Defendants Undertook Joint Efforts to Undermine

¶and Discredit the Scientific Consensus that ETS Causes Disease . . . . 1266

a. Defendants Acted Through a Web of Coordinated and Interrelated International and Domestic Organizations . . . 1266

(1) 1975-1980: The Tobacco Institute ETS Advisory Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1266

¶(2) 1977-1991: "Operation Berkshire" . . . . . . . . . . . . . . . 1273

¶(3) 1987: Operation Downunder . . . . . . . . . . . . . . . . . . . . 1282

(4) 1988-1999: The Center for Indoor Air Research (CIAR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1287

¶(a) CIAR Applied Projects . . . . . . . . . . . . . . . . . . 1294

¶-xxi-

(b) Defendants Cultivated CIAR's Apparent Independence . . . . . . . . . . . . . . . . . . 1301 (c) The Demise of CIAR . . . . . . . . . . . . . . . . . . . 1307 (5) Post-1991: IEMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1308 (6) The Global ETS Consultancy Program . . . . . . . . . . . . 1319 (a) Establishment and Goals of the ETS Consultancy Program . . . . . . . . . . . . . . . . 1319 (b) Implementation of the ETS Consultancy Program: Recruiting, Training, and Educating the Consultants . . . . . 1321 (c) The Indoor Air Pollution Advisory Group (IAPAG) . . . . . . . . . . . . . . . . . . . . . . . . 1328 (d) The Appearance of "Independence" . . . . . . . . . 1330 (e) Defendants' Use of Consultants . . . . . . . . . . . . 1333 (f) ARIA and IAI . . . . . . . . . . . . . . . . . . . . . . . . . . 1336 (g) The Industry's ETS Consultants Cited and/or Published Without Disclosure of Tobacco Industry Ties . . . . . . . . . . . . . . . . . 1340 (h) ACVA/HBI . . . . . . . . . . . . . . . . . . . . . . . . . . . 1343 (7) ETS Symposia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1346 (a) The 1974 Bermuda (Rylander) "Workshop" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1347 (b) The Geneva (Rylander) Conference . . . . . . . . . 1349 (c) The Vienna Conference . . . . . . . . . . . . . . . . . . 1353 (d) The 1987 Tokyo Conference . . . . . . . . . . . . . . 1356 (e) The 1989 McGill "Symposium" . . . . . . . . . . . . 1359

¶-xxii-

b. Defendants and Their Paid Consultants Controlled ETS Research Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1364 (1) The 1995 Japanese Spousal Study . . . . . . . . . . . . . . . . 1364 (2) The 1989 Malmfors/SAS Airline Study . . . . . . . . . . . . 1372 (3) The 1992 HBI 585 Building Study . . . . . . . . . . . . . . . 1377 (4) The 2003 Enstrom/Kabat Study . . . . . . . . . . . . . . . . . . 1380

Defendants Made False and Misleading Public Statements

¶Denying that ETS Is Hazardous to Nonsmokers . . . . . . . . . . . . . . . . . 1384

Defendants Continue to Obscure the Fact that ETS

is Hazardous to Nonsmokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1397 a. Websites and Other Public Statements . . . . . . . . . . . . . . . . . . 1397 b. The Philip Morris External Research Program (PMERP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1402 c. Other Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1405 9. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1406

At Various Times, Defendants Attempted to and Did Suppress

and Conceal Scientific Research and Destroy Documents Relevant to Their Public and Litigation Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1407 1. Suppression and Concealment of Scientific Research . . . . . . . . . . . . . 1408 a. R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1409 b. BAT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1414 c. Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1424 d. Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1432 2. Document Destruction Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1432 a. BAT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1432

¶-xxiii-

b. R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1463 3. Improper use of Attorney-Client and Work Product Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1464 a. BAT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1465 b. R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1471 c. Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1472 d. Findings by Other Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1473 4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1477

THE PROVISIONS AND IMPLICATIONS OF SETTLEMENT

AGREEMENTS BY DEFENDANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1478 A. Liggett's Settlement Agreement with Various States . . . . . . . . . . . . . . . . . . . 1478 B. The Master Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481 1. Provisions of the MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481 2. Enforcement of the MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1486 3. Developments Since the MSA . . . . . . . . . . . . . . . . . . . . . . . . . 1492

¶VII. DEFENDANTS HAVE VIOLATED 18 U.S.C. 1962(c) . . . . . . . . . . . . . . . . . . . . . . 1498

¶A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1498

Defendants Engaged in a Scheme to Defraud Smokers

¶and Potential Smokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1501

Defendants Falsely Denied the Adverse Health Effects

¶of Smoking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1505

Defendants Falsely Denied that Nicotine and Smoking

¶Are Addictive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1508

¶-xxiv-

Defendants Falsely Denied that They Manipulated Cigarette

Design and Composition so as to Assure Nicotine Delivery Levels Which Create and Sustain Addiction . . . . . . . . . . . . . . . . . . . . 1512

Defendants Falsely Represented that Light and Low Tar

Cigarettes Deliver Less Nicotine and Tar and, Therefore, Present Fewer Health Risks than Full-Flavor Cigarettes . . . . . . . . . . . 1514 5. Defendants Falsely Denied that They Market to Youth . . . . . . . . . . . . 1518 6. Defendants Falsely Denied that ETS Causes Disease . . . . . . . . . . . . . 1522 7. Defendants Suppressed Documents, Information, and Research . . . . . 1526

¶C. Defendants Established an Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1528

Applicable Legal Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1528 2. Defendants' Enterprise Had a Common Purpose . . . . . . . . . . . . . . . . 1530 3. The Enterprise operated through both formal and informal organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1532 4. The Enterprise Has Functioned as a Continuous Unit . . . . . . . . . . . . . 1534

The Enterprise Engaged in and Its Activities Affected Interstate

¶and Foreign Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1536

¶E. Each Defendant Was Associated with, but Distinct from,

the Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1539 1. Each Defendant Is Associated with the Enterprise . . . . . . . . . . . . . . . 1539 2. Each Defendant is Distinct from the Enterprise . . . . . . . . . . . . . . . . . . 1542

¶F. Each Defendant Participated in the Conduct of the Enterprise . . . . . . . . . . . . 1542

Each Defendant Carried Out Its Participation in the Conduct

¶of the Enterprise by Engaging in a Pattern of Racketeering Activity . . . . . . . 1548

¶-xxv-

The Government Has Proven that Defendants Caused

Mailings and Wire Transmissions, in Furtherance of the Scheme to Defraud, in Violation of 18 U.S.C. § § 1341 and/or 1343 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1548

¶a. Defendants' Routine Mailing Practices . . . . . . . . . . . . . . . . . . 1552

¶(1) Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

¶(2) Lorillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

¶(3) Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1553

¶(4) R.J. Reynolds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1554

¶(5) The Tobacco Institute . . . . . . . . . . . . . . . . . . . . . . . . . . 1554

¶(6) Council For Tobacco Research . . . . . . . . . . . . . . . . . . 1554

b. Prior Stipulations and Admissions Establish the Mailings and Wire Transmissions Underlying 79 of the Alleged 145 Racketeering Acts . . . . . . . . . . . . . . . . . . . . . 1555

c. The Mailings and Wire Transmissions Underlying the Alleged Racketeering Acts Which Involve Defendants' Press Releases and Advertisements Were Disseminated to the Public Via the United States Mails and Wire Transmissions . . . . . . . . . . 1555

d. Defendants Caused Wire, Radio, and Television Transmissions Underlying the Racketeering Acts . . . . . . . . . . 1557

e. The Mailings and Wire Transmissions Involving Communications Were Sent or Received by Defendants or their Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1558

f. The Cigarette Company Defendants Are Liable for the Mailings and Wire Transmissions Underlying the Racketeering Acts Committed By Defendants CTR and TI . . 1560

The First Amendment Does Not Protect Defendants' False

¶and Misleading Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1562

¶-xxvi-

a. Noerr-Pennington Protects Only Those Defendants' Statements Made in the Course of Petitioning the Legislature; It Does Not Immunize Statements Made with the Purpose of Influencing Smokers, Potential Smokers, and the General Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1563

b. The Government Has Met the Necessary Standard of Proof to Show that Defendants' Actions Are Fraudulent . . . . . 1564

Defendants Engaged in a Pattern of Racketeering Activity in Furtherance of the Scheme to Defraud . . . . . . . . . . . . . . . . . . . . . . . . . 1566

a. Each Defendant Committed at Least Two Racketeering Acts, the Last One of Which Occurred Within Ten Years from the Commission of the Prior Racketeering Act . . . . . . . . 1566

¶(2) The Racketeering Acts Have Been Continuous . . . . . . 1570

Defendants Acted with the Specific Intent to Defraud or Deceive . . . 1571

a. Defendants Are Liable for the Acts of Their Officers, Employees, and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1572

b. Defendants Are Deemed to Possess the Collective Knowledge of Their Officers, Employees, and Agents . . . . . . 1575

c. Specific Intent May Be Established by the Collective Knowledge of Each Defendant and of the Enterprise as a Whole . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1578

Defendants' False and Fraudulent Statements, Representations, and Promises Were Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1583

¶VIII. DEFENDANTS HAVE VIOLATED 18 U.S.C. §1962(d) . . . . . . . . . . . . . . . . . . . . . 1588

¶A. Applicable Case Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1588

Each Defendant Is Liable for the RICO Conspiracy Charge

¶Because Each Entered into the Requisite Conspiratorial Agreement . . . . . . . 1591

¶-xxvii-C. Liggett Withdrew from the Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1597 IX. ALTRIA IS LIABLE FOR ITS VIOLATIONS OF 18 U.S.C. §1962(c) and (d) . . . . 1599

THERE IS A LIKELIHOOD OF PRESENT AND FUTURE

VIOLATIONS OF RICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1601 A. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1601

The Enterprise's Scheme to Defraud Presents Continuing

Opportunities for Defendants to Commit Violations of 18 U.S.C. 1962 (c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1606

The MSA Has Not Sufficiently Altered Defendants' Conduct to

¶Justify Not Imposing Appropriate Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 1609

As to Certain Defendants, There is Not a Reasonable Likelihood

of Future Violations of 18 U.S.C. § 1962 (c) and (d) . . . . . . . . . . . . . . . . . . . 1613 1. CTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1613 2. The Tobacco Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1615 3. Liggett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1618

¶XI. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1620

A. Legal Standards Governing Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1620 B. Specific Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1627 1. Prohibition of Brand Descriptors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1627 2. Corrective Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1631 3. Disclosure of Documents and Disaggregated Marketing Data . . . . . . 1636 a. Depositories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1638 b. Websites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1640 c. Privilege Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1641

¶-xxviii-

d. Disaggregated Marketing Data . . . . . . . . . . . . . . . . . . . . . . . . 1642 4. General Injunctive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1643 5. National Smoker Cessation Program . . . . . . . . . . . . . . . . . . . . . . . . . . 1644 6. Youth Smoking Reduction Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1645 7. Corporate Structural Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1647 8. Public Education and Countermarketing Campaign . . . . . . . . . . . . . . 1650 9. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1651

¶-xxix-