United States v. Philip Morris USA Inc.: Amended Final Opinion

Background

What it found

1. The court found that the companies had conspired to violate RICO and had violated it, running a scheme to defraud smokers and potential smokers for financial gain that lasted some fifty years. p. 32 p. 1531 p. 33

   “In short, Defendants have marketed and sold their lethal product with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted.”

2. The court found that for at least 40 years the companies publicly denied that smoking causes disease, to keep up the appearance of an "open controversy", while their internal documents acknowledged the purpose of that strategy. p. 1538 p. 1537 p. 1535

   “Similarly, an undated internal B&W document titled ‘Smoking and Health Proposal’ explained: ‘Doubt is our product since it is the best means of competing with the 'body of fact' that exists in the mind of the general public. It is also the means of establishing a controversy.’”

3. It found that the companies denied that nicotine is addictive, although they recognised it internally, and falsely denied that they controlled the nicotine their cigarettes deliver. p. 1538 p. 1539 p. 1543

   “Defendants spent many millions of dollars and thousands of scientist hours over decades to ensure that smokers of all brands consumed sufficient nicotine to establish and maintain addiction.”

4. It found that the companies marketed "light" and "low tar" cigarettes to keep would-be quitters smoking, knowing for decades that they offered no meaningful reduction in risk. p. 1544 p. 1545 p. 1545

5. It found that the companies recognised new teenage smokers as essential to their profits, marketed to young people, and publicly denied doing so. p. 1548 p. 1549

   “Defendants aggressively pursued the youth market, often not distinguishing those under 18 from those under 21, while publicly denying their activities. For example, Tobacco Institute spokesperson Brennan Dawson appeared on television and provided statements to newspapers, making such assertions as, ‘If a child never picks up another cigarette, it would be fine with the tobacco industry.’”

6. It found that the companies denied that secondhand smoke causes disease despite acknowledging its hazards internally, and that they suppressed, concealed and destroyed documents and research. The opinion singles out the central role of their lawyers. p. 1553 p. 1556 p. 34

7. The court did not find every allegation proved. It held that the Government had not shown that the companies deliberately chose to sabotage the marketing and production of less hazardous cigarettes. p. 768

8. Finding that the violations were likely to continue and that the 1998 settlement had not changed the companies' conduct enough, the court banned "light", "low tar" and similar descriptors and ordered corrective statements on five subjects. p. 1634 p. 1639 p. 1660 p. 1665

Where to start reading

Short on time? These sections carry the report's argument. Each opens at the start of the section.

1. Introduction p. 32 · Read →

   The whole judgment in four pages — what the Government alleged, what the court found, the remedies it could and could not order, and a word on the lawyers.

   “At every stage, lawyers played an absolutely central role in the creation and perpetuation of the Enterprise and the implementation of its fraudulent schemes.”

2. Creation of the Enterprise p. 49 · Read →

   Where it began — the December 1953 meeting at the Plaza Hotel, the public relations firm Hill & Knowlton, and the "Frank Statement" of January 1954.

3. Defendants Falsely Denied the Adverse Health Effects of Smoking p. 1536 · Read →

   The court's conclusions on the central deception, with the internal memos that set out the "open controversy" strategy.

   “Using the sophisticated and well-organized machinery created to serve their agenda, Defendants fraudulently denied the adverse health effects of smoking for at least 40 years in order to sustain the appearance of an open controversy about the link between smoking and disease, and thereby maintain and enhance the cigarette market and their collective revenues.”

4. Defendants Falsely Denied that They Market to Youth p. 1549 · Read →

   The court's conclusions on marketing to young people, and on the companies' public denials.

   “Defendants' fraudulent statements stem from their recognition, contained in internal documents written for decades, that new teenage smokers were essential to their continued profitability.”

5. Applicable Law p. 1632 · Read →

   Why the court concluded the companies had not changed — including what their senior executives said on the witness stand.

   “For example, during live testimony in January 2005, more than forty years after the 1964 Surgeon General's Report, Reynolds American Executive Chairman Andrew Schindler refused to admit that smoking causes disease.”

6. Remedies: Banning "Light" and "Low Tar" p. 1658 · Read →

   The remedy the court ordered first — a ban on descriptors that imply a cigarette is less harmful.

   “Accordingly, beginning January 1, 2007, Defendants are prohibited from using any descriptors indicating lower tar delivery -- including, but not limited to, ‘low tar,’ ‘light,’ ‘mild,’ ‘medium’ and ‘ultra light’ -- which create the false impression that such cigarettes are less harmful to smokers.”