Posts Tagged ‘Philip Morris’
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.
Monday, June 1st, 2015
By Edward L. Sweda, Jr.
There are 8,760 hours in any given year (excluding leap years). The management of Altria Group, Inc. used just under one of those 8,760 hours to conduct its 2015 Annual Shareholders’ Meeting at the Greater Richmond Convention Center in Richmond, Virginia on the morning of May 20th. The meeting began precisely at 9:00 A.M. and was adjourned at 9:57 A.M.
In his business presentation, Altria Group, Inc. Chairman, CEO and President Martin J. Barrington reported that “2014
was a very strong year for Altria and its shareholders,” that “Marlboro achieved record retail share of 43.8%, larger than the next ten brands combined” and Altria “delivered shareholder return of over 34%, far outpacing the S&P 500 and the S&P Food, Beverage and Tobacco Index.” Addressing an important concern in Washington, Mr. Barrington stated that Altria believes that the U.S. Food and Drug Administration “has an unprecedented opportunity to advance public health goals by recognizing that some types of tobacco products may have significantly lower risk compared to cigarettes.”
During the Question and Answer session, I asked the following question:
“According to Altria Group’s most recent form 10-K filed with the SEC ‘an unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages claimed in some tobacco-related or other litigation are significant and, in certain cases, range in the billions of dollars.’ Just last month, the Boston Globe reported on an upsurge of tobacco product liability lawsuits that have been filed in Massachusetts, spurred on by a recent ruling from the state’s Supreme Judicial Court that is favorable to plaintiffs in those cases. Moreover, Altria’s Form 10-K also states on page 67 that ‘after exhausting all appeals in those cases resulting in adverse verdicts associated with tobacco-related litigation since October of 2004, PMUSA has paid in the aggregate judgments (and related costs and fees) totaling approximately $144 million as of December 31, 2014.’ So my question is ‘Why shouldn’t Altria’s shareholders and investors expect the company to continue to pay judgments in the hundreds of millions, if not billions, of dollars in the years to come?’”
Mr. Barrington answered that litigation “presents risks to this company and to others. But it is also true that we have considerable experience in managing that risk. And I think if you look at the track record for Altria, and fill it more so over the years, you see that it has been extremely well managed. The approach we take is to defend the cases strongly and vigorously and you overwhelmingly see that from time to time, a matter may present itself in which we have a unique opportunity to resolve the matter. And if we think it’s in shareholders’ best interest to do that, we will go ahead to do that, but I think actually if you look at the curve of tobacco litigation over the last, I don’t know, 7 to 10 years, you will see that it is not up at all. In fact, it’s sharply down. And I think that’s because we have managed it and we have addressed the challenges that we have had in litigation that you are pointing out.”
Father Michael Crosby of the Province of St. Joseph of the Capuchin Order in Milwaukee addressed the issue of forced labor in tobacco fields. After Mr. Barrington had stated that Altria opposes illegal cigarette smuggling, Fr. Crosby commented that Altria “does not seem to be that much against illegal trafficking in human beings who are coming into our fields to produce and harvest the tobacco. You called the trafficking of tobacco products criminal behavior, for me it’s criminal behavior when this company is aware of the illegality of having so many undocumented workers, some people say up to 70% of all farm workers in the United States are undocumented, that means this company is involved in illegal behavior maybe not directly but indirectly it knows it’s going on and doesn’t do anything, so there’s culpability. This is the elephant in the board room. This is the elephant in the shareholders meeting that our dividends are coming on the back of illegal activities.”
In response, Mr. Barrington stressed that “we oppose exploiting labor on the farm or elsewhere.” He added that, as opposed to doing nothing, the company “have put it in our supplier code of conduct. We tell the growers that they should not be using forced labor or exploitive labor in our work.”
Officials from the AFL-CIO’s Farm Labor Organizing Committee addressed concerns about child labor in tobacco fields as well as the effort to get substantive change in the conditions, wages and housing for tobacco farm workers.
Cathy Rowan, on behalf of Trinity Health as well as Catholic Health Initiatives , the Sisters of St. Dominic of Caldwell, New Jersey, the Sisters of Charity of St. Elizabeth and the Sisters of St. Francis, supported a resolution asking the Altria Board of Directors to “initiate efforts to develop materials informing tobacco users who live below the poverty line or have little formal education about the health consequences of smoking our products along with market-appropriate smoking cessation materials.” The proposal “speaks to the high prevalence of smoking among people living in poverty, people with disabilities and minority populations. Many of these are fellow citizens who are people who have the fewest resources, the least amount of social support and the least access to cessation services.” The company’s opposition to this resolution claims that the company “believes the wide variety of current communication programs sponsored by multiple parties addresses the objectives of this proposal.” This resolution was defeated.
Two other shareholder resolutions were presented. One, sponsored by the AFL-CIO, called on Altria Group, Inc. to prepare a report on the steps it has taken to reduce the risk of acute nicotine poisoning (or “Green Tobacco Sickness”) for farmworkers in the company’s supply chain for tobacco. The other resolution, sponsored by the Province of St. Joseph of the Capuchin Order in Milwaukee, requested the company’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.” Just as at the Reynolds American Shareholders Meeting two weeks earlier , both of these resolutions were defeated.
Thursday, March 26th, 2015
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
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.
Thursday, September 25th, 2014
On September 16, 2014, a jury in the U.S. District Court for the Middle District of Florida returned a verdict of $27,010,000.14 against Philip Morris USA on behalf of Judith Berger, who started smoking in 1958 at the age of 14. Clearly outraged by evidence of Philip Morris’ conduct in targeting children, the jury awarded over $20 million in punitive damages and added fourteen cents to the total. Judith Berger, as did her now-deceased twin sister, developed severe chronic obstructive pulmonary disease (COPD) from smoking.
Kenny Byrd, the lead trial counsel for Lieff Cabraser, which represented the plaintiff, was delighted with the verdict. “We are pleased that the jury held Philip Morris accountable for their calculated choice to target children, such as Mrs. Berger, to take up smoking. The addition of the 14 cents is just as meaningful as the $20 million before it. The jury understood our society should protect 14-year-olds, not target them for profits as the cigarette industry does.”
One of the pieces of evidence presented to the jury was a Philip Morris memo that said “today’s teenager is tomorrow’s regular customer.”
This case in federal court is one of thousands of “Engle Progeny” lawsuits that were filed following the Supreme Court of Florida’s 2006 ruling in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006). The trials in these lawsuits, which began in February 2009, have resulted in plaintiff verdicts in approximately two-thirds of the 120 such trials that have reached a jury verdict. While most of these cases are being tried it state court, it is encouraging to see plaintiff victories occurring in federal court as well.
Not surprisingly, Philip Morris relied on its well-worn “personal responsibility” defense as its main attempt to evade accountability. Plaintiff co-counsel Lance Oliver of Motley Rice LLC, commented that, at trial, “Philip Morris attempted to lay all the blame on Mrs. Berger for choices she made as a kid. Thankfully, the jury saw through this and held Philip Morris accountable for its choices.”
When juries learn the details of outrageous tobacco industry behavior, the end result will be more verdicts – including punitive damages – comparable in size and scope as the one in this case. After the verdict, Mrs. Berger reacted as follows: “I am so grateful that the jury held Philip Morris accountable for its actions over the past 60 years. Before this lawsuit, I had no idea that the tobacco industry deliberately designed cigarettes to make them addictive and then conspired to lie to the public about their deadly effects. I fought this battle in part for my twin sister Josephine – may she rest in peace – who died from the same disease that will take my life in the next few years. I encourage anyone whose rights are violated by Philip Morris – or any corporation – to stand up, fight for justice and hold them accountable for their actions.”
Achieving justice and holding powerful corporations accountable for their wrongdoing: that’s what the Engle Progeny litigation is all about.
US Supreme Court deals devastating blow to the cigarette industry and settlement value of nearly 8,000 pending Engle cases rises dramatically
Monday, October 7th, 2013
For seven years, cigarette companies have repeatedly claimed that the Florida Supreme Court’s decision in Engle v. Liggett, which relieved about 8,000 Florida cases of the need to prove general liability or that cigarette smoking causes disease, violated the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. They repeatedly represented to industry analysts and shareholders that these key procedural advantages, which have helped plaintiffs in the trials held to date obtain verdicts against the cigarette manufacturers in two out of every three cases, ultimately would be wiped out as unconstitutional.
The original ruling was based on the long-established notion of res judicata, meaning that the matter had already been judged. The issues that the defendants wanted to re-litigate were already determined in a year-long class action trial in 1999.
Twice now, the cigarette companies have failed to get these important procedural advantages overturned by the U.S. Supreme Court and it appear that, for all intents and purposes, the industry’s uphill legal battle has just become considerably steeper in Florida.
Last November, the U.S. Supreme Court declined to review an appeal of another Engle progeny case, Clay v. RJ Reynolds Tobacco, which raised similar Due Process issues.
Today, about seven months after the Florida Supreme Court issued a decision upholding its 2006 Engle ruling in Philip Morris v. Douglas, the industry was again rebuffed by the nation’s highest court and may have exhausted ways of arguing that its Constitutional rights to due process have been denied in Florida.
Mark Gottlieb, Director of the Public Health Advocacy Institute, at Northeastern University School of Law in Boston noted that, “the cigarette companies have two choices left in Florida: either spend the next century continuing to lose around 65-70% of its cases or working to fairly settle them and bring some closure to those 8,000 or so victims who have been waiting more than 15 years for their day in court.”
Public Health Advocacy Institute’s Senior Attorney, Ed Sweda, said,”the tobacco companies’ long-repeated claim that the procedure for trying Engle Progeny cases violates their Due Process rights is now legally dead. The rights of the victims of these companies have been vindicated.”
Friday, May 24th, 2013
By Edward L. Sweda, J.D.
In sharp contrast to the manner in which management at Reynolds American, Inc. conducted its annual meeting of shareholders a week earlier, Altria Group, Inc.’s Chairman and Chief Executive Officer Martin J. Barrington treated everyone at the May 16th meeting in Richmond, Virginia with courtesy and politeness.
Barrington began his presentation by commending the Altria Board of Directors’ “strong leadership and oversight.” He touted “strong results in 2012” and declared that the company’s “main brands did well.” Citing the company’s 9000 employees, Barrington praised the company for being a founding member of the Farm Labor Practices Group, supporting the arts and investing in communities. He admitted that “more needs to be done to discourage youth tobacco use” and, without giving any data showing how the program discourages youth tobacco use, praised Altria’s “We Card” program.
Barrington reported increased market share for Marlboro (in red, green, gold and black) cigarettes and progress for Black & Mild (tipped cigarillos) and the two major smokeless tobacco brands of Skoal and Copenhagen. He informed the audience that the company would introduce NuMark, a brand of e-cigarettes, in the second half of 2013.
Altria’s CEO also assured shareholders that the company’s outlook for 2013 is good; he noted that Altria had increased dividends six separate times since 2008. Also, Altria’s shareholder returns had increased by 84.2% during the span of 2008 to 2012.
On the topic of tobacco litigation, Barrington declared that the company had “success in managing litigation,” mentioned the ongoing Brown case in California dealing with light cigarettes and said that Altria has “strong defenses” as it continues to defend Engle Progeny cases in Florida.
A shareholder resolution, submitted by the Province of St. Joseph of the Capuchin Order in Milwaukee, dealt with the issue of disclosure of the company’s lobbying policies and practices. Specifically, it called on the Board of Directors to prepare a report, to be updated annually, for shareholders disclosing the following:
- “Company policy and procedures governing lobbying, both direct and indirect, and Grassroots lobbying communications;
- “Payments by Altria used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient;
- “Altria’s membership in and payments to any tax-exempt organization that writes and endorses model legislation; and
- “Description of the decision making process and oversight by management and the Board for making payments described in section 2 above.
Fr. Michael Crosby presented the resolution. He stressed that, while Altria has disclosed its payments to political candidates, it has kept largely secret the details about its spending on lobbying and making contributions to third-party organizations such as ALEC, the American Legislative Exchange Council. The resolution’s supporting statement pointed out that “Altria spent approximately $21.37 million in 2010 and 2011 on direct federal lobbying activities” but that these figures “do not include lobbying expenditures to influence legislation in states.”
This author then spoke in support of the “modest, pro-transparency resolution” and described the opposition to the resolution by Altria’s management as “short-sighted.” The company had described the reports required by the proposal as imposing “additional and unnecessary burdens and costs on the Company and would not be in the best interests of the Company and its shareholders.”
The results of preliminary voting were reported that the resolution was defeated with supporters garnering 21.82% of the votes cast.
During the question and answer session, to which thirty minutes were allotted, this author noted that Altria had suffered a major setback in mid-March when the Florida Supreme Court ruled 6-1 that the way dozens of Engle Progeny trials have been conducted since February 2009 does not violate the tobacco companies’ due process rights. I concluded my observations about this litigation with the question: Why shouldn’t shareholders believe tobacco company attorneys who have warned about “massive liability” with thousands of Engle Progeny cases still in the pipeline with “no end in sight,” rather than believing the optimistic assurances from management?
Barrington’s response was to acknowledge that litigation is a “challenge” and to refer shareholders to the company’s 10-Q report (PDF), which covers litigation in detail.
Fr. Crosby noted that heavy users of cigarettes are often those who are at the lowest rung of the economic ladder. “What steps will Altria Group take to reduce consumption of its tobacco products by the poor?” Rev. Crosby asked. Mr. Barrington simply cited the company’s programs to reduce youth consumption without addressing low-income adult smokers. Even after a follow-up question by Fr. Crosby, Barrington refused to commit any company resources to trying to discourage tobacco consumption among low-income adults.
After the 67-minute meeting had been adjourned, Altria Group, Inc., with its Marlboro brand having increased its market share of cigarettes by two-tenths of a percentage point in the first quarter of 2013, continued to conduct its business as it so usually does. During the course of the meeting, approximately 56 people died in the United States from smoking-caused diseases.
Monday, March 18th, 2013
Florida smokers and their families who are suing tobacco companies won a resounding victory on March 14, 2013 when the Supreme Court of Florida upheld its landmark 2006 ruling in Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla. 2006).
By a vote of 6 to 1, Florida’s highest court ruled in favor of the plaintiff in Philip Morris USA, Inc., et al. v. Douglas, 2013 Fla. LEXIS 440, upholding a $2.5 million award in the death of Charlotte Douglas and explicitly rejecting industry arguments that the Florida Supreme Court’s ruling seven years ago violated the Due Process rights of the companies.
The Engle case originated as a class action and went to trial before a jury; that jury in Phase I of the trial found the defendant companies strictly liable, in that the cigarettes that the defendants manufactured and placed on the market “were defective in many ways including the fact that the cigarettes contained many carcinogens, nitrosamines, and other deleterious compounds such as carbon monoxide.” While the case ultimately was not allowed to proceed as a class action, the Supreme Court of Florida ruled in 2006 that the members of the class could file their own individual cases (so-called “Engle Progeny” cases) and proceed with those cases relying upon the jury’s Phase I findings of liability, including that smoking caused a variety of specific diseases, that nicotine in cigarettes is addictive, that the tobacco defendants placed cigarettes on the market that were defective and unreasonably dangerous and that all of the Engle defendants were negligent.
The tobacco companies have argued that, despite the fact that they vigorously presented a defense to these claims during the original Engle trial, applying the Phase I findings to the Engle Progeny trials violates their due process rights. Even though the R.J. Reynolds Tobacco Co. relied on this argument unsuccessfully in the Martin case a year ago, (see http://www.phaionline.org/2012/03/26/supreme-court-rejects-key-tobacco-industry-appeal-leaving-massive-liability-with-no-end-in-sight/ ), the companies tried again in Douglas. Commenting on the original Engle trial, the six-member majority in Douglas said: “As illustrated by hundreds of witnesses, thousands of documents and exhibits and tens of thousands of pages of testimony, the Engle defendants had notice and the opportunity to defend against all theories of liability for each of the class’s claims in the yearlong Phase I trial.”
That six-member majority also noted that the tobacco defendants “argue that the Phase I findings establish, at most, that some of their cigarette were defective for some unspecified reason and that they engaged in some, unspecified tortious conduct. This, they claim, requires reversal of the verdict for the plaintiff based on strict liability because the Douglas jury was not instructed (and did not find) a causal connection between a specific defect in the defendants’ cigarettes and the injuries alleged. We disagree and decline the defendants’ invitation to revisit our decision in Engle.”
The majority clearly recognized and emphatically rejected the industry’s fundamental argument. “At its core, the defendants’ due process argument is an attack on our decision in Engle to give the Phase I findings res judicata – as opposed to issue preclusion – effect in class members’ individual damages actions. However, res judicata is the proper term, and we decline the defendants’ invitation to rewrite Engle.”
The decision was bad news for the tobacco industry and its friends on Wall Street. Pro-industry analyst David J. Adelman of Morgan Stanley admitted that the ruling “was even more pro-plaintiff than we expected and will make it more difficult for the industry to successfully defend these claims.”
After the decision was released, Philip Morris USA announced that “it plans to seek further review” of the Douglas decision. That means yet another attempt to persuade the Supreme Court of the United States to consider the industry’s appeal that Engle Progeny trials that result in plaintiff verdicts somehow violate the companies’ due process rights. If the Supreme Court of the United States makes the same decision it made a year ago about an almost identical appeal (Martin), the answer to the tobacco companies will be a final “No.”
-Edward L. Sweda, Senior Attorney for the Tobacco Products Liability Project
PHAI’s Friedman and Gottlieb Co-author: “Soda and Tobacco Industry Corporate Social Responsibility Campaigns: How Do They Compare?” in PLoS Medicine
Tuesday, June 19th, 2012
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.
Thursday, May 26th, 2011By Edward L. Sweda, Jr., Senior Attorney
RICHMOND, VA. – Just eight days before the Altria Group, Inc. 2011 Annual Shareholders Meeting in this historic city, Altria Group’s former Chief Executive Officer, Louis Camilleri, complicated matters for his successor. At the Philip Morris International Annual Shareholders Meeting in New York City on May 11, 2011, Camilleri answered a question from a shareholder who is also a nurse who has treated many smokers with serious diseases. While admitting that smoking is addictive, Camilleri added the comment that “it is not that hard to quit” using tobacco products. That comment made international headlines after the Associated Press reported it.
So, when Altria Group’s Szymanczyk gave management’s report at the meeting in Richmond on May 19th, he specifically, on page 10 of his prepared remarks stated: “Because tobacco use is addictive and it can be very difficult to quit, our tobacco companies help connect adult tobacco consumers who have decided to quit with cessation information from public health authorities.”
During the question and answer session, shareholder Rev. Michael Crosby of the Interfaith Center for Corporate Responsibility and I both pressed Szymanczyk to state whether, as Altria Group’s CEO, he disagreed with Camilleri’s comment and, if so, why. Refusing to do so, he stated that “I would simply say that what I said is on our website. There is nothing new here.” The juxtaposition between the public statements of two tobacco executives just six days apart was the central focus of the Richmond Times-Dispatch article on the meeting.
I also pressed Szymanczyk on the issue of the ongoing Engle Progeny trials taking place in Florida. Noting that 30 out of 43 (now, as this report is written, 32 out of 46) such trials resulting in verdicts have seen jurors return plaintiff verdicts, I asked whether Altria Group, for the sake of its shareholders, would abandon its no-settlement policy regarding the thousands of Engle Progeny cases remaining throughout Florida. His response was simply to refer shareholders to the company’s 10Q form, which restates its standard policy of refusing to settle these cases.
Virginia shareholder Anne Morrow Donley, citing studies from March 2011 which showed that a fetus subjected to secondhand smoke is at a higher risk of stillbirth, lower birth weight and lower birth length , asked Szymanczyk whether he would publicly advise smokers not to smoke around women of child-bearing age. His response was to acknowledge that pregnant women should not be exposed to secondhand smoke, but he refused to broaden that recommendation to include women of child-bearing age.
Cathy Rowan, representing shareholder Trinity Group, noted Altria Group’s willingness to address concerns about implementing internally agreed upon code upholding the human rights of tobacco farm workers and about ensuring that the company’s suppliers are enforcing those rules. Altria Group’s cooperation with shareholders following a 2009 vote of shareholders where 25% supported a resolution to protect the human rights of farm workers stands in contrast to the rigid opposition by the management of Reynolds American, Inc. to similarly worded resolutions.
In his prepared remarks, Szymanczyk also bragged about Altria Group’s donations to various charitable and civic organizations, including the Boys and Girls Clubs, 4H, as well as the Virginia Museum of Fine Arts, the Kennedy center and the National gallery of Art. He boasted that “Altria made nearly $50 million in cash and in-kind corporate contributions to non-profit organizations” in 2010, without noting that the $50 million figure represented just 0.205% of the company’s net revenues ($24.363 billion) in 2010.
A shareholder resolution was offered, calling on the Board of Directors to move “to ensure that Altria stops the production of any of its tobacco products with characterizing flavoring added, as well as their distribution and marketing, unless and until it can be proven by independent and evidence-based research that such added characterizing flavors do not contribute significantly to youth initiation of tobacco use.” That resolution was defeated, with 97.5% of shares voting NO, with 2.5% voting YES.