Author Archives: Ed Sweda

About Ed Sweda

Edward L. Sweda, Jr., is Senior Attorney for the Tobacco Products Liability Project (TPLP), a project of PHAI. Having been active in tobacco control since 1979 with a particular focus on the legislative and litigation aspects of public policy, Mr. Sweda has worked to promote tobacco litigation and thereby force tobacco companies to bear legal and financial responsibility for the harm caused by the intended use of their products. Articles authored or co-authored by Mr. Sweda have appeared in Trial Magazine, the European Journal of Public Health, Indoor Pollution Law Report, the British Medical Bulletin, Tobacco Control and the New York State Journal of Medicine.

2018 Altria Group Annual Shareholders Meeting – A Time of Transitions

By Edward L. Sweda, Jr., Senior Attorney

It became clear in the months leading up to the May 17^th Annual Shareholders Meeting for Altria Group that 2018 would be a time for change for the company. In January, Chairman, CEO and President Martin Barrington publicly announced his intention to retire due to the approach of his 65^th birthday later in the year. At the shareholders meeting in Richmond, VA it was noted that 54-year-old Howard A. Willard III would become the next Chairman and CEO of the company while 47-year-old William F. Gifford, Jr. would become the Vice Chairman of Altria. But, as it was during the Philip Morris/Altria Group regimes of Hamish Maxwell, Geoffrey C. Bible, Michael A. Miles, Louis C. Camilleri and Martin J. Barrington, it is expected to be business as usual.

For this author, completing this annual trip to Virginia’s capital was unlike any of the more than two dozen such trips he has made. As I addressed the meeting on an overcast Thursday morning in Richmond, I noted that this meeting “is the first Altria Group Shareholders Meeting taking place since the death of Father Michael Crosby. He passed away last August, eight months after his diagnosis with cancer. And I just wanted to state and I think this is certainly a very appropriate setting for me to state my enormous admiration and respect for Father Crosby. I met him actually in the early 1990s coming to shareholder meetings when the company was called Philip Morris, and also going to the Reynolds meetings in Winston-Salem. He was just without any flaw in terms of his total dedication to social justice, inspired by his devotion to his Catholic faith and, of course, he was a Capuchin father for many, many years. So, I just wanted to note that most certainly, I could not possibly be here without thinking of and respecting his memory.”

Citing five separate litigation setbacks for the tobacco industry that occurred just within the past three months, I asked Mr. Barrington, “isn’t it true that the value of Altria shares has been diminished by the uncertainties and concern about tobacco litigation?” In response, Mr. Barrington did begin by seconding my comments about Father Crosby and noted that the company had reached out to his family after his death. As to the issue of litigation and stock price, Mr. Barrington denied a link, alleging that Altria’s shareholders “should feel good about the way the company’s handled litigation.”

Before, during and after the meeting at the Greater Richmond Convention Center , dozens of youth from Reality Check of New York and No Limits Nebraska exercised their First Amendment rights by demonstrating forcefully outside the building with the resounding message: People Over Profits. Other slogans included “Say Yes to Life, No to Altria” and “We’ve Seen Enough.”

Austin Ring, a Senior at Olean (NY) High School entered the meeting and asked a question on the company’s advertising and packaging of tobacco products. He noted that the “three most heavily advertised brands in America – Marlboro, Newport and Camel – were the preferred brands of cigarettes smoked by middle school and high school students. So, my question is, what is Philip Morris doing to decrease the appeal of its products to youth?” In response, Mr. Barrington referred the questioner to the company’s website and specifically claimed that the company does “not make our packaging to look like the other products” [such as mint, gum and beef jerky products].

Emma Stewart, a Senior at Plattsburgh (NY) High School, addressed the problem of the 4.5 trillion cigarette filters that are littered worldwide each year. She recommended the adoption of smoke-free policies for outdoor spaces as one way to reduce such litter. Mr. Barrington responded that the fight against litter could be viewed as a totally separate issue from the question of adopting smoke-free policies outdoors, which the company opposes.

Justin Flores, the Vice President of the Farm Labor Organizing Committee (FLOC) and a colleague, Jackie Castillo, addressed the problem of farm conditions having gotten worse for FLOC’s members.

Sister Nora Nash

The one shareholder resolution was sponsored by the Sisters of St. Francis of Philadelphia. The resolution called on the Board of Directors to “take steps to preserve the health of its tobacco-using customers by making available to them information on the nicotine levels for each of our cigarette brands and begin reducing nicotine levels in our brands to a less addictive level.” In support of the resolution, Sister Nora Nash urged the company to “play a more significant role in protecting young Americans against the severe health effects of tobacco.” She also noted that Mr. Barrington in November 2017 had said that “Altria is ready for the introduction of reduced {risk] cigarette products.” Moreover, Mr. Barrington had admitted that Altria has “developed ways of producing reduced nicotine cigarettes and aspire to become the U.S. market leader in non-combustible tobacco products such as the e-cigarettes, ahead of potential federal requirements for tobacco.” She concluded by stating that the Sisters of St. Francis and other supporters of the resolution “are about protecting families and reducing the risk, the FDA and all concerned shareholders are looking at how we can protect the American family and all who have serious issues with nicotine.”

The resolution got 4% voting in favor, with 96% in opposition.

As I left downtown Richmond after the 2018 shareholders meeting, I realized that it was not only Altria Group, Inc. that was undergoing transitions. For I had seen that, in addition to middle-aged adults who were speaking truth to power, there was an energetic and passionate group of youth who were ready, willing and able to do the same. In that regard, even if they had never met him, the dozens of youth were indeed carrying on the legacy of Father Michael Crosby.

Author with Youth Activists

Spending 45 Minutes with 80 of My Fellow Altria Shareholders

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.

Barrington

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 2^nd 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.”

Sweda with Reality Check NY

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!”

May 5, 2016 – a RAIny day in Winston-Salem

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

Cameron with a “digital vapor cigarette”

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

Edward L. Sweda, Jr.

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.

FLOC demonstration