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Archive for the ‘Tobacco Litigation’ Category

Snowflakes Are Found in 84 Degree Richmond: The 2017 Altria Group Annual Shareholders Meeting

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:

  1. Tobacco Harm Reduction;
  2. Marketing;
  3. Supply Chain Responsibility; and
  4. Employees.

The company’s strategies are:

  1. Maximize income from core tobacco businesses over the long term;
  2. Grow new streams with innovative tobacco products (including MarkTen XL, the “fastest growing e-vapor brand” in the last quarter of 2016); and
  3. 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’s Daynard Discusses Tony Gwynn Lawsuit on ESPN and in the New York Times

Tuesday, May 24th, 2016

gwynn_family_griefOn 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.



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

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

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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

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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.

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FLOC demonstration



Florida jury awards $13 million to children of a smoker who died from lung disease after smoking for decades.

Saturday, April 23rd, 2016

Complete story on Law 360



Philip Morris ordered to pay Massachusetts smokers of Marlboro Lights $15 million for false claim that the cigarettes had “lowered tar and nicotine” than Marlboro Reds

Friday, February 19th, 2016

Visit Social Law for the complete story.



Tobacco Company pays family of deceased Boston smoker $79 million to settle wrongful death claim

Monday, January 18th, 2016

For complete information, visit http://www.phaionline.org/tag/lorillard/



Jury awards widower $10 million in the death of wife who suffered lung cancer due to smoking

Wednesday, December 23rd, 2015

Complete story on Law360



Florida woman awarded $20 million in punitive damages after suffering with COPD for years

Friday, January 16th, 2015

For complete information, visit LexisNexis




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