US Appeals Court Agrees Tobacco Companies Lied

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by
Reuters

US Appeals Court Agrees Tobacco Companies Lied

by
Diane Bartz

Cigarette companies systematically lied for decades to hide the dangers of smoking, a U.S. appeals court said on Friday as it upheld a trial judge's racketeering verdict. (REUTERS/Lucas Jackson)

WASHINGTON - Cigarette companies systematically lied for
decades to hide the dangers of smoking, a U.S. appeals court said on
Friday as it upheld a trial judge's racketeering verdict.

But in a blow to anti-smoking groups, the U.S. Court of Appeals for
the District of Columbia also upheld U.S. District Judge Gladys
Kessler's 2006 rejection of plans to force the companies to fund
smoking cessation programs, which could have cost them billions of
dollars.

The appeals court's three-judge panel ruled that the companies,
including Altria Group Inc and its Philip Morris USA unit, violated
federal anti-racketeering laws by conspiring to lie about the dangers
of smoking.

"Defendants knew of their falsity at the time and made the
statements with the intent to deceive," the court said in a 92-page
ruling. "Thus, we are not dealing with accidental falsehoods, or
sincere attempts to persuade; Defendants' liability rests on deceits
perpetrated with knowledge of their falsity."

Other companies appealing Kessler's ruling were the R.J. Reynolds
Tobacco unit of Reynolds American Inc, Lorillard Inc, Vector Group
Ltd's Liggett Group, British American Tobacco Plc and its Brown &
Williamson unit, as well as now defunct industry groups: the Council
for Tobacco Research and the Tobacco Institute.

The case was filed in 1999 by the Clinton administration, which sought $289 billion in damages.

During the original trial, which began in 2004, the Justice
Department under the Bush administration scaled back its demands to $14
billion for anti-smoking campaigns.

Kessler ultimately ruled the companies broke the law and could no
longer use expressions such as "low tar" or "light" in their cigarette
marketing. But she said she did not have the authority to force them to
fund a smoking cessation program.

Philip Morris, Altria and Reynolds said on Friday that they would
press on with their legal fight, although they had not yet decided if
they would ask for a rehearing before the entire appeals court or ask
the Supreme Court to consider the case.

Tobacco companies are already paying billions of dollars a year
under a 1998 settlement agreement with state governments that also bars
targeting children in cigarette advertising and puts other restrictions
on cigarette ads.

Legislation working its way through the U.S. Congress would give the
Food and Drug Administration power to control the advertising and
manufacture of tobacco products.

CORRECTIVE STATEMENTS

In its ruling on Friday, the appeals court upheld an order requiring
warnings on cigarette packages and demanding that tobacco sellers
publish "corrective statements" on corporate web sites. They would also
have to buy full-page advertisements in thirty-five major newspapers
and put at least ten advertisements on a major television network.

In a victory for convenience stores and other retailers, however,
the appeals court said the lower court overstepped its authority in
requiring merchandisers to add countertop signs with the "corrective
statements."

The National Association of Convenience Stores said the requirement
would take away valuable counter space and cost the industry $82
million in lost sales annually.

The appeals court was highly critical of the tobacco companies,
rejecting their arguments that they had never advertised "light"
cigarettes as less dangerous.

The court also pointed to evidence that the companies knew that
second-hand smoke was dangerous, dismissing their assertions that there
was no "scientific consensus."

"Again defendants miss the point," the ruling said. "Regardless of
whether a scientific consensus existed at any point, defendants may be
liable for fraud if they made statements knowing they were false or
misleading."

The court also found that tobacco companies were deceitful in
asserting they were unaware that tobacco is highly addictive, citing
numerous findings "all unchallenged --

(which) support the district court's conclusion that defendants were
aware that nicotine creates a chemical dependency far stronger than a
mere habit."

The decision follows a ruling by the Supreme Court in December that
tobacco firms can be sued under state law for deceptive advertising of
"light" cigarettes.

That case involved three longtime smokers from Maine who said Philip
Morris was deceptive in advertising cigarettes as "light" or with
"lowered tar and nicotine."

The Tobacco Products Liability Project said the Supreme Court
decision, along with Friday's ruling, should help the 40 or so lawsuits
filed nationwide which accuse cigarette companies of deceptively
marketing light cigarettes.

"We're delighted with the opinion today," said Edward Sweda, of the
advocacy group. "The government's presentation of the evidence provides
a roadmap for plaintiff's attorneys."

The case is U.S. v Philip Morris USA et al, U.S. Court of Appeals for the District of Columbia, No. 06-5267.

The ruling was posted at: here

(Additional reporting by James Vicini; Editing by Gerald E. McCormick and Tim Dobbyn)

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