Archive for the ‘Tobacco’ Category
Monday, June 12th, 2017
By Edward L. Sweda, Jr., PHAI Senior Attorney
As I approached the Greater Richmond Convention Center on the partly cloudy morning of Thursday, May 18, 2017, thoughts of sub-freezing temperatures and snowstorms never entered my mind. But, before the morning gave way to the afternoon, I realized that I had just seen dozens of snowflakes.
As he opened the meeting just before 9:00 A.M., Altria Group Chairman, President and CEO Martin J. Barrington declared that the company had experienced “another outstanding year” in 2016. That was followed by a “solid start” in the first quarter of 2017. He listed four priorities for the company:
- Tobacco Harm Reduction;
- Supply Chain Responsibility; and
The company’s strategies are:
- Maximize income from core tobacco businesses over the long term;
- Grow new streams with innovative tobacco products (including MarkTen XL, the “fastest growing e-vapor brand” in the last quarter of 2016); and
- Manage diverse income streams and a strong balance sheet to deliver consistent financial performance (citing Altria’s ownership of over 10% of AB InBev and its Ste. Michelle Wine Estates ).
I was able to begin the Question and Answer session of the meeting with the following question:
“You and other executives of Altria Group have often referred to tobacco litigation as an issue that is ‘manageable’ and, therefore, should not be troubling to investors.
Yet, just within the past two months, the following developments have occurred:
- On April 6th, the Florida Supreme Court in the R.J. Reynolds Tobacco Co. v. Marotta case ruled that federal law does not preempt Engle Progeny plaintiffs from bringing strict liability and negligence claims against tobacco companies.
- On April 12th in the Boatright v. Philip Morris USA, Inc. case, a Florida Appeals Court affirmed a jury award of $35 million against Philip Morris USA, Inc., and reversed the reduction of the award by the trial judge because the smoker was also at fault for his illnesses, ruling that Florida’s comparative fault law does not apply to intentional torts. This increases the company’s exposure to liability.
- On April 6th in the Sommers v. Philip Morris case, a Florida state jury awarded $1 million to the widow of a lawyer and real estate developer after finding Philip Morris responsible for his coronary artery diseases and fatal lung cancer.
My question is: do you understand why there are shareholders who believe that the tobacco litigation problem is no longer simply ‘manageable’?”
Mr. Barrington’s response was, while acknowledging these and other recent legal setbacks for Altria, to emphasize that in the larger picture, tobacco lawsuits are still “manageable” in the view of Altria’s management. He admitted that “litigation presents a risk and we devote substantial resources to it.” Mr. Barrington also claimed that the litigation has been “well managed” and that the slope of the numbers of cases “has been coming down.” Regarding Engle, he said that it presents a “complex set of individual cases” and that Altria is “working our way through it.” He complained that the “terms on which those cases are being tried are not particularly fair to the defendants.” He concluded by stating that tobacco litigation is “a complex matter but it is a finite matter.”
Reality Check’s Jonathan Chaffe asked about the growing number of localities across the country that have adopted Age 21 policies – making it illegal to sell or give cigarettes and other tobacco products to people under age 21. Mr. Barrington responded by saying that he prefers to minimum age to be 18 rather than 21. He also raised the potential problem of communities that have passed Age 21 laws being surrounded by other communities that hadn’t, thus encouraging young smokers to travel to a place where the minimum age is still 18. Finally, he opined that it would be better to have this issue dealt with by Congress, rather than by states or localities.
A 15-year-old student from Elmira, New York asked Mr. Barrington what steps Altria is taking “to ensure that specific populations with higher smoking rates based on ethnicity, income, education and mental health are not being profiled by Altria’s advertising?” Altria’s current top executive gave an answer that any number of his predecessors have given over the years. He claimed that the company markets cigarettes “only to adults.”
In response to a question about how Altria plans to respond to the U.S. Department of Housing and Urban Development’s November 2016 policy for smoke-free public housing, Mr. Barrington said that Altria “hasn’t weighed in” on the issue but that, as a general rule, homeowners should decide whether to allow smoking in people’s homes.
A shareholder resolution, sponsored by the Sisters of St. Francis of Philadelphia (see http://osfphila.org/ ), called on the company to “voluntarily commit itself that, by August 15, 2017, it will not allow any images of its logo or products be placed anywhere outside any store, in store windows or anywhere else inside any store selling its tobacco products and will stop incentives to any retailer for such placements.” The proposal noted that “people of low socioeconomic status have higher rates of cigarette smoking than the general population” and that a city of Philadelphia analysis of licenses found that lower income zip codes “had two-thirds more tobacco retailers per capita than higher-income zip codes and three-quarters more within 1000 feet of a school.”
The resolution received a 2.6% YES vote.
Before, during and after the meeting, at least thirty teenagers demonstrated outside the convention center, carrying teal and black balloons to emphasize how young people who begin using a deadly and addictive product become replacement smokers for Altria’s customers who die from smoking-caused diseases. The teenagers, who were accompanied be several adults, were representatives of Reality Check New York ) and No Limits Nebraska.
After the 50-minute meeting had ended, I emerged from the meeting room to learn that the approximately 85 attendees were blocked from exiting from the same doors through which they had entered an hour or so earlier. Instead, everyone had to walk down a long corridor – about the length of a city block – to get to the exit which led to the parking garage.
Why did Altria management take this action, which had never been done before in my experience of having attended annual shareholder meetings for more than 20 years?
If it hadn’t done so, shareholders would have seen dozens of teenagers wearing T-shirts with the message “People Over Profit.” They would have seen the balloons that represent both tobacco’s death toll and replacement toll. They would have heard the chants that describe the lies used by tobacco companies to help maximize profit levels at the expense of the health and the lives of the public.
In May 2016, the Urban Dictionary defined “snowflake” as “an overly sensitive person, incapable of dealing with any opinions that differ from their own.” The key message of this year’s Altria Group shareholders meeting was not that 2016 was an “outstanding” year for the company. It was that Altria’s management is afraid of opinions that differ from their own, especially when those opinions are espoused by young people who have the courage to speak truth to power – up close and personal.
PHAI Submits Comments to Support Smoke-Free Low Income Housing to MA Dept of Housing and Community Development
Thursday, January 5th, 2017
PHAI, on behalf of the Tobacco Free Living Community of Practice (a statewide coalition organized through the Massachusetts Dept. of Public Health), submitted recommendations to the Massachusetts Department of Housing and Community Development (“MDHCD”) for its 2017 Qualified Allocation Draft Plan and Low Income Housing Tax Credit Program.
MDHCD implements the federal Law Income Housing Tax Credit and helps encourage the development of private low-income housing. Its 2017 Qualified Allocation Draft Plan, which includes a competitive scoring system for applicants seeking to build low-income housing and claim tax credits, provides points to applicants that promote clean indoor air.
Chris Banthin, PHAI’s Director of its Tobacco Control Resource Center, suggests in Comments submitted in December 23, 2016, that applicants should be required to include smoke-free policies for all indoor common areas and living units or, alternatively, that points be awarded to applicants that agree to implement such policies.
The following organizations signed on to the comments to lend their support:
• American Lung Association, Northeast
• Asthma & Allergy Foundation of America, New England Chapter
• Beacon Communities LLC
• Boston Alliance for Community Health
• Boston Children’s Hospital
• Boston Public Health Commission
• Charlestown Coalition
• Codman Square Health Center
• Codman Square Neighborhood Council
• Dorchester Bay EDC
• East Boston Neighborhood Health Center
• Fenway CDC
• Harbor Health Services, Inc.
• Health Resources in Action
• Healthy Weight Initiative, HSPH
• Massachusetts Environmental Health Association
• MGH Center for Community Health Improvement
• New England Regional Council of the National Association of the Housing and Redevelopment Officials
• Peabody Properties, Inc.
• Public Health Advocacy Institute, Inc.
• Vaughan W. Rees, PhD, Director, Center for Global Tobacco Control, Department of Social and Behavioral Sciences, Harvard T.H. Chan School of Public Health
• Resilient Sisterhood Project
• South Boston Substance Abuse Prevention Collaborative
• South End Community Health Center
• Tobacco Free Mass
Wednesday, August 24th, 2016
On August 8, 2016, new regulations by the FDA went into effect that have a profound impact on a major segment of the electronic cigarette industry: vape shops. The shops that mix flavors for vaping products are now considered to be manufacturers and subject to the same requirements as manufactures owned by the companies that make Marlboros, Camels, and Newports.
The new rules will require each and every flavor variation of electronic cigarettes to be approved by the FDA as a new tobacco product. The cost associated with each application is estimated by the agency to average over $300,000. Vape shops had typically created many dozens of varieties of “e-juice” every month and, under the new rules, the revenues from these flavor varieties would account for only a small fraction of the cost for submitting new tobacco product applications. This has led some vape shops to close their doors.
WGBH’s Isaiah Thompson reported on these developments for NPR’s All Things Considered (with an expanded written version). PHAI’s executive director, Mark Gottlieb, is quoted in the piece.
Monday, June 6th, 2016
by Edward L. Sweda, Jr.
As soon as Altria Group, Inc. Chairman, CEO and President Martin J. Barrington opened the 2016 Annual Shareholders Meeting, he boasted that 2015 had been “another terrific year.” The “excellent business results” included dividends increasing by 8.7% (to $4.2 billion) and a shareholder return of more than 23%. Marlboro, with 44% of the retail share in the United States, is larger than the next 10 brands combined. But, just as at the Reynolds American Inc. meeting two weeks earlier, the tobacco company executive made no mention of other numbers – numbers that tally the toll in death and disease that is directly caused by the intended use of the company’s main product.
By distributing to shareholders a colorful, glossy handout summarizing the company’s 2015 business accomplishments, Mr. Barrington significantly cut back on the length of his oral business report compared to previous annual meetings. After that report and some perfunctory votes on election of the board of directors and the accounting firm were completed, the meeting’s agenda quickly came to the question and answer session.
After an initial question from a company-friendly stock analyst, I asked the following question of Mr. Barrington:
“Just within the past two months, the following developments have occurred.
- “On March 17, the Florida Supreme Court ruled in the Soffer case that the widow of a smoker who died of lung cancer can seek punitive damages against a tobacco company on strict liability and negligence claims.
- “On March 24, the Florida Supreme Court in the Ciccone case ruled that a smoker did not need an official diagnosis before the cutoff date for membership in the original Engle class.
- “On April 25, the Connecticut Supreme Court in the Izzarelli case ruled that the “good tobacco” language of the Restatement 2nd of Torts does not shield tobacco companies from product liability lawsuits. (See news coverage) This is similar to a ruling in Massachusetts
- “And, earlier this week on May 16, the U.S. Supreme Court in the Schwarz case declined Philip Morris USA’s request to review an Oregon jury’s $25 million punitive damages award to a widower whose wife died of lung cancer.
“Why shouldn’t Altria Group’s shareholders and investors be very concerned about these negative litigation developments for the company?”
Mr. Barrington’s response echoed the traditional party line from the top executives of the major cigarette companies in the United States: tobacco litigation is a “well-managed risk” that should not alarm shareholders and investors. He commended the quality of the work of the company’s lawyers, including Denise Keane, Altria’s General Counsel.
A representative of the AFL-CIO’s Farm Labor Organizing Committee (FLOC) cited “poverty wages and squalid housing” on tobacco farms and called on Altria to crack down on the abuses of farm workers in tobacco fields. He also specifically mentioned Jackson Farms in North Carolina, where seven workers who had filed a wage theft lawsuit were subsequently blacklisted. Mr. Barrington responded by confirming that Altria does not use Jackson Farms to get any of its tobacco.
Amber Updike, a 14-year-old member of New York-based Reality Check , mentioned Altria’s having spent $9 billion annually in marketing to youth in the United States. Mr. Barrington responded by denying that Altria targets youth and referred her to the company’s websites. He also claimed that Altria “led the effort to get cigarettes off the [store] counter.”
Cathy Rowan, representing Trinity Health, spoke in favor of a resolution calling on Altria to “undertake a thorough analysis, engaging chemical and pharmacological experts as needed, of all the harmful liquids, additives and chemicals and their potential health consequences when each brand of our tobacco products is used as intended by consumers and report the results of the analysis on the Company’s website.” Ms. Rowan noted that there is no clarity regarding the ingredients in Altria’s cigarettes and e-cigarettes and that compliance with the U.S. Food and Drug Administration’s (FDA) deeming regulations (which were adopted on May 5, 2016) could take up to three years.
Altria opposed the resolution, preferring to leave the matter to the FDA. The resolution was defeated with 93% of the shares having been voted “No.”
The second shareholder resolution, which was sponsored by the national AFL-CIO, called on Altria to follow the lead of Pepsico and follow the United Nations’ Guiding Principles on Business and Human Rights. A company would have the following: a) A policy commitment to meet their responsibility to respect human rights; b) A human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights; and c) Processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute.”
Since agricultural workers are excluded from the National Labor Relations Act, it is important to have non-judicial grievance mechanisms to remedy human rights violations. Altria opposed the resolution, arguing that its “responsible supply chain management practices appropriately address the objectives of this proposal.” This resolution was defeated with 94.1% of the shares having been voted “No.”
After the 45-minute meeting concluded, I went outside to meet some of the 40 youth members of Reality Check who had protested against Altria’s targeting of youth. [Insert photo] The loud protests were heard inside the Richmond Convention Center (especially as attendees came to and from the restrooms) before, during and after the shareholders meeting.
It was a distinct pleasure to meet with Gretchen Galley, Ken Dahlgren and Jon Chaffee, as well as the youth – about 40 in number – who sent the clear message to Altria that “We have seen enough!”
Tuesday, May 24th, 2016
On May 23, 2016, the widow and children of baseball great Tony Gwynn filed a wrongful death lawsuit against Altria Group alleging that the manufacturers of Skoal smokeless tobacco’s negligence, fraud, defective design, and failure-to-warn caused the death of the Hall of Famer in 2014.
Richard Daynard, PHAI’s president and University Distinguished Professor of Law at Northeastern University, discussed the case in the New York Times and also on ESPN along with Neil Romano of the National Spit Tobacco Education project.
Friday, May 13th, 2016
By Edward L. Sweda, Jr.
When Reynolds American International (RAI) President and CEO Susan M. Cameron told the company’s 2016 annual shareholders meeting that it is “always a pleasure to report good news,” this shareholder was reminded of a similar message: “Alive with Pleasure.” That ubiquitous advertising slogan for Newport cigarettes – which RAI acquired
in 2015 when it purchased Lorillard Tobacco Company – emphasized the short-term, pleasurable qualities of the deadliest consumer product while ignoring the long-term consequences of using that product.
Ms. Cameron listed the examples of “good news” from 2015: shareholder return of 49%; an increase of 7.5% in dividends; a 2 for 1 stock split. Integration with the Newport brand has “done well,” she said. Vuse, RAI’s leading brand of “digital vapor cigarettes”, was the most successful new product in convenience stores.
There was no mention of the enormity of cigarettes’ 2015 death toll during the course of the 80-minute shareholders meeting. Nor was there any mention of litigation against R.J. Reynolds Tobacco Co. until Agenda Item #10, the Question & Answer session. My question to RAI Chairman of the Board Thomas C. Wajnert was as follows:
“Just within the past two months, the following developments have occurred:
“On March 17, the Florida Supreme Court ruled in the Soffer case that the widow of a smoker who died of lung cancer can seek punitive damages against RJR on strict liability and negligence claims.
“On March 24, the Florida Supreme Court in the Ciccone case ruled that a smoker did not need an official diagnosis before the cutoff date for membership in the original Engle class.
“On April 21 and 22, a Florida jury returned verdicts in the Turner case totaling $13 million for the children of a heavy smoker who died of lung cancer, finding that RJR hid the dangers of cigarettes from her until she was hopelessly addicted.
“And just last week, on April 25, the Connecticut Supreme Court in the Izzarelli case ruled that the “good tobacco” language of the Restatement 2nd of Torts does not shield tobacco companies from product liability lawsuits.(see news coverage) This is similar to a ruling in Massachusetts.
“Why shouldn’t RAI shareholders and investors be very concerned about these negative litigation developments for the company?”
For a response, Mr. Wajnert turned to Mark Holton, RAI’s executive vice president, and general counsel. While acknowledging the litigation developments I had just cited, Mr. Holton advised that shareholders and investors should consider the company’s overal
l litigation strategy, that has been used for many years, rather than a string of setbacks that had occurred since mid-March. He also mentioned that there had been some recent defense verdicts during that time span and, as to the Izzarelli case, he noted that RJR still had other legal grounds for its appeal of the jury’s $28 million verdict. On that case, Mr. Holton congratulated me on the ruling by the Connecticut Supreme Court and noted that I had submitted an amicus curiae brief for the Public Health Advocacy Institute (PHAI) on behalf of Ms. Izzarelli.
The day before the RAI Annual Shareholders Meeting, the Associated Press reported that several growers who sell tobacco to R.J. Reynolds Tobacco Co. had children under the age of 13 working in their fields, despite RAI’s pledge to prohibit the hiring of children of that age. A news release by the Farmworkers Labor Organizing Committee (FLOC) commented that the “presence of child labor, which the company has denied for years, confirms what the farmworkers’ union, FLOC, has been telling the company since 2007: the tobacco industry is guilty of turning a blind eye to child labor, dangerous working conditions, and many other abuses for far too long.” That news was consistent with the findings of a December 2015 report by Human Rights Watch, entitled, “Teens of the Tobacco Fields: Child Labor in Unites States Tobacco Farming.”
During the question & answer session, several speakers raised the issue of working conditions for farm workers. Hillary Laslo, a FLOC member from Toledo, OH, spoke of abusive conditions on the farm and the fear of retaliation. Julie Taylor, the ex-Director of the National Farm Worker Ministry, visited farm labor camps and saw “terrible housing” conditions. A 20-year-old FLOC member described many problems working in the fields, including not getting necessary breaks while working in the fields, especially on brutally hot days.
Fred Romero, a 14-year-old high school freshman who had worked in the fields for the last 2 to 3 years, described how he had gotten ripped off, being paid even less than the $7.25 per hour minimum wage. He noted how his mother struggles hard to pay the family’s bills; he asked Mr. Wajnert whether RAI will sign an agreement to get a livable wage paid for those who work on farms that provide the tobacco for RAI. Mr. Wajnert answered that the company would not do so.
After the meeting concluded at 10:20 A.M., more than 100 FLOC supported demonstrated in the rain against RAI for its refusal to do more to improve working conditions for farm workers and to end child labor in tobacco fields.
Just a week after the meeting, RAI suffered yet another courtroom loss when a Florida jury in the Dion case returned a $12 million verdict to the widower of a woman who died of lung cancer after smoking for decades.
Tuesday, January 19th, 2016
The Public Health Advocacy Institute submitted comments to a proposed rule by the U.S. Department of Housing and Urban Development (“HUD”) to make its public housing smoke-free. The proposed rule would affect 1.1 million households, but leave 3.4 million other HUD-funded households unprotected. These include the agency’s tenant-based and project-based rental assistance.
PHAI argues that there is are several ways that HUD could expand the proposed protections:
- HUD maintains significant control over the development and operation of many mix financed properties, in part, through the Housing Assistance Payment Contracts. HUD has a legal right to change these contracts during the renewal process. Going smoke-free could simply become part of the eligibility requirements, for example, under the all HAP contract renewals going forward. Just like it currently prohibits marijuana use in all the housing it finances, HUD could require a smoke-free environment, too.
- There is widespread support for smoke-free policies among owners and property management companies of mix-financed, affordable properties. In Massachusetts, some of the leading management companies of mixed financed affordable properties have made many, and in some cases all, of their properties smoke-free. Examples include Beacon Communities, Peabody Properties, and Corcoran Management.
- Surveys show that residents who are eligible for affordable housing prefer a smoke-free building, despite the high smoking rates in affordable housing.
- Smoke-free rules reduce maintenance costs, which would benefit the private owners and funders of affordable housing.
- The health and safety risk to residents exposed to drifting secondhand smoke is the same regardless of whether the resident lives in public housing or another type of affordable housing.
- Requiring smoke-free buildings for the use of tenant-based assistance would cause approximately 700,000 landlords to go smoke-free. This change would benefit all residents living at these properties, not just the voucher holders.
Download our comments here.
PHAI operates the Commonwealth of Massachusetts’s Smokefree Housing Program as well as the Public Health and Tobacco Policy Center, which provides services, including smoke-free housing legal and policy technical assistance, to entities funded by the New York State Bureau of Tobacco Control.
Monday, September 21st, 2015
In March, the non-profit Public Health Advocacy Institute (“PHAI”) announced that it had formed a center to bring important public health litigation, and had hired a former Assistant Attorney General to oversee this litigation in the Massachusetts courts. Today, PHAI, which is based at Northeastern University, announced the filing of its latest suit, and also the formation of a strategic alliance with a group of prominent Boston lawyers to pursue important public health cases, including cases against the tobacco industry on behalf of the families of former smokers who have suffered devastating disease from cigarettes.
“We are so pleased to be working with this outstanding group of lawyers to help some of tobacco’s victims in Massachusetts,” said Andrew Rainer, PHAI’s Litigation Director and Director of the Center for Public Health Litigation. Working together with PHAI will be:
- Lisa Arrowood, Kevin Peters and Jed DeWick of Arrowood Peters, LLP
- Sam Perkins of Brody, Hardoon, Perkins & Kesten, LLP
- Neil Leifer, of Neil T. Leifer, LLC
- Leo Boyle, Michael Bogdanow and Valerie Yarashus of Meehan, Boyle, Black & Bogdanow, PC
PHAI’s latest suit, filed today in Middlesex Superior Court in Woburn together with Perkins and Brody, Hardoon, Perkins & Kesten, LLC, is brought on behalf of Linda Troupe and her husband Carleton against R.J. Reynolds Tobacco Company of Winston-Salem, North Carolina, and Donelan’s Supermarkets, Inc. of Littleton, Massachusetts. Mrs. Troupe, who smoked Winston and Kool cigarettes for over 35 years, was diagnosed in 2013 with throat cancer. The suit alleges that, in order to treat Mrs. Troupe’s cancer, doctors had to remove her larynx, and she has lost most of her ability to speak with her four children and eleven grandchildren.
Arrowood, Peters, DeWick and Leifer will be working with PHAI on two cases previously filed in the Middlesex Court — the first brought for the family of James Flavin, Jr., a former executive of Filene’s and Staples, who died of lung cancer in 2012 after smoking Newport cigarettes for over 40 years, and the second brought for Patricia Greene, a Newton realtor, who was diagnosed with lung cancer in 2013, even though she had stopped smoking Marlboro cigarettes 25 years earlier.
Arrowood is the current President of the Boston Bar Association, and a fellow of the American College of Trial Lawyers. Perkins is a founding partner of Brody, Hardoon, Perkins & Kesten, and a previous Lawyer of the Year. Leifer, a former partner of Thornton & Naumes (now the Thornton firm), represented the Commonwealth of Massachusetts in its successful litigation against the tobacco industry to recover the health care costs incurred by the state in caring for residents harmed by smoking. Boyle and Yarashus are past Presidents of the Massachusetts Bar Association. Boyle also served as President of the Association of Trial Lawyers of America (now the American Association for Justice), and is a fellow of the American College of Trial Lawyers.
R.J. Reynolds’ Shareholder’s Report from Winston-Salem: A “Good Year,” a Proposal to Merge and a Death Toll that Must Not Be Acknowledged
Monday, May 18th, 2015
By Edward L. Sweda, Jr.
Like clockwork, the 2015 Reynolds American (RAI) Annual Shareholders Meeting started precisely at 9:00 A.M. on Thursday May 7, 2015 at the company’s headquarters in Winston-Salem, North
Carolina. Seventy-five minutes later, the meeting was adjourned.
Before I could attend the meeting, I had to proceed through intense security, with machines provided by Security Detection, empty my pockets and hand over my camera to the RAI staff.
The meeting was held again in the company’s main auditorium that seats around 200 people. On the dais were the following representatives of RAI management: Thomas C. Wajnert, the Non-Executive Chairman of the Board, who ran the meeting; Dara Folan, Senior Vice President, Deputy General Counsel and Secretary; Mark Holton, Executive Vice President and General Counsel; Andrew Gilchrist, the Chief Financial Officer and Executive Vice President; and Susan M. Cameron, RAI’s President and Chief Executive Officer. After announcing the rules of conduct for the meeting and potential penalty for violation of the rules, Mr. Wajnert turned to Ms. Cameron for an overview of the company’s business performance for 2014. Curiously, Ms. Cameron began by noting that 2014, while being a “good year” for RAI, “seems a long time ago.” She cited some specifics of RAI’s 2014 performance, including Camel’s high market share and VUSE’s “successful national expansion.” She described RAI’s plans to acquire Lorillard Tobacco Company as the “Right Decision at the Right Time” that is still awaiting regulatory approval by the U.S. Federal Trade Commission. She also called on the U.S. Food and Drug Administration to adopt different regulations for e-cigarettes than for combustible cigarettes. Ms. Cameron made no mention of any of the company’s customers who died during 2014 from smoking-caused diseases.
Much of the remainder of the meeting dealt with farm labor issues. Many members of FLOC (the Farm Labor Organizing Committee of the AFL-CIO) were in the audience; they dominated the 30-minute question-and-answer session. While Mr. Wajnert admitted that “bad conditions exist” on tobacco farms in North Carolina, he claimed that “we are working with our growers” to try to remedy those conditions. FLOC representatives cited ongoing violations of child labor laws in the tobacco fields and emphasized that many of the farm workers were doing extremely hard and dangerous work for a minimum wage salary of $7.25 per hour. Another major grievance was the fact that RAI, despite its claims of transparency, continues to refuse to provide FLOC with a list of tobacco growers with which RAI has contracts to provide it the tobacco for its cigarettes.
During the question-and-answer session, I asked the following question on ongoing tobacco litigation.
“During last month’s RAI First Quarter Earnings Conference Call, Chief Financial Officer and Executive VP Andrew Gilchrist said that ‘a significant portion of our legal budget at this point is being spent on Engle.’ The Engle verdicts in Florida keep on coming. Just last week, a Florida jury returned a verdict of over $6 million for a plaintiff. Meanwhile the Boston Globe last month reported on an upsurge in tobacco product liability lawsuits being filed in Massachusetts – an upsurge that was spurred on by a recent state supreme court ruling that is favorable to plaintiffs.
“I have a two-part question. Would you clarify that when Mr. Gilchrist or other executives refer to the company’s legal budget, that it includes not just salaries of company lawyers and payments to local counsel but also the payment of judgments in cases where plaintiff verdicts have survived all appeals?
“Secondly, instead of using broad adjectives like ‘significant,’ would you give shareholders the specific dollar amount of the company’s legal budget and a breakdown by category of cases?”
In response, Mr. Holton said that the amount paid in judgments is not included in the “legal budget” category. He also said that the company provides overall amounts for the legal budget, though not broken down by category of cases, to the U.S. Securities and Exchange Commission.
Two shareholder resolutions were defeated. The first, supported by the North Carolina AFL-CIO, called on RAI’s Board of Directors to prepare a report “on the steps the Company has taken to reduce the risk of acute nicotine poisoning (‘Green Tobacco Sickness’) for farmworkers in the Company’s supply chain for tobacco. The report should include a quantitative summary of the results of the Company’s inspections of its suppliers.” The supporters of the resolution noted that children “who are under age 18 work as tobacco farmworkers in the United States and are exposed to Green Tobacco Sickness as an occupational risk. A 2014 Human Rights Watch report described symptoms of Green Tobacco Sickness in nearly three-quarters of 141 child tobacco workers, ages 7 to 17, who were interviewed and worked in North Carolina, Kentucky, Tennessee and Virginia in 2012 or 2013.”
The second resolution, which dealt with issue of forced labor in tobacco fields, was sponsored by the Province of St. Joseph of the Capuchin Order in Milwaukee, Wisconsin. Specifically, the proposal noted that, “with U.S. immigration reform stymied, undocumented workers (often the main workforce in many agricultural areas) can be exploited. In their country of origin they often must pay contract labor brokers thousands of dollars to cross our borders; once here, they often are under the control of other labor contractors in order to work on U.S. farms. This practice results in forms of forced and compulsory labor on many, if not most, U.S. farms, including tobacco farms.”
The proposal called on RAI’s Board of Directors to “create a policy that all its suppliers throughout its tobacco procurement supply chain verify (with independent monitoring) their commitment and compliance regarding non-employment, directly or indirectly, of laborers who have had to pay to cross the U.S. border to work or, once here, to work on U.S. farms.”
Father Michael Crosby presented the proposal and noted that currently RAI is financially benefitting from forced labor. That is a fundamental moral issue that must be addressed, he added.
In seconding this resolution, I noted that RAI’s opposition statement that the issue of forced labor is “an issue that should be addressed in a comprehensive manner as part of immigration reforms and policies at the national level” was technically true but amounted to an excuse to pass the buck since there is no likelihood that the current Congress will allow a comprehensive immigration reform bill to be voted upon, given the track record of the House majority in the last Congress.
So, in this regard as in so many other aspects of Reynolds American’s business, the status quo continues.
Friday, May 1st, 2015
On April 23, 2015, the Public Health Advocacy Institute submitted the following written comments concerning proposed regulations for electronic cigarettes issued by Massachusetts Attorney General Maura Healey:
April 23, 2015
Amber Villa, Assistant Attorney General
Consumer Protection Division
Office of the Attorney General
One Ashburton Place
Boston, MA 02108
Re: Massachusetts Attorney General Proposed Regulations of E-Cigarettes Retail Sales
Dear Assistant Attorney General Villa:
On behalf of the Public Health Advocacy Institute at Northeastern University School of Law (PHAI), I am writing in response to Attorney General Maura Healey’s
request for comment on the proposed regulation of e-cigarettes sales. We at PHAI are dedicated to protecting and improving public health through law and legal policy. We enthusiastically support the proposed regulations to reduce youth access to e-cigarettes.
The three-fold increase in e-cigarette use among middle and high school age youth from 2011 to 2013 demands a response.  Now a quarter of all high school age children and eight percent of middle school age children use e-cigarettes and do so regularly.  We appear to be watching tobacco become ‘cool again’ among youth, and this time it is e-cigarettes.
This alarming trend sadly is not surprising. E-cigarette advertisements appear everywhere, promoting brands like Blu, which suddenly have become as recognizable as Marlboro and Camel. Additionally, candy and other exotic flavored e-cigarettes are contributing to the growing popularity among youth. Tobacco industry documents discovered through litigation tell us that manufacturers used such flavors in the past to target sales at children.  Today, e-cigarette manufacturers may be doing the same thing with flavors like Cotton Candy, Sweet Tart and even Unicorn Puke.  Unicorn Puke is a mash-up of candy flavors.
PHAI applauds Attorney General Healey’s effort to stop the sale of e-cigarettes to children. Although some municipalities already established similar youth access
protections, many have not.  The thousands of retailers in these municipalities can legally sell to children of any age. Unattended vending machines and self-services displays, which lead to youth acquisition of tobacco products, are allowed. Even online retailers do not need to verify a buyer’s age, if the product is delivered anywhere in these cities and towns. Attorney General Healey’s proposed regulation would stop these retail practices.
The leadership shown by Attorney General Healey also challenges others to join her and develop a more comprehensive public health response to e-cigarette use. Our state legislators, state agencies, and public health partners working at the municipal level must also respond in a coordinated and sustained manner. The e-cigarette industry appears to be acting just like tobacco manufacturers did decades ago. Partly, this similarity can be explained by the fact that many cigarette manufacturers also manufacture e-cigarettes.  Another, perhaps more important reason we appear to be reliving the tobacco industry’s past is because we are letting it happen through our own inaction.
Consider just some of the differences in regulatory oversight. E-cigarette advertisements are on television and cable. Other tobacco products are not because it would be illegal. The 1998 Master Settlement Agreement, which prohibits the use of cartoons in tobacco advertising and tobacco brand sponsorships at youth oriented events, is not applied to e-cigarettes.  Candy and fruit-flavored cigarettes are prohibited,  but exotic flavored e-cigarettes are heavily promoted and sold in Massachusetts. We tax tobacco products to dissuade use and help pay for tobacco prevention programs.  There is no tax on e-cigarettes. We passed smoke-free workplace laws to protect against secondhand smoke exposure and to de-normalize smoking.  Except for a few municipalities,  no such equivalent protection exists for e-cigarette emissions.
Attorney General Healey takes a strong first step in establishing at least some proportionality in e-cigarette regulation compared to other tobacco products. Although initial research suggests that e-cigarettes are a less harmful alternative to traditional cigarettes, scientific research also tells us that e-cigarettes are not safe. Just last week, CDC Director Dr. Thomas Frieden stated that e-cigarettes are not safe, in part, because “research had found that nicotine harms the developing brain.”  In addition to a lifelong addiction to nicotine, exposing the young, developing brain to nicotine acts as a ‘gateway’ to other drug addictions. 
Additionally, e-cigarettes emit other constituents that should raise concerns for the public’s health. Monitoring of e-cigarette emissions has found varying levels of toxins and carcinogens in different brands and product types.  The range is broad. Some brands emit trace amounts of carcinogens, while other e-cigarette products, like refillable tank systems for example, can produce levels of formaldehyde comparable to combusted tobacco products.  Currently, there is no regulation of liquid or gel solution in e-cigarettes or how they are vaporized. Put simply, e-cigarettes are not a cessation product designed to end the harm caused by tobacco use or nicotine addiction.
PHAI would recommend one technical change in the proposed regulation. The regulations should not set “18 years of age” as the minimum sales age. Instead, the proposed regulations should use the minimum sales age set by the Legislature. Currently, that age is 18, but proposed state legislation would raise it to 21.  Several municipalities have already taken this step. 
Christopher Banthin, Esq.,
1 Intentions to Smoke Cigarettes among Never-Smoking U.S. Middle and High School Electronic Cigarette Users, National Youth Tobacco Survey, 2011-13, Nicotine & Tobacco Research, April 2015.
3 United States v. Phillip Morris, Inc., RJ Reynolds Tobacco Co., et al., 449 F.Supp.2d 1 (D.D.C. 2006).
4 Sabrina Tavernise, Use of E-Cigarettes Rises Sharply Among Teenagers Report Says, New York Times, April 17, 2015.
5 Donald Wilson, Municipal Tobacco Control Technical Assistance Program, Mass Municipal Ass’n (March 2015).
6 Big Tobacco Companies are Putting Big Warning Labels on Their E-Cigarettes, Washington Post, Sept. 29, 2014.
7 http://www.naag.org/naag/about_naag/naag-center-for-tobacco-and-public-health.php, visited on April 19, 2015.
8 21 U.S.C. § 387g.
9 Mass Gen Law. Ch 64C.
10 Mass. Gen Law. Ch. 270, Sec. 22.
11 Donald Wilson, Municipal Tobacco Control Technical Assistance Program, Mass Municipal Ass’n (March 2015).
12 Tavernise, supra, n. 4.
13 Eric Kandel, et al., A Molecular Basis for Nicotine as a Gateway Drug, New England Journal of Medicine, Vol. 371, Pp. 932-41 (2014).
14 US Food and Drug Administration. Final Report on FDA Analyses, May 4, 2009, available at http://www.fda.gov/downloads/Drugs/ScienceResearch/UCM173250.pdf
15 Matt Richtel, Some E-Cigarettes Deliver a Puff of Carcinogens, New York Times, May 3, 2014.
16 House Bill 2021, An Act Further Regulating the Sale of Tobacco Products to Teenagers, 189 General Court 2015.
17 Wilson, supra, n. 5.