died of lung cancer in 1995. The jury found the defendants’ negligence and product defect were the legal cause of Margot Putney’s death.
The jury apportioned responsibility for Margot Putney’s death at 15% for Philip Morris, 30% for R.J. Reynolds, 20% for Liggett Group, and 35% for Ms. Putney. Additionally, the jury assessed $5 million in punitive damages, $2.5 million against R.J. Reynolds and $2.5 million against Philip Morris. If today’s verdict is upheld on appeal, the plaintiffs will receive $14.75 million.
Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project (TPLP), based at Northeastern University School of Law in Boston, welcomed the victory for the Putney family, noting that the “verdict brings the total number of plaintiff victories in ‘Engle progeny’ cases in Florida to 14 out of 16 trials that have gone to a jury verdict over the past 14 months. This includes a streak of 12 consecutive plaintiff victories. Given this unmistakable trend in favor of holding corporate wrongdoers accountable for their actions, I anticipate even more victories for plaintiffs in these Florida lawsuits in the coming weeks and months.”
The Putney family was represented by Rossman, Baumberger, Reboso, Speir & Connolly in Miami. Charles Baumberger can be reached at 305-373-0708.
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Tobacco Companies Are Dealt a Series of Major Litigation Losses in Florida During March And April – and There’s no End in Sight
Thursday, April 22nd, 2010
FOR IMMEDIATE RELEASE: April 22, 2010
Contact: Edward L. Sweda or Mark Gottlieb
(617) 373-2026 or (617) 373-8462
Florida juries and a Court of Appeal have help make March and April of 2010 two months during which tobacco companies are being held accountable for their massive, reprehensible misconduct that has wreaked havoc on the lives of Florida residents.
In the most recent case, a jury in Gainesville on April 21 rendered a $10 million compensatory damages award and an $80 million punitive damages award against R.J. Reynolds Tobacco Co. in the Townsend case. The jury assessed 51% responsibility to RJR and 49% responsibility to Mr. Townsend. The apportionment of liability is possible through the legal doctrine of comparative fault which permits a defendant to be held liable for the portion of the harm it is responsible for in situations where the plaintiff bears some of the responsibility as well. Thus, if the verdict withstands appeal, the plaintiff will receive $80.5 million.
Other blows to Big Tobacco include the following:
- March 10. A jury awarded $5 million compensatory damages award to the plaintiff in the Douglas case. The jury assessed 50% responsibility to the deceased smoker, 27% responsibility to Liggett Group, 18% responsibility to Philip Morris, and 5% responsibility to R.J. Reynolds. Thus, if the verdict withstands appeals, the plaintiff will receive $2.5 million.
- March 12. A jury in Gainesville awarded $5 million in compensatory damages and $12.5 million in punitive damages against R.J. Reynolds in the Hall case. The trial judge later reduced the total award to $15.75 million.
- March 17. The Third District Court of Appeal upheld the $24.8 million award to John Lukacs, a longtime smoker who died of cancer shortly after his 2002 trial. The defendants in that case are Philip Morris USA, Brown & Williamson and Liggett Group.
- March 24. A jury in Fort Lauderdale awarded $10 million in compensatory damages and $20 million in punitive damages against Philip Morris and R.J. Reynolds in the Cohen case. The jury assessed one-third responsibility to Mr. Cohen, Philip Morris and RJR; thus, the total award to the plaintiff, if the verdict withstands appeals, will be $26.6 million.
- April 13 and 14. A jury awarded $3.5 million in compensatory damages and $18 million ($17 million against R.J. Reynolds and $1 million against Liggett Group) in punitive damages to the family of a longtime smoker in the Clay case. The jury assessed the smoker as 30% responsible, R.J. Reynolds 60% responsible and Liggett Group 10% responsible. Thus, if the verdict withstands appeal, the plaintiff will receive $20.45 million.
“This ever-growing list of plaintiff victories in Florida constitutes a trend with a capital ‘T,’” said Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project (TPLP), a project of the Public Health Advocacy Institute, which is based at Northeastern University School of Law in Boston. “The tobacco companies must soon re-examine their policy of not settling these ‘Engle progeny’ cases, since many more trials are scheduled in the upcoming weeks and months,” Sweda concluded.
Mark Gottlieb, Director of TPLP noted that, “while there are some unique features of these Florida cases, there is no reason why this sort of success against the cigarette companies cannot be reproduced in many states. Rational minds hear the evidence and hold wrongdoers accountable regardless of state boundaries.”
All Parties Seek Supreme Court Review of Racketeering Trial: US v. Philip Morris
Friday, February 19th, 2010
Review could open door for substantial remedies that would help smokers to quit protect kids from starting –
and could force the cigarette companies to pay hundreds of billions of dollars
Today the Solicitor General of the United States filed a Petition for Writ of Certiorari with the Supreme Court of the United States seeking review of a 2-1 pre-trial ruling by the U.S. Court of Appeals for the D.C. Circuit. That ruling strictly limited the remedies available to the district court judge when she found that the cigarette industry engaged in racketeering in 2006. The Petitioners largely agree with the dissent in that decision that would permit the District Court more leeway in fashioning an appropriate set of remedies.
The pre-trial ruling for which the United States seeks review rejected the proposed remedy under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO) seeking forfeiture of the cigarette industry’s ill-gotten gains flowing from sales to children. It also limited other potential remedies that had been available to the judiciary unless they were clearly “forward looking” and carefully tailored only to prevent future RICO violations.
In 2005, when it appeared that political concerns in the Department of Justice might be interfering with the prosecution of the trial, the district judge approved a number of public health groups to join as parties to the action. Led by the Tobacco Free Kids Action Fund, they too are seeking Supreme Court review of the pre-trial decision and are seeking public health remedies that could have a greater impact on tobacco control.
Philip Morris, as expected, is seeking review of the district court’s decision that found that the cigarette companies were liable under RICO. The other cigarette industry defendants are likely to appeal independently.
Mark Gottlieb, Director of the Tobacco Products Liability Project at Northeastern University School of Law in Boston said: “The Solicitor General’s Petition is enormously important because it could result in a second opportunity for the District Court to mete out justice with a fuller option of remedies in its arsenal. These could include disgorgement of ill-gotten gains; industry-funded cessation programs; counter-marketing; and many other remedies.”
Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project noted that: “Freed from the constraints of the pre-trial decision by the DC Circuit Court of Appeals, the District Court would be able to reshape the public health landscape around cigarettes and prevent future violations of RICO.”
See more on the case and trial here.
PHAI Attorney Chris Banthin Appears on WGBH with Boston Mayor Tom Menino to Discuss Smokefree Public Housing
Wednesday, February 3rd, 2010
The City of Boston is taking a leadership role in making public housing smokefree. Today, PHAI’s Chris Banthin appeared on a panel with Boston mayor Tom Menino on WGBH FM’s Callie Crossley Show to discuss why smokefree public housing is the right thing to do. Chris directs the Massachusetts Smoke-Free Housing Project. Listen to the broadcast here.
PHAI Senior Attorney Christopher Banthin discussed low tobacco control funding on WCVB News
Thursday, December 10th, 2009
Although uncredited in the clip, PHAI Senior Staff Attorney and Director of the Tobacco Control Resource Center, Christopher Banthin, discusses the public health impact of Massachusetts’ low funding commitment to tobacco control. He is responding to a report issued by the Campaign for Tobacco Free Kids on the Tobacco Settlement, 11 years later.
VIDEO: State Spends Less On Tobacco Prevention Programs, Report Says (WCVB-Boston 12/9/09)
PHAI Researches Unfair Food Marketing to Kids (and those who purchase for kids)
Tuesday, December 8th, 2009
-- Staff Attorney, Cara Wilking, Presents Poster
On December 2, 2009, Mark Gottlieb and Cara Wilking presented a poster to the Robert Wood Johnson Foundation’s Healthy Eating Research program grantees in Tucson, Arizona.
PHAI is exploring how state consumer protection laws can be used to address unfair and deceptive food and beverage marketing practices directed toward children or those who purchase food and beverages for children. Such state laws may permit private citizens, attorneys general or prosecutors to bring actions consumer fraud.
Recently, Connecticut state attorney general Richard Blumenthal launched an investigation into the Smart Choices labeling program. The eight large food companies that participated in the labeling program (ConAgra Foods, General Mills, Inc., Kellogg Company, Kraft Foods, PepsiCo, Inc., Riviana Foods, Sun-Maid and Unilever) have agreed to remove the program’s logo from their products, at least during the investigation.
PHAI’s findings will be available by the Fall of 2010.
PHAI’s Tobacco Products Liability Project is mentioned in NY Times editorial
Monday, November 30th, 2009
A November 27, 2009 editorial entitled A Big Loss for Big Tobacco, stated:
Last week’s $300 million verdict, which could still be reversed or reduced on appeal, provides a strong incentive for others to sue.
Big awards can send a message to the tobacco industry, or be regarded as simply a cost of doing business. Mark Gottlieb, director of the Tobacco Products Liability Project, says more class-action suits are needed, with settlements requiring the industry to finance effective counter-marketing. State settlement money pays for the hard-hitting “truth” campaign, a nationwide effort that aims to discourage young people from smoking.
While it is always nice to be mentioned an the editorial pages of a prestigious paper, what is really important is that jurors are more frequently having the opportunity to learn about the conduct of cigarette companies and, through the civil justice system, send the message that it is unacceptable.
Tobacco Products Liability Project hails $244 million punitive damages award against Philip Morris as “entirely proportionate to the level of reprehensible misconduct by the company”
Friday, November 20th, 2009
A Fort Lauderdale, Florida jury on the afternoon of November 19, 2009 returned a nearly $300 million dollar ($55 million in compensatory damages and $244 million in punitive damages) verdict against tobacco giant Philip Morris in the trial of Naugle vs. Philip Morris. The three-week trial featured the testimony of the plaintiff, Luncinda (Cindy) Naugle, who started smoking in 1968 at the age of 20 and who quit smoking in 1993. Ms. Naugle now suffers from severe emphysema. She is represented by the Kelley Uustal Law Firm in Fort Lauderdale. [Contact Attorney Bob Kelley at 954-522-6601.]
Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project (TPLP) at Northeastern University School of Law in Boston, was delighted with the jury’s verdict. “Clearly, this jury recognized the outrageous and reprehensible misconduct by Philip Morris and appropriately expressed its outrage by awarding $244,000,000 in punitive damages. This jury went far beyond a slap on the wrists and, instead, hit Philip Morris hard in order to punish the company for its extraordinary wrongdoing and to deter Philip Morris and other tobacco companies from committing similar wrongdoing in the future,” Sweda said.
Mark Gottlieb, TPLP’s Director, noted that “trial lawyers should be encouraged by the success that plaintiffs in Florida have been able to achieve when juries have had the chance to review the evidence of cigarette makers’ astonishing misconduct.”
Thursday’s verdict was the tenth verdict this year in Engle progeny cases in Florida. 8 out of those 10 verdicts have been for the plaintiffs; the jury verdict in the Naugle case was the largest of the eight plaintiff verdicts. Thousands of other Engle progeny cases remain in the pipeline, awaiting trial in Florida.
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The Tobacco Products Liability Project (TPLP) is a project of the Public Health Advocacy Institute, which is based at Northeastern University School of Law in Boston.
