Tag Archives: Lorillard

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

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

Ed Sweda

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.

Wajnert

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.

 

PHAI Takes Cigarette Companies to Court

For Immediate Release
Contact:  Mark Gottlieb  –  617-373-2026

       The Public Health Advocacy Institute (“PHAI”) announced today that its newly formed Center for Public Health Litigation has filed lawsuits against two major tobacco companies and several local distributors on behalf of the families of two former smokers who suffered devastating disease from smoking cigarettes.

“This is the first time a non-profit organization has directly taken on the tobacco industry in court,” said Richard Daynard, University Distinguished Professor at Northeastern University School of Law and the President of PHAI.  “Big Tobacco kills more than 50% of the people who buy its products, and it has for years tried to deny its legal responsibility for this public health calamity. The Center for Public Health Litigation is going to ask the Massachusetts courts to hold the tobacco companies accountable in these two cases, and in more cases to be filed soon.”

The two cases were filed yesterday afternoon in the Middlesex Superior Court in Woburn. The first was brought for the family of James E. 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.  Mr. Flavin had tried repeatedly to quit smoking, using almost every method he could find, including

James E. Flavin, Jr.

James E. Flavin, Jr.

nicotine patches, hypnosis, and numerous other cessation products.  The companies named as defendants in Mr. Flavin’s case are Lorillard Tobacco Company, manufacturer of Newport cigarettes, and two local distributors, Garber Bros, Inc. of Stoughton and Albert H. Notini & Sons, Inc. of Lowell.

The second case was brought for Patricia Greene, a Newton realtor, who was diagnosed with lung cancer in 2013, even though she had stopped smoking 25 years earlier.  Ms. Greene, like many others, had begun smoking as a result of being given free Marlboro cigarettes in downtown Boston when she was a teenager.  The companies named as defendants in Ms. Greene’s case are Philip Morris USA, Inc., manufacturer of Marlboro, and Star Markets Company, Inc. of West Bridgewater, owner of the store where Ms. Greene bought her cigarettes for years.

According to Andrew Rainer, the Director of the Center for Public Health Litigation, “Massachusetts is now the best state in the country in which to bring suit against the manufacturers and sellers of cigarettes, because of a 2013 ruling by the Massachusetts Supreme Judicial Court.”  In that 2013 case, Evans v. Lorillard Tobacco Co., the Court ruled that a manufacturer of cigarettes could be held responsible for the death of one of its customers, because it could have manufactured a cigarette that was safer and less addictive, but chose not to. The high Court’s decision also upheld an award of damages to the deceased customer’s family of $35 million plus interest. The case was later settled for $79 million.

###

Download Flavin v. Lorillard complaint.
Download Green v. Philip Morris complaint.

PHAI’s Center for Public Health Litigation Launches Ad Campaign Seeking Cigarette Industry Victims

The Center for Public Health Litigation, a project of the Public Health Advocacy Institute at Northeastern University School of Law, has launched an advertising campaign in Massachusetts to help inform victims of cigarette companies of their legal rights.   While Massachusetts is the best state in the nation to hold cigarette makers responsible in court for the decades of damage they have done after two landmark rulings from the state’s highest court, few Massachusetts victims realize that they are in a position to find some measure of justice in the courtroom.

The Center for Public Health Litigation seeks to inform victims of their rights and, where possible, provide or find legal representation to hold the industry liable.  The ad, reproduced below, will appear in newspapers and other media over the next several weeks.  It makes references to the $79 million payment by Lorillard Tobacco Company to the family of lung cancer victim Marie Evans.

Unlike other advertising by trial lawyers, this is an effort by a non-profit public health-committed organization. It is one of several public health legal initiatives being undertaken by PHAI’s new Center for Public Health Litigation.

Historic $79 Million Cigarette Settlement Signifies Beginning of Wave of Tobacco Cases in Massachusetts

If you someone in your family was recently harmed by smoking, please see our cigarette lawsuit information page.

Boston

FOR IMMEDIATE RELEASE

CONTACT: Mark Gottlieb – 617-373-2026

Massachusetts is now the most favorable state in the country to bring a cigarette smoking personal injury case.  A Massachusetts Tobacco Case Information Hotline has been established for victims of smoking and their families to learn more at: 888-991-8728 or here at www.MATobaccoCase.com.

Today’s announcement in Lorillard’s 8K SEC filing of a $79 million settlement for compensatory damages and interest and conclusion of Evans v. Lorillard Tobacco Co. marks the end of the first tobacco trial in Massachusetts since 1990.  Much has changed since then.

In 1994, a torrent of extraordinarily damaging documents from the cigarette companies’ internal files laying out how the companies hid what they knew about the dangers of their products from customers and government became available to the public.

  • Whistleblowers came forward offering their testimony of what they saw.
  • Congress held embarrassing hearings where cigarette company CEOs blatantly lied under oath on national television.
  • States sued cigarette manufacturers for billions of dollars lost treating sick smokers on Medicaid.

After years of constant litigation and public disclosure of the industry’s bad behavior, in 2006, a federal judge issued a scathing opinion detailing in 1,500 pages of factual findings the industry’s improper activities and finding them liable for racketeering.

These developments have transformed the tobacco litigation landscape.  In Florida, under special rules subsequent to the dismissal of a class action, 71 out of 104 individual tobacco trials held over the past 4 years have resulted in verdicts for the plaintiff.  But the most important state for tobacco litigation is not Florida. It’s Massachusetts.

Massachusetts, benefitting from the combination of two key rulings by the Supreme Judicial Court, is the best state in the nation for litigation against cigarette manufacturers.

In Haglund v. Philip Morris (847 N.E. 2d 315 (2006)), the Massachusetts Supreme Judicial Court unanimously rejected the tobacco industry’s blame-the-smoker-for-smoking defense.  This is the only court opinion in the country that has squarely held that, as a matter of law – except in extremely rare and unlikely cases – the so-called “personal choice defense” is unavailable to the tobacco companies.  The Court wrote that, “If Philip Morris chooses to market an inherently dangerous product, it is at the very least perverse to allow the company to escape liability by showing only that its product was used for its ordinary purpose.”  The affirmative defense that the smoker’s behavior was unreasonable or should have known the risks is not available in Massachusetts.

In this past June’s Supreme Judicial Court ruling in the case announced as settled today, Evans v. Lorillard (465 Mass. 411 (2013)), the Court held that Lorillard breached the implied warranty of merchantability and that cigarettes that were addictive and caused disease were not fit to be sold in Massachusetts.  This rendered virtually every cigarette sold here as defective. The Court reasoned, “We decline to place addictive chemicals outside the reach of product liability and give them special protection akin to immunity based solely on the strength of their addictive qualities.  . . . Rather, we conclude . . . that a reasonable jury could find from the evidence presented that a low tar, low nicotine cigarette constituted a safer reasonable alternative to Lorillard’s Newport cigarettes.”

By “low tar, low nicotine cigarette,” the Court is not referring to brands that were deceptively marketed as “light cigarettes.”  Rather it means cigarettes that do not addict and expose consumers to an array of carcinogens. While the cigarette companies could have sold such products, virtually no cigarettes sold in Massachusetts utilized such a reasonable alternative to the deadly and addictive products that have been so lucrative for Philip Morris, R.J. Reynolds, Lorillard, Brown and Williamson, American Tobacco Co., or Liggett for so long.

As the book closes on Evans v. Lorillard, a new era of tobacco litigation based in Massachusetts is about to begin.  Individuals and family members of those who have suffered from a cigarette-caused illness such as lung cancer, COPD, Buerger’s disease or bladder cancer, to name a few, should contact the Massachusetts Tobacco Case Information Hotline at 888-991-8728 to learn more about their legal rights.  They can also contact the Hotline via the web here.

Mark Gottlieb, Director of the Public Health Advocacy Institute, at Northeastern University School of Law noted that, “The time for so many tobacco industry victims in Massachusetts to come forward to hold the industry responsible is finally here.”

Edward Sweda, Senior Attorney for the Institute stated, “The state of the law in Massachusetts, as set forth by the Supreme Judicial Court, is that any cigarette that addicts or maintains the nicotine addiction of consumers is defective. This is great news for smokers who seek legal redress from the companies that put these defective products on the market. Conversely, it is disastrous news for the cigarette companies.”

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Lorillard Inc., v. United States Food and Drug Administration, No. 11-440

On February 21, 2011, Lorillard Tobacco Company and R.J. Reynolds Tobacco Company filed a complaint[1] against the FDA in the United States District Court for the District of Columbia challenging the composition of the Tobacco Products Scientific Advisory Committee (“TPSAC”) and alleging that TPSAC failed to comply with the Federal Advisory Committee Act (“FACA”). TPSAC was formed immediately following the passage of the Family Smoking Prevention and Tobacco Control Act (“Tobacco Act”). TPSAC was charged with researching the health effects of menthol in cigarettes and reported to the FDA that mentholated cigarettes adversely affected public health, and that their removal from the market would benefit public health.[2]

In their complaint, the tobacco companies allege that three members of TPSAC have financial and appearance conflicts of interest stemming from their continued service as paid expert witnesses in anti-tobacco litigation, as well as their continued employment for pharmaceutical companies that manufacture smoking-cessation products.[3] The tobacco companies argue that this creates an unbalanced committee representing only one set of viewpoints that are against smokeless tobacco products and menthol in cigarettes.[4]

Lorillard and R.J. Reynolds alleged injuries include disclosure of confidential information to conflicted committee members who could use it to testify for parties adverse to them, that the conflicted members have the ability to shape the TPSAC report to help with their work as expert witnesses, that Lorillard lost 2 billion in shareholder value, and that their procedural right to fair decision making was violated.[5] The companies are seeking declaratory relief that the three committee members violated FACA, as well as an injunction preventing the FDA from receiving or considering any suggestions from TPSAC pending the result of this litigation.[6]

On April 29, 2011, the FDA moved to dismiss the suit for lack of subject matter jurisdiction and failure to state a claim. The FDA argued that the tobacco companies lacked standing to challenge the committee’s composition because their alleged injuries were speculative, not traceable to the FDA, and were unlikely to be redressed by the court.[7] Furthermore, the FDA argued that any conflicts of interest are within FDA discretion and are not subject to judicial review.

On August 1, 2012, the U.S. District Court for the District of Columbia denied the FDA’s motion in its entirety.[8] The court held that Lorillard and R.J. Reynolds pled sufficient injuries and that the conflicts of interest are justiciable by the court.[9] Due to the limited number of viewpoints regarding tobacco issues and the scientific, rather than political, nature of the issues, the court determined they are equipped with sufficient standards against which it can assess the committee’s objectiveness.[10] With the denial of the FDA’s motion to dismiss, the tobacco companies are able to proceed with their suit.

On July 21, 2014, Judge Richard Leon granted Lorillard’s Motion for Summary Judgment to bar the Committee’s menthol report from consideration and orders the agency to reconstitute the Committee.  The judge found that the, “the Committee’s findings and recommendations, including reports such as the Menthol Report, are, at a minimum, suspect, and, at worst, untrustworthy.”[11]  The FDA has not yet announced whether it would appeal the ruling.

The FDA appealed Judge Leon’s ruling to the U.S. Court of Appeals for the DC Circuit which reversed the District Court’s ruling in a January 16, 2016 decision.  [12]   The Court considered the plaintiff/appellee’s  three alleged injuries and found none of them to be imminent enough to confer standing.  It, therefore, vacated the District Court’s judgment for lack of standing and dissolved Judge Leon’s injunction preventing the agency from utilizing the Menthol Report issued by the Tobacco Products Scientific Advisory Committee.

2012 Summary by Katelyn Blaney, updated by Mark Gottlieb in 2016.

[2] The Tobacco Products Scientific Advisory Committee, Menthol Cigarettes and Public Health: Review of the Scientific Evidence and Recommendations, Chapter 8, p. 220 (March, 2011).

[3] 2d Amended Complaint at ¶ 2, Lorillard, Inc. v. U.S. Food & Drug Admin., No. 11-440 (RJL), 2012 WL 3542228 (D.D.C. 2012).

[4] Id. at ¶ 3.

[5] Lorillard, Inc v. United States Food & Drug Admin., No. 11-440 (RJL), 2012 WL 3542228, at *2 (D.D.C. 2012).

[6] Id. at ¶ 4.

[7] Lorillard, No. 11-440 (RJL), 2012 WL 3542228, at *2 (D.D.C. 2012).

[8] Id. at *1.

[9] Id. at *2.

[10] Id. at *2.

[11]  Lorillard Inc v. United States Food and Drug Administration, Civil Action No. 2011-0440 (D.C. 2014) District Court, District of Columbia.

[12] RJ Reynolds Tobacco v. US FOOD AND DRUG ADMIN. 810 F. 3d 827 – Court of Appeals, Dist. of Columbia Circuit 2016.

Disc. Tobacco City & Lottery, Inc. v. United States

In August, 2009,  tobacco manufacturers and sellers[1]  brought suit[2] in the United States District Court for the Western District of Kentucky against the FDA, challenging provisions of the Family Smoking Prevention and Tobacco Control Act (“Tobacco Act”). In a case previously known as Commonwealth Brands, Inc v. United States, plaintiffs challenged the following requirements as violations of their First Amendment free speech protections, and sought a preliminary injunction barring the FDA from enforcing them, as well as a judgment declaring the provisions unconstitutional:

Graphic Warning Requirement: Tobacco manufacturers must reserve a portion of tobacco packaging for health warnings and graphic images

  • Restrictions on commercial marketing of “modified risk” tobacco products
  • Ban of statements that express or imply tobacco products are safer due to FDA regulation
  • Ban the distribution of free samples of tobacco products, brand-name tobacco sponsorship of anything non-tobacco related, brand-name merchandising of non-tobacco products, and distribution of free items in consideration of a tobacco purchase (“continuity programs”)
  • Tobacco advertisements can only consist of black text on a white background

In Commonwealth Brands,[3] the District Court granted partial summary judgment in favor of the tobacco industry, holding both the color restrictions on their advertisements and the ban on safer product claims due to FDA regulation to be unconstitutional violations of the First Amendment. The District Court granted summary judgment in favor of the United States for every other challenged provision holding them to be constitutional. Both parties appealed this judgment to the Sixth Circuit Court of Appeals.

On March 29, 2012 a three-judge panel for the Sixth Circuit Court of Appeals upheld every contested provision of the Tobacco Act as constitutional, except for the restriction on the colors used in tobacco advertisements and the ban on continuity programs.[4]

Graphic Warning Requirement: In a 2-1 decision, the Court of Appeals held the graphic warning requirement to be constitutional. Arriving at this decision, the court distinguished between the Zauderer and Central Hudson standards of review for infringements on commercial speech, asserting that the former is reserved for disclosure requirements and the latter for prohibitions on speech.[5] The court viewed the graphic warnings as disclosures of factual information about the health risks of tobacco and, as such, evaluated them against Zauderer.[6] The Zauderer standard permits disclosure requirements as an infringement on commercial speech if they are reasonably related to the government’s interest in preventing consumer deception.[7] The court held that the graphic warning requirement was reasonably related to the FDA’s interest in preventing consumers from being mislead about the health risks of tobacco. The court noted the tobacco industry’s history of deceiving consumers about the health risks and addictiveness of tobacco, as well as the ineffectiveness of the current warnings on cigarette packaging, to hold that the graphic warnings are reasonably related to preventing consumer deception.[8]

The Court viewed the remaining provisions of the Act as prohibitions on speech and measured them against the Central Hudson standard. In order for restrictions on commercial speech to pass Central Hudson and be deemed permissible under the First Amendment, the government must assert a substantial interest in limiting the speech and the means by which they limit it must be narrowly tailored, meaning the government must use the least restrictive methods to further their interest.[9]

Restrictions on marketing “modified risk” tobacco products and the ban on implying tobacco product safety due to FDA regulation: Similar to the graphic warning requirement, the Court of Appeals found the government’s interest in preventing the tobacco industry from making fraudulent claims about the health effects of cigarettes to be substantial enough to satisfy the first prong of Central Hudson.[10] Under the Tobacco Act, in order for tobacco companies to market a product as “modified risk,” the FDA must first determine that the product will actually reduce the harm and risk of tobacco-related disease, taking into account first and second-hand smoke.[11] The court found the pre-approval of “modified risk” health claims to be sufficiently narrowly tailored to further the government’s interest in preventing consumer deception.[12] The Court of Appeals also held that the prohibition of claims that a tobacco product is safer, or less harmful, due to FDA regulation is narrowly tailored to prevent consumer deception. The Appellate Court, reversing the District Court on this count, saw this as a narrow infringement on the tobacco industry’s commercial speech that would otherwise mislead consumers into thinking the FDA endorses cigarettes and tobacco related products.[13]

 Ban on free samples of tobacco products and the ban on brand-name sponsorship and merchandising for non-tobacco related products: For these provisions of the Tobacco Act, the Court of Appeals found the government’s interest in curbing juvenile tobacco use to be substantial enough to limit the commercial speech of the tobacco industry.[14] The FDA produced considerable evidence showing that these specific marketing techniques reached an overwhelming number of juveniles. Based on this evidence, the Court found the ban on free samples of tobacco products, as well as the ban on any brand-name tobacco sponsorship of anything non-tobacco related, to be narrowly tailored to prevent juvenile tobacco use.[15]

Color restrictions in tobacco advertisements and the ban on continuity programs: Although the court decided that the government’s interest in protecting consumer deception was substantial, the court held that color restrictions of tobacco advertisements were too overbroad to further that interest.[16] The court stated that the government could have chosen less restrictive means to limit deceptive advertising, such as prohibiting specific images or phrases, rather than limiting them to black text on a white background.[17]

Furthermore, the court held that the tobacco industry’s continuity programs, in which companies offer benefits to existing customers, did not narrowly fit the government’s substantial interest of limiting juvenile tobacco use. The Appellate Court, reversing the District Court, relied on evidence which showed that most existing tobacco users are adults, thus, limiting the continuity programs would not have a material effect on curbing juvenile tobacco use.[18]

After the ruling in this case the tobacco industry petitioned for a Writ of Certiorari asking the Supreme Court to review the ruling (American Snuff Co v. United States). The Plaintiff’s Writ of Certiorari was denied on April 22, 2013.

Summary by Katelyn Blaney

[1] Discount Tobacco City & Lottery, Inc., Lorillard Tobacco Company, National Tobacco Company, L.P., R.J. Reynolds Tobacco Company, Commonwealth Brands, Inc., & American Snuff Company, LLC.

[4] Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509, 518 (6th Cir. 2012).

[5] Id. at 552.

[6] Id. at 558.

[7] Id. at 555.

[8] Id. at 562-63.

[9] Id. at 534.

[10] Id. 534-36.

[11] Id. at 531.

[12] Id. at 536-37.

[13] Id. at 551.

[14] Id. at 541.

[15] Id. at 541-43.

[16] Id. at 548.

[17] Id.

[18] Id. at 544.

Massachusetts Supreme Judicial Court rules that all cigarettes sold in Massachusetts are defective

FOR IMMEDIATE RELEASE

CONTACT: Edward L. Sweda, Jr. or  Mark Gottlieb

617-373-8462 or 617-373-2026

 2010 Verdict Reflected Juror Outrage at Handouts of Free Cigarettes to Children.

 

Marie Evans at the age Lorillard began handing her free samples of Newports

Marie Evans at the age Lorillard began handing her free samples of Newports

The SJC today unanimously rejected Lorillard Tobacco Co.’s attempt to evade liability in a case brought by Willie Evans, whose mother Marie died in 2002 at the age of 54.  Testimony at trial reported that while Marie was a child growing up in the Orchard Park housing project in the Roxbury neighborhood of Boston, she received free samples of Newport cigarettes.   Marie, who first received the free samples of Newport cigarettes when she was 9 or 10 years of age, became addicted by the time she was 13, according to lawyers for her son, Willie Evans.

Newport, which is Lorillard’s best-selling brand of cigarettes and contains menthol, has been heavily marketed toward the African-American community, a fact that was highlighted at the 2010 trial.

In today’s ruling the Massachusetts high court upheld the compensatory damages of $35 million but reversed a punitive damages award of $81 and sent the case back for a new trial on the issue of punitive damages. The Court found that the jury was not adequately instructed about the negligence claims pertaining to design and marketing.

However, the key finding was that the Court upheld the jury’s finding that Newport cigarettes were not fit to be sold in  Massachusetts (breaching the implied warranty of merchantability).

Lorillard could have and should have sold a safer alternative product that did not addict Ms. Evans and cause her lung cancer. The Court wrote:

We decline to place addictive chemicals outside the reach of product liability and give them special protection akin to immunity based solely on the strength of their addictive qualities.  . . . Rather, we conclude that, in determining as a matter of law whether the evidence presented at trial was sufficient for a reasonable jury to conclude that the plaintiff’s proposed design was a reasonable alternative to the defendant’s product, we must determine whether the design alternative unduly interfered with the performance of the product from the perspective of a rational, informed consumer, whose freedom of choice is not substantially impaired by addiction. Applying that standard to the evidence in this case, we conclude that a reasonable jury could find from the evidence presented that a low tar, low nicotine cigarette constituted a safer reasonable alternative to Lorillard’s Newport cigarettes. (emphasis added)

By “low tar, low nicotine cigarette,” the Court is not referring to brands that were deceptively marketed as “lights.”  It means cigarettes that do not addict and expose consumers to an array of carcinogens. As a matter of law in Massachusetts, any cigarette sold that addicts or maintains the nicotine addiction of consumers is defective.  That would include just about every cigarette sold in Massachusetts.

Mark Gottlieb, Director of the Public Health Advocacy Institute (PHAI), which is based at Northeastern University School of Law in Boston, was delighted with today’s ruling: “Florida has been a hotbed of tobacco litigation in recent years because cigarettes there are considered defective as a matter of law for a former class of addicted smokers.  About 8,000 cases are awaiting trial in Florida.  After today’s ruling, this is  now the law in Massachusetts with the important difference that it applies to every plaintiff victim of cigarette industry products.  I expect many more cases here to help to address the suffering of victims like Marie Evans who were needlessly addicted in their youth to a deadly product.”

Edward L. Sweda, Jr., Senior Attorney for PHAI, added that, “It is high time that Lorillard is forced to pay the Evans family for the suffering caused by its outrageous practice of giving away deadly and addictive Newport cigarettes to children near housing projects.  This company’s profiteering for decades on the backs of African Americans must come to an end and today’s ruling is an important step in that process.”

PHAI’s Friedman and Gottlieb Co-author: “Soda and Tobacco Industry Corporate Social Responsibility Campaigns: How Do They Compare?” in PLoS Medicine

PHAI senior staff attorney Lissy Friedman and executive director Mark Gottlieb collaborated with Lori Dorfman, Andrew Cheyne and Asiya Wadud of the Berkeley Media Studies Group to produce this article published today in PLoS Medicine.

Soda companies’ PR campaigns are bad for health:

Health advocates need to organize strong public health campaigns to educate the public and policymakers about the dangers of both sugary beverages and the misleading industry corporate social responsibility campaigns that distract from their products’ health risks, according to US experts writing in this week’s PLoS Medicine.

In a Policy Forum article, the authors (media and public health experts from the Berkeley and Boston, USA) examined prominent campaigns from industry leaders PepsiCo and Coca-Cola, that, according to the authors, have embraced corporate social responsibility (CSR) with elaborate, expensive, and multinational campaigns.

The authors say that while soda companies may not face the level of social stigmatization or regulatory pressure that now confronts Big Tobacco, concern over soda and the obesity epidemic is growing.

In response to health concerns about their products, the authors argue that soda companies have launched comprehensive CSR initiatives sooner than did tobacco companies but that these campaigns echo the tobacco industry’s use of CSR as a means to focus responsibility on consumers rather than the corporation, bolster the companies’ and products’ popularity, and to prevent regulation.

However, unlike tobacco CSR campaigns, soda company CSR campaigns explicitly target young people and aim to increase sales.

The authors say: “It is clear that the soda CSR campaigns reinforce the idea that obesity is caused by customers’ “bad” behavior, diverting attention from soda’s contribution to rising obesity rates.” They continue: “For example, CSR campaigns that include the construction and upgrading of parks for youth who are at risk for diet-related illnesses keep the focus on physical activity, rather than on unhealthful foods and drinks. Such tactics redirect the responsibility for health outcomes from corporations onto its consumers, and externalize the negative effects of increased obesity to the public.”

The authors argue: “Emerging science on the addictiveness of sugar, especially when combined with the known addictive properties of caffeine found in many sugary beverages, should further heighten awareness of the product’s public health threat similar to the understanding about the addictiveness of tobacco products.”

They conclude: “Public health advocates must continue to monitor the CSR activities of soda companies, and remind the public and policymakers that, similar to Big Tobacco, soda industry CSR aims to position the companies, and their products, as socially acceptable rather than contributing to a social ill.”

This article is one in a PLoS Medicine series on Big Food that examines the activities and influence of the food and beverage industry in the health arena. The series runs for three weeks beginning 19 June 2012 and all articles will be collected at www.ploscollections.org/bigfood. Twitter hashtag #plosmedbigfood

Funding: This research was supported by the Healthy Eating Research program (http://www.healthyeatingresearch.org/) of the Robert Wood Johnson Foundation, grant #68240. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Download the article here.

Jury in Miami Assesses $25 Million in Punitive Damages Against Tobacco Firm in an Engle Progeny Trial

FOR IMMEDIATE RELEASE

Contact: Edward L. Sweda, Jr. (617) 373-8462

A Florida state jury today assessed $25 million in punitive damages against Lorillard Tobacco Co. for its reprehensible misconduct involving the lung cancer death of Coleman Alexander.  His widow Dorothy, a retired nurse who brought a wrongful death lawsuit against the company, was awarded $20 million in compensatory damages last week.

Edward L. Sweda, Jr., Senior Attorney for the Public Health Advocacy Institute (PHAI) which is based at Northeastern University School of Law in Boston, was delighted by the jury’s verdict.  “This jury was justifiably outraged by the reprehensible behavior of Lorillard, whose actions were found to be a legal cause of Mr. Alexander’s death from lung cancer,” Sweda said.  “The award is absolutely appropriate given the facts of what Lorillard has done,” he added.

Mark Gottlieb, who directs PHAI, noted that, “the liability shadow hanging over the cigarette industry won’t go away with thousands of more cases lined up for trial in Florida and beyond.”

Coleman Alexander died in 1995 from small cell lung cancer after having smoked for more than 40 years.  One of the brands he had smoked, Kent, was manufactured by Lorillard.  The jury last week found that Mr. Alexander was addicted to cigarettes containing nicotine and that his addiction was a legal cause of his death.

Since February 2009, verdicts (not counting mistrials) in Engle Progeny trials in Florida have been 41 for plaintiffs and 19 for the tobacco companies, for a winning percentage for the plaintiffs of 68.3%.  One of those 41 plaintiff verdicts has been overturned on appeal.

Dorothy Alexander is represented by Alex Alvarez of the Alvarez Law Firm, by Gary Paige of the Paige Law Firm and by Jordan Chaikin of Parker Waichman LLP.  The case is The Estate of Coleman Alexander v. Lorillard Tobacco Co., case number 2007-046830-CA-01.

The Public Health Advocacy Institute (PHAI) is based at Northeastern University School of Law in Boston, MA. PHAI is an independent federally recognized non-profit charity.

$17.3 million verdict against Lorillard in Jacksonville, FL

FOR IMMEDIATE RELEASE
Contact: Edward L. Sweda, Jr. or Mark Gottlieb (617)373-8462 or (617)373-2026

A jury awarded the family of a smoker who died of lung cancer in 1994 at the age of 63 a total of $6 million in compensatory damages. The jury assessed Lorillard Tobacco Company 65% responsibility for the death of Jacqueline Miller and 35% to Ms. Miller. This means that the compensatory damages award will be reduced by 35% while the punitive damages award will not.   Therefore, Lorillard is liable for $15.2 million plus interest for the wrongful death.

Starting smoking while in high school in the 1940s, two decades before health warnings appeared on cigarette packages, Jacqueline Miller smoked Lorillard’s brands Old Gold, Kent and Max. The lawsuit was brought by her daughter, Michelle Mrozek.  The case is: Mrozek v. Lorillard.

Representing the family is Attorney Bruce Anderson of the Jacksonville law firm Terrell Hogan.

Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project (TPLP), which is based at Northeastern University School of Law in Boston, was delighted with today’s verdict. “Once again, a Florida jury has heard all the evidence in a tobacco trial and rendered a significant verdict for the plaintiff on behalf of a woman who was clearly addicted to nicotine, right up until her death from lung cancer. In addition, and not surprisingly, the jury assessed punitive damages as well to punish and deter Lorillard’s reprehensible conduct .”

Of the Engle Progeny trials that have reached a verdict, 25 out of 36 such verdicts have been for the plaintiffs.