Defendants Have Made False and Misleading Public Statements

Regarding Their Control of the Nicotine Content and Delivery of Their Products 1705. Despite the overwhelming evidence of their research into and utilization of methods

¶to control the amount and delivery of nicotine in cigarettes, Defendants have denied, repeatedly and publicly, that they manipulate nicotine content and delivery in cigarettes in order to create and sustain addiction. Defendants have also repeatedly and publicly claimed that the levels of nicotine delivered by cigarettes are determined by their levels of tar delivery.17

667

a. The Waxman Hearings 1706. In 1994, the United States Congress held a series of public hearings regarding the

¶addictiveness of cigarettes and the tobacco industry's design of cigarettes and manipulation of nicotine. These hearings, before the House of Representatives Subcommittee on Health and the Environment, later became known as the "Waxman Hearings," referring to Subcommittee Chairman Henry Waxman of California. The Chief Executive Officers of six Defendant cigarette manufacturers -- Philip Morris, B&W, RJR, Lorillard, Liggett, and American -- appeared voluntarily at a Subcommittee hearing on April 14, 1994.

During the April 14, 1994 hearing, the CEOs testified under oath and before television cameras to the following:18

Philip Morris did knowingly cause to be transmitted the testimony of President and Chief Executive Officer William I. Campbell. Campbell denied that nicotine is addictive, denied that Philip Morris

668

research establishes that smoking is addictive, and denied that Philip Morris manipulates the amount of nicotine contained in cigarettes.

RJR did knowingly cause to be transmitted the testimony of Chairman and Chief Executive Officer James Johnston. Johnston denied that nicotine is addictive and denied that RJR manipulates the amount of nicotine contained in cigarettes.

American did knowingly cause to be transmitted the testimony of its Chief Executive Officer, Donald S. Johnston. Johnston denied that American manipulates the amount of nicotine contained in cigarettes.

B&W did knowingly cause to be transmitted the testimony of Chief Executive Officer Thomas Sandefur. During this hearing, Sandefur made material misrepresentations regarding B&W's control of the amount of nicotine contained in its cigarettes.

Lorillard did knowingly cause to be transmitted the testimony of Chief Executive Officer Andrew H. Tisch. During this hearing, Tisch denied that Lorillard manipulates the amount of nicotine contained in cigarettes.

Liggett did knowingly cause to be transmitted the testimony of Chairman and Chief Executive Officer Edward A. Horrigan, Jr. Horrigan denied that Liggett manipulates the amount of nicotine contained in cigarettes.

¶TLT0730001-0850 (US 77011).

In a written statement submitted by Philip Morris on March 25, 1994, to the House of Representatives Committee on Energy and Commerce in connection with the Waxman Hearings,

¶Philip Morris asserted that it "does nothing in the processing of tobacco or the manufacture of cigarettes that increases the nicotine in our products above what is naturally found in tobacco."

¶Philip Morris also stated that the FTC testing method provided consumers with "information concerning the relative nicotine yields of products that permit them to make an informed choice."

¶TLT0730001-0850 at 0362–0363 (US 77011).

669

On April 14, 1994, William I. Campbell, President of Philip Morris U.S.A., testified at the Waxman Hearings that "Philip Morris does not add nicotine to our cigarettes. Philip Morris does not manipulate nor independently control the level of nicotine in our products." In his written statement to the Committee of the same date, Campbell stated that

[w]hen creating a cigarette for a tar category, we select a particular tobacco blend and flavors to provide "uniqueness" for a product. . . . So, how do we "manipulate" or independently "control" nicotine as our critics charge? The answer is we don't. We accept the nicotine levels that result from this process.

¶TLT0730001-0850 at 0546, 0556 (US 77011) (emphasis in original).

Campbell also testified that the amount of nicotine measured by the FTC testing method accurately reflected the amount of nicotine that a smoker of its low tar cigarettes receives. After acknowledging that Philip Morris manufactured its Merit Ultima low tar cigarette using, for 40% of the blend, a tobacco that had a nicotine content higher than that used for the manufacture of some of its other products, Campbell contended that the reason for selecting the high nicotine tobacco was for taste and flavor. Campbell was asked, "You may think that's for taste, but it also produces a higher nicotine level. Isn't that what's happening in your products?" Campbell responded: "No, it isn't. . . . We compensate in our ultra low tar cigarettes by using reconstituted tobacco and expanded tobacco. So that what the smoker gets is what we . . . say in our FTC advertisements, 0.1 milligram of nicotine." TLT0730001-0850 at 0768 (US 77011).
Although Campbell acknowledged that Philip Morris intentionally used tobacco blends with higher nicotine concentrations in the manufacture of "ultra low tar" cigarettes, Campbell testified that Philip Morris did so only for taste. Campbell was asked by a Member of Congress: "I'm asking about the concentration of nicotine in the tobacco. You have blended tobacco. I want to know if there's a higher concentration in that tobacco in the Ultima [an "ultra low tar" brand] than there would be in a regular cigarette?" Campbell responded, "It's there for taste, yes, sir." Additionally, Campbell was asked, "For whatever reason, do you occasionally decide to use a higher nicotine content tobacco leaf to manufacture one brand than you do to manufacture another of your brands?" Campbell testified in response: "That's the end result. As I say, we do not design the product that way. We design the product for its category in the market, which is generally a tar category." TLT0730001-0850 at 0768, 0769 (US 77011).

670

In a written statement submitted by RJR on March 24, 1994 to the House Committee on Energy and Commerce in connection with the Waxman Hearings, Reynolds stated that it

does not . . . establish specific nicotine yields or manipulate nicotine to create, maintain or satisfy "addiction. . . ." It is a simple fact that reducing "tar" yields automatically results in proportional reductions in nicotine.

¶In a February 28, 1994 letter mailed to FDA Commissioner Kessler in advance of the Waxman Hearings, Reynolds's CEO James W. Johnston claimed that "R.J. Reynolds Tobacco Company does not increase the nicotine in its cigarettes above what is found naturally in tobacco." TLT0730001- 0850 at 0368, 0370 (US 77011).

On April 14, 1994, Reynolds's CEO James Johnston testified at the Waxman Hearings that RJR does not "add, or otherwise manipulate nicotine to addict smokers. . . . [W]e do not do anything to hook smokers or to keep them hooked." In his written statement to the Committee of the same date, Johnston claimed that the level of nicotine contained in a cigarette is proportional to and linked to the level of tar. Johnston also stated that the level of nicotine present in a cigarette is not "a result of a decision to 'manipulate' nicotine levels to some carefully controlled 'addictive level.' The concept of an 'addictive level' [of nicotine] . . . is not a concept known to or understood by Reynolds Tobacco." TLT0730001-0850 at 0562, 0576-0577, 0579 (US77011).

671

Johnston further testified on April 14, 1994, that Reynolds did not "design our cigarettes with any nicotine levels in the specifications. We design our cigarettes . . . for tar levels, usually within a band. It might be a light cigarette within that band or sometimes a specific tar level objective and the nicotine flows from there. . . ." TLT0730001-0850 at 0722 (US 77011).
In a written statement submitted by B&W on March 25, 1994 to the House Committee on Energy and Commerce in connection with the Waxman Hearings, B&W stated that "[t]he only direct source of nicotine in cigarettes manufactured by Brown & Williamson Tobacco Corporation is the tobacco that is used in the cigarettes." B&W also asserted that "[t]he filtering and ventilation techniques that are utilized by B&W result in the smoker's receiving only a small fraction of the nicotine contained in the tobacco that was used to produce the cigarette." TLT0730001-0850 at 0381 (US 77011).
In an April 14, 1994 written statement submitted to the House Committee on Energy and Commerce in connection with the Waxman Hearings, Thomas E. Sandefur, Jr., Chairman and CEO of B&W, stated that "Dr. Kessler suggested that cigarette manufacturers 'commonly add nicotine to cigarettes to deliver specific amounts of nicotine.' Brown & Williamson has never done that." Sandefur also stated that B&W "believe[s] that smokers can expect to receive lower amounts" of nicotine from cigarettes that yield lower amounts in FTC testing. TLT0730001-0850 at 0594- 0595 (US 77011).
Sandefur was accompanied to the Waxman Hearings by Tilford Riehl, B&W's Vice President of Research and Development. In response to questions concerning B&W's "ultra light"

672

¶Barclay cigarette, which used tobacco with a nicotine concentration of 2.3% (35% higher than the average amount of nicotine found in tobacco), Riehl did not deny that B&W used a tobacco with a high nicotine concentration to manufacture Barclay cigarettes. Riehl testified, however, that B&W selected the tobacco used for Barclay for its taste. Specifically, Riehl stated: "We blend for taste, not nicotine." TLT073 0001-0850 at 0767 (US 77011).

When asked by a Member of Congress, during a continuation of the Waxman Hearings on June 23, 1994, whether B&W believed "that nicotine is present for taste or is it in cigarettes for its drug-like qualities," Thomas Sandefur, then-Chairman and CEO of B&W, stated under oath, "we very strongly believe that nicotine is a very important constituent in the cigarette smoke for taste." TLT0730851-1975 at 1584 (US 77012). Sandefur further testified at the same hearing that he did not believe that nicotine is a drug. TLT0730851-1975 at 1585 (US 77012).
Sandefur testified at the June 23, 1994 Waxman Subcommittee hearing, that B&W added ammonia to commercially produced cigarettes only "[f]or the benefit of taste, to improve the taste characteristics of our cigarettes." TLT0730851-1975 at 1620 (US 77012).
Sandefur also testified to Congress on June 23, 1994, on behalf of B&W, "We do not manipulate the nicotine levels of our cigarettes. . . ." TLT0730851-1975 at 1673 (US 77012).
In a written statement submitted by American on March 25, 1994, to the House Committee on Energy and Commerce in connection with the Waxman Hearings, American stated that it "does not use nicotine in the manufacture of its cigarettes" and that "nothing is done in the tobacco processing or manufacture of cigarettes by the American Tobacco Company to increase nicotine beyond that naturally occurring in tobacco." TLT0730001-0850 at 0378-0379 (US 77011).

673

On April 14, 1994, Donald S. Johnston, Chairman and CEO of American, testified at the Waxman Hearings that:

the American Tobacco Company does not use nicotine in the manufacture of its cigarettes. . . . American has no desire or intent to manipulate nicotine. At no time has the American Tobacco Company attempted to market a cigarette based on its nicotine content. Or more generally, has it ever designed or marketed a cigarette with the purpose or intent of selling nicotine.

¶TLT0730001-0850 at 0597, 0599 (US 77011).

On March 25, 1994, Alexander W. Spears, Vice Chairman and Chief Operating Officer of Lorillard, testified at the Waxman Hearings that "[w]e do not set levels of nicotine for particular brands of cigarettes." Spears further stated that "[n]icotine follows the tar level," that the correlation between the two "is essentially perfect," which "shows that there is no manipulation of nicotine." In a 1981 study, the Chemical and Physical Criteria for Tobacco Leaf of Modern Day Cigarettes, Spears had previously stated explicitly that "low-tar" cigarettes used special blends of tobacco to keep the level of nicotine up while tar is reduced: "[T]he lowest tar segment [of product categories] is composed of cigarettes utilizing a tobacco blend which is significantly higher in nicotine." Spears did not inform Congress of his earlier statement. TLT0730001-0850 at 0148- 0149, 0382-0383 (US 77011); 82495618-5628 at 5620 (US 86932).
In response to questioning by the panel concerning data he submitted at the March 25, 1994 hearing, Spears again contended in testimony on April 14, 1994, that the level of nicotine found in cigarette products is a function of the level of tar in those products. Spears testified that "the statement that nicotine follows tar" was true from the 1950s to 1990 and that he "stick[s] with that statement and [he] believe[s] it is accurate." TLT0730001-0850 at 0707, 0719 (US 77011).

674

On April 14, 1994, Andrew H. Tisch, Chairman and CEO of Lorillard Tobacco Company, testified at the Waxman Hearings that "the level of nicotine in the products manufactured and sold by Lorillard is solely determined by the tobacco that we buy and the blending of different tobaccos used in our manufacturing. . . . Nicotine levels follow tar levels and are not raised or reduced for particular brands." Tisch also testified that "Lorillard does not take any steps to assure a minimum level of nicotine in our products. Lorillard does not add nicotine to cigarette tobacco for the purpose of manipulating or spiking the amount of nicotine received by the smoker." TLT0730001-0850 at 0596, 0597 (US 77011).
In a written statement submitted by Liggett on March 24, 1994, to the House Committee on Energy and Commerce in connection with the Waxman Hearings, Liggett stated:

we do not increase the nicotine level of our cigarettes beyond that found naturally in the tobacco from which our cigarettes are made. . . . We do not artificially increase the level of nicotine in our cigarettes to allegedly "addict" smokers or otherwise influence our consumers.

¶TLT0730001-0850 at 0380 (US 77011).

On April 14, 1994, Edward A. Horrigan, Jr., Chairman and CEO of Liggett, testified at the Waxman Hearings that "Liggett does not increase the nicotine level of our cigarettes beyond the level of nicotine found naturally in the unprocessed tobacco that we use to make our cigarettes. . . . Liggett does not manipulate the level of nicotine in our cigarettes to hook or addict smokers." Horrigan, who formerly had been Chairman and CEO of RJR, also testified that "[i]n all my years in this business world-wide, I have never known of a product-designed [sic] objective or goal that included even the notion of spiking the amount of nicotine in a cigarette to achieve a level that would hook or addict smokers." TLT0730001-0850 at 0600, 0601 (US 77011).

675

Following Horrigan's testimony at the Waxman Hearings, Representative Waxman sent a request for information to Liggett on May 25, 1994, seeking additional information concerning its use of nicotine in the design of its cigarettes. In its response to a request for information concerning which methods of controlling nicotine it used in its products, Liggett responded: "Liggett does not and has never used any of these methods for the purpose of controlling or changing the levels of nicotine alone in its cigarette brands. . . . Liggett has not conducted any research that was designed to develop methods for the purpose of changing or controlling the level of nicotine alone in cigarettes it sold commercially." LDOJ9511212-1230 at 1216-1218 (US 86933) (Confidential).

In response to Representative Waxman's letter, Liggett also stated that: Liggett has conducted no research on nicotine analogues. . . . Liggett has not performed any research to increase or maintain nicotine levels while decreasing "tar" levels. Liggett does employ traditional blending techniques which maintain the consistency of its products, including "tar" and nicotine deliveries. Liggett has specified neither minimum nor maximum nicotine levels or deliveries, nor has it taken any steps to alter or adjust the level of nicotine delivery alone at any stage of cigarette production. [Apart from limited research concerning reduction of nicotine], Liggett has done no other research on adjusting, altering or maintaining nicotine levels or nicotine delivery alone.

¶LDOJ9511212-1230 at 1220, 1221, 1222-23 (US 86933) (Confidential).

The Tobacco Institute also made a statement before Congress in connection with the Waxman Hearings. On March 25, 1994, the Tobacco Institute's spokesperson, Charles O. Whitley, testified that "nicotine levels are a function of tar levels. Over the past 30 years or so, the consumer demand for lighter cigarettes has led the tobacco manufacturers to reduce tar levels . . . and the nicotine levels have dropped correspondingly." Whitley further testified that "we do not add nicotine, have not added nicotine, we do not manipulate nicotine." In the written statement submitted by Whitley in connection with his testimony, Whitely stated that FDA Commissioner Kessler's suggestions that cigarette manufacturers add nicotine to cigarettes to produce and sustain addiction were "unequivocally . . . false," and that "when . . . 'tar' levels" are reduced, "nicotine is reduced automatically." TLT0730001-0850 at 0146, 0350 (US 77011).

676

b. Defendants' False and Misleading Public Statements Continued After the Waxman Hearings 1731. On February 28, 1994, Philip Morris distributed a public statement that stated: There is nothing done in the processing of tobacco or manufacture of cigarettes by Philip Morris that increases the nicotine in the tobacco blend above what is normally found in tobacco. . . . Philip Morris provides its consumers with a range of choices in tar and nicotine levels in its products. As a matter of fact, over the years, consumer taste preferences have resulted in products with lower levels of both tar and nicotine. For many years, nicotine levels for all cigarettes have been measured pursuant to FTC methods and publicly displayed in every cigarette advertisement.

¶682637639-7640 at 7639 (US 30999).

In an advertisement in the New York Times released the day following the CEOs' 1994 Congressional testimony, titled "Smokers and Non-Smokers: Facts You Should Know," Philip Morris stated: "Philip Morris does not 'manipulate' nicotine levels." The advertisement claimed that Philip Morris's methods of "quality control [do] not constitute 'manipulation.'" 2023011263-1263 (US 20371); Farone WD, 98:22-99:17.
On June 23, 1994, after a connection between the use of ammonia technologies and increased nicotine deliveries was publicized, Philip Morris released a press statement saying:

677

[t]here is no indication that ammonia compounds in our cigarettes alter the amount of nicotine the smoker inhales. . . . [T]he presence of ammonia compounds in cigarettes does not support Dr. Kessler's allegation that cigarette companies manipulate nicotine levels to "addict" their customers.

¶2076733633-3633 (US 43887).

In a June 14, 1995, letter to the editor of The New York Times, written by James Morgan, then President and CEO of Philip Morris, criticizing an article that The Times had published regarding Philip Morris's research and marketing practices, Morgan claimed that "basic research regarding 'tar' and nicotine ratios was never used in the company's manufacturing processes to alter, much less 'manipulate,' the natural ratio of 'tar' to nicotine in the cigarettes the company sells." 2505560444-0447 at 0445 (US 86934).
An October 18, 1995 Philip Morris press release stated, in part, that "Philip Morris U.S.A. does not use ammonia in the cigarette manufacturing process to increase the amount of nicotine inhaled by the smoker or to 'affect the rate of absorption of nicotine in to [sic] the bloodstream of the smoker,' or to 'increase the potency of the nicotine a smoker actually inhales.'" 2076733634-3634 (US 43888).
Defendants have also prepared internal "talking points" documents to prepare their spokespersons for public comment on important smoking and health issues. For example, on July 8, 1994, Christopher Proctor sent to all General Managers, BAT Corporate Affairs Managers, and BATCo Board members a memorandum including "Questions and Answers related to U.S. hearings." Recipients were told to use the materials in response to questions from media and staff. Regarding nicotine, BATCo's response was that "BAT does not 'manipulate' the level of nicotine in its products." Recipients were also instructed to respond to questions regarding addiction that

678

¶"BAT does not 'spike' its tobaccos with nicotine. Smoking is not an addiction." 800335882-5886

B&W issued a press release in 1994 that stated: "B&W does nothing in the manufacture of its tobacco products that increases the level of nicotine above that which is naturally found in the tobacco plant, nor does it artificially increase nicotine." 202337394-7394 (US 21965).
In a June 1994 article, BAT spokesman Ralph Edmonson stated, "It is nonsense to say we want to make people more addicted to nicotine." 502575988-5988 (US 86884).
In a 1994 letter to FDA Commissioner David Kessler, James Johnston, Chairman and CEO of RJR, stated that "R.J. Reynolds Tobacco Company does not increase the nicotine in the tobacco we use in the manufacture of our cigarettes." TLT0730001-0850 at 0798 (US 77011) (emphasis in original).
In 1994, Reynolds placed an advertisement in national media outlets, featuring a photograph of RJR's Chairman James W. Johnston holding a burning cigarette with the following quote in large lettering under the photograph: "WE DO NOT 'SPIKE' OUR CIGARETTES WITH NICOTINE." In the text of the advertisement, Reynolds claimed that:

Recently, a TV show accused tobacco companies of somehow "spiking" the level of nicotine in our products to "addict" smokers. As Chairman of a tobacco company and a smoker, I want America's 45 million smokers to know that this is sheer nonsense. At R.J. Reynolds we do not increase the level of nicotine in any of our products in order to "addict" smokers. Instead of increasing the nicotine levels in our products, we have in fact worked hard to decrease "tar" and nicotine. Much of the recent controversy has focused on our use of various techniques that help us reduce the "tar" (and consequently the nicotine) yields of our products.

¶525722360-2360 (US 86935) (emphasis in original).

679

In a June 21, 1994 press release, RJR contended that its use of ammonia or ammonia compounds in processing tobacco "do[es] not have any technical or function [sic] effect in the finished product." RJR0000000526009069700493448-3448 (US 86936).

The Tobacco Institute also drafted a 1994 press release that stated: Cigarette manufacturers do not "manipulate" the level of nicotine in various brands. Nicotine levels follow "tar" levels -- as manufacturers have reduced "tar" levels and yields over the years to satisfy changing consumer tastes, nicotine levels and yields have fallen correspondingly.

¶TIMN328214-8215 (US 21284).

On a March 27, 1994, airing of "Face the Nation," Brennan Dawson, Tobacco Institute Senior Vice President of Public Affairs, stated:

The industry does take the position that . . . not only do they not add nicotine, but they don't manipulate nicotine. So Congress has been told formally by every cigarette manufacturer in the United States that this claim is without foundation.

¶TLT0730851-1975 (US 77012).

On October 18, 1995, BAT denied in the press that it had "doctored its cigarettes" based on reports from America that ammonia could boost nicotine delivery. BAT stated that "[t]here is no way we add anything to enhance the nicotine." ARU6532615-2615 (US 86883).
Defendants' public denials were likewise reflected in submissions to government bodies. For example, on January 2, 1996, RJR submitted its "Comments of R.J. Reynolds Tobacco Company Concerning FDA's Jurisdictional Analysis" to the Food and Drug Administration. Reynolds stated in its comments that its decades of research concerning nicotine "[did] not reflect an intent to provide smokers with pharmacologically active 'doses' of nicotine. . . . Reynolds's cigarette design research and the cigarettes that Reynolds has marketed and advertised to smokers demonstrate an intent to provide smoking taste and pleasure." 515639064-9121 at 9070 (US 86939).

680

In the late 1990s, an RJR scientist gave a presentation to the World Health Organization in which he denied that Reynolds was using ammonia to manipulate nicotine delivery in its cigarettes. Suber PD, United States v. Philip Morris, 7/18/02, 47:15-48:18.
A spokeswoman for RJR told The New York Times in February 1998 that "nicotine levels were not a 'design characteristic' in developing cigarettes . . . [and that its] 'research through the years has focused on reducing total tar and nicotine yield.'" RJR0000000141023624700466952- 6957 at 6954 (US 86941).
On January 29, 1998, Altria CEO Geoffrey Bible testified before the House of Representatives Commerce Committee in hearings that were televised nationwide. Bible stated:

I'm told that ammonium compounds are used in two ways in our products. In the first instance they are used as a blending agent in the manufacture of what is called sheet tobacco, which is included in the cigarette. . . . It is also used as a flavor. But I'm also told that the ammonium compounds that are used in the cigarettes we sell do not cause the amount of nicotine in smoke to rise. It does not change the form of the nicotine that goes to the brain. And it may result in a slight increase in the amount of nicotine in the mouth, . . . but that the nicotine absorbed through the mouth reaches the brain more slowly than nicotine absorbed through the lung.

¶MTP0030945-0986 at 0969 (US 76202); 2078124371-4372 at 4371 (US 86938).

In a February 24, 1998 letter to The New York Times written by Peggy Roberts, Director of External Relations, Philip Morris stated that "its use of ammonia compounds in the cigarette manufacturing process does not increase the amount of nicotine delivered to the smoker, does not increase the amount of nicotine absorbed in the lungs of the smoker, and does not affect the form of nicotine delivered to the smoker's brain." 2076733606-3607 at 3606 (US 43886).

681

In the 1990s, Brennan Dawson communicated Defendants' public position that "nothing in the cigarette manufacturing process is done with an eye toward manipulating nicotine levels. . . . It's all done with taste in mind." Dawson WD, 63:8-18; BWC3930802-0806 at 0803 (US 86937). Dawson told the Wall Street Journal that nicotine levels "follow" tar levels. BWC3930802- 0806 at 0803 (US 86937).
Defendants' public denials of nicotine manipulation continue. As of 2004, Philip Morris's current public Internet website states that: "[S]ome have alleged that we use specific ingredients to affect nicotine delivery to smokers. That is simply not true." ARG0540406-0407 at 0406 (US 88058).
As of 2004, RJR's public Internet website states that RJR "do[es] not add nicotine or any nicotinic compounds to any of our cigarettes, nor do we do anything to enhance the effects of nicotine on the smoker." This statement has been on RJR's website for several years. TLT1020067- 0069 at 0067 (US 86942); (no bates) (JD 068012 at 108).
As of 2004, B&W's current public Internet website states that: "Brown & Williamson does not in any way control the level or nature of nicotine in cigarettes to induce people to start smoking or to prevent people from quitting." TLT0770044-0049 at 0044 (US 86656).

c. Testimony Consistent with Fraudulent Public Statements 1754. In deposition and trial testimony, and in discovery responses, Defendants have made

¶the same or corresponding statements denying their ability and efforts to control nicotine.

682

On June 21, 2002, Hector Alonso, Vice President of Product Development and Technology at Philip Morris, when asked "Does Philip Morris exercise any control over the level of nicotine in the cigarettes that it sells," answered unequivocally "No." Alonso further stated that Philip Morris controls tar delivery, and repeated the oft-invoked public industry position that nicotine follows tar. Alonso PD, United States v. Philip Morris, 6/21/02, 51:6-51:9.
Liggett continues to deny that it manipulates nicotine. In its Answer to the United States' Complaint filed in this case, Liggett stated: "Liggett admits that it has stated in the past and does now state that it does not manipulate nicotine levels." Answer of Liggett Group Inc. to Plaintiff's Complaint for Damages and Injunctive and Declaratory Relief (R. 180, filed 10/30/2000), at ¶¶ 77, 78-80, 82.
Timothy Jackson, Vice President for Operations at Vector Tobacco, the holding company of Liggett as of September 2000, testified in this action that he was "not aware of . . . any way that nicotine is controlled through cigarette design." Jackson also testified that the delivery of nicotine is "directly relat[ed] to tar delivery." Prior to the time that Jackson became Vice President for Operations, he was the President of Liggett Operations for three years and had worked at Liggett since 1983. Jackson's duties at both Liggett and Vector include overseeing all areas relevant to the manufacture of cigarettes. Jackson also participated substantially in the design and manufacture of the Quest cigarette, which expressly and intentionally contains different levels of nicotine. Jackson PD, United States v. Philip Morris, 3/21/03, 8:16-9:1; 27:12-28:3; 11:15-11:19, 18:23-19:13, 65:20- 21; 65:2-65:20; 67:16-67:22; 66:23-68:2.

683

The Defendants have repeatedly made vigorous and impassioned public denials -- before Congressional committees, in advertisements in the national print media, and on television -- that neither smoking nor nicotine is addictive, and that they do not manipulate, alter, or control the amount of nicotine contained in the cigarettes they manufacture. The Findings of Fact contained in this Section and Section V(B), supra, provide overwhelming evidence that those statements are false.
As established by the Findings of Fact set forth in this Section, cigarette company Defendants researched, developed, and implemented many different methods and processes to control the delivery and absorption of the optimum amount of nicotine which would create and sustain smokers' addiction. These methods and processes included, but were not limited to: altering the physical and chemical make-up of tobacco leaf blends and filler; maintaining or increasing the nicotine to tar ratio by changing filter design, ventilation and air dilution processes, and the porosity and composition of filter paper; altering smoke pH by adding ammonia to speed nicotine absorption by the central nervous system; and using other additives to increase the potency of nicotine.
The fact that some of these methods and processes may also have been used, as Defendants argued, to improve flavor and taste, especially of low tar cigarettes as they were developed in response to the fears of the public about the adverse health effects of smoking, is in no way inconsistent with these Findings of Fact that Defendants also used them to manipulate, and increase the amount and form of nicotine delivered in cigarettes.
Nor is the fact that during the 1970s, the public health community may have encouraged the development of low tar cigarettes because it believed -- erroneously -- that nicotine levels would fall as tar levels fell, in any way inconsistent with these Findings of Fact. What the public health community did or did not know is irrelevant to the issue of what Defendants knew about the relationship between nicotine and tar and whether they knowingly made false public statements about that relationship.

684

The words of Defendants themselves establish that the goal of their extensive efforts, through research and experimentation, to control the levels of nicotine delivery was to ensure that smokers obtained sufficient nicotine to create and sustain addiction:

-- Philip Morris listed as one of the achievements of its Electrophysiological Studies Research Group a discovery "that there are optimal cigarette nicotine deliveries for producing the most favorable physiological and behavioral responses." ¶947, supra.

-- RJR's "top priority [was] to develop and market low 'tar' brands . . . that: [m]aximize the physiological satisfaction per puff -- the single most important need of smokers." ¶1431, supra.

-- BATCo named as a "high priority" development of "alternative designs (that do not invite obvious criticism) which will allow the smoker to obtain significant enhanced deliveries should he so wish." ¶1460, supra.

-- The "major objective" of Lorillard's study of filter design was to "increase the physiological impact and/or nicotine to tar ratio in ultra low tar cigarettes." ¶1488, supra.

In sum, the evidence as presented in these Findings of Fact is overwhelming that

¶Defendants have, over the course of many years, time and again -- and with great self-righteousness

¶-- denied that they manipulated the nicotine in cigarettes so as to increase the addiction and dependence of smokers. Those denials were false.

685

D. The Government Has Failed to Prove by a Preponderance of the Evidence that Defendants Deliberately Chose Not to Utilize or Market Feasible Designs or Product Features that Could Produce Less Hazardous Cigarettes. 1. Introduction 1764. The cigarette company Defendants have made many efforts and have used many

¶different scientific approaches, over the last forty years, to develop and market less hazardous cigarettes. These Defendants knew that there was an enormous market for such cigarettes and an enormous profit to be made by whichever company was first to achieve success. For that reason, they invested hundreds of millions of dollars, as well as the time and creativity of hundreds of scientists and technical assistants, to reach that goal. They still failed.

The Government alleges that the Defendants failed because they did not wish to undermine the commercial viability of their existing brands by suggesting that they were less safe, or provide any ammunition to plaintiffs in the smoking and health litigation which they greatly feared. Based on the facts presented, infra, however, the Court cannot find that the Government has proved, by a preponderance of the evidence, that the cigarette company Defendants deliberately chose not to develop, market, and profit from less hazardous cigarettes in order to insulate their existing brands from competition and reduce their litigation exposure.

686