Defendants Researched, Developed, and Utilized Various

Designs and Methods of Nicotine Control to Ensure that All Cigarettes Delivered Doses of Nicotine Adequate to Create and Sustain Addiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567

a. Defendants Recognized the Need to Design Cigarettes that Would Produce Low Nicotine and Tar Measurements under the FTC Method While Also Delivering the Minimum Nicotine Levels to Create and Sustain Addiction . . . . . . . . . . . 570

b. Leaf Blend and Filler: Defendants Controlled the Amount and Form of Nicotine Delivery in Their Commercial Products by Controlling the Physical and Chemical Make-Up of the Tobacco Blend and Filler . . . . . . . . . . . . . . . . 572

¶(1) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575

¶(2) R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578

¶(3) Brown & Williamson and BATCo . . . . . . . . . . . . . . . . 580

¶(4) American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583

¶(5) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587

¶(6) Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589

c. Nicotine to Tar Ratio: Defendants Have Used Physical Design Parameters to Increase the Nicotine to Tar Ratio of Their Cigarettes . . . . . . . . . . . . . . . . . . . . . . . . . 589

¶(1) Filter Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592

¶(2) Ventilation and Air Dilution . . . . . . . . . . . . . . . . . . . . . 593

¶(3) Paper Porosity and Composition . . . . . . . . . . . . . . . . . . 594

d. Smoke pH and Ammonia: Defendants Altered the Chemical Form of Nicotine Delivered in Mainstream Cigarette Smoke for the Purpose of Improving Nicotine Transfer Efficiency and Increasing the Speed with Which Nicotine Is Absorbed by Smokers . . . . . . . . . . . . . . . . . . . . . . . 596

¶-x-

(1) Scientific Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596 (2) Individual Defendants' Documents . . . . . . . . . . . . . . . . 605 (a) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 (b) R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . 610 (c) Brown & Williamson and BATCo . . . . . . . . . . 617 (d) American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627 (e) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628 (f) Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631 e. Other Additives: Defendants Researched the Use of Other Additives to Control Nicotine Delivery . . . . . . . . . . . . . . 633

Defendants Have Made False and Misleading Public

Statements Regarding Their Control of the Nicotine Content and Delivery of Their Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636 a. The Waxman Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637 b. Defendants' False and Misleading Public Statements Continued After the Waxman Hearings . . . . . . . . . . . . . . . . . . . 646 c. Testimony Consistent with Fraudulent Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653

¶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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655 1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655

Defendants Have Long Acknowledged Internally the

¶Existence of a Market for a Genuinely Less Hazardous Cigarette . . . . . 656

¶-xi-

Defendants Received Conflicting Messages From the

Government and the Public Health Community About Their Efforts to Create and Market Less Hazardous Cigarettes . . . . . . . . . . . 658 4. As Part of the Effort to Make Less Hazardous Cigarettes, Defendants Experimented with General and Selective Reduction . . . . 663 a. General Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663 b. Selective Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 667 (1) Defendants' Efforts to Reduce Benzo(a)pyrene . . . . . . . 668 (2) Defendants' Efforts to Reduce Phenols Through Use of Charcoal Filtered Cigarettes . . . . . . . . 669 (a) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 (b) RJ Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673 (c) Lorillard's York Cigarette . . . . . . . . . . . . . . . . . 675 (3) Defendants' Efforts to Reduce Ciliastats . . . . . . . . . . . . 676 (4) Defendants' Efforts to Reduce Delivery of Tobacco-Specific Nitrosamines . . . . . . . . . . . . . . . . . . . 677

Defendants' Efforts to Develop/Market Potentially Less

Hazardous Non-Conventional Products . . . . . . . . . . . . . . . . . . . . . . . . 682 a. Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 (1) Accord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 (2) Next . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 (3) Nicotine Analogue Program . . . . . . . . . . . . . . . . . . . . . . 687 b. RJ Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 (1) The Multijet Filter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 (2) Heated Tobacco Products . . . . . . . . . . . . . . . . . . . . . . . . 690

¶-xii-

(a) Premier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 (b) Eclipse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703 (3) EW/Winston Select . . . . . . . . . . . . . . . . . . . . . . . . . . . . 712 c. BATCo and Brown &Williamson . . . . . . . . . . . . . . . . . . . . . . . 721 (1) FACT Cigarette . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721 (2) Project Ariel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722 (3) Project Airbus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723 (4) Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726 d. Lorillard's Zero Tar and PMO Projects . . . . . . . . . . . . . . . . . . . 731 e. Liggett's Project XA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 732

The Government Has Not Proven by a Preponderance

of the Evidence that Defendant Had a "Gentleman's Agreement" Not to Develop a Less Hazardous Cigarette and Not to Do In-House Biological Research on the Hazards of Smoking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734 7. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 738

Defendants Falsely Marketed and Promoted Low Tar/Light

Cigarettes as Less Harmful than Full-Flavor Cigarettes in Order to Keep People Smoking and Sustain Corporate Revenues . . . . . . . . . . . . . . . . 740

Low Tar/Light Cigarettes Offer No Clear Health

Benefit over Regular Cigarettes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 a. History of Health Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 b. The FTC Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 746 c. The FTC Method Does Not Measure Actual Tar and Nicotine Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750

¶-xiii-

d. The Public Health Community Has Concluded that Low Tar Cigarettes Offer No Clear Health Benefit . . . . . . 765 2. Based on Their Sophisticated Understanding of Compensation, Defendants Internally Recognized that Low Tar/Light Cigarettes Offer No Clear Health Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786 a. Defendants Internally Recognized that Low Tar Cigarettes Are Not Less Harmful Than Full-Flavor Cigarettes . . . . . . . . . 786 (1) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786 (2) RJ Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 770 (3) Brown & Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . 791 (4) BATCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 (5) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793 (6) Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 794 b. Internally, Defendants Had an Extensive and Sophisticated Understanding of Smoker Compensation . . . . . . 794 (1) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796 (2) RJ Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 806 (3) Brown & Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . 809 (4) BATCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811 (5) American Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817 (6) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817

Defendants Internally Recognized that Smokers Switch

to Low Tar/Light Cigarettes, Rather than Quit Smoking, Because They Believe They Are Less Harmful . . . . . . . . . . . . . . . . . . . 819 a. Defendants Recognized that Smokers Choose Light/Low Tar Cigarettes for a Perceived Health Benefit . . . . . 822

¶-xiv-

(1) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 822 (2) R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831 (3) Brown & Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . 834 (4) BATCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 838 (5) American Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840 (6) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 842 b. Defendants Internally Recognized that Smokers Rely on the Claims Made for Low Tar/Light Cigarettes as an Excuse/ Rationale for Not Quitting Smoking . . . . . . . . . . . . 843 (1) Tobacco Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 (2) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 (3) R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850 (4) Brown & Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . 855 (5) BATCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 858 (6) American Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 861 (7) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 862 (8) Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 864

Despite Their Internal Knowledge, Defendants Publicly

Denied that Compensation Is Nearly Complete and that the FTC Method is Flawed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 864 a. Tobacco Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871 b. Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872 c. RJ Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 874 d. Brown & Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875

¶-xv-

e. BATCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 876 f. American Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877 g. Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877