United States v. Philip Morris USA Inc.: Amended Final Opinion · 2006
Despite Their Internal Knowledge, Defendants' Marketing and Public Statements About Low Tar Cigarettes Continue to Suggest that They Are Less Harmful than Full-Flavor Cigarettes
Despite Their Internal Knowledge, Defendants' Marketing and Public Statements About Low Tar Cigarettes Continue to Suggest that They Are Less Harmful than Full-Flavor Cigarettes
¶2377. As detailed below, Defendants made, and continue to make, false and misleading statements regarding low tar cigarettes in order to reassure smokers and dissuade them from quitting. These actions include: assertions that low tar cigarettes deliver "low," "lower," or "less" tar and nicotine than full-flavor cigarettes; claims that low tar cigarettes are "mild" or deliver "clean" taste; and use of brand names with descriptors such as "light" and "ultra light," with full knowledge that consumers interpret these claims and descriptors to convey reduced risk of harm.
908¶2378. Low tar cigarettes have captured an enormous share of the total cigarette market. The percentage of low tar cigarettes (i.e., cigarettes with an FTC-reported tar yield of 15 mg. or less) has increased from 2% in 1967 to 81.9% of total cigarette sales in 1998. (no bates) (US 86655) (FTC, 1994 Report at Table 6A, Table 7); 92382035-2095 at 2057 (US 57179); (no bates) (US 87925 at 8) (FTC, 1979 Report); (no bates) (US 60434 at 22-26) (FTC, 1998 Report).
¶2379. From the 1960s to the present, Defendants' marketing of their health reassurance brands has featured claims of lowered tar and nicotine accompanied by written statements that implied a health benefit as a result of the lowered tar levels. Defendants have also used marketing imagery, such as lighter color cigarette packaging and white tipping paper, to communicate to smokers that Defendants' health reassurance brands were "lighter" and lower in tar.
¶2380. Over the last five decades, Defendants have not only introduced numerous stand- alone cigarette brands that purport to be low in tar (e.g., Merit, Vantage, and Carlton), but have also introduced low tar "brand extensions" of existing full flavor cigarette brands (e.g., Marlboro Lights and Ultra Lights as extensions of the full flavor Marlboro brand). Defendants have used so-called brand descriptors such as "light," "medium," "mild," and "ultra light" to market both their new brands, as well as their brand extensions as low in tar. Virtually every major brand undertook line extensions and by 1980 over 50% of cigarettes sold were "low tar" (with an FTC Method tar yield of 15 mg or less). Dolan WD, 123:21-124:7. Defendants acknowledge that, today, every major manufacturer continues to manufacture and sell low tar brands and brand extensions in both the 'light' and 'ultra light' categories. Ivey WD, 54:6-17; Bonhomme WD, 8:13-9:18.
¶2381. Although the FTC does not formally classify cigarettes according to tar or nicotine yield, industry practice, according to Denise Keane, Philip Morris General Counsel, has long been to apply the 'light' descriptor to cigarettes with 7 to 14 milligrams of tar, and the 'ultra light' descriptor to cigarettes with fewer than 7 milligrams of tar." These brand descriptors "have been developed by cigarette manufacturers through their advertising." Keane WD, 56:14-23; Mulholland WD, 26:4-27:9; accord Henningfield WD, 56:8-11 (testifying that the FTC has no "control over which cigarettes Defendants advertise as 'light' or 'ultra light'").
909¶2382. The terms "Light" and "Low Tar," as they are used by Defendants, are essentially "meaningless" and "arbitrary." As Dr. Farone explained:
[T]here are lights of certain brands with higher tar levels than regulars of other brands from the same company, and there are also lights and regulars of the same brand that have the same FTC tar rating. So therefore the term "light" is not related to tar or taste. For example, according to the most recent FTC report of tar and nicotine yields, Philip Morris sells versions of Virginia Slims and Virginia Slims Lights that both deliver 15 mg of tar by the FTC method.
¶Farone WD, 116:3-14; 525311179-1223 at 1185, 1207-1208, 1222 (US 52977).
¶2383. The FTC's 1967 report to Congress concluded that Defendants were using the word "mild" in advertising "as a euphemism for cloaking the dangers of increased cigarette smoking." The Report noted, in particular, the following ads:
Carlton filters have "Good mild taste . . . created for those who are interested in the amount of tar and nicotine in the smoke of their cigarette. . . ." "Montclair (menthol filter) cigarettes are made especially for smokers who seek exceptional mildness. . . ." "You get Pall Mall's famous extra length of fine tobaccos . . . and a filter tip. Result? A new longer length, a full 100 millimeters long and a new milder taste . . ." and "(Chesterfield kings) made to taste even milder through longer length."
¶92382035-2095 at 2058-2059 (US 57179).
910¶2384. In its 1968 report, the FTC concluded that Defendants' use of the phrase "mild taste" in advertising is just another way to communicate the term "less harmful" to smokers:
Advertising in 1966 featured the phrase "mild taste" to describe the satisfactions obtained from smoking and also as a euphemism to cloak the dangers of cigarette smoking. The euphemistic effect derives from the possibility that the public assumes "mild" tasting cigarettes to be less strong, i.e. lower in tar and nicotine than many cigarettes, and hence less hazardous.
¶TIMN288040-8122 at 8055-8056 (JD 043418).
¶2385. The 1971 FTC report noted that "[r]elieving anxieties about the risks to health posed by cigarette smoking" was among Defendants' three main advertising themes and that "[c]laims of low tar and nicotine content present yet another appeal to relieve concern about the dangers to health associated with cigarette smoking." In 1975 and 1976 reports, the FTC reported that this theme, used separately or with themes regarding taste or desirable personality characteristics, "continued to predominate in 1975," and "continued to dominate in 1976, with little variation in format and copy except in the greatly increased promotional emphasis given to the lower and lowered 'tar' varieties." 680043553-3595 at 3564, 3567 (US 87922);1005121108-1119 at 1114 (US 87921); (no bates) (JD 003563 at 4-5) (FTC, 1976 Report).
¶2386. The 1981 FTC report on cigarette advertising noted, many of Defendants' advertising campaigns had, over the course of the preceding four decades, "impl[ied] that smoking a particular brand solves the health problem or at least minimizes the risk." The report noted that Philip Morris's Parliament and American Tobacco's (subsequently B&W's) Tareyton cigarettes "imply that their special filters minimize the risks of smoking." The report also cited the advertisements for RJR's Vantage, B&W's Viceroy, and Lorillard's True cigarettes as examples of advertising campaigns implying that the brands marketed are either not harmful or less harmful. (no bates) (JD 004744 at 2-12) (FTC, 1981 Report).
911¶2387. Similarly, the 2001 Institute of Medicine report cited the advertisements of Defendants Philip Morris, RJR, B&W, American Tobacco, Lorillard, and Liggett as examples of advertisements that relate health benefits to particular low tar cigarette brands. (no bates) (US 20919) (Institute of Medicine, Clearing the Smoke: Assessing the Science Base for Tobacco Harm Reduction) (K. Stratton, et al., eds., National Academy Press 2001); 99053048-3558 at 3124-27 (US 57494).
¶2388. The FTC noted in a 1976 report that "[t]he lower and lowered 'tar' and nicotine cigarettes have in the last year been the subject of an intensive promotional effort by cigarette manufacturers." Defendants' spending on the advertising and marketing of low tar cigarettes (i.e., cigarettes yielding 15 mg. or less tar per the FTC Method) has been disproportionately high compared to their domestic market share. The FTC's report for 1997 revealed that for every single year from 1967 to 1992. Defendants' advertising and promotional spending for low tar cigarettes exceeded their domestic market share. According to one marketing expert, low tar cigarettes came to "substantially reshape and define the cigarette market," explaining that:
912[T]he real "boom: time for these cigarettes is the late 1970s. In 1974, manufacturers devoted about 15% of their advertising and promotion dollars to these products. By 1979, this spending grew to 67%. At the time, the percent of sales represented by low tar was only 30%, so spending was disproportionately high on these "health reassurance" brands. These products, which accounted for less than 15% of cigarette sales in 1975 came to hold the majority of the market by 1981.
¶It was not until the mid-1990s that the percentage of sales made by low tar brands finally equaled the amount that Defendants were spending to promote them, which was about 70% of the industry total. HHS1311770-1805 at 1799 (US 76080); Dolan WD, 125:6-126:7.
¶2389. According to Dr. Henningfield, who among his many other credentials headed the National Institute of Drug Abuse from 1994 to 1996, smokers are not always familiar with the FTC rating of their cigarette, but are aware of whether their cigarettes are "light" cigarettes or "regular." There is little, if any, dispute that consumers believe that "light" cigarettes deliver less tar and nicotine than regular cigarettes, and that consumers believe that regular cigarettes are more hazardous than "light" cigarettes. Henningfield WD, 56:12-57:10.
¶2390. Relatively few people understand that smoking low tar or light cigarettes can be -- and often is -- just as dangerous as smoking full flavor cigarettes. Weinstein WD, 54:21-55:20. A peer-reviewed, published study showed that 70% of low tar cigarette smokers believe that such cigarettes decrease one's daily intake of tar. Weinstein WD, 55:5-8 (citing Kozlowski et al., Smoker reactions to a "radio message" that Light cigarettes are as dangerous as regular cigarettes. Nicotine & Tobacco Research, 1(1);67-76(1999)). Similarly, another study showed that approximately half of all respondents did not know how many light cigarettes would have to be smoked to get the same level of tar intake as from one full flavor cigarette. Fewer than 10% believed that it would be one light cigarette. Weinstein WD, 55:12-15 (citing Kozlowski, L.T., Goldberg, M.E., Yost, B.A., White, E.L., Sweeney, C.T., Pillitteri, J.L. Smokers' misperceptions of light and ultra-light cigarettes may keep them smoking. American Journal of Preventive Medicine, 15, 9-16 (1998) ("Kozlowski, Goldberg, et al., 1998")).
913¶2391. Defendants have used this misperception to their advantage. A 1996 article in the American Journal of Public Health cited a 1993 Gallup survey in which 56% of smokers believed use of the term "low tar" conveyed relative safety compared to full-flavor cigarettes. The American Journal of Public Health article also cited a 1987 National Health Interview Survey finding that 46% of smokers of cigarettes with tar yields of 6 mg. or lower (per the FTC Method) believed they had reduced cancer risk compared with smokers of cigarettes with higher FTC tar yields. 2074759740- 9746 at 9741 (US 43526); accord 99053048-3558 at 3112 (US 57494) (2001 Institute of Medicine study stating "When filtered and low-yield cigarettes were introduced into U.S. markets, they were heavily promoted and marketed with both explicit and implicit claims of reducing the risk of smoking. Even as data accumulated, albeit slowly, that these products did not result in much -- if any -- decrease in risk, consumers have continued to believe otherwise. . . . Consumer misunderstanding is explained in part by the ways in which these products are marketed. . . . [T]he tobacco companies have appealed to health concerns of smokers at least since 1927. Claims about tar and nicotine levels appeared as early as 1942").
¶2392. Defendants continue to disseminate false and misleading public statements regarding their true intent in marketing low tar cigarettes. For example, Defendants Philip Morris, RJR, B&W, and Lorillard jointly stated to the FTC in February 1998: "The manufacturers do not claim that lower-yield cigarettes are 'safe' or are 'safer' than higher yield cigarettes." Comments of Philip Morris Inc., RJR Tobacco Co., Brown & Williamson Tobacco Corp., and Lorillard Tobacco Co. on the Proposal Titled FTC Cigarette Testing Methodology Request for Public Comment (62 Fed. Reg. 48,158) at 3, 94 ("Joint Comments") (US 88618).
914¶2393. Defendants have publicly committed to refrain from marketing with implied health claims. In April 1964, the Cigarette Company Defendants adopted the Cigarette Advertising and Promotion Code ("Code"), which includes provisions prohibiting "advertising which makes a representation with respect to health." The Cigarette Company Defendants have claimed publicly that they have obeyed and continue to obey the 1964 Code, last revised in December 1990. Krugman WD, 164:6-21. Each cigarette company Defendant continues to state on its website and in other public statements that it has adopted the Code and that it follows the Code in planning and executing its cigarette marketing. 2070557699-7702 (US 20519). 2025345360-5362 (US 20414); MNAT00608606-8614 (US 78779); TIMN0102493-2494 (US 21271); TIMN0015615-5617 (US 21265); 2022976326-6335 (US 20370); ATX040294056-4056 (US 58599). See Section V(F)(7)(a)((1)) regarding the total lack of enforcement of the Code. More recently, Defendants agreed in the 1998 Master Settlement Agreement not to make "any material misrepresentation of fact regarding the health consequences of using any tobacco product." Section III(r) of the Agreement states:
Prohibition on Material Misrepresentations. No Participating Manufacturer may make any material misrepresentation of fact regarding the health consequences of using any Tobacco Product, including any tobacco additives, filters, paper or other ingredients.
¶(no bates) (JD-045158) (Master Settlement Agreement, § III(r)).
¶2394. Defendants also told the FTC in their 1998 testimony: "Smokers are familiar with the ratings produced by the current test method, and continued use of the current test method assures historical continuity of the data. For these reasons, testing under the current FTC test method should continue." Joint Comments at 4.
915¶2395. In response to the FTC's question regarding the need for official guidance on brand descriptors, Defendants stated: "The manufacturers are not convinced that there is a need for official guidance with respect to the terms used in marketing lower rated cigarettes." As to terms, such as "light" and "ultra light," "[t]he manufacturers believe smokers understand that these descriptors are terms of comparison rather than signifiers of absolute value." Joint Comments at 94.
¶2396. In response to the following FTC query:
What data, evidence, or other relevant information on consumer interpretation and understanding of terms such as "ultra low tar," "ultra light," "low tar," "light," "medium," "extra light," and "ultima," as used in the context of cigarettes exists? Do consumers believe they will get significantly less tar from cigarettes described as "light" or "low tar" than from regular full flavor cigarettes, and do they believe they will get significantly less tar from cigarettes described as "ultra low tar" or "ultra light" than from "light" or "low tar" cigarettes? Do the brand descriptors convey implied health claims?
¶Defendants Philip Morris, RJR, B&W, and Lorillard jointly stated in their joint comments to the FTC:
The manufacturers believe that consumers choose "light" or "ultra" products for a variety of reasons, including lighter flavor, lighter taste, less menthol (or other flavor) taste, and smoother smoking characteristics. Some consumers may choose such products for other reasons. The manufacturers do not intend the descriptors to convey any level of 'safety' with regard to their products.
¶Defendants' joint comments further stated: "The manufacturers are not aware of evidence that consumers use descriptors in lieu of the FTC numbers as their primary source of information about the 'tar' and nicotine yields of different brand styles." Joint Comments at 95.
¶2397. In response to the FTC's question:
916What available evidence exists concerning how consumers view cigarettes with relatively low tar and nicotine ratings and their perception of the relative risks of smoking such cigarettes rather than full flavor cigarettes?
¶Defendants Philip Morris, RJR, B&W, and Lorillard jointly stated:
The manufacturers are unaware of evidence concerning such consumer views and perceptions except to the extent that such evidence is presented in [the National Cancer Institute's Smoking and Tobacco Control Monograph No. 7].
¶Joint Comments at 89.
¶2398. Defendants' testimony to the FTC fails to make any reference to the vast amounts of consumer research Defendants conducted, and had conducted for them by their numerous advertising and marketing consultants, that expressly found that many consumers strongly disliked the taste of low tar cigarettes, but were smoking them because they believed they were healthier for them. Accord 2041186475-6517 at 6478, 6504 (US 22181*) (November 29, 1994 submission to the National Cancer Institute on behalf of B&W, American Tobacco, Lorillard, and Liggett contending that smokers use FTC tar and nicotine ratings primarily for information relating to taste considerations, referring to what Defendants called "the well-established significance of the FTC's machine-determined yields for comparing the flavor, richness and satisfaction of different brands of cigarettes," and predicting that if modifications to the FTC Method occurred, "[c]onsumers . . . would be deprived of important information about the flavor, taste and feel of cigarettes -- information consumers consider to be highly relevant in distinguishing among" brands).
¶2399. As detailed below, Defendants' public statements about low tar cigarettes on their websites, the statements of their executives, and their internal documents are false and misleading.
917Philip Morris
Philip Morris's Low Tar Cigarette Marketing Techniques
¶2400. Over the last 50 years Philip Morris has used a variety of marketing techniques to reassure smokers that certain brands and types of cigarettes would reduce their health risk from smoking by reducing their exposure to tar. Philip Morris advertisements in the early 1950s made explicit claims of reduced harm, such as the following:
1952: "If, like millions today, you are turning to filter cigarettes for pleasure plus protection . . . it's important that you know the Parliament Story." 696000888-0916 at 0894, 0905, 0908 (US 21387); Harris WD, 70:3-6.
1952: "Parliament's exclusive Filter Mouthpiece gives you the important extra protection of the Parliament 'Safety-Zone' Construction. . . . As the irritants, brown tars and colorless nicotine are trapped, they remain where they belong–in the recessed filter, completely out of contact with your lips." 696000888-0916 at 0894, 0905, 0908 (US 21387)
1954: "You're So Smart to Smoke Parliaments." (US 2731) (emphasis in original); see also (US 2756) (1956 Parliament advertisement in Sports Illustrated magazine noting same).
1954: "The cigarette that takes the FEAR out of smoking!" 696000888-0916 at 0908 (US 21387).
¶2401. In addition to making explicit health claims, since the 1970s Philip Morris has used brand descriptors such as "light" and "ultra light" to communicate that certain brands of cigarettes are low in tar and nicotine. James Morgan, who was Brand Manager of Marlboro from 1969 to 1972, during the time when Philip Morris introduced Marlboro Lights, its first "light" cigarette, explained the intended meaning of the "lights" descriptor. Morgan stated that, from the very beginning, the "lights" descriptor was intended to communicate that the brand was low in tar -- as opposed to a brand that was lighter in taste:
918From the very beginning the phrase, "Lowered tar and nicotine" was going to be on the package [of Marlboro Lights]. That was the phrase that described to the consumer what the product was in our judgment. . . . We felt the brand name, Marlboro Lights, was a real help in terms of the description of the product being low in tar and nicotine which appeared on the pack from the inception of the project. . . . We are not talking, in my judgment, talking about light . . . as a taste. It's not a term that means anything in terms of taste, and the name Marlboro Lights as I said before, a word which we feel has appeal in a different sense than suggesting what the cigarette even tastes like. . . . It was our desire in this entire Marlboro Lights brand project to constantly position Marlboro Lights as being -- as having lower tar and nicotine from Marlboro [Reds].
¶Morgan PD, Philip Morris Inc. v. R.J. Reynolds Industries, Inc., 10/15/74, 4:9-10; 10:15-11:4; 78:20-79:14; 79:25-80:5; 81:8-12; 85:23-86:4; Morgan PD, Philip Morris Inc., 11/25/74, 247:11-14.
¶2402. According to Morgan, Philip Morris made a calculated decision to use the phrase "lower tar and nicotine" even though its own marketing research indicated that consumers interpreted that phrase as meaning that the cigarettes not only contained comparatively less tar and nicotine, but also that they were a healthier option. Morgan PD, Price v. Philip Morris, Inc., 6/15/02, 45:2-45:25, 45:2-46:25, 47:2-47:25, 48:2-48:25, 49:2-49:25, 50:2-50:25, 51:2-51:5, 52:15-52:20.
¶2403. Morgan, who later became CEO of Philip Morris, further explained in 2002 that rather than relying on the tar and nicotine numbers from the FTC Method, "the major influence in people's perceptions in the tar of a cigarette would have come from the marketing positioning of a brand as opposed to people literally reading the FTC [tar and nicotine figures]." Morgan also stated that,
919if you took the advertising, the point of sale, whatever may have been said on the racks or the cartons, the whole panoply of what the consumer saw about a cigarette brand would be more influential in that consumer's perception of the tar of that brand . . . than the fact that they may or may not have sat down and looked at a newspaper that had the latest Federal Trade Commission report.
¶Part of the image that Philip Morris was marketing was the concept of lowered tar and nicotine. Morgan PD, Philip Morris Inc., 11/25/74, 174:10-175:4; 175:16-175:25.
¶2404. Jeanne Bonhomme, Director of Consumer Insights for Philip Morris, echoed these views:
Philip Morris aims its low tar cigarette marketing at least in part at smokers of regular cigarettes who are concerned about the amount of tar they are inhaling and want to reduce it. . . . Philip Morris was aware that consumers understood the "lights" brand descriptor from its advertising and marketing pieces to be equated with low tar.
¶Bonhomme WD, 12:6-11; 13:17-19; 15:1-4; 16:1-7; 43:11-14.
¶2405. In or around 1995, Philip Morris considered changing the name of Merit to Merit Lights, because "Philip Morris was concerned that consumer research showed that Merit marketing no longer effectively conveyed to consumers that Merit was low in tar." Bonhomme WD, 13:1-22.
¶2406. This contemplated name change is documented in a June 23, 1995 internal Philip Morris memorandum, titled "Merit 'Filter' vs. 'Lights' Test -- Research Proposal," from Lauren Schwed, Philip Morris Analyst, to Jodi Sansone, then Brand Manager for Merit at Philip Morris USA, and Rebecca Gordon, a Philip Morris USA Assistant Brand Manager under Sansone. The memorandum described the motivation behind an attached consumer research study as follows:
920Merit is considering changing the name on the Parent pack from "Filter" to "Lights" in order to clarify the tar level of the cigarette. There is a thought that changing the wording on the pack to replace the word "Filter" with the word "Lights" would help clarify what the
true tar level is for Merit Parent. However, there is some concern that changing the name to "Lights" could possibly detract from the brand's flavor heritage.
¶2045628330-8330 (US 26955).
¶2407. In a memorandum dated November 27, 1995, Shari Teitelbaum, a consumer researcher for Philip Morris, summarized the results of the "Merit 'Filter' vs 'Lights' -- Final Report" for Sansone. Teitelbaum noted that the name change affected Merit smokers' perceptions: "Before tasting the cigarette, Merit smokers seemed to think that Merit Lights was lower in tar than Merit Filter." Teitelbaum noted that changing the name to Merit Lights caused one third of current Merit smokers to "alter their perception of Merit in terms of taste and tar level." The study also confirmed Philip Morris's fear that changing the name to Merit Lights would imply a poor-tasting cigarette: for current Merit smokers, "[t]he name change did seem to have a significantly adverse impact on perceptions of the brand's taste." 2045596010-6012 at 6011 (US 26952); 2045596013-6040 at 6032 (US 26953); Bonhomme WD, 14:1-15:4.
¶2408. Philip Morris did finally change the name of Merit Filters to Merit Lights, even though there was no difference in the cigarette. Brennan-Lund PD, Price v. Philip Morris, Inc., 9/20/02, 157:15-22.
¶2409. Similarly, Philip Morris marketed a 15 mg. cigarette as both Virginia Slims and Virginia Slims Lights. 525311179-1223 at 1222 (US 52977).
¶2410. Jeanne Bonhomme verified that Philip Morris has known for years from its consumer research that some smokers "interpret brand descriptors as communicating a less hazardous cigarette than full-flavor brands." Bonhomme WD, 20:3-6.
921¶2411. In an October 21, 1994 memorandum, titled "Marlboro Medium Smoker Image Study," Marian Halpern, an employee in the Philip Morris consumer marketing research department, reported to Tom Keim, a Philip Morris brand manager, that the "Reasons for Smoking Medium" were as follows:
Most smokers said they chose Medium because of its perceived health benefit. Over half of the Medium smokers said they started smoking Medium because they wanted a cigarette with lower tar and nicotine (56%). For many respondents, the name "Medium" communicated information on this product feature, with almost one quarter (24%) of these smokers saying that 'Medium' refers to the cigarette's lower tar and nicotine.
¶2063731671-1688 at 1672 (US 22222); Bonhomme WD, 18:1-19:5.
¶2412. Philip Morris tries to create marketing pieces that communicate certain brands are low in tar, not just with words like the "lights" brand descriptors, but also with the imagery they present to consumers, such as the color it selects for the cigarette pack and tipping paper. When packaging decisions are made at Philip Morris, it is recognized that the color influences peoples' perception of the strength and tar level of the product. Bonhomme WD, 20:10-17; 22:1-4.
¶2413. For example, Philip Morris knows that consumers perceive a blue cigarette pack and white tipping paper as an indication that a cigarette is low in tar, and that generally speaking, the lighter the cigarette package color, the lower its tar content is perceived to be by consumers. Philip Morris continues to this day to market and sell Marlboro Lights and Marlboro Ultra Lights with lighter color packaging and tipping paper. Bonhomme WD, 21:13-18; 23:20-22.
¶2414. Nancy Brennan-Lund, Philip Morris Senior VP of Marketing, confirmed that, in order to communicate low tar in cigarettes, Philip Morris USA has used a "lighter, more white background" and a "white filter as opposed to a cork colored filter." Susan Norris, Marlboro Brand
922¶Manager from 1995-1999, also noted that, in her experience, colors such as silver and light blue communicate to consumers that a cigarette is an ultra light brand. Brennan-Lund PD, Price, 9/20/02, 179:6-17; Norris PD, United States v. Philip Morris, 7/31/03, 162:6-165:8, 179:17-184:19.
¶2415. Over the last five decades, Philip Morris has conducted extensive consumer research to perfect the delivery of its "light" and low tar cigarette brand marketing message to ensure it provided smokers with health reassurance and offered an alternative to quitting.
¶2416. Marlboro Lights. With respect to Marlboro Lights, Philip Morris designs the packaging to distinguish it from Marlboro Red and communicate to consumers that it provides "the best of both worlds," -- low tar and good taste. Bonhomme WD, 22:5-18.
¶2417. A November 15, 1971 "Philip Morris U.S.A. Inter-Office Correspondence" to James Morgan from the Philip Morris USA Marketing Research Department set forth results of a Philip Morris consumer study on Marlboro Lights. Under the heading "Advertising Awareness," the report stated that "[l]ow tar and nicotine remained the most frequently mentioned comment." 1000292744- 2762, 2745 (US 35205).
¶2418. A December 1971 Marlboro Lights "Product Promotion Plan" distributed to the Philip Morris sales force discussed the introduction of Marlboro Lights and ways to market and maximize sales of the brand. It stated:
The introduction of Marlboro Lights is a very timely move on the part of your company. The consumer is becoming increasingly aware of tar and nicotine contents in cigarettes and many are searching for one with low tar and nicotine content and full flavor. Marlboro Lights fill this need.
¶2045404133-4163 at 4141 (US 85000).
923¶2419. A retrospective Philip Morris document dated September 1991, titled "Background Information on PM Brands," stated:
To capitalize on the booming low tar market, Marlboro Lights was introduced in 1972. It became the first successful low tar line extension in the industry . . . Marlboro further broadened its appeal to low tar smokers with the addition of Marlboro Lights 100's in 1978, Marlboro Lights King Size Flip-Top Box in 1980 and Marlboro Lights 100's Flip-Top Box in 1984.
¶2070143190-4433 at 3206 (US 27257).
¶2420. James Morgan, former President and CEO of Philip Morris USA, confirmed that Marlboro Lights were positioned as "lower in tar and lighter in taste than Marlboro Red" and were marketed to people seeking a low tar and nicotine cigarette, including smokers of both high and low tar cigarettes. A 1974-1975 Philip Morris magazine advertisement for Marlboro Lights stated: "Marlboro Lights. The spirit of a Marlboro in a low tar cigarette." Philip Morris has used the phrases "lowered tar and nicotine" and "Lights" in association with Marlboro Lights for over 30 years. Morgan PD, Price, 6/5/02, 20:13-25, 21:2-6, 32:22-25, 33:2-25, 34:2-11; 2045404133-4163 (US 85000); 03496228-6630 at 6323 (US 20057); Morgan TT, Price v. Philip Morris, Inc., 2/18/03, 64:4-7.
¶2421. A May 31, 1988 Philip Morris USA Marketing Research Department report from Philip Morris's primary advertising agency, Leo Burnett, and Philip Morris consumer researchers Karen Eisen and Jeanne Bonhomme, recited focus group results and stating that "many felt that Marlboro Lights was gaining in favor because of health concerns." 2044743883-3891 at 3885 (US 85001); Brennan-Lund PD, Price, 9/20/02, 190:1-192:11; Bonhomme WD, 23:5-19.
924¶2422. Benson & Hedges. A 1974-1975 advertisement for Philip Morris's Benson & Hedges Multifilter brand stated: "Today people not only want a great tasting cigarette, but one that's low in 'tar' and nicotine. Nothing's simple anymore . . . [w]e've managed to lower the 'tar' and nicotine and still give you a cigarette with full rich flavor for you to enjoy." (US 87184); see also 03496228-6630 at 6326 (US 20057).
¶2423. A September 1991 Philip Morris document, titled "Background Information on PM Brands," stated:
Benson & Hedges 100's Lights and Lights Menthol were introduced in 1977 in response to consumer preference for a milder, lower tar cigarette . . . today Benson & Hedges is among the leading low tar cigarettes. In mid-1982, Benson & Hedges Deluxe Ultra Lights was launched to take advantage of dynamic growth in both the 100mm and ultra low tar markets. The regular and menthol packings, both at 5mg tar, were instant successes. Fueled by distinctive packaging and taste richer than that of other ultra low (hence the ad slogan "rich enough to be called deluxe"), Deluxe Ultra Lights is a major contributor to the image and sales strength of Benson & Hedges.
¶2070143190-4433, 3211-3214 (US 27257); see also ADV004 1118-1120 (US 745) (1982 advertisement).
¶2424. Cambridge. Tom Goodale's handwritten notes from an October 15, 1979 meeting, the regular "new products" meeting of Philip Morris scientists, reflect Philip Morris's plan to create an impression in consumers' minds of Cambridge as being extremely low in tar. The plan was to introduce Cambridge with a tar level below the then-lowest FTC tar brand sold -- Carlton -- and then to raise the tar level over time. The notes reveal, under the heading Project Trinity (Cambridge's project name prior to commercial introduction), "Hit mkt [market] below Carlton tar - afterwards can drift higher." 1001507595-7596 at 7595 (US 85102).
925¶2425. According to Dr. Farone, former Director of Applied Research at Philip Morris USA, based on his participation in numerous monthly meetings in 1979 relating to Cambridge:
The long-range plan [for marketing Cambridge] was to introduce the product as a low tar product and then eventually to increase the tar of the product. . . . [I]t was anticipated that the product would not sell very well at that low tar and eventually they would increase the tar, and having sold it as a low tar product people still would think of it as a low tar product. In my view, and from my experience, the lowest yielding version of many brands, including the original Cambridge, but also B&W's Carlton, RJR's NOW, etc., were created to give the brands a lowest tar image, while the sales are in the higher tar and nicotine versions of those brands. Those lowest yield versions of the brand are very hard to find in stores.
¶Farone WD, 2:2-8; 2:15-19; 128:4-128:22.
¶2426. In 1979, Philip Morris promoted Cambridge as a low tar brand yielding 0.0 mg tar (less than 0.1 mg tar) on the FTC test. The 0.0 mg tar Cambridge cigarette was removed from the market and replaced by Cambridge light and ultra light brands, all of which had considerably more tar than the original Cambridge cigarette. Dr. Farone made it clear that:
The plan all along was to deceive the public into thinking that the Cambridge Light cigarette was a low tar cigarette, when in fact it was not . . . the trend to increasing tar deliveries in the product is very clear and there is no advertising that says that such increases are being made.
¶Farone WD, 129:18-132:17; 2024983860-3862 at 3860 (US 20015).
¶2427. Dr. Farone explained that "Philip Morris never even bothered to consumer test the 0.0 mg [Cambridge] version against the similar variant of Carlton and this is a major piece of evidence that they had no plans to keep it on the market." A September 20, 1979 Philip Morris memorandum, titled "Project Trinity," states that with respect to the 0.0 mg tar version of
926¶Cambridge: "Consumer testing is not required for this model." Farone WD, 128:23-129:17; 1000774422-4422 (US 35306).
¶2428. Nancy Brennan-Lund, Senior Vice President of Marketing at Philip Morris, admitted that Cambridge Lights had more tar and nicotine than the original Cambridge. She further admitted that, as the tar and nicotine numbers were not identified on the packs of Cambridge Lights cigarettes, the only way consumers could possibly know that Cambridge Lights had more tar than Cambridge regular was by a perceived taste difference. Brennan-Lund PD, Price, 9/20/02, 145:5-154:16.
¶2429. Merit. In 1976, Philip Morris introduced a new brand, Merit, at 9 milligrams tar with "enriched flavor." Merit formed the basis for line extensions to Merit Ultra at 4 milligrams and later Merit Ultima at 1 milligram. The three were jointly advertised in a "low, lower, lowest" presentation of the product line. Dolan WD, 124:1-4; 1002325022-5022 (US 21510).
¶2430. Philip Morris's marketing for some of its low tar cigarette brands, including Merit, "encouraged consumers [whom Philip Morris referred to as potential "down-switchers"] to switch from regular cigarettes to low tar cigarettes." Historically, "Philip Morris targeted potential down-switchers with its marketing for Merit," and "Merit [consumer] research is used to target potential down-switchers." Bonhomme WD, 13:4-5; 27:16-21; 29:3-30:5.
¶2431. Philip Morris's marketing for Merit cigarettes targeted "self-conscious" and "uncomfortable" smokers. A Philip Morris memorandum, titled "The Uncomfortable Merit Smoker," dated January 6, 1993, stated: "'Self-conscious' smokers are defined as people who are uneasy with their status as smokers. They see smoking as a sign of personal weakness and are starting to feel ashamed that they smoke." 2044905001-5007 at 5001 (US 20454); Bonhomme WD, 49:1-3:47:8-11; see also, Teitelbaum PD, United States v. Philip Morris, 4/16/02, 132:21-137:21.
927¶2432. According to Suzanne LeVan, Philip Morris Vice-President of Premium Brands from 1991-2001 with responsibility for Merit, "the Merit strategy is to convince smokers who are switching down [in tar levels] and who are looking for a good tasting cigarette that Merit is a brand that they should try." LeVan PD, United States v. Philip Morris, 6/25/02, 178:13-181:2; accord 2063690017-0018 (US 85002).
¶2433. According to a retrospective Philip Morris document dated September 1991 and titled "Background Information on PM Brands," the "Benefits Statement" of Merit was: "You'll enjoy low tar and good flavor with Merit." "At only 7 mg. of tar, Merit delivers the rich flavor of leading cigarettes with twice the tar." "With Merit Menthol you get rich menthol flavor at only 8 mg tar." The document indicated that Merit Ultra Lights and Merit Ultra Lights 100's were introduced in 1981. 2070143190-4433 at 3211:3214 (US 27257); accord 2063724711-4714 (US 39838) (Confidential).
¶2434. Philip Morris's targeting strategy was recorded in a retrospective June 13, 1995 document from Leo Burnett -- Philip Morris USA's long-time marketing agency -- titled "Merit Advertising Overview Historical and Current for Jodi Sansone." Under the heading "Merit -- Current 'You've Got Merit' Campaign," the document stated: "Strategy: Convince Self-conscious and uncomfortable smokers who want to switch to a low tar alternative but won't sacrifice taste completely," "With Merit, you can switch down to lower tar and still enjoy smoking," "Because: Merit delivers satisfying taste at every level of low tar." The document described the "Merit Brand Essence" as follows: "Since the brand's introduction twenty years ago, the core Merit proposition has been low tar with good taste. Once a smoker has made the decision to switch to a lower tar product, they are faced with the challenge of finding one that delivers on taste. Merit offers a positive solution–they can switch down to lower tar and still get satisfying taste." 2048200699-0727 at 0708 (US 38648) (emphasis in original); Bonhomme WD, 48:12-49:3.
928¶2435. Philip Morris's strategy for Merit was successful. Norma Suter Drew, Philip Morris Vice President for Portfolio Brands and former Brand Manager and Marketing Director for Merit cigarettes from 1992-1994, delivered a July 1993 presentation, titled "Merit Franchise," in which she reported that "Merit is a brand smokers switch to in order to reduce tar/nicotine." Elsewhere in the presentation, Drew wrote that one of the top two "Goals" for Merit advertising was to achieve a "[s]ignificant increase in Merit's highest brand image statement, 'Are among the lowest in tar/nicotine', versus Carlton and Now." The presentation also noted that "70% of industry switching is between tar levels." Under the heading "Merit Advertising," the presentation noted that "Merit smokers tell us that they come to the franchise because they desire a lower tar cigarette that still tastes good – switching down makes them feel better about the fact that they smoke." Bonhomme WD, 49:4-14; 2070661683-1727 at 1685, 1687, 1713, 1716 (US 40337) (emphasis added).
¶2436. The following Merit advertisements, in conformity with the internal marketing documents detailed above, communicated to consumers that, with Merit, they could reduce their tar intake and thus reduce their health risk, without sacrificing taste:
1976: "New Low Tar Entry Packs Taste of Cigarettes Having 60% More Tar." (no bates) (US 5087).
9291976: "The greatest challenge to cigarette-makers in the last two decades has been how to make a low tar cigarette that wasn't 'low'; in taste. It seemed impossible. Until now. After twelve long, hard, often frustrating years, Philip Morris has developed the way to do it. The cigarette is called MERIT. It delivers only 9 mg. tar. One of the lowest tar levels in smoking today." (no bates) (US 4981); Biglan WD, 203:17- 207:3.
1977: "New MERIT 100's. Only 12 mg. of tar. Yet packed with extra flavor. The kind of flavor that makes 'low tar, good taste' a reality for 100's smokers." (no bates) (US 5342); Biglan WD, 203:17-207:3.
1978: "Merit Solving Smoker Dilemma." (US 5704); Biglan WD, 203:17-207:3; (no bates) (US 5483).
1978: "'Best Move Yet.' MERIT['s] . . . . ability to satisfy over long periods of time could be the most important evidence to date that MERIT is what it claims to be: The first real alternative for high tar smokers." (no bates) (US 5951); see also (no bates) (US 6112); (no bates) (US 6131); Biglan WD, 203:17-207:3.
1978: "Research concludes MERIT taste makes move from high tar to low tar smoking unexpectedly easy." (no bates) (US 5803); Biglan WD, 203:17-207:3.
¶1988: "You Won't Miss What You'll Miss." (no bates) (US 8505).
¶1988: "Our Less Is Your Gain." (no bates) (US 8556).
1989: "Smoke This Page. If That Reminds You of Your Ultra Lights, Read This Ad." (no bates) (US 8711).
1994: "You can do it! You really can switch down to lower tar and enjoy satisfying taste." (no bates) (US 12892); Biglan WD, 203:17-207:3; 970469347-9474 at 9421; (no bates) (US 85104).
1994: "Yes you can! You can switch down to lower tar and still get satisfying taste. You've got MERIT." (no bates) (US 9241) (emphasis in original); Bonhomme WD, 30:6-18.
¶2437. A September 16, 1987 Leo Burnett U.S.A. research report for Philip Morris, titled "Merit Brand Image Study," noted in the section "Attitudes Toward Smoking" that "[w]hile health concerns are motivating factor, taste/enjoyment are still key." A summary at the end of the report stated: "Merit smokers we sampled are committed smokers . . . However, they have mixed feelings about smoking -- health concerns/loss of control . . ." and their switching to Merit "provides health reassurance." 2072735414-5500 at 5431, 5492 (US 41598); Bonhomme WD, 27:22-28:17.
930¶2438. A January 1991 document, titled "Merit Positioning Study," assessed "perceptions of Merit's positioning within the low tar category." Under the heading "What Down Switchers want in a cigarette," the document noted that approximately half of downswitchers found "very low tar" (50%) and "very low nicotine" (48%) to be "absolutely essential." 2048976844-6906 at 6850, 6890, 6892 (US 85004).
¶2439. Consumer feedback confirmed the successful delivery of Philip Morris's intended message. An August 1991 report prepared for Philip Morris, titled "Merit Positioning Strategy Development," observed that, "[i]n addition to advantages associated with lesser tar and nicotine delivery, low tar users note that such brands allow higher volume, deeper inhalation smoking with few tradeoffs." The report also commented that Ultra Light users "note their further downswitching to ultralights from lights for health benefits primarily." The report noted that Merit users "like perceiving [Merit cigarettes] as rather safe, sensible, middle-of-the-road, non-threatening, and generating the feeling that they aren't doing anything wrong." 2072735123-5247 at 5131, 5132 (US 41596).
¶2440. An internal Philip Morris memorandum dated May 16, 1995 from Lauren Herman, an employee in the market information and planning group, to Norma Suter Drew, then acting Brand Manager for Merit cigarettes, titled "Merit Alternative Campaign Qualitative Exploratory -- Final Report," discussed the results of research conducted to gauge consumer interest and appeal of Merit marketing campaigns. Under the heading "Key Findings," Herman reported that "Competitive smokers appear to be most likely to respond to the concepts that offer the clearest product cues.
931¶These smokers require the most rational reason why they should smoke Merit, (e.g. lower tar)." Under the heading "Implications," Herman recommended that "[s]ince low tar is essentially the core of these alternative concepts, the low tar message should be more pronounced." 2063724960-4962 at 4960, 4962 (US 39842).
¶2441. A September 4, 1996 Leo Burnett document reported on an August 27, 1996 meeting held in New York between Leo Burnett and Philip Morris (Jose de Castro, Suzanne LeVan, and Jodi Sansone) to discuss Merit marketing for 1997. The document acknowledged that past Merit marketing focused more heavily on communicating that it is low in tar, and less on sending a message about the brand's taste. Under the heading "Discussion/Agreements Reached," the document stated: "Client/agency agreed that we need to move the bar forward in terms of taste communication, as currently it is not as recognizable/prominent as low tar in Merit awareness ratings, yet it is a key driver of consumer choice/purchase." 2071522201-2203 at 2201 (US 27299).
¶2442. A February 9, 1998 draft research report prepared for Philip Morris by the research firm Kane, Bortree & Associates, titled "Merit Strategic Revitalization Plan, Stage I Learnings," analyzed ways to "build Merit's share of the low tar segment." 2063687348-7527 at 7350, 7353- 7356 (US 39820*); see also 2063686921-6942 at 6934 (US 88629) ("Kane Bortree makes use of a variety of innovative, psychologically derived techniques. These techniques allow us to get inside the consumers' heads"). The 1998 report discussed two types of low tar smokers who find the taste of light cigarettes unsatisfying and do not feel comfortable smoking: "Quitters" and "Validation Seekers." The report cited Merit Ultima, Merit Ultra Lights, Camel Lights, and Marlboro Ultra Lights as brands for those who do not feel comfortable smoking. 2063687348-7527 at 7356, 7357, 7359 (US 39820*).
932¶2443. The February 1998 draft research report was followed by a March 31, 1998 draft report by Kane, Bortree & Associates, titled "Merit Strategic Revitalization Plan, Stage II Learnings/Stage III Recommendations." Under the heading "Positioning Learnings to Date," the March report noted that "'Light' is a bigger promise than low-tar with opportunity for broad appeal" because it conveys "Tastes light," "Feels light," "Low tar," and "Better for you." The report recommended that Merit's "positioning should convey acceptability of smoking." The report further discussed a contemplated "Additive Free" Merit line extension, and noted that: "Additive-free is an excellent fit with 'light'" because it "[r]einforces 'better for you.'" 2080486996-7108 at 7010-12 (US 45330); Bonhomme WD, 17:2-16.
¶2444. A May 14, 1998 internal Philip Morris document, titled "Merit Brand Initiatives," incorporated the findings of the March 31, 1998 Kane, Bortree & Associates study, recreating that study's representation of the four segments of the lights market and stated, under the heading "Merit Strategic Positioning Copy Strategy": "What we would like smokers to believe -- Merit offers a viable alternative to Light brands with full flavor heritage." 2070657640-7650 at 7644, 7646 (US 22015).
¶2445. Marlboro Ultra Lights. A June 1979 draft report prepared for Philip Morris by Goldstein/Krall Marketing Resources, Inc., titled "Smokers' Reactions to an Ultra Light Brand Extension for Marlboro," discloses that Philip Morris began conducting consumer marketing research on a new cigarette line extension of the Marlboro brand, Marlboro Ultra Lights, as early as 1979. Discussing the reactions of Marlboro Red smokers to the concept of Marlboro Ultra Lights, the report stated:
933The introduction of a Marlboro Ultra Light brand appeared to be viewed in the following manner: . . . An attempt to produce a safer cigarette for those interested in cutting down their smoking and in a lighter cigarette. . . . A "smart" way to prevent the loss of or switching of Marlboro smokers to other brands if they are currently unsatisfied in their quest for a lighter/safer cigarette.
¶2041097977-7999 at 7984 (US 85006); Bonhomme WD, 31:10-34:17.
¶2446. Under the heading "How Marlboro Ultra Lights Were Positioned," the report stated: The following is a description of a brand image developed from the discussions [with consumers] in all three groups: . . . Safer cigarette -- less tar and nicotine. . . . Probably a better/innovative filter." The report further stated: "With regard to smoker image, respondents suggested: . . . People cutting down for health reasons/people trying to quit. More concerned people (about health). More aware people (those reading the numbers in the ads)." 2041097977-7999 at 7987 (US 85006).
¶2447. On May 1, 1989, Philip Morris began test marketing Marlboro Ultra Lights, which it positioned as delivering 6 mg. of tar (per the FTC Method). In a February 8, 1989 internal Philip Morris memorandum, Richard Camisa delivered to colleagues at Philip Morris the "Marlboro Ultra Lights Marketing Plan Overview." The overview set forth the target audience for Marlboro Ultra Lights, noting that
[c]onsumer research suggests that there are vast numbers of smokers, including Marlboro smokers, who are seeking lower tar but who are also unwilling to sacrifice flavor and/or smoking satisfaction in return. The opportunity for Marlboro lies in its ability to offer smokers the lower tar they seek with less trade off in taste.
¶2070624747-4763 at 4748 (US 22014).
934¶2448. The document further stated: "A blue/gray pack with white tipping . . . provides traditional ultra low tar reassurance." Jeanne Bonhomme, Director of Consumer Insights for Philip Morris, confirmed that "low tar reassurance," as used in the document, referred to the fact that:
Within the context of selecting a pack color for Marlboro Ultra Lights there was discussion about what pack color would make it readily apparent that the brand was an ultra low tar. Many of the lights and low tar products used blue packaging as a signal of being lower tar, so there were discussions about making sure that advertising and packaging easily communicated that Marlboro Ultra Lights was an ultra low tar.
¶2070624747-4763 at 4748 (US 22014); Bonhomme WD, 64:1-6.
¶2449. Philip Morris conducted research to determine how cigarette pack and tipping color influenced consumer perceptions of Marlboro Ultra Lights' strength and tar level. In a June 25, 1990 memorandum from Jeanne Bonhomme, then a contract consumer marketing researcher for Philip Morris, to Richard Camisa, titled "Marlboro Ultra Lights Portfolio Test," Bonhomme reported the results of a cigarette ad pack test conducted on consumers for Marlboro Ultra Lights. Bonhomme reported that for consumers tested, "[p]redictably, expectations about [Marlboro Ultra Lights'] strength and tar level were influenced by the pack and tipping color. Red/Cork was viewed as being strongest tasting and higher in tar than the two white tipped options, particularly Blue/White." 2070197338-7340 at 7338 (US 40255); Bonhomme WD, 21:4-22:4; see also 2071535027-5090 at 5033, 5043 (US 22020).
¶2450. Marlboro Ultra Lights was launched nationally on January 28, 1998, and Philip Morris continues to market and sell Marlboro Ultra Lights to this day. Philip Morris targeted all Marlboro smokers with Marlboro Ultra Lights, not just current low tar smokers. Norris PD, United States v. Philip Morris, 7/31/03, 132:17-23, 162:6-165:8, 121:13-125:11; Bonhomme WD, 34:15-17.
935¶2451. Marlboro Medium. In June 1991, Philip Morris launched Marlboro Medium, a lower tar line extension of the Marlboro brand. A September 1991 Philip Morris document, titled "Background Information on PM Brands," stated that Marlboro Medium was aimed at "consumers still looking for a satisfying low tar cigarette with flavor." 2070143190-4433 at 3206 (US 27257).
¶2452. Philip Morris's November 1994 continuous smoker tracking survey (a random smoker phone survey Philip Morris has conducted continuously since the 1980s) discusses Philip Morris's targeting of health-conscious smokers. The document stated that male smokers of Marlboro Medium age 18-24 "need affirmation as smokers" and may be candidates for ultra lights. In this survey, Philip Morris created a profile of 18-24 year old male Marlboro Flavor Low (Marlboro Medium) smokers as individuals who are less comfortable with smoking, feel pressure to quit, and do not enjoy some of the "image benefits" to the same degree as other smokers. The Marlboro Flavor Low (Marlboro Medium) male smokers age 18-24 are more likely to cite the low tar level as influential in determining their regular brand. 2048735500-5604 at 5562, 5543, 5548-5549 (US 21971).
¶2453. An internal February 10, 1995 Philip Morris memorandum from Marian Wood to Tom Keim, titled "Marlboro Medium Brand Imagery," revealed that in 1991, Philip Morris spent $50 million on advertising for Marlboro Medium, 36% of Marlboro's total advertising budget for that year. 2063731689-1710 at 1695 (US 79820).
¶2454. Philip Morris continues to sell Marlboro Medium. Bonhomme WD, 20:1-2.
¶2455. Parliament. Philip Morris marketed the Parliament brand as a low tar brand featuring a "recessed" filter. A Philip Morris document, titled "Background Information on PM Brands," dated September 1991, stated:
936It was during the proliferation of filtered cigarettes in the 1950's that Philip Morris gave Parliament its hallmark of today -- the recessed filter. Unlike ordinary filter tip cigarettes, Parliament's famous recessed filter kept tar from touching the smoker's lips. Since the addition of this unique filter, Parliament smokers have enjoyed their brand's approach to smoking: clean, sophisticated, and distinctive. In 1979, Parliament's name was changed to Parliament Lights. This change reflected the brand's low tar status and helped capitalize on a growing low tar trend.
¶A "Benefit Statement" in the document was: "Parliament Lights -- since tar on the filter tip never touches your lips, the taste is refreshingly light." 2070143190-4433 at 3217-3218, 3222 (US 27257).
¶2456. A 1975 Parliament advertisement in Sports Illustrated magazine stated that, although cigarette holders gave "cleaner taste," there was "[n]o need for a cigarette holder today. Parliament's filter is recessed, so you taste only rich, clean tobacco flavor. It's the neatest trick in smoking." (US 4709); see also (no bates) (US 4885).
¶2457. A 1977 Parliament advertisement in Cosmopolitan magazine stated:
As you smoke, tar builds up on the tip of your cigarette filter. That's "filter feedback." Ordinary flush-tipped cigarettes put that tar build-up against your lips. And that's where Parliament has the advantage. Parliament's filter is recessed to keep tar buildup from touching your lips.
¶ADV029 0247-0249 (US 10614).
¶2458. As noted in the 1981 FTC Report on cigarette advertising, Philip Morris's Parliament advertisements from the time period preceding the Report (i.e., late 1970s-1981) implied that its "special filters minimize the risks of smoking." FTC, 1981 Report at 2-12 (JD 004744).
¶2459. Jeanne Bonhomme observed that although the recessed nature of the filter did not further reduce the tar delivery or make the cigarette any less harmful, she could "recall learning that some consumers believed that a recessed filter produced a cigarette that was better for you because it reduced tar and less tar was perceived to be less of a health risk." A November 23, 1988 Philip Morris USA memorandum co-written by Bonhomme and Karen Eisen, with the subject heading "Parliament Super Lights In-Depths," confirmed that "[f]or many, the recessed filter implied a health benefit -- 'keeps tar away.'" Bonhomme WD, 34:18-35:1; 35:20-36:15; 2071388176-8178 at 8178 (US 40452).
937Philip Morris's Research on the Low Tar Cigarette Category
¶2460. Internal Philip Morris documents show that Philip Morris conducted consumer marketing research not just on individual low tar cigarette brands, but on low tar cigarettes as a category. These documents establish that Philip Morris has long known and intended that its advertisements and marketing for low tar cigarettes, featuring claims of lowered tar and nicotine and "light" and "ultra light" brand descriptors, contributed to and reinforced consumers' mistaken belief that low tar cigarettes are better for their health, and encouraged consumers to smoke them for this reason.
¶2461. According to Nancy Lund, Senior Vice President of Marketing at Philip Morris, Philip Morris was aware in the 1970s and 1980s that some consumers believed that light/low tar cigarettes were safer than full-flavored cigarettes. She also noted that, during this time period, Philip Morris marketed such cigarettes to these consumers and profited from those sales. Brennan-Lund PD, Price, 9/20/02, 158:6-161:15.
¶2462. James Morgan, the former CEO of Philip Morris, acknowledged that the trend in the 1970s toward low tar cigarettes was due in large part to consumer perception that they were less hazardous to health than higher tar cigarettes, and specifically admitted that "the consumer was perceiving in the 1970s lower tar as tied to less hazardous." Although Morgan conceded that "we were aware of that," he admitted that, despite being armed with this knowledge, Philip Morris took no additional steps to counter that mistaken perception. Morgan PD, Price, 6/5/02, 42:16-42:25; 43:2-43:25; 44:2-44:25; 45:2 - 45:25; 63:10-63:25; 64:2-64:25; 65:2-65:21; 1004888470-8484 (US 85009); 502641641-1646 (US 85008).
938¶2463. A May 1976 study prepared for Philip Morris by The Roper Organization, titled "A Study of Smokers' Habits and Attitudes With Special Emphasis on Low Tar Cigarettes," stated:
[T]his study shows that the smoking public is convinced that to the extent any brands are better for health, it is the low tar brands that are. . . . Low tar brand smokers cite as the most liked characteristic of their brand . . . as compared with smokers of flavor filters, they say it is "better for your health" and cite its "more effective filter. . . ." Brands Thought Better For Health -- The low tar brands have cornered opinion that to the extent any brands are better for your health, they are. . . . Three in ten of all smokers said some brands were better for health than others, and almost half of the low tar brand smokers said this. . . . Furthermore, it is the lower tar content of these brands that make people say they are better for your health.
¶2024921314-1612 at 1333, 1348, 1352-1353 (US 20403).
¶2464. A January 1979 study prepared for Philip Morris stated:
939These ultra low tar smokers indicated that they are aware of the low tar levels in their brands and that they switched to them specifically because of advertising calling this fact to their attention. . . . As lower and lower tar brands become available, it would appear smokers are subject to advertising pressure and brand availability, and the opportunity for switching obviously occurs. . . . Characteristics of ultra low tar smokers were: people who want to quit . . . more interested in health. . . . When asked how they happened to switch to the brand they are now smoking many of the Carlton smokers cited advertising and tar and nicotine ratings. . . . When Carlton ads were shown in the groups, it was obvious that most respondents had seen them and were aware of the copy claims. It was these claims and other Carlton ads to which smokers referred prior to exposure and
when discussing the fact that advertising had been one of the factors causing them to try the brand. This would seem to indicate that ultra low tar smokers are paying attention to and being attracted by the advertising. Respondents . . . appeared to react favorably to the Triumph ads. They said that 3 mg. tar was within the ultra low tar range implying that it represented a safer cigarette.
¶2040066740-6766 at 6747, 6748, 6751-52, 6754, 6756, 6757 (US 20435).
¶2465. A March 1979 report prepared for Philip Morris, titled "A Study of Smokers' Habits and Attitudes With Special Emphasis on Low Tar and Menthol Cigarettes," stated:
The appeal of low tars is simple and single -- better for you, less harmful, easier on the lungs, throat, etc. The weakness or objection to low tars is also simple -- tasteless, lacking in satisfaction, and the related factor of hard to draw on. At the same time there is clear evidence that if the appeal -- safety -- is strong enough, people can over time grow used to, and in some cases come to actually like, the main objection to low tars -- low taste.
¶2049455309-5318 at 5315 (US 22218).
¶2466. A June 1979 draft report prepared for Philip Morris by Goldstein/Krall Marketing Resources, Inc., titled "Smokers' Reactions to an Ultra Light Brand Extension for Marlboro," stated, under the heading "Awareness of Tar and Nicotine Levels":
One of the points on which respondents were probed when first shown the array of packs used as stimuli was their awareness of tar and nicotine levels for the brands. While most smokers in the groups could not give correct tar figures for each brand, they seemed to know a general range in which brands fell. . . . Respondents attributed their knowledge . . . to advertising. Evidently, the heavy weight of advertising concentrated against tar claims has penetrated these various groups of smokers to some extent.
¶2041097977-7999 at 7990 (US 85006).
¶2467. A July 27, 1987 Philip Morris Asia letter from Joe Tcheng to Cecil Yow stated:
940The mild/lights segment is the fastest growing segment in the Hong Kong market. . . . There is definitely a growing health consciousness in the market due to regular Government anti-smoking campaign. . . . Research shows that Lights = Mild = Less Harmful. Government's anti-smoking measures will intensify and . . . [t]his may further increase health concern and it is very likely that the mild/lights segment will continue its rapid growth.
¶2504046594-6601 at 6594 (US 85012).
¶2468. A 1990 Philip Morris transcript of a conversation between Richard Carchman, then Principal Scientist, and John Tindall acknowledged that Philip Morris had used filters and claims of low tar as health reassurance mechanisms and that cigarette sales were tied to health concerns. Tindall stated:
[T]he things that happened in the market in the past I put under basically three groups. One has to do with people's health concerns which we addressed first through filters and then through low tar and ultra low tar. . . . The main thing that has happened in the market over which we have some control is that we have addressed peoples' health concerns through the number of steps I have mentioned. . . . the[re] are opportunities in the market now in the area of smoking and health. People's perceptions of cigarettes with regard to their effects on them. . . . [I]f we are going to do something significant enough to possibly even reverse the declining sales in the market, we're going to have to make advances in the area of people's health.
¶2023148544-8550 at 8545 (US 85098).
¶2469. A 1990 Philip Morris document relating to "New Brand Development" in Pakistan revealed Philip Morris's knowledge that cigarette packaging can communicate "mildness" to consumers anxious about the "health/safety issue":
941There was little doubt that the pack design with its reliance upon the central gold panel against a white background effectively projected the impression of a very mild cigarette. . . . The evidence as a whole seemed to indicate, in fact, that anxiety about the health safety issue had not yet reached the level where avowedly very mild
cigarettes . . . could expect an extensive franchise. . . . Over time, anxiety levels would rise, as they have done in other markets and when this happened mild/light brands . . . would begin to achieve respectable sales.
¶2504008471-8519 at 8478, 8518 (US 85013).
¶2470. Philip Morris USA's 1992-1996 Strategic Plan for Research and Development stated, under the heading "Perceived Health Concerns," that: "An analysis of the cigarette market over the last 50 years suggests that there have been only two major influences on smokers buying patterns; namely smokers seeking to address their perceived health concerns and smokers seeking price relief." The document further stated:
The development of products which address perceived health concerns . . . is very much an R&D issue. Previous product changes driven by "perceived health concerns" were the growth of filtered products from 3 to 70% of the market between 1945 and 1953, and the growth of the low tar segment to nearly 50% of the market by 1985. . . . Filtered cigarettes now make up over 96% of the market.
¶2021529528-9638 at 9608 (US 85084).
Philip Morris's Public Statements About Low Tar Cigarettes
¶2471. Jeanne Bonhomme, Director of Consumer Insights for Philip Morris, stated that to her knowledge:
• "Philip Morris has always denied publicly that it markets low tar cigarettes as safe or safer than full-flavor brands;" and
- "Philip Morris has always denied publicly that it uses brand descriptors such as 'light' and 'ultra light' to communicate they are safe or safer than full-flavor brands."
¶Bonhomme WD, 11:18-20; 12:12-15.
942¶2472. A November 14, 1994 fax from Censydiam USA to Philip Morris advised that with respect to the "Health & Fitness" trend: "Outside pressures have made consumers more concerned about health and fitness. They are interested in finding 'user friendly' ways of making their lives healthier without making dramatic changes in their current lifestyles." As examples of the consumer health trend, the document noted increased consumer interest in package labeling that included references to "low/no fat/salt" and "all natural," as well as an increase in the sale of products considered "good for you" such as fruits and vegetables. A 1994 Strategic Trend Analysis prepared for Philip Morris by Censydiam USA illustrating the "Health & Fitness" trend recognized how Defendants had capitalized on this trend, noting that: "Implications for Tobacco Companies: While the trend toward health and fitness is still alive, it has tapered off from its rage in the 1980's. The 1990's focus on moderation. The importance of low/ultra low products should continue in the near future." 2063704131-4132 (US 39829); 2063704088-4091 at 4090-4091 (US 39827); 2063704135-4136 (US 27135).
¶2473. Faxes dated November 17, 1994 and December 7, 1994 from Thomas R. Keen of the consumer research company Censydiam USA to Marian Halpern, an employee in the Philip Morris consumer marketing research department, described an agreement with Philip Morris whereby Censydiam would produce "write-ups" to Philip Morris on consumer "trends," including, among others, "Health & Fitness," "Delusions of Youth & Beauty," "Dieting Dilemma," and "Quality of Life."
¶2474. In May 1996, representatives from Philip Morris, including Philip Morris General Counsel, Denise Keane, RJR, B&W, and Lorillard met with the FTC to discuss in part "how Philip Morris and other tobacco companies use FTC test results in their advertising," and "whether the FTC test method could be modified to more accurately reflect actual smoker intake." At that meeting, "the FTC referred to published research showing that smokers believe brand descriptors like 'low tar' and 'light' convey relative safety messages." The FTC requested that the industry representatives provide the FTC with "any information the companies had concerning the issue of consumer perception of low tar, so-called "light" cigarettes." Despite the decades of consumer and marketing research conducted or commissioned by Philip Morris concerning consumers' interpretation of these terms (see Section V(E)(3)(a), supra), Keane testified that "Philip Morris did not provide any such information" to the FTC. Keane WD, 46:18- 48:23; Keane TT, 1/18/05, 10369:20-10370:25; 2048216131-6135 at 6134 (US 38655).
943¶2475. A September 10, 1999 Davis Polk & Wardwell memorandum to Mark Berlind of Philip Morris includes "a series of questions that might arise, as well as possible answers, relating to low delivery cigarettes and brand descriptors." In answer to the question "If the brand descriptors do not indicate what smokers actually inhale or serve as a point of comparison among competing brands, what purpose do they serve?," the memorandum proposed responding that Philip Morris's brand descriptors do communicate that Philip Morris's lower tar brands deliver less tar and nicotine than full-flavor brands: "For example, the 'Lights' in Marlboro Lights indicates that the smoke yields for Marlboro Lights is lower than that for Marlboro, and Marlboro Ultra Lights delivers less smoke 'tar' and nicotine than Marlboro Lights." 2072675414-5417 at 5415 (US 27347).
¶2476. This document's proposed response to the question whether "Philip Morris ever intend[ed] to or propose[d] to take advantage of" the "perception" of consumers that "lower-yielding brands [are] 'safe' or 'safer' than full-flavor brands" was that "Philip Morris has never intended [to] or proposed to take advantage of this perception. (although over time various individuals in the
944¶Company may have suggested that the Company do so)[.]" 2072675414-5417 at 5415-5416 (US 27347) (bracketed material in original).
¶2477. Following publication of the NCI's Monograph 13 in November 2001, ABC News.com requested information from Philip Morris regarding low tar cigarettes and, as stated in a November 26, 2001 email from Philip Morris employee Christina Malito, "whether or not there are real health benefits to them." In an internal e-mail reply sent that same day, Ellen Merlo, then Senior Vice President of Corporate Affairs at Philip Morris and a decades-long Philip Morris employee, wrote that Philip Morris's response to the inquiry should be: "[W]e make no claims. Started producing them in response to consumer demand for lighter tasting cigarettes." 2085802175- 2176A at 2175B (US 85123*).
¶2478. Merlo later stated:
[A]s far as Philip Morris's position publicly, we would advise people not to in any way infer that light or lighter cigarettes are any safer than full flavor cigarettes . . . my communication, both through our website and in any public statements that I make, would be that the general public should not in any way infer that light or lighter means that that cigarette is safer than a full-flavor cigarette.
¶Merlo PD, Price, 10/2/02, 96:24-101:24.
¶2479. According to Nancy Brennan-Lund, then Senior Vice President of Marketing at Philip Morris USA, Philip Morris's use of the word "lights" in its marketing of low tar cigarettes is intended to mean a lighter tasting cigarette. Brennan-Lund PD, Price, 9/20/02, 19:21-24.
¶2480. As recently as 2003 and 2004, the Board of Directors of Altria (formerly known as Philip Morris Companies), publicly made misleading statements to its shareholders and to the U.S. Securities and Exchange Commission ("SEC") in documents filed with the SEC. In a March 17,
945¶2003 Proxy Statement, a group of Altria shareholders proposed to the Altria Board of Directors that "the Board find appropriate ways of informing our customers about the actual health risks of smoking 'light and ultra light' cigarettes to disassociate them from any belief that such products are safer and deliver less tar and nicotine." The shareholder proposal cited Monograph 13 which found that "most smokers believe 'Lights' and 'Ultra Lights' are less harsh and deliver less tar and nicotine," and that, "on average, smokers believe that Lights afford a 25% reduction in risk, and Ultra Lights a 33% reduction in risk;" the Canadian Government's conclusion that the terms low tar, light and ultra light are deceptive to the consumer; and the World Health Organization's recommendation that the terms light and ultra light be banned as misleading. The Board of Directors of Altria recommended that shareholders vote against this proposal, stating: "for those adults who choose to smoke, PM USA and PMI believe descriptors such as 'low-tar,' 'mild,' and 'light' serve as useful points of comparison for cigarette brands regarding characteristics such as strength of taste and reported tar yield." (no bates) (US 87741).
¶2481. In May 2004, Philip Morris placed the following statement on its website: "Philip Morris USA does not imply in its marketing, and smokers should not assume, that lower-yielding brands are safe or safer than full-flavor brands. There is no safe cigarette." TLT0770066-0088 at 0077 (US 72408); accord TT, 2/24/05, 14340:19-20 (counsel for Defendants referring to Philip Morris website and stating "we don't tell people that these cigarettes are safer"); see also PM3000185282-5319 at 5289, 5291-92 (US 88095).
¶2482. Philip Morris further states on its website:
946Because smokers have varying preferences, Philip Morris USA offers products with differing yields of tar and nicotine, as measured by machine methods. We believe that it is appropriate to continue to
differentiate our brands on this basis and that descriptors such as "lights," "ultra-lights," "medium" and "mild" help communicate these differences to adult smokers.
¶TLT0770066-0088 at 0077 (US 72408); see also PM3000185282-5319 at 5289 (June 2003 Philip Morris website stating same and further stating "we believe that [low tar brand] descriptors serve as useful points of comparison for cigarette brands regarding characteristics such as strength of taste and reported tar yields . . .") (US 88095).
¶2483. Similarly, on August 22, 2002, although Geoffrey Bible, former CEO of Philip Morris Companies, claimed he had never been presented with any data as to how consumers actually perceive brand descriptors, he testified that he believes that they "simply convey taste preferences." Bible PD, United States v. Philip Morris, 8/22/02, 165:3-166:7.
R.J. Reynolds
R.J. Reynolds's Low Tar Marketing Techniques
¶2484. Camel Lights advertisements in the 1980s offered the "solution" of low tar cigarettes that offered "[s]atisfaction" by providing acceptable "taste," which was lacking in low tar cigarettes:
¶1980: "Discover Camel Lights. Satisfaction. Low tar."
1980: "Discover satisfaction. Camel Lights. The Camel World of satisfaction comes to low tar smoking. . . . Camel Lights brings the solution to taste in low tar."
¶1981: "Camel Lights. Low tar. Camel taste."
¶1981: "Camel Lights. . . . Same low tar, same Camel taste." 519315781-5797 at 5788-5789, 5792-5793, 5795, 5796 (US 79583).
947¶2485. RJR's 1994 marketing research on Camel Special Lights advertising ("Concept #17: The Special Lights Filter. Takes out impurities other filters can't touch") included the following statements from smokers that the advertisement conveyed to them:
¶"It sounds like it's taking the poison out of the cigarette."
¶"Takes out the impurities -- makes it sound like a healthier cigarette."
"The special filter would clean the cigarette and make it a healthier cigarette to smoke."
"It makes me feel I can enjoy smoking without harming myself because the filter takes out impurities. It sounds safer to smoke." "[I]t's safer for you."
¶"Sounds like it would save your lungs." 509619620-9625 at 9620, 9622, 9624, 9625 (US 85015).
¶2486. RJR marketed Doral as a low tar cigarette brand in the 1970s. A January 1972 Doral advertisement in Newsweek magazine stated: "Doral, the low 'tar' and nicotine cigarette . . . [t]he filter system you'd need a scientist to explain. . . . But Doral says it in two words: 'taste me.'" (US 87452); Schindler WD, 68:12-13.
¶2487. A June 1975 RJR Doral advertisement in Sports Illustrated magazine analogized smoking low tar cigarettes to a "Doral Diet." The advertisement, depicting a man lighting a cigarette, stated:
How I lost 700 mg. of "tar" the first week . . . without losing out on taste. I'm not too big in the willpower department. But I lost 700 milligrams of "tar" the first week on what I call "The Doral Diet." Now I can still enjoy smoking, and cut down on 'tar' and nicotine, too. . . . For a pack a day smoker like me, my Doral Diet really ads up.
¶(US 4746); Schindler WD, 68:14-69:9; 03496228-6630 at 6329 (US 20057).
948¶2488. A June 24, 1975 advertising research report for the Doral "Diet Filter" advertising campaign prepared by Reynolds's Marketing Research Department and "conducted to aid in evaluating six 'Doral Filter' executions in recall impact and communication," recorded smokers' impressions and perceptions of Doral advertisements. 501457575-7706 at 7576 (US 22150). Consumers had the following perceptions of the campaign:
The ad said something about a diet of tar and nicotine. My impression was that they had less tar and nicotine than other brands. The main idea was that they're better for you because of the cut-down in tar and nicotine. (Id. at 7581).
My impression was that they claim it's safer to smoke Doral than other cigarettes. (Id. at 7585).
¶The main idea was that it's safer to smoke. (Id. at 7586).
I got the impression that they want you to switch to Dorals and save your health. (Id. at 7587).
They brought out the idea that it might be a good cigarette to try if you're worried about the amount of "tar" and nicotine your lungs are absorbing. The main idea was to save your health, but if you still want to smoke, smoke Doral. (Id. at 7588).
It showed a man sitting in a chair and lighting up a Doral. It said that it had less "tar," but the taste didn't change. The impression it brought out was just the fact that it's a safer cigarette for your health, if you have to smoke. They were trying to get across that it has less "tar," and is still as good in taste as the other cigarettes. (Id. at 7591).
The main idea was that it's less dangerous to your health than any other cigarette. (Id. at 7593).
949A man was smoking a cigarette. The ad said that Doral is lower in tar and nicotine than any other cigarette. The impression that came across was that they would be less harmful if you smoked them. There's a lower tar and nicotine count. The main idea of the ad was that smoking Doral is better for your health. (Id. at 7608).
Their main idea was that they would still taste good, but they're low in tar and nicotine and would consequently be better for you. (Id. at 7611).
The main idea was you have less chance of danger to your health with Doral than another brand. (Id. at 7613).
¶My impression was it's much less of a health risk. (Id. at 7613). Schindler WD, 69:14-71:21.
¶2489. Two months after this Doral Diet research report, RJR placed another Doral Diet advertisement in the August 4, 1975 edition of Sports Illustrated magazine that doubled the claimed loss of tar -- to 1400 mg. -- compared to the June 1975 advertisement, (US 4746). The August 1975 advertisement featured the headline: "How I lost 1400 mg. of 'tar' the first week . . . without losing out on taste." (no bates) (US 4789); Schindler WD, 72:5-17.
¶2490. A 1975 study regarding the effectiveness of another Doral advertising campaign found that: "Attitude diagnostics indicated that smokers had no problem understanding the 'Wise Up' campaign. Respondents felt that 'Wise Up's' main point was a low tar and nicotine claim (84%) with some taste mentions (24%)." By way of example, some of the respondents noted:
The main idea they were trying to get across was it's less dangerous to the health and better tasting.
I guess the idea is that Doral is safer to smoke, as it has less tar and nicotine than others.
¶My impression was that Doral is less harmful.
The main idea they were trying to get across was to smarten up because the cigarettes have less tar.
950The main point of the ad was you can have good taste and be a little less harmful, too.
¶501719738-9761 at 9738, 9748-49, 9752, 9755 (US 22075); Schindler WD, 72:18-73:19.
¶2491. A July 27, 1976 letter to RJR employee Ed Blackmer discussed Doral's market positioning. The letter noted that the
smoker we are going after must be concerned about the health controversy. It is understood that we cannot necessarily target our media against "concerned" smokers, but that this must be accomplished via creative. Nevertheless, we believe it is an important factor in further "segmenting" our target audience.
¶50224143-4151 at 4147-4148 (US 22103).
¶2492. In discussing a Doral 4 advertising research proposal in June 1977, the copy strategy was described as: "Convince the Prime Prospect that new Doral 4 is the solution to his concern about the smoking controversy because it offers the optimum combination of ultra-low tar and taste satisfaction." As a result, the advertising was to be addressed to smokers "seriously concerned about the alleged hazards of smoking," and who, "because of [their] concern, seek[] one of the lowest tar levels available (or an ultra-low level)." 501533008-3011 (US 22107); Orlowsky WD, 69:1-23.
¶2493. Martin Orlowsky, former Executive Vice President of Marketing and Sales for RJR, admitted that RJR's advertisements for Vantage were targeted toward smokers who, due to their concerns about health risks, were seeking a low-tar cigarette. Orlowsky TT, 10/13/04, 2288:24-2289:19.
¶2494. Vantage advertisements from the 1970s used purported testimonials characterizing Vantage as delivering low tar to smokers and thereby reducing the health risk from smoking:
9511972: "Why I smoke Vantage. I read the papers. I watch TV. I hear the things some of them are saying about smoking. . . . And then, frankly, all that the critics say about 'tar' and nicotine has to make an impression. Fact is, they don't make me feel
guilty about smoking Vantage." (no bates) (US 3683); Biglan WD, 377:12-379:22.
1977: "Smoking. Here's what I'm doing about it . . . like a lot of people I'm . . . aware of what's being said [about the harm of cigarette smoking]. And like a lot of people I began searching for a cigarette that could give me the taste I like with less tar. . . . Vantage. It's everything the ads say it is. . . . What am I doing about smoking? I'm smoking Vantage." (no bates) (US 5578); see also (no bates) (US 324) (1978 Vantage advertisement in Rolling Stone magazine noting same).
1977: "Vantage is solving a lot of my problems about smoking. (no bates) (US 239).
1977: "Vantage is changing a lot of my feelings about smoking. . . . I'm not living in some ivory tower. I hear the things being said against high-tar smoking as well as the next guy. And so I started looking for a low-tar smoke that had some honest-to-goodness cigarette taste. . . . As far as I'm concerned, when I switched to Vantage, I changed to a cigarette I could enjoy." (no bates) (US 87456).
1977: "My wife got me to switch to Vantage. . . . My wife . . . would remind me of the stories being told about high-tar cigarettes. Well, I began looking into those new low-tar cigarettes. . . . [Vantage] tasted really good and they actually had less than half the tar of my old brand. . . . So now, I smoke Vantage. I get the taste I want and the low tar . . . ." (no bates) (US 87457).
1978: "'Why I choose to smoke. . . . I'm not deaf to what's being said about tar. So I searched out a cigarette that would give me taste with low tar. . . . Vantage has all the taste I enjoy yet, surprisingly, much less tar than my old brand." ADV017 1589-1591 (US 5756).
9521978: "'Vantage gives us more taste and less to argue about. My husband and I . . . [are] both aware of the things being said against high tar. So there we were facing each other every day, smoking our high-tar cigarettes and daring each other to switch to something lower. . . . Today, we both smoke Vantage. You could say we're getting less tar and we're
getting along -- with Vantage." ADV108 0001-0003 (US 87504).
1978: "These days, why do I smoke? . . . . With all the talk about smoking and high tar, it didn't take much imagination for me to conclude that the cigarette of the future would taste good and probably be low in tar as well. . . . Then I discovered Vantage. It was my kind of cigarette. It gave me taste. Pleasure. And the low tar I was looking for." (no bates) (US 295).
1979: "New Vantage Ultra Lights. Ultra taste. Never-before, silky smooth, truly satisfying taste -- in an ultra low tar cigarette! (And we do mean ultra low. At only 6 mg of tar, it's lower than 90% of all the cigarettes that people buy.) How is it possible? Through a unique blend of very select, very flavorful tobaccos. That's the Ultra Cigarette -- new Vantage Ultra Lights from Vantage." (no bates) (US 6255); (no bates) (US 6286); Biglan WD, 377:12-379:22.
1988: "Vantage Ultra Lights. How can anything so ultra light taste so ultra good? Find out for yourself. Try a pack today." (no bates) (US 1613); Biglan WD, 377:12-379:22.
¶See also Orlowsky WD, 73:1-76:22 (discussing US 5578; 324; 239; 87456; 87457; and 295); 76:23-77:11 (discussing US 6255 ); 77:12-78:21 (discussing US 5756 and 87504); Orlowsky TT, 10/13/04 2284:14-2285:20 (discussing US 87504).
¶2495. The following advertisements for Vantage from the 1970s are clearly encouraging health conscious smokers to switch to Vantage:
9531974: "Maybe the people who criticize smoking should stare the facts in the face. Then they might recommend that if you've decided to smoke, but are concerned about 'tar' and nicotine, you might smoke Vantage. Vantage offers smokers the rich, tobacco flavor they've come to appreciate. With a substantial cut in 'tar' and nicotine. So if you're one of those smokers who is now deciding between high 'tar' and nicotine cigarettes that taste good, and low 'tar' and nicotine cigarettes that taste like nothing, you might appreciate Vantage. . . . Vantage is
both high in flavor and low in 'tar' and nicotine." 03496228-6630 at 6313 (US 20057).
1976: "Are you still smoking? In the years since the criticism against smoking first appeared, many people have given up cigarettes. But many more people haven't. . . . [W]e'd like to talk to. . . . [t]hat even larger group of people who are still smoking today. If you're a smoker, you've probably heard the charges leveled against 'tar' and nicotine. You may have become concerned. And chances are you even tried to do something about it. Like trying . . . low 'tar' and nicotine cigarettes. . . . Vantage cuts down substantially on the 'tar' and nicotine you may have become concerned about. . . . So, if you still smoke, but would like to cut down on 'tar' and nicotine, Vantage is one cigarette you should seriously consider."
¶500713420-3420 (US 48350).
¶2496. An internal February 11, 1975 B&W memorandum by "J.V.B." commenting on RJR's Vantage advertisements stated that RJR's advertisement ("Why do you smoke? With what you've been hearing about smoking these days, you probably wonder sometimes why you smoke at all") was "address[ing] the health issue for competitive purposes." 690007757-7760 at 7759 (US 21039).
¶2497. An April 19, 1978 memorandum states that "Vantage has traditionally limited its target market to 'concerned' full flavor smokers." 500210073-0075 (US 22108).
¶2498. In a 1981 memorandum to M.M. Sheridan, titled "Reactions to the VANTAGE/Merit Image Study," K.A. Schmitt reported that, based upon the study, "smokers in our target category have two primary product desires: a lower tar product which addresses their safety/health concerns, and a product which provides taste satisfaction." The memorandum further reported that "VANTAGE is seen as not dealing as directly or effectively with the health/safety concerns of the consumer as Merit. Our current advertising approach focuses much more heavily upon the taste/pleasure aspects of our brand than on the safety/health aspects." As a result, the memorandum recommended that Vantage marketing be modified to better "target" smokers with health concerns: "Perhaps a more balanced approach is needed, both to tone down the perceptions of harshness and to renew the belief that VANTAGE does indeed address the target consumer's health/safety concerns." 523474848-4851 at 4848 (US 22156); Orlowsky WD, 71:15-72:16.
954¶2499. An August 1981 consumer research study, titled "Vantage Personalities," prepared for RJR by Social Research, Inc., noted that people in the Vantage target market "have very definite concerns about the alleged health hazards connected with smoking. It is these qualms that have prompted many of them to seek out lower tar brands." That report likewise noted that the target market
abandoned [] harsher brands in search of milder brands with lowered tar and nicotine. This movement was almost always prompted by health concerns. In some cases, people were experiencing actual problems such as coughing, throat irritation, and shortness of breath. Others may not have experienced actual symptoms, but were worried about the publicized alleged health hazards associated with stronger cigarettes.
¶503148009-8077 at 8006, 8070 (US 22159).
¶2500. An April 1982 research study, titled "Vantage and Merit Smokers," prepared for RJR by Social Research, Inc., stated:
955Both Vantage and Merit smokers have similar early smoking histories . . . switching to lighter cigarettes to relieve physical symptoms and as an acknowledgment of increased concerns about alleged health hazards. . . . [Quoting a Vantage smoker]: "They are lighter, lower in tar and nicotine. . . . They are satisfying like a full-tar cigarette, but they are better for my health. . . . The filter seems strong and effective as a trap for 'harmful' ingredients." Vantage smokers believe that the filter itself is strong enough to catch these impurities. . . . These ideas make them think the end product is a milder and more "healthful" smoke. . . . [Quoting a Vantage smoker]: "I like the filter because
there's a lot of it, like it's filtering out a lot of the harmful things, like the tar."
¶511469097-9250 at 9105, 9116 (US 20842) (emphasis in original); Orlowsky WD, 72:17-23; 81:4-8.
¶2501. A 1979 study prepared for RJR, titled "An Exploratory Study of Smokers' Comprehension of and Reaction to Several Proposed Winston Lights Campaigns," noted that with respect to one of the Winston Lights advertisements, consumers typically reported that they understood the advertisement to mean: "A low tar cigarette that tastes good, is satisfying and safer." 501071439-1530 at 1453 (US 22110); Orlowsky WD, 83:7-12.
¶2502. Advertisements for RJR's Now cigarette in the late 1970s and 1980s described Now as "the lowest," "lowest in tar," and "lowest tar champion," and included the following:
¶Now. It's a Satisfying Decision.
LOWEST TAR CHAMPION. NOW MENTHOL IS LOWEST By U.S. Gov't. testing method.
NOW is LOWEST Of All Softpack 100's. Pick the Lowest. NOW IS LOWEST By U.S. Gov't Testing Method.
WHEN IT COMES TO THE LOWEST IN TAR, ONLY ONE MEASURES UP. NOW IS LOWEST Of All Soft Pack 100s. By U.S. Gov't. testing method.
¶(no bates) (US 5852) (1978); 970469347-9474 at 9430, 9429, 9427, 9431 (US 85104).
¶2503. A 1983 Now Brand Image report, prepared for RJR, concluded that health concerns heavily influenced a smoker's decision to choose one brand over another and that smokers perceived lower tar cigarettes as healthier than their full-flavor counterparts. It stated that "[a] major motivation in brand switching has been concern over health. . . . The typical solution to this dilemma is the two pronged approach of trying to cut down and/or moving to a lower tar brand."
956¶The report went on to indicate that, when respondents were asked what the words "low" and "lowest" in the advertisements meant to them, "[t]hey interpret this to mean that the two brands are 'safer' and pose less of a health hazard. Consequently, they reason, this would make the brands more appealing to younger people who are very health conscious or to older, long-time smokers who are concerned about the long-range effects of tobacco." 506671319-1418 at 1379 (US 22160).
R.J. Reynolds's Research on the Low Tar Cigarette Category
¶2504. Internal RJR documents show that RJR conducted research not just on individual low tar cigarette brands, but on low tar cigarettes as a category. These documents demonstrate that RJR has long known and intended that its advertisements and marketing for low tar cigarettes, featuring claims of lowered tar and nicotine and "light" and "ultra light" brand descriptors, contributed to and reinforced consumers' belief that low tar cigarettes are better for their health, and caused consumers to smoke them for this reason.
¶2505. A 1974 survey showed that "a substantial majority of smokers said they agreed with the statement, 'low tar and nicotine cigarettes are a major step in making smoking less harmful to their health.'" 501238259-8269 at 8265, 8269, 8271 (US 22072); 501238270-8357 (US 48736).
¶2506. As part of a 1975 marketing plan to introduce a new low tar Salem product, RJR recognized that "[l]ow numbers are the primary benefit/feature which can solve the concerned smoker's anxiety about health." 50231320-3308 at 3253 (US 22151).
¶2507. A November 17, 1975 report prepared for RJR by Rosenfeld, Sirowitz & Lawson, Inc., titled "An Evaluation of the 120MM Market and Its Potential for RJR," stated:
957Currently RJR divides the total cigarette market into three basic categories: Full Flavor; Medium Flavor; High Filtration. However,
the recent rapid growth of the High Filtration segment, may be a signal that the consumer is beginning to be more health conscious than ever before, and will be even more so as time goes on. If this is the case, we believe that consumers will ultimately divide the market into three categories which in their minds would be categorized as: "Least Safe Brands" "Safer Brands" "Safest Brands."
¶The RJR report defined the "Safer" and "Safest" brand categories as follows:
Safer Brands: These are brands which are perceived to combine an acceptable level of taste with mildness. Smokers of these cigarettes, while not overtly concerned with health, do switch to them after feeling some physical discomfort from their previous brand. Although they are not aware of T&N numbers, they know they are "moving down" to a milder cigarette.
Safest Brands: Cigarettes in this category are perceived to have a mild taste. Smokers of these brands are very concerned about health and quite aware of T&N numbers. Their concern -- more than any physical discomfort -- causes them to switch to brands with low T&N numbers.
¶2508. The report further concluded: "We believe that the most dramatic evidence of the growing interest in Safer Cigarettes may be seen in the growth of the various Lights/Milds line extension products." 500671364-1454 at 1402, 1403, 1405 (US 22158) (emphasis in original). The report also stated: "As previous research has indicated, Smokers of Lights/Milds products (designated in this report as Safer Brands) are not aware of T&N numbers. Hence, the fact that a 120MM Lights entry will have high T&N numbers (on a total cigarette basis) should not impede its progress." 500671364-1454 at 1408, 1436-37 (US 22158); Schindler WD, 75:5-13.
¶2509. A November 16, 1976 RJR document, titled "New Brand Development," recommended introducing a "New, Single-Minded Advertising Campaign" that would "convey our lowest 'tar' benefit." In terms of future plans, the document stated "[f]or example, in the new and special wants area, there is style and value which we met with MORE, extreme health concerns which we are meeting with NOW [brand cigarettes], and with the evolution of the market toward low 'tar', many more opportunities will be present in this area . . . ." A section of the document titled "Super Low 'Tar' Products" stated: "We will also be working on super low tar products which address the wants of very concerned smokers. A growing number of smokers seek products with tangible/visible features to assuage their concern about smoking." 501282466-2513 at 2480-2481, 2488, 2496, 2502 (US 48813).
958¶2510. A June 21, 1982 Product Research Report on Non-Menthol Ultra Low Tar Consumer Probes, written by RJR's Marketing Development Department, stated: "Most respondents [ultra low tar smokers] preferred a white filter to a cork filter because they considered white to be more indicative of ULT cigarettes. The white filter generated strong associations with gentleness, purity, cleanliness, modernization, and innovativeness." 503394459-4485 at 4464 (US 85036).
¶2511. The 1982 report also stated: "Women are more optimistic about new brands that could offer lower tar. They are more willing to compromise on taste if they feel a cigarette has more personal benefits, although 'It would be great if it has good taste, too.'" The report further stated that ultra low tar smokers "want as little tar as possible, but they want taste to be at least on par with current ULT brands. They feel they have made taste trade-offs by smoking a ULT." The report continued: "It is unlikely ULT smokers would switch brands if the tar level of the new cigarette is equivalent to their current brand. Lower tar is a strong motivating factor." The report also recognized that smokers perceive low tar cigarettes as having less desirable taste, stating: "The main obstacle appears to be to convince smokers the new cigarette delivers a more flavorful, richer taste, and lowering the tar does not reduce taste and smoking satisfaction." The report also noted:
959Women seem to be more accustomed to moderation in their lifestyles. For example, they are inclined to trade-off some taste for the weight control and health benefits of low calorie and low fat foods. They want some taste assurance, but are open to compromise. They are willing to tolerate an adjustment period as they become acclimated to a new product they perceive to be better for them.
¶The document further stated: "ULT smokers perceive low tar claims to be credible. They try to balance their desire to smoke and personal concerns." 514343517-3566 at 3522, 3524-26, 3530, 3540 (US 51848).
¶2512. According to Gary Burger, RJR Senior President of Research & Development, RJR was aware that consumers smoke low tar cigarettes for the perceived health benefit. Burger observed that "[c]ertainly, smokers perceive lower tar cigarettes in some ways to be better for them and therefore they want them." He noted that consumers "have that impression that there are higher levels of bad stuff in high tar cigarettes and lower levels of bad stuff in low tar cigarettes." Burger PD, Arch v. American Tobacco Co., 8/21/97, 226:9-243:18.
(3) R.J. Reynolds's Public Statements About Low Tar Cigarettes
¶2513. In May 2004, RJR's website stated: "Reynolds Tobacco is not interested in trying to persuade any nonsmokers to begin smoking or in persuading any smokers not to quit." Andrew Schindler, Executive Chairman of Reynolds American Inc., testified that "Reynolds Tobacco is not interested in trying to talk any smokers out of quitting." TLT0770095-0128 (US 72410); Schindler WD, 76:17-77:5.
¶2514. RJR's website further stated:
960Our company, like other cigarette manufacturers, uses brand descriptors such as "full flavor," "lights" and "ultra lights" to differentiate cigarette brand-styles in terms of such characteristics as
strength of taste, and reported "tar" and nicotine yield. These terms do not, and are not meant to, imply that any cigarette brand-style or any category of cigarettes is safer than any other.
¶TLT0770095-0128 at 0111 (US 72410); Schindler WD, 64:19-65:3.
¶2515. A March 21, 2003 RJR statement to stockholders presented a proposal "to find appropriate ways of informing our customers about the actual health risks of smoking 'light and ultra light' cigarettes to disassociate them from any belief that such products are safer and deliver less tar and nicotine." This proposal cited the conclusions of NCI Monograph 13 that low tar cigarettes present no significant reduction in harmfulness relative to full-flavor cigarettes, and that "'many smokers choose these products as an alternative to cessation'" out of a mistaken belief that they are less harmful. The proposal also referenced several pending lawsuits against one or more of the Defendants alleging fraudulent marketing of low tar cigarettes as less harmful. The Board of Directors of RJR recommended a vote against this proposal. One of the reasons given by RJR for rejecting this proposal was that, "if implemented, this proposal could significantly interfere with RJR's defense of pending litigation." TLT0960025-0029 at 0027-0028 (US 87993); Schindler WD, 66:4-67:16.
Brown & Williamson
Brown & Williamson's Marketing of Low Tar Cigarettes
¶2516. A B&W document, titled "Kool Family Utopian Objectives 1979-1985," stated that "Kool must move into the health reassurance segment so that 45% of KOOL business will be in the perceived product safety arena by 1982 which will approximate the 45% of total smokers who will be smoking hi-fi products by 1982." Under the heading "Strategies," the document stated: "Provide product safety reassurance while enhance [sic] the satisfaction and refreshment perception of the appropriate KOOL styles through the successful national launch in 1979 of either: 1. Low 'tar' parent [or] 2. Repositioned KOOL Milds." 680559149-9162 at 9149-9150 (US 54048).
961¶2517. An internal March 25, 1983 B&W memorandum from A. J. Mellman, a B&W marketing employee, to R.A. Blott, B&W Senior Vice President of Domestic Marketing, regarding current cigarette project ideas for the Kool brand family, including low tar brands, stated: "KOOL maintained a three share level for over 30 years (through mid-60's) while positioning itself as a specialty cigarette to be smoked only for remedial or medicinal purposes." The fourth project idea was: "Improve health aspect: Anything that can be done to decrease the risks associated with cigarettes is a positive to most consumers." 514110006-0009 at 0007-0008 (US 21745).
¶2518. An April 28, 1998 document prepared for B&W, titled "Kool Natural Lights Round I & II Focus Groups: Presentation of Findings Prepared for Brown & Williamson," under the heading "Highlights : Natural Lights Idea," stated: "Respondents assumed that a natural light cigarette would be less harmful than a regular cigarette, they did not assume it would be 'healthy.'" 210430297-0396 at 0322 (US 67711); Smith WD, 83:18-84:20, 85:6-8.
¶2519. B&W's objectives for the 1957-1961 Viceroy advertisements were to "[a]ttract smokers . . . promising . . . implied health benefits because of filter" and "with substantial health benefit implications, because of blend and filter." Ivey WD, 51:15-52:13; Smith WD, 71:18-72:1; 670001750-1766 at 1754-1755 (US 20962).
¶2520. A 1975 B&W document, titled "Viceroy Marketing Strategy," identified the "Problem Advertising Must Solve": "[A]dvertising must . . . cope with consumer attitudes about smoking, providing either a rationale or a means of repressing the health concern." 680113760-3763 at 3762 (US 20987); accord 680116947-6968 at 6959, 6961 (US 21877) (1975 document, titled "Viceroy
962¶Agency Orientation Outline," stating "Test Market Campaigns: Strategy-Given consumers awareness of the smoking and health issue, full flavor smokers must deal with their illogical behavior. Therefore, we attempted to communicate Viceroy's flavor/satisfaction benefits by providing consumers a rationalization for smoking or a repression of the health concern"); Smith WD, 73:2-17.
¶2521. The memorandum noted that, in 1953-1954, Viceroy's advertising campaign slogan was "VICEROY's double barreled health protection" and "Better Your Health," with the "objective and creative strategy" being to "[a]ttract smokers of all other cigarette brands by promising superior health protection because of more effective filtration from both a new filter and a longer length." The memorandum concluded that "[t]hese two product changes firmly positioned VICEROY as a high-filtration, healthier cigarette and attracted smokers in droves." The same theme continued in 1955-56, when one of the "Objectives and Creative Strategies" listed was to "Attract smokers of non-filter brands and the new filter brands by promising good taste equivalent to non-filter brands and superior health protection because of blend and filter." 670001750-1766 at 1752-1754 (US 20962); see also (US 87468); (US 87469); (US 87470) (1953 magazine advertisements featuring claim of Viceroy's "double barreled health protection").
¶2522. Carlton is a low tar brand that was originally manufactured by American Tobacco until that brand was acquired by B&W in 1994, along with American Tobacco's Lucky Strikes, Pall Mall, & Tareyton brands. Gesell PD, State of Minnesota v. Philip Morris Inc., 9/18/97, 6:10-17; 117:3-15; 25:23-26:3; 93:2-13.
¶2523. According to Sharon Smith, former Director of Marketing Services and Operations at B&W, "Carlton advertising focused on tar delivery." She explained:
963For Carlton, it's not an imagery campaign. It's more communication of tar levels. I'm familiar with consumers of competitive brands to Carlton saying in focus groups that to convince them to switch from their brand to Carlton, an understanding of what the tar levels are is more important to them.
¶Smith further explained that, for those smokers, her research has found that their understanding of the tar and nicotine numbers is based "certainly on our advertising." Smith WD, 69:10-14; 75:3-23.
¶2524. A B&W document circa 1996-1997, titled "Carlton Creative Plans," disclosed that the first "Primary" trait of Carlton's target audience was "Health Conscious." With respect to print advertisements, the report stated: "Magazine [advertisements for Carlton] Will be Driven by Editorial That is: 'Health Conscious.'" Carlton's "brand strategy" was "to continue to defend the franchise while communicating its 'lowest' positioning to maintain switching inflows from those smokers trading down in tar levels." The document went on to state that "CARLTON packaging issues will be explored to determine how best to communicate ultra light product cues . . . hype its increased communication of ultra low tar." 176020783-0800 at 0785, 0792, 0798 (US 23351); accord 176020856-0926 at 0868-0869 (US 23357).
¶2525. In 1999, B&W began a promotional campaign emphasizing that Carlton cigarettes were Ultra Ultra Light, including package statements that Carlton delivered only "1 mg." of tar. B&W's advertisements featured the slogan "Isn't it time you started thinking about number one?" According to Susan Ivey, "many factors drove consumers' preference for Carlton, and for some smokers, one of those factors was a belief that ultra low tar could reduce one's risk." Ivey WD, 52:14-53:15; ADV027 0780-0782 (US 9846); ADV045 0468-0470 (US 11362) (1999 advertisement); ADV027 0924-0926 (US 9892); ADV032 0011-0013 (US 10678).
964¶2526. In March 1999, Nicholas Brookes, B&W Chairman and CEO from 1995 to 2000, became aware of a discrepancy in the tar delivery of Carlton cigarettes. The cigarette, when smoked by human smokers, delivered three milligrams instead of the advertised one milligram of tar. Because B&W had just introduced a new advertising campaign "touting Carlton as the '1' for you," Brookes attempted to delay the publication of a study that would have alerted the public to the new findings. Brookes did not direct B&W's marketing department to discontinue the "Carlton is the '1' for you" campaign, even though he acknowledged that it might cause confusion for consumers. 190245079-5080 (US 85018); Brookes PD, United States v. Philip Morris, 3/31/03, 146:18-148:12; 149:3-149:20; 150:14-150:18.
¶2527. A July 27, 2000 document prepared for B&W by Kay Harwood Marketing Analysts, Inc., titled "Topline Report of Findings for Carlton Advertising Research," indicated that smokers continue to view Carlton cigarettes as healthier, stating: "Focus groups were allowed to submit two words in addition to those suggested by the group hosts. Among the words independently chosen to describe Carlton cigarettes were 'feeling healthier' and 'healthier.'" Among the Report's 'Key Findings' are the statements from the focus groups in response to several Carlton campaigns. The statements include:
965Healthier -- trying to sell a healthy cigarette -- Very few people have realized that Ultra is better . . . Purity/better for you. . . . Fewer people have health problems smoking this brand . . . . This cigarette is best for you . . . better for you. . . . Clean & improved -- healthier brand; less nicotine. . . . Healthier living. . . . Carlton is healthier for you. . . . Gives next to nothing harmful -- means healthier -- Carlton is healthier for you . . . safe cigarette. . . . They are much better for you -- A healthier cigarette. . . . Healthier. . . . This is the best for you -- lowest in bad stuff. . . . Better for you, lighter smoke. . . . Carlton will make you happier and healthier. . . . Health-minded, concerned people (get healthier). . . . The safe cigarette -- Cut down
your risk -- Light and less harmful. . . . This will save you -- this is the solution you have been waiting for.
¶250255336-5347 at 5340, 5343-5347 (US 22031). These statements were repeated in an August 8, 2000 document prepared for B&W by Kay Harwood, Marketing Analysts, Inc. titled "Carlton Advertising Research: Report of Key Findings." 250255060-5075 at 5064, 5066-5068, 5071-5075 (US 22170).
¶2528. A document, titled "Carlton Advertising Research: Four Focus Groups," bearing MAI (Marketing Analysts, Inc.) and B&W insignia on the cover, discussed July 2000 focus groups stating that smokers of both Carlton and competitive Carlton Ultra light associated Carlton cigarettes with being "[b]etter for you/[h]ealthier." The Report concluded that the Carlton "It's the Least You Can Do" campaign (labeled the "U" campaign) created the impression that "Carlton is better for you." The Report's "Key Recommendations" include: "If the primary objective of the advertising campaign is to position Carlton as a lower/the lowest tar and nicotine cigarette, the current research suggests the "U" campaign (It's the least you can do) effectively conveys this positioning." 250221262-1294 at 1275, 1277, 1287 (US 22030); Ivey WD, 59:20-6060:12.
Brown & Williamson's Research on the Low Tar Cigarette Category
¶2529. Susan Ivey acknowledged that she is aware that "some smokers choose lights because they perceive a health benefit," and that "Brown & Williamson's consumer research . . . indicates that certain smokers switch to low tar cigarettes because they believe that these cigarettes are 'less harmful' than regular cigarettes." As demonstrated below, these consumer research documents establish that B&W has long known and intended that its advertisements and marketing for low tar cigarettes, featuring claims of lowered tar and nicotine and "light" and "ultra light" brand descriptors, contributed to and reinforced consumers' mistaken belief that low tar cigarettes are better for their health, and caused consumers to smoke them for this reason.
966¶2530. For instance, a 1967 B&W advertising and marketing strategy for high-filtration/low tar products describes B&W's marketing strategies:
[Vanguard brand strategy:] "To capitalize upon a prevalent smoker desire to lessen the health risk involved in his smoking via a switch to a low tar cigarette . . . . Advertising Objective -- Communicate a dual smoker benefit: low tar and satisfying taste."
Modified LIFE "Marketing Strategy -- To fully capitalize on health vs. cigarette smoking publicity and publishing of tar/nicotine data by marketing LIFE as the lowest tar cigarette in the filter 85 segment."
Filter 70's "Marketing Strategy -- To capitalize on smoker concern of 'smoking too much' by offering a means for reducing smoking without . . . cutting down on number of cigarettes smoked . . . . Advertising -- Filter 70's would offer smokers the opportunity to smoke up to one-third less (shorter tobacco section), but they can light up as often."
¶Ivey WD, 57:22-58:10, 63:1-8; 670186789-6824 at 6790, 6792, 6798, 6802, 6804 (US 21431).
¶2531. An August 1967 B&W document, titled "A Psychological Map of the Cigarette World," stated that
PEOPLE WHO SMOKE FILTER CIGARETTES . . . ARE MORE CONSCIOUSLY IN CONFLICT ABOUT SMOKING . . . . THEY CAN'T COMPLETELY ENJOY SMOKING BECAUSE THEY KNOW IT IS NOT HEALTHY. . . . THEY MAY BE RECEPTIVE TO ADVERTISING WHICH HELPS THEM ESCAPE FROM THEIR INNER CONFLICTS ABOUT SMOKING.
¶680282619-2668 at 2642 (US 85305).
¶2532. A 1969 marketing document from B&W's files prepared by a consultant for Imperial Tobacco, the sister company of B&W, stated that the smoker "seeks a new covenant between himself and the tobacco industry" and has "trust" that the industry "is going to provide him with a product that he can enjoy without fear of physical or psychological reprisal." 680082943-3125 at 2959-2960 (US 20983).
967¶2533. An October 21, 1971 Philip Morris document acknowledged that it "was abundantly clear" that manufacturers in the United States, and B&W in particular, "are concentrating on the low TPM [total particulate matter] and Nicotine segment in order to create brands with distinctive product features which aim . . . to reassure the consumer that these brands are relatively more 'healthy'" than regular full-delivery cigarettes. "Hence B&W is devoting its efforts entirely to the Hi-Fi ["high filtration"] segment, and its two major projects . . . demonstrate this strategy." 100028935-8937 at 8935 (US 20089).
¶2534. A September 1974 B&W marketing research study, titled "The 'New' Smoker," examined the "Behavioral Factors" of new smokers and concluded that new smokers are "mis- informed on cigarette strengths." The study concluded that new smokers believed that low tar cigarettes were "better for you." 779217794-7833 at 7822-7823 (US 21055).
¶2535. A November 29, 1976 B&W memorandum from F.E. Latimer to B.L. Broecker and M.J. McCue, all B&W marketing employees, described the role cigarette advertising plays in allaying smokers' fears of the health consequences of smoking:
968[B]ecause such large numbers of the institutions and leaders he believes in are against smoking, the average smoker often seeks self-justification for smoking. Good cigarette advertising in the past has given the average smoker a means of justification on the two dimensions typically used in anti-smoking arguments. . . . All good cigarette advertising has either directly addressed the anti-smoking arguments prevalent at the time or has created a strong, attractive image into which the besieged smoker could withdraw.
¶680086039-6044 at 6039-6040 (US 20984).
¶2536. A January 1977 report prepared for B&W by Post Keyes Gardner, Inc., discussed successful cigarette marketing in similar terms:
The fundamental long term trends in the business are for smokers to move gradually to products that represent benefits of "health" and modernity . . . . Successful brands have offered "real" or "perceived to be real" products benefits that are founded on smokers' needs for "health" and modernity. . . . Successful advertising in the cigarette business is achieved by establishing a brand image based on a product benefit that fulfills consumers' needs for taste, "health" and modernity. . . . Historically, brands that have achieved the most success are those that offer taste within the confines of "health. . . . ." [T]he real "action: is in products that deliver, or are perceived to deliver, taste while representing the most reasonably "safe" product available . . . products have evolved along the long term continuum toward "health" and modernity. Those that have capitalized on these trends with a point-of-difference are the ones that have been the most successful. . . . Viceroy was the first brand to directly capitalize on [the perceived health benefits of filters] by featuring its filter benefit, and sales were dramatic for the brand. . . . [In 1965,] Carlton was introduced -- the first real response to the "health" issue as we see it today . . . . Three hifi [high filtration] brands, True, Doral and Vantage (with new, more modern filters) were successfully introduced [in the late 1960's], capitalizing on the "health" atmosphere that the anti-smoking forces were creating . . . . FORECAST FOR THE FUTURE. . . . In sum, the dynamics of "health" and modernity trends will be dominant. The smoker appears to be ready to make another major shift, losing gratification and obtaining a "safer" product, to a new generation of products with single digit tar numbers. . . . The smoker will be inundated with 'health' oriented advertising.
¶776158413-8426 at 8416, 8419, 8422-8423, 8425 (US 22339) (emphasis in original).
¶2537. B&W's 1977 New Products Annual Marketing Plan reviewed marketing strategies for new "health oriented" low tar brands to be directed at "the extremely health conscious (worried) segment of the market." According to the plan, the "Overall Objective" was "[t]o develop and successfully launch a product which distinctively positions itself as being the 'safest' alternative in smoking." In a review of Savannah brand cigarettes, the plan noted that the "Hi-Fi [high filtration] segment stems directly from the increasing concern over the smoking and health issue." The Savannah brand was to be "positioned against those consumers with serious health concerns who continue to smoke full flavor brands." 670156293-6424 at 6303, 6323-6324, 6342 (US 53746*).
969¶2538. This same 1977 Marketing Plan recommended that the:
[a]dvertising copy should assume the tone of objectivity and genuine importance. The authenticity and frankness of the copy must be arresting enough to gain the attention of those consumers concerned about their health. Taste reassurance for the brand should be subordinated in efforts to play up health reassurance claims.
¶In a section titled "Market Review," the plan went on to say that "[t]he appeal of the brands competing in this segment [enriched flavor ultra low tar] is solely on the basis of implied health claims." 670156293-6296 (US 53745); 670156297-6242 at 6324, 6327 (US 53746*).
¶2539. A July 25, 1977 B&W Internal Marketing Study, titled "Low 'Tar' Satisfaction, Step 1: Identification of Perceived and Underperceived Consumer Needs," recited the percentage of starters and quitters from 1969-1976, and stated:
[A]s the dynamic proportion of quitters continues to be larger than the proportion of starters, actual smoking incidence has declined about ten percentage points over the last ten years. . . . Increases in per capita consumption are assumed to correlate with lowered "tar" delivery as well as other factors. . . . HEALTH REASSURANCE: Almost all smokers agree that the primary reason for the increasing acceptance of low 'tar' brands is based on the health reassurance they seem to offer. . . . It must be assumed that Full Taste smokers come down to "low tar" expecting less taste . . . [t]hey are willing to compromise taste expectations for health reassurance.
¶775036039-6067 at 6043-6044, 6047, 6052 (US 21053).
970¶2540. A 1977 document bearing the B&W seal discusses B&W's Belair low tar cigarette:
Does Belair have growth opportunities? -- Increasing "health"- orientation of cigarette marketing and the correspondingly greater potential for 'lighter' cigarettes.
To realize this growth opportunity, Belair must: . . . -- compete directly in the low 'tar' segment where greatest potential is. . . .
Current Positioning Objective: To reestablish and maintain the relevancy of Belair's heritage as a cigarette which provides a light, yet, satisfying menthol alternative and a 'health' reassurance relative to full-taste brands. . . .
July 1977 'tar' reduction . . . will allow for specific low "tar" support of the important "health" reassurance element of this brand positioning. . . .
Overall Belair Operating Strategy: -- Through advertising, make the Belair historical image/positioning as a "light" cigarette more relevant to the current 'tar' conscious environment. . . .
Belair Copy Strategy: To position Belair as a cigarette which offers . . . lower "tar" reassurance relative to full-taste brands. . . .
Belair Prime Prospect: The current Belair smoker with whom the reassurance of the lower "tar" positioning addresses possible concerns which might otherwise prompt the user to switch to a competitive low 'tar' cigarette.
¶779027336-7360 at 7339-40, 7350-51, 7354-55 (US 22163).
¶2541. A September 26, 1977 letter from P.J. Tighe, B&W Senior Brand Manager of New Products, to colleague Don Johnson discussed additions to Low Tar Brand Plans. The letter stated that the "Low 'Tar' Menthol Plan" needed to provide "Health Reassurance." 660093935-3935 (US 53576).
¶2542. A document, titled "Fact Operational Plan for Fourth Quarter 1977 and 1978," noted that "[t]o the extent that health reassurance equates with smoking fewer of less 'harmful' cigarettes, the reassurance must be handled carefully, since consumers clearly consume low 'tar' cigarettes in greater quantities." The document also concluded that "[t]he greatest need in the marketplace is for a cigarette that promises and delivers: 1) Taste/Flavor, 2) Product Quality, and 3) Health Reassurance." 676038502-8796 at 8573, 8578, 8590 (US 53923).
971¶2543. A 1978 B&W document, titled "Purite Filter," acknowledged that the "common area of leverage" of successful brands was implied health benefits due to low tar:
The move to hi-fi cigarettes is continuing, motivated by consumers who demonstrate personal concerns towards smoking in either the health, social areas, or both. To capitalize upon these perceived consumer needs, three successful positionings have emerged in hi-fi: health reassurance, taste reassurance, and social acceptability. All three positionings use low "tar" as a common thread. . . . To stem the continued decline in smoking incidence, the industry must rapidly move to a point where it can address cigarettes in a totally positive light. . . . The modern hi-fi segment . . . has been growing dramatically over the last five years. This growth has been spurred by the consumer desire for health protection, as achieved through particulate matter reduction and the industry response in offering low "tar" brands with heavy marketing support. . . . Although the hi-fi segment is continuing its rapid expansion to a projected 50% by 1982, only three positionings are demonstrating vitality and durability among the freestanding low "tars": low "tar"/implied health, i.e. Carlton, True; extra flavor, i.e. Merit; social acceptability, i.e. Vantage. . . . Low "tar"/implied health is the common area of leverage with all these entries.
¶680559100-9124 at 9100, 9101, 9110, 9120 (US 21003).
¶2544. A November 14, 1978 document, titled "Low Delivery Cigarette Project For Brown & Williamson Tobacco Corp.," reported that, between 1974 and 1976, 60-74% of consumers believed that "'low tar and nicotine cigarettes represent a major step in making smoking less harmful.'" Under the heading "'Health' vs. Image/Taste/Satisfaction," the document stated that B&W's marketing plan included "using acceptably Low Delivery numbers to provide assurance that the brand is at least at parity with its health-oriented competitors." 670133560-3690, 3572, 3581 (US 87887).
972¶2545. An October 1979 "History and Key Trends in the U.S. Cigarette Market," compiled by E.T. Parrack, B&W Vice President of Brand Management, confirmed B&W's knowledge that smokers turn to low tar cigarettes in response to health, not taste, concerns. 670624932-5364 at 4935 (US 53869). The document contains the following statements, reflecting B&W's knowledge that the increase in filtered and low tar cigarette sales from the 1950s through the 1980s resulted from consumers' belief that these products were less harmful, as a result of Defendants' extensive marketing of these products:
The success of hi-fi brands is due in part to the large sums being spent to advertise them. Id. at 5279.
[Between 1957 and 1960] the consumer was bombarded with messages regarding high filtration. Id. at 5036.
1964-1975 -- Emergence of brands using low "tar" as primary appeal . . . appearance of brands which actually based their appeal on low tar and nicotine numbers. Id. at 5275, 5277.
Two forces are driving the current high rates of brand switching: Smoker concern about personal health [and] Smoker concern about social censure. . . . successful new brand development would have to be aimed at and satisfy the smoker needs arising out of these two key forces. Id. at 5165.
¶Regarding the perceived health benefits of menthol cigarettes, the compilation stated:
973[T]he split between menthol and Hi-Fi continued. Smokers were forced into a trade off of Hi-Fi vs. menthol. But was it indeed a trade-off? As we have noted, Salem was perceived as a relatively mild cigarette, and menthol itself had been promoted for years for soothing throats irritated by smoking and was the cigarette used by many when they had colds. Thus Salem and other menthols could be regarded as equivalent to a Hi-Fi. Id. at 5036-5037.
¶670624932-5364 (US 53869).
¶2546. A June 2, 1980 B&W memorandum from Brian R. O'Hare to J.F. Roberts stated:
It now becomes necessary, in light of the increasing importance of the smoking and health issue and Kent's repositioning as the health reassurance brand[,]" to implement the remaining phases of B&W's plan to position Kent as a less harmful brand. The memorandum noted the importance of implementing this plan" as the smoking and health issue becomes more important on a worldwide basis.
¶660942115-2116 at 2115 (US 53580) (emphasis in original).
¶2547. In a July 2, 1982 B&W report, titled "What Are the Obstacles/Enemies of a Swing to Low 'Tar' and What Action Should We Take?," B&W Assistant General Counsel J. Kendrick Wells gave his views that B&W should respond to attacks on low delivery cigarettes in the following manner:
B&W will undertake activities designed to generate statements by public health opinion leaders which will indicate tolerance for smoking and improve the consumer's perception of ultra low "tar" cigarettes (5 mg. or less). The first step will be the identification of attractive scientists not previously involved in the low delivery controversy who would produce studies re-emphasizing the lower delivery, less risk concept. Through political and scientific friends, B&W will attempt to elicit from the administrative and legislative branches of the federal government, and perhaps voluntary health groups, statements sympathetic to the concept that generally less health risk is associated with ultra low delivery cigarette consumption. The program is designed to produce statements of sufficient news interest to reach the public through the media. In addition, B&W would seek to generate spontaneous mainstream media articles dealing with component deliveries, much as the old Readers Digest articles. . . . B&W will urge the industry to sponsor research in the ultra low delivery cigarette area which turns the principles used against the industry to positive use. . . . Industry positions favoring the low delivery cigarette can be effectively presented, but must be carefully structured.
¶680592164-2169 at 2164-2168 (US 21009); (no bates) (US 76213); Wells WD, 46:11-49:3.
974¶2548. A March 27, 1985 B&W memorandum from E.T. Parrack, Jr., Vice President of Domestic Marketing, to Thomas E. Sandefur, Jr., B&W's CEO, stated that "health reassurance" is one of the "'rational' benefits" that have been grafted on to the two "basic benefits" that cigarettes have always offered to consumers. The two basic benefits are: "physical smoking satisfaction" and "Emotional (image/social) reinforcement: 'The me I want to be.'" 528010755-0759 at 0755, 0757 (US 20926).
¶2549. A 1999 B&W document, "Current Trends in Lights and Ultra Lights," stated under the heading "Learnings": "Consumers were ready for low tar before Marlboro Lights. Health concerns. . . . Anti-smoking pressure and PM's initiative ignited the process. Manufacturers' focus on Lights accelerated the growth." 430403186-3194 at 3193-94 (US 22084).
¶2550. According to Sharon Smith, former B&W Director of Marketing Services and Operations, her consumer research indicated that smokers of light cigarettes, as compared to ultra light smokers, "did not have the same level of understanding of the tar numbers, and instead spoke in terms of full flavor versus lights," and as a result "rely primarily on brand descriptors like 'light,' 'medium,' and 'ultra light' as relative indicators of the cigarette's tar level," and that they "think of light and ultra light cigarettes as being lower in tar and nicotine." Smith WD, 76:4-12.
Brown & Williamson's Public Statements About Low Tar Cigarettes
¶2551. Since at least 1981, Brown & Williamson's public position has been that "it has never marketed filtered or low tar cigarettes as less harmful than regular cigarettes." Similarly, Sharon Smith, former Director of Marketing Services and Operations at B&W, denied that the words "low tar" communicates any health benefit, stating that "I would not say that low tar implies any sort of benefit, other than it's lower in tar." Ivey WD, 51:9-13; Smith WD, 66:19-22.
975¶2552. A June 17, 1999 B&W Question & Answer ("Q&A"), labeled a "working document," stated that B&W did not lower the tar and nicotine in its cigarettes for health reasons and that B&W does not "claim that [low tar] cigarettes are any better/safer for you than any other cigarette on the market." 127030138-0138 (US 22113).
¶2553. In March 1999, Nicholas Brookes, B&W Chairman and CEO from 1995 to 2000, denied that B&W had conducted research on consumer perception of light cigarettes and whether reduced risk was associated with these cigarettes. Brookes PD, United States v. Philip Morris, 3/31/03, 162:13-163:9.
¶2554. Sharon Smith has claimed that "Brown & Williamson has only used the terms 'low tar' or 'light' with respect to its cigarettes to communicate lighter taste -- lighter taste and nothing else," and that "consumers have overwhelmingly responded that lighter taste is the only benefit that Brown & Williamson's advertising for its low tar brands has indicated." Similarly, Susan Ivey has also said that "[m]y experience is that most consumers choose lights for taste, because they prefer a lighter tasting cigarette." Smith WD, 50:7-51:2; Ivey WD, 57:18-21.
¶2555. B&W states on its website: "We do not believe that people who are concerned about the health risks of smoking should view lower tar products as an alternative to quitting." TLT1040050-0055 at 0055 (US 88620); Ivey WD, 63:9-16, 64:1-6; Smith WD, 61:19-23.
¶2556. Despite the substantial evidence already referred to, supra, that B&W was aware that consumers interpreted its low tar brand descriptors to be indicative of a less harmful cigarette, in
976¶May 2004, B&W stated on its website that brand descriptors were intended only to communicate taste:
Cigarette brands in the U.S. are usually identified on packs, cartons and advertising as belonging to the following categories: "Ultra Lights" or "Ultra Low Tar," "Lights" or "Low Tar," and "Full Flavor. . . ." Recent published studies suggest that the majority of smokers use descriptors to guide their product selection based on taste. . . . It is not Brown & Williamson's intention to suggest that any individual brand, regardless of the category descriptor terminology used, or tar yield, is safer than any other.
¶TLT1040056-0062 at 0061 (US 88628); Ivey WD, 70:5-14.
BATCo
BATCo's Research on the Low Tar Cigarette Category
¶2557. BATCo's research documents establish that the company has long known and intended that its advertisements and marketing for low tar cigarettes, featuring claims of lowered tar and nicotine and "light" and "ultra light" brand descriptors, contributed to and reinforced consumers' mistaken belief that low tar cigarettes are better for their health, and caused consumers to smoke them for this reason.
¶2558. A 1972 BATCo memorandum pointed out that health reassurances usually result in increased sales:
Over the years manufacturers have provided the public with a variety of platforms to . . . "enhance the association in smokers minds between the benefits of smoking and our cigarette products." Increasingly, by implication, these claims have turned to a health orientation and very often the closer these have come to relating the smoking benefit to being one of "health" the more successful has been the brand.
¶100006864-6868 at 6864 (US 20076).
977¶2559. A May 3, 1974 note from Anthony D. McCormick of BATCo's Legal Department "[t]o all Members of the Conference" enclosed a document for discussion by BATCo employees at an upcoming company conference. Under the heading "SMOKING AND HEALTH ASSUMPTIONS," the discussion document stated: "On legal grounds alone it will continue to be to the industry's advantage not to make explicit health claims. The industry will make increasingly competitive use of products for which health claims are implied." 100428581-8599 at 8581, 8583, 8599 (US 34649).
¶2560. A March 29, 1976 BATCo report, titled "The Product in the Early 1980s," stated that "opportunities exist for filter and cigarette design which offer the image of 'health reassurance.'" 11069974-9982 at 9974, 9979 (US 20268).
¶2561. An internal April 14, 1977 BATCo memorandum by P.L. Short, Manager of BATCo's Marketing Department, describing BATCo's marketing plan, stated that "[a]ll work" would be
directed toward providing consumer reassurance about cigarettes and the smoking habit . . . provided . . . by claimed low deliveries, by the perception of low deliveries and by the perception of "mildness." Furthermore, advertising for low delivery or traditional brands should be constructed in ways so as not to provoke anxiety about health, but to alleviate it, and enable the smoker to feel assured about the habit and confident in maintaining it over time.
¶100427791-7800 at 7794 (US 34641) (emphasis in original).
¶2562. An April 1982 document, titled "Conference on Marketing Low Delivery Products: January 1982," stated: "The BATCo.'s Board policy stated in the Market Expansion document is to lead the industry in the trend towards lowering deliveries. . . . [C]onsumers will probably believe that lower deliveries mean less 'risky' products." 690120722-0756 at 0726, 0728 (US 21043); Ivey WD, 80:14-81:9.
978¶2563. An undated BATCo document, titled "Lights Segment Project Consumer Insight Into Smoking Lights," listed under the heading, "How to Create a Positive Lights Culture," the following three ways to "differentiate the lights from full flavor smoking . . . Color, Cues e.g. Blues & Whites . . . Lighter Lifestyles e.g., water related outdoor fun activities . . . Light symbols e.g. Bubbles[;] Air balloons[;] Light winds." 321546706-6724 at 6719 (US 46770).
¶2564. Susan Ivey, who worked in marketing for BATCo from 1990 to 1999, admitted that, in her experience, "while many smokers know they are buying a lights product, their actual understanding of what the specific delivery numbers are is quite limited. For example, consumers might know they are smoking a lights version of a brand, but they wouldn't know what the machine-measured tar yield was for that cigarette."
¶2565. Similarly, a September 1992 BATCo Business Review prepared by Norma Simamane, BATCo Lights Project Manager, stated that "[g]enerally, the specific meaning of Tar and Nicotine is not understood by consumers. However, they perceive a strong association between the numbers with 'perceived health effects.' Basic understanding is that 'the higher the numbers, the stronger the negative health effects.'" Instead of precluding use of advertisements intimating that low tar cigarettes are healthier, the document stated: "Reference to overt communication of health related issues must be avoided." The document also advocated using brand descriptors such as "'Light,'" "'Ultra'" and "'Suave (indicating Lights)'" as opposed to tar and nicotine yields, because "T&N numbers . . . tend to highlight negatives and to remind consumers of the negatives of smoking thereby increasing the 'guilt' feeling." The document further stated: "The importance of the Lights segment is demonstrated by the growth trend that is 5 times faster than total world cigarettes volume.
979¶. . . In addition to being profitable, future projections indicate an even faster growth of lights." Ivey WD, 76:10-12. Ivey WD, 82:4-11, 76:10-18; 321683062-3099 at 3087, 3090, 3065 (US 28586).
¶2566. A January 1995 research report prepared for BATCo, titled "Silk Cut Brand Status Check & Concept Evaluation," stated, under the heading "Attitudes to LTN [low tar and nicotine]":
There was universal agreement . . . amongst ff [full flavor] smokers that they would switch to LTN if and only if a lights brand with taste could be produced. But that seemed almost a contradiction in terms for many of them as many ff [full flavor] smokers described a direct correlation between tar and nicotine levels and taste. Regular lights brands smokers -- even Marlboro Lights -- were reassured about health concerns by choosing to smoke such brands.
¶800056515-6581 at 6526 (US 31643).
¶2567. A BATCo document bearing the heading "Barclay Business Review 1996" concludes both that consumers rely on product packaging and marketing (as opposed to FTC tar and nicotine deliveries) to indicate low tar level and that reduced tar level significantly increases purchase interest:
Consumers -- with the exception of 1MG [tar cigarette] smokers -- are not able to quote correct tar/nic deliveries of the brand they are smoking currently. This means that the consumer does not segment the market in terms of deliveries but he uses colour coding and descriptors to distinguish FF, Lights and Ultra Lights . . . shelving according to [FTC tar and nicotine] deliveries has a positive impact on the awareness of the Lights category in general. The willingness to try Barclay increased significantly.
¶700767443-7457 at 7452 (US 22123); accord 321184656-4672 (US 22045).
¶2568. In a BATCo Kent Super Lights Brand Plan, BATCo discussed ways in which to "accelerate its lights segment growth." Under the heading of "Key Insights from 1997," the plan reported that "[l]ights franchise is skewed towards upscale 35+ female smokers, this is consistent with associated smoker (who is assumed to be health conscious)" and that "'[h]ealth conscious' brand choice is seen by ASU [adult smokers under] 30s as a purchase pattern for 40+ smokers." 321551304-1323 at 1304, 1305 (US 22057); Ivey WD, 78:1-13.
980¶2569. A "Qualitative Research Report on Light Cigarette Brand Perceptions" dated January- February 1997, stated, under the heading "Benefits Sought From Lights":
Most older males pointed out that the main benefits of Lights was the fact they were less harmful. This factor was also very important for younger females, who often said they "had to think of the future." Some of the girls were sure Lights didn't form so strong smoking habits, [believing that] "it's easier to give up smoking if one smokes lights."
¶The "Conclusions" Section stated: "Light brands are primarily perceived as . . . less harmful for one's health (easier breathing, better physical state in general). . . . Some of the females perceive the concept of ULTRA LIGHTS as . . . the last step before giving up smoking," and noted that 18-24 year olds "ranked health care features of lights most highly." 760008596-8803 at 8686, 8692-8693 (US 54588) (Confidential).
¶2570. A 1999 BATCo document, titled "Lightning -- Extreme Smoking Regimes Testing Results and Implications for IT and The Light-Mild Issue," cited a "Smokers' attitudes report" which showed that more smokers perceive the terms "light" and "mild" to indicate low tar than to connote taste or any other characteristic. 321989078-9276 at 9121-9122 (US 28819).
¶2571. A 1999 BATCo presentation on marketing in Europe bearing the headings "Research" and "Heathrow Proposition" stated that many smokers want to "trade down" in tar in order to minimize risk and harm caused by their cigarettes:
981[S]trong potential for a new low tar brand -- many smokers looking to trade down. . . . Low tar Minimise Risk, Maximise Pleasure. . . . New Product Proposition Low tar product with smoother yet fuller
smoking experience[.] All, bar quitters, welcome proposition -- more fun/enjoyment, less harm.
¶321628040-8076 at 8056, 8059, 8061 (US 22060).
¶2572. A January 2001 BATCo file, titled "Consumer Concept Trial Notes Jan 2001 Project Baltec II," contains a section dated January 10-12, 2001, titled "Philadelphia -- General Impressions and Summary," that revealed the results of consumer research on low tar cigarette smokers. The document stated: "There was some guilt over smoking . . . some had switched to lights with the belief that lights are better for them. . . . General feeling that lights are healthier." 325238922-8994 at 8981, 8991-8994 (US 22079) (Confidential).
¶2573. A January 10, 2001 BATCo document written by Steven Coburn, titled "Project Balcony," that referenced Philadelphia, Pennsylvania marketing studies related to proposed campaigns, stated "3rd board impresses the low nic/tar idea -- appears to imply healthier though no cig is healthy." 325239028-9036 at 9029 (US 22083). An identically titled document from the same author dated January 11, 2001, stated under the heading "Benefit": "Lights are supposed to be more healthy." 325239035-9036 at 9035 (US 22083). A BATCo document dated January 15, 2001 with the same title and author, but which referenced Santa Monica, California marketing studies related to proposed campaigns, stated "less tar nic -- less harmful." 325239014-9027 at 9015 (US 22082).
BATCo's Public Statements About Low Tar Cigarettes
¶2574. Susan Ivey claimed that BATCo's public position was that the use of low tar brand descriptors was "not intended to make any health claims," and was "not meant to imply that light or ultra-light cigarettes are less harmful." Ivey WD, 71:20-72:3.
982American Tobacco Marketing of Low Tar Cigarettes
¶2575. American Tobacco's brands included Carlton, Lucky Strikes, Pall Mall, and Tareyton, until they were acquired by B&W in 1995. Gesell PD, State of Minnesota v. Philip Morris Inc., 9/18/97, 6:10-17; 117:3-15; 25:23-26:3; 93:2-13. Like the other Defendants, American Tobacco used descriptive terms and low FTC tar ratings to convey misleading and unsubstantiated health messages to the public regarding their low tar cigarettes.
¶2576. For nearly 30 years, American placed advertisements in nationally-circulated magazines that emphasized Carlton's purportedly low tar. For instance, American's advertisements in Time and Newsweek in 1964 for Carlton cigarettes stated:
Everything about Carlton is selected and crafted to produce this one result: A cigarette that is low in 'tar' and nicotine -- yet high in smoking pleasure. Carlton is so low in 'tar' and nicotine that we print test results on all packs, on all cartons. . . . Carlton -- lightest smoke of all. See for yourself.
¶ATX040070514-0519 at 0514(US 21125); see also ADV011 1575-1579 (US 3028); ADV107 0020- 0022 (US 88689); ADV107 0023-0027 (US 88690) (1964 Carlton advertisements).
¶2577. A June 8, 1964 report prepared by Gardner Advertising Company for American Tobacco, titled "A Summary Report of Two Carlton Research Studies," summarized "Carlton Concept Research" and "Carlton Penetration Research." The report stated as a "Highlight" that "Based on Ad Exposure Before Product Availability," smokers "[s]aw CARLTON as a high filtration cigarette, low in tar and nicotine. Although the advertisement made no mention of it, there was a tendency to interpret CARLTON as lower in tar and nicotine, safer, less harmful." ATC2503644- 3706 at 3650 (US 87891) (emphasis in original).
983¶2578. A 1967 Annual Report of American Tobacco shows that its Carlton cigarette, which "was developed to appeal to those smokers preferring a light cigarette -- one that is low in 'tar' -- and nicotine yield," achieved "sizeable sales increases in 1967" resulting from "favorable publicity" as a low tar, low nicotine cigarette. MNAT00029170-9201 at 9176 (US 21222).
¶2579. In 1968, American's Carlton advertising stressed the fact that it was found lowest in 'tar' by U.S. Government testing and cited its "unique Air-Stream Filter" as the source of its ability to reduce tar to 4 mg. (as compared to what was then the industry average of over 20 mg.). ATX40397140-7141 (US 85020); MNAT00386652-6652 (US 85112); Dolan WD, 124:12-17.
¶2580. American Tobacco's Carlton advertisements in the 1970s emphasized FTC machine test yields to support the company's "low tar" health claim:
1973: "For 10th straight published Gov't Report Carlton. Still lowest in 'tar' of all regular filter kings tested. . . . For the last 10 consecutive Government Reports. Carlton has been found lowest in 'tar' of all regular filter kings tested. That's every Report since October 1968." ATX040070514-0519 at 0515 (US 21125).
1974: "Of all filter kings tested: Carlton is lowest. For the 12th straight time, the U.S. Government has reported Carlton to be the lowest in tar of all filter kings tested." (US 87178).
1975: "Of all filter kings tested: Carlton is lowest. Look at the latest U.S. Government figures for other brands that call themselves low in tar." US 4605; Biglan WD, 281:17-283:22; (US 87183).
1975: "U.S. Government Report shows only one is lowest . . . Carlton." (US 88691).
9841978: "U.S. GOVERNMENT REPORT: CARLTON LOWEST. Carlton claim confirmed. Many cigarettes are using national advertising to identify themselves as 'low tar.' Consumers, however, should find out just how low these brands are–or
aren't. Based on U.S. Government Report:14 The American Psychiatric Association focuses on behavioral and clinical symptoms indicative of drug dependence, compared to the WHO, Surgeon General, and FDA, which focus more on the pharmacological effects of the drug. -345- Carltons, Box or Menthol, have less tar than one Vantage.11 Lorillard did not participate in the second phase of funding for the Brotman/Freedman research. (US 30450). -147- Carltons, Box or Menthol, have less tar than one Merit.11 Lorillard did not participate in the second phase of funding for the Brotman/Freedman research. (US 30450). -147- Carltons, Box or Menthol, have less tar than one Kent Golden Lights.6 See United States' Preliminary Proposed Findings of Fact at 14. -11- Carltons, Box or Menthol, have less tar than one True. . . . This same report confirms of all brands, Carlton Box to be the lowest with less than 0.5 mg. tar and 0.05 mg. nicotine." (US 5961); (US 5978).
1978: "Carlton is lowest. See how Carlton stacks down in tar. Look at the latest U.S. Government figures [table comparing Carlton favorably with Winston Lights, Vantage, Salem Lights, Kent Golden Lights, Merit and True cigarettes]" (US 5811); (US 5707).
1978: "Based on latest U.S. Government Report: Carlton is lowest. See how Carlton stacks down in tar. Look at the latest U.S. Government figures [referring to table indicating Carlton has lower tar than Winston Lights, Vantage, Salem Lights, Kent Golden Lights, Merit and True cigarettes]." (US 5948).
1983: "Read the numbers on the pack. Carlton is lowest." (US 7637); Biglan WD, 281:17-283:22.
¶ATX040070514-0519 (US 21125); 03496228-6630 at 6309, 6310, 6580 (US 20057).
¶2581. A September 1973 report prepared for American, titled "Tareyton, Iceberg 10, Carlton," discussed marketing strategies for these three brands. In the "Advertising Strategy Statement" for Carlton, the report noted that in focus group interviews "the 'health' problem is most frequently mentioned, but people tend to ignore the negatives and continue to smoke out of pleasure or habit." The report went on to say that "Carlton's copy strategy for 1973/1974 will continue to be straight forward and factual, appealing to those smokers whose concern for 'health' hazards leads them to seek out a cigarette with truly low 'tar' and nicotine content." ATC2472182-2243 at 2216, 2225 (US 87892).
985¶2582. When Eric Gesell, who worked for American from 1963-1994, was asked what American intended by its Carlton cigarette advertisements from 1974 and 1978 with the slogans "Carlton is lowest" and "Carlton lowest," he admitted that, "[w]hat [American is] doing in this ad is using the FTC figures in order to try to sell a cigarette." Gesell PD, State of Minnesota v. Philip Morris Inc., 9/18/97, 5:8-25, 6:5-6, 6:10-17, 115:19-118:14; ATX040070514-0519 (US 21125).
¶2583. When Gesell was asked what the significance was of a cigarette being lower in tar, he answered that: "It's lighter, lighter taste." When asked: "Isn't there also an implied health claim there?," he denied it: "No, there isn't." Gesell also claimed that the company "didn't have an understanding that people tended to smoke low-tar cigarettes because they were concerned about their health." Gesell PD, Minnesota, 9/18/87, 5:8-25, 6:10-17, 97:8-13, 130:25-131:4.
¶2584. Carlton's 1981 Marketing Plan, dated August 18, 1980, discussed ways to make Carlton cigarettes "the brand of the 1980's." The forward to the plan noted that "[t]he Ultra Low segment of the market is continuing to grow rapidly as more and more smokers search for smoking pleasure at tar levels more in tune with the mores of the times. Carlton, as innovator and category leader, is well poised to capitalize on this trend by its inherent positioning." ATC0735197- 5261 at 5199 (US 87893) (emphasis in original).
¶2585. A 1983 letter to H.W. Bahrenburg, American Tobacco Product Manager, from Tom Keane of Laurence, Charles & Free, Inc., discussed advertisements for American's Carlton cigarettes, stating that American would proceed with the advertisement that best communicated that Carlton was "'lowest'" in tar and nicotine:
986Our recommendation was to go with the Bad -- "Compare" with the "U.S. Gov't Report." This ad did very well in the general low-tar area and in fact it was the only ad which showed a "lowest" playback on
the primary question -- "What do you get out of this ad?". . . . [W]e are proceeding with "Compare" and "U.S. Gov't" on the new . . . ad.
¶The advertisements attached to the letter stated: "Compare to your brand. . . . Box King -- lowest of all brands -- less than 0.01 mg. tar, 0.002 mg. nic. Carlton is lowest. . . . U.S. Gov't Report -- no brand lower than Carlton Box King -- less than 0.5 mg. tar, 0.05 mg. nic. . . . FTC Report Mar. '83." 991034809-4816 at 4809, 4816 (US 85113); see also (US 7536) (1983 Carlton advertisement that appeared in Sports Illustrated magazine).
¶2586. An August 4, 1983 American Tobacco memorandum from John A. McGinn, Product Manager, to W.J. Moore, Marketing Director, titled "CARLTON Slims," stated: "At a 6 mg. tar level, this 100 mm product would be responsive to those consumers seeking low tar. . . . It would also extend CARLTON's 'lowest' position to yet another cigarette category." 991341428-1440 at 1428 (US 85114).
¶2587. A February 1987 magazine advertising campaign for Carlton also prominently featured claims for tar and nicotine reduction:
If you smoke. . . . Compare your cigarette to Carlton. If you're interested in smoking an ultra low tar and nicotine cigarette, you should compare the tar and nicotine content of your cigarette to Carlton. Most cigarettes sold today have 10 times the tar and nicotine of Carlton Box Kings & Box 100's.
¶Another Carlton advertisement campaign from the late 1980s also had lowest tar as its centerpiece and implied a United States Government endorsement, listing Carlton as having lower tar than Philip Morris's Merit and RJR's Vantage cigarettes:
987If you smoke. . . . Here's the latest comparative information for smokers who want lower tar & nicotine. . . . CARLTON became the first brand to put these figures right on the pack. . . . In the last 21 reports issued by the U.S. Government, no cigarette has tested lower
than Carlton. . . . If you are interested in the tar content of your cigarette, you should compare the tar content of your cigarette vs CARLTON. If you are interested in the lowest . . . LATEST U.S. GOV'T REPORT CONFIRMS: no brand lower than Carlton Box King.
¶MNAT00746229-6229 (US 21230); (US 8246) (1986 Carlton advertisement that appeared in Sports Illustrated magazine).
¶2588. A February 29, 1988 American Tobacco memorandum from R.E. Smith, Director of Brand Management, to K.P. Noone, Product Manager, stated:
The singular objective of all consumer communication should be registering Carlton's lowest positioning. We must continue to hammer this lowest message home to our current franchise. It's why they came to Carlton. As switching losses to Now show, it's the best way to lure them away. . . . It is my belief that most smokers will continue to seek lower tar. They have switched for it in the past, often several times.
¶991216857-6858 at 6857 (US 85115).
¶2589. In the 1990s, American's advertisements for Carlton also featured purported testimonials of smokers who claimed to have reduced their exposure to tar by switching to Carlton, including the following:
1994: "I switched to less tar. Like many other smokers, I wanted less tar. But I thought I'd have to sacrifice flavor . . . and isn't that what smoking's all about? Then I tried Carlton . . . and I switched! Carlton is the lowest in tar. . . . I figure if you're going to switch to less tar, why not go the distance!" (US 9257); ATX040268971-8971 (US 21127).
¶1994: "I switched to lowest tar." (US 9285).
9881994: "If you want less tar please try Carlton. . . . U.S. Gov't. Test Method confirms of all king soft packs: Carlton is lowest in tar and nicotine." 970469347-9474 at 9460 (US 85104).
¶See also 970469347-9474 at 9452-9457 (US 88612) ("Carlton Creative" collection of advertisements including Carlton's "I Switched To Lowest Tar" advertisements); 970557462-7465 (US 85116) (Dec. 6, 1993 letter on American Tobacco letterhead from James M. Murray to Nancy Gavlick attaching similar "print ad comps" for Carlton).
¶2590. American Tobacco also placed advertisements for Carlton in the 1990s claiming that smokers could smoke ten packs of Carlton and still receive less tar than they would from smoking one pack of Marlboro, Camel, Winston, Kent, or Viceroy. (no bates) (US 9182) (1993 advertisement in Sports Illustrated magazine stating: "10 packs of Carlton Menthol have less tar than 1 pack of these brands" ); (no bates) (US 9122) (1992 advertisement noting same); Biglan WD, 281:17-283:22; (no bates) (US 9093) (1992 Carlton advertisement stating same); 970469347-9474 at 9464-9466 (US 85104) (1990s Carlton advertisements stating same); (no bates) (US 9186) (1993 advertisement stating: "A WHOLE CARTON OF CARLTON . . . HAS LESS TAR THAN 1 PACK OF THESE BRANDS. . . . Carlton is lowest in tar and nicotine"); Smith WD, 68:15-21.
¶2591. A September 13, 1994 document prepared for American Tobacco, titled "LCF & L Agency Orientation Handbook," describes American's print advertising strategy to
[p]rompt competitive target smokers to question their Brands Tar Level and present CARLTON as a contemporary, satisfying answer for those smokers seeking lower tar. The strategy and presentation should start and build from a common 'truth' in our prime prospects mindset -- to serve as a reminder that they too want less tar.
¶The "Positioning Statement" was: "Carlton is the brand chosen to 'switch' to in the ULT category because it is the lowest in tar and nicotine, as confirmed by the U.S. government FTC method. By smoking Carlton you get the lowest and you do not have to sacrifice flavor." 970469347-9474 at 9354, 9411 (US 85104).
989¶2592. In 1974, American Tobacco advertised that by switching to Lucky Strikes, smokers could: "Cut your 'tar' in half with Lucky 100's." (no bates) (US 4405); (US 4415); Smith WD, 74:3- 14; Ivey WD, 52:4-8.
¶2593. American Tobacco advertisements for Pall Mall Gold cigarettes in the 1950s and 1960s featured claims of "mildness" and lowered tar and nicotine, and stated: "You make out better at both ends." (no bates) (US 88720) (1953 Life magazine advertisement); (no bates) (US 87209) (1969 Life magazine advertisement); ATX040696413-6413 (US 88613*) (1968 Time magazine advertisement); (no bates) (US 87476) (1968 Time magazine advertisement); MNAT00282147-2147 (US 88614) (1969 Life magazine advertisement).
¶2594. A 1976 advertisement for American's Pall Mall Extra Mild cigarettes published in Sports Illustrated magazine stated: "Lower in tar than 95% of all cigarettes sold. De-tarred but not de-tasted." (US 5232); MNAT00742048-2048 (US 21229) (1976 New York Post advertisement stating same).
¶2595. A 1954 Tareyton advertisement explicitly stated that its cork filter provided health protection, stating: "Tareyton's genuine cork tip protects your lips." 696000888-0916 at 0913 (US 21387).
Lorillard
Lorillard's Marketing of Low Tar Cigarettes
¶2596. In a May 20, 1958 letter to Morgan J. Cramer, Lorillard's Director of Export & Government Operations, the General Manager of a Venezuelan distributor of Kent cigarettes noted that "the health angle" had been "our main selling and advertising point" for Kent advertising in the United States. The letter added: "We have succeeded in covering a good part of the American colony who are by far the majority of people who are sticking to Kent. No doubt they are influenced by American advertising and no doubt the mildness of Kent chimes in with the 'protection' angle." 95508397-8398 (US 32365).
990¶2597. A July 31, 1963 Lorillard memorandum from R.F. Kieling, Director of Market Research, to M.J. Kramer, President of Lorillard, with the subject heading "1963 Gallup Attitude Survey on Smoking," reached the following conclusions concerning the public's perception of the "safest" cigarette brand based on Gallup polling:
As in the past two studies (1959 and 1962) Kent leads the field here, with 18% of all cigarette smokers saying this brand is "safest" to smoke. Among filter smokers, Kent rates even higher (21%). . . . Winston and Salem are second and third choice brands, although considerably below KENT. . . . Filter and mentholated cigarettes are considered most favorably, with most people voting them "very safe" or 'moderately safe. . . ."
¶The "General Wrap-Up" stated: "Although the American public is considerably more antagonistic towards the cigarette industry this year, the Kent brand continues to stand alone as the one brand believed 'safest' by a significant proportion of other brand smokers, as well as among Kent smokers themselves." 89836071-6076 at 6074-6076 (US 32095).
¶2598. A September 15, 1964 Lorillard memorandum from M. Yellen to Morgan J. Cramer, President and CEO, concerning Lorillard's marketing and sales policies, stated that, for several months before the release of the first Surgeon General's Report in January 1964, "LARK [a Liggett cigarette brand] was setting a base for future sales activities through the use of hospitals via rumors or otherwise . . . that medical scientists endorse LARK as the safest cigarette. This marketing technique on the part of LARK proved successful." This memorandum also acknowledged that Lorillard's marketing of Kent cigarettes as a less harmful brand contributed to its increased sales:
991As all of us are aware, KENT was marketed as a "safer" cigarette for the smoker who was concerned about smoking and health. In 1956 when an innocent third party (Reader's Digest) created an awareness to the consumer that KENT was the "safest" of all popular cigarettes, Lorillard exploited this advantage so that within a short period of two years the KENT volume grew from less than four billion cigarettes to thirty-eight billion annually. . . . I feel we were successful in accomplishing our objective and maintaining the safety image of KENT among consumers sensitive to health.
¶01124257-4265 at 4259, 4257-4258 (US 20033).
¶2599. In the early 1970s, Lorillard returned to the Micronite filter, redirecting its efforts to the product feature it had promoted for decades as providing health benefits to smokers. With respect to Kent's "marketing strategy," the "Lorillard Brand Reviews & Projections 1970/71" report stated: "Losses sustained as a result of moves to higher filtration brands will be stemmed through revitalization of the Kent health assurance heritage provided by the 'Micronite' Filter." 04105292-5384 at 5296 (US 29394).
¶2600. A May 1971 Report prepared for Lorillard, titled "A Study of the Meaning of the Micronite Filter to Smokers Today," demonstrated that Lorillard targeted "health-anxious" smokers with "health reassurance:"
The marketing strategy has been to hold on to its current Kent smokers and to attract lo-fi [low tar] smokers by promising taste satisfaction plus health reassurance. With the growth of the hi-fi [full-flavor] segment, a third target is those health-anxious hi-fi smokers who are looking for more taste satisfaction than these current hi-fi brands can deliver.
¶The report added that
992Kent and micronite filter may be, after years of advertising, strongly associated in smokers minds. . . . Prior research suggests that dropping micronite for five years had little effect on Kent's health filter image. This does not mean, however, that if Kent had not
dropped micronite for those 5 years that Kent might not have been even more strongly perceived as a health brand.
¶03340192-0201 at 0195-0196 (US 29265) (emphasis in original).
¶2601. A Lorillard document circa 1972, titled "Kent Status," stated:
Kent became a major brand after the 1957 Reader's Digest article had proclaimed it as the brand with the most effective filter. In the next years of gains and consolidation, the micronite filter was advertised as a unique Kent benefit, giving health reassurance to its growing franchise of older, better-educated, health concerned smokers.
¶03300409-0418 at 0411 (US 29263).
¶2602. A document, titled "Kent Local Newspaper Support Summary Apr/August '73," under the heading "Kent Creative Strategy," stated: "1) Consumer Benefit To convince smokers that Kent offers a combination of satisfying taste . . . . With health reassurance through superior filtration." 03078097-8110 at 8100 (US 74705*) (emphasis in original).
¶2603. A March 21, 1978 "Kent Advertising Brief" was prepared for the consumer research firm Foote, Cone and Belding, to provide "the background and brand information necessary to develop a global creative strategy for the Kent brand." In a section titled, "Brand Positioning," the brief recommended that "[a]dvertising and support materials should emphasize Kent's mildness in taste and health terms. The white pack and tipping will be exploited to reinforce this positioning." Also in this section, it was noted that "Kent Deluxe will present an image consistent with the King Size styles in offering health reassurance." In a section, titled "Target Audience," the brief stated that "[a]s the Smoking and Health controversy expands, it is assumed that some smokers from all socio-economic and age groups will be prepared to switch to milder, healthier brands which provide an acceptable taste and prestige." The brief maintained that "we wish to try and develop advertising for the Kent parent brands which clearly offers the smoker health reassurance. . . . The Come/Stay campaign goes some way to projecting a health image for Kent while retaining a taste message and communicating prestige." 661076440-6453 at 6445, 6446 (US 53620).
993¶2604. On March 21, 1978, a "Kent Golden Lights Advertising Brief" was prepared for Foote, Cone and Belding, to provide advertising guidelines for Kent Golden Lights, that stated: "In industrialized nations the target consumer is unlikely to need education on the benefits of smoking low deliver [sic] products in general terms. . . . Prospective Golden Lights' consumers will know and understand the vocabulary of mildness, low tar and nicotine." 464012420-2429 at 2424 (US 47672).
¶2605. Lorillard's implicit health claims in Kent advertisements from the 1970s and 1980s included the following:
1972: "Micronite filter. Mild, smooth taste. For all the right reasons. Kent." (US 3785); (US 87460); (US 3837); (US 10229); (US 3797); (US 3816); see also (US 10257); (US 3932); (US 3949) (1973 magazine advertisements noting same).
1982: "Kent. When you know what counts." (US 7275); (US 7379) (1983 magazine advertisement noting same); (US 7504); (US 7702); (US 7746) (1984 magazine advertisements noting same).
¶2606. In 1966, Lorillard introduced True brand cigarettes. Martin Orlowsky, Chairman, President, and Chief Executive Officer of the Lorillard Tobacco Company, admitted that Lorillard's True advertisements were targeted toward smokers who, due to their concerns about health risks, were seeking a low-tar cigarette. Orlowsky TT, 10/13/04, 2288:24-2289:19.
994¶2607. A report, titled "Lorillard Brand Reviews & Projections 1970/71," stated that one of True's "marketing objectives" was to "[s]eek out highly health-conscious smokers from all filter brands." One of True's "marketing strategies" was to "[p]roject TRUE's low tar and nicotine benefit in a way that is compelling to health oriented smokers." The report also listed the following as the "copy strategies" for True: "1. Capitalize on the basic True low tar and nicotine image and the thought that health-conscious smokers have devoted to the cigarette/health issue [and] 2. Switch to True characterized as being the logical, appropriate and popular thing to do." 04105292-5384 at 5328-5329 (US 29394).
¶2608. Lorillard's True advertisements in the early 1970s made the following statements, which implied that switching to True brand cigarettes would provide health benefits:
1971: "Think about it. Doesn't it all add up to True?" (no bates) (US 3436).
1973: "U.S. Government tests show True lower in both tar and nicotine than 98% of all other cigarettes sold. . . Think About It." (no bates) (US 4029); see also (no bates) (US 3846) (1972 True advertisement); Biglan WD, 233:20-235:22; (no bates) (US 4221) (1974 True advertisement).
1974: "True. Easy on your mind. Easy on your taste . . . because True is so low in tar and nicotine, every cigarette is as easy on your mind as it is on your taste. Think about it." (no bates) (US 4491); see also 03496228-6630 at 6271 (US 20057) (circa 1974 True advertisement noting same).
¶2609. Lorillard's True advertisements from the mid-1970s portrayed True as an acceptable alternative to quitting smoking, as the following examples show:
9951974: "My wife bugged me into it, would you believe it? It seemed every time I'd light up a cigarette, my wife would put on that look . . . So, we had one of our little talks. . . . Look hon, I said . . . would it make you feel better if I changed to a low tar
and nicotine cigarette? She smiled. So I bought a pack of True next morning." 01767161-7161 (US 74702).
1975: "Considering all I'd heard, I decided to either quit or smoke True. I smoke True." (no bates) (US 4853); (no bates) (US 4939); (no bates) (US 5000) (1976 advertisement in Sports Illustrated magazine noting same); Biglan WD, 233:20- 235:22.
1975: "With all the talk about smoking I decided I'd either quit or smoke True. I smoke True." (no bates) (US 87206).
1975: "With all I've read about smoking and things I decided to: 1. Play as hard as I work. 2. Cut out the heavy lunches. 3. And either quit smoking or smoke True. I smoke True. The low tar, low nicotine cigarette. Think about it." 03496228-6630 at 6268 (US 20057).
1975: "I thought about all I'd read and said to myself, either quit or smoke True. I smoke True." (no bates) (US 10447); 03061394-1394 (US 21700).
1975: "I'd heard enough to make me decide one of two things: quit or smoke True. I smoke True." (no bates) (US 87462); 01408237-8237 (US 21808); 03496228-6630 at 6269 (US 20057).
¶Dolan WD, 125:1-5.
¶2610. As a 1981 FTC Report on cigarette advertising noted, Lorillard's True advertisements "incorrectly impl[y] that when the alternatives of quitting smoking or smoking a low 'tar' cigarette are weighed, the low 'tar' cigarette is the healthier option." FTC, 1981 Report at 2-12 to 2-13 (JD 004744).
¶2611. Several other True advertisements from 1974-1975 emphasized True's FTC method tar and nicotine measurements:
996U.S. Govt. tests show True is lower in both tar and nicotine than 98% of all other cigarettes sold. That means True is not only gentle on your mind, it's gentle on your taste.
No other cigarette can make this statement: U.S. Government tests of all cigarettes show True is lowest in both tar and nicotine of the 20 best-selling cigarettes. In fact, True is lower than 99% of all cigarettes sold. . . . Doesn't it all add up to True?
¶03496228-6630 at 6272, 6274 (US 20057).
¶2612. A May 1987 report prepared for Lorillard, titled "AN EXPLORATORY STUDY – AN OVERVIEW OF THE TRUE BRAND," discussed smokers' perceptions of Lorillard's True cigarette. The report contained the following statements:
Use of the True brand or consideration of it via trial is viewed as an expression of health concern. . . . Both True smokers and those who smoke other brands expressed awareness of the way True has been advertised. It was not uncommon to attribute initial trial of the brand to being attracted by that presentation of the brand. Respondents specified having noticed the emphasis on tar count and filter. . . . Based on these findings, it would appear important to continue to stress True as a low tar brand with taste, and the "specialness" of the filter, since those are clearly important factors in motivating trial, and in conversion to the brand. . . . The respondents were also asked whether they think the image of True has changed over a period of time. Most felt unable to answer this, but it was suggested that True stood alone originally, as the brand for the health concerned.
¶93359378-9437 at 9378, 9385, 9387, 9420 (US 57295).
Lorillard's Research on the Low Tar Cigarette Category
¶2613. Lorillard's internal research documents demonstrate that Lorillard conducted research not just on individual low tar cigarette brands, but on low tar cigarettes as a category. These documents establish that Lorillard has long known and intended that its advertisements and marketing for low tar cigarettes, featuring claims of lowered tar and nicotine and "light" and "ultra light" brand descriptors, contributed to and reinforced consumers' mistaken belief that low tar cigarettes are better for their health, and caused consumers to smoke them for this reason.
997¶2614. A November 13, 1973 presentation by Alexander Spears, a Lorillard scientist and later Lorillard's CEO, noted in a discussion of "Health psychology" that smokers' concern about the health effects of smoking "has been used to an advantage in marketing both the KENT and TRUE brands." The document stated: "Clearly the consumer is concerned about smoking and health, and is convinced in varying degrees that smoking is a possible detriment to his health. Presently, this factor is of active interest to R&D, since it has been used to an advantage in marketing both the KENT and TRUE brands." 80634635-4642 at 4639 (US 21063).
¶2615. Lorillard was well aware in 1976 that consumers perceived its low tar brands as less harmful. A November 30, 1976 Lorillard memorandum from R.E. Smith to fellow Lorillard marketing executive J.R. Ave, with the subject heading "1976 Switching Study," stated:
I share MCA's overall conclusion that the Switching Study confirms the rightness of our 5 Year Plan; focussing [sic] Company effort against smokers' health concerns. . . . This view suggests sensible positionings for those Lorillard brands that directly address smokers' health concerns. (I believe these are totally compatible with ongoing work).
¶03918494-8495 at 8494 (US 74777), 03296482-6544 at 6485 (US 64511).
¶2616. Lorillard's "CONFIDENTIAL" 1976 "DOMESTIC CIGARETTE MARKETING 5 YEAR PLAN 1976-1980" stated:
998Consumer preferences have shown a dramatic shift since World War II away from non-filter brands towards brands more responsive to the cigarette smoking and health controversy, and less harsh, filtered cigarettes, and, most recently, towards filtered brands offering low tar and nicotine.
¶The document further stated: "The most recent 6 year period has followed the traditional pattern in many essential characteristics . . . 2) impressive gains by brands offering a perceived solution to health concerns." 03357128-7178 at 7137 (US 85023); Orlowsky WD, 65:10-19; 65:20-66:2.
¶2617. Lorillard's Five Year Plan for 1977-1981 stated: "The structure of the market is changing in the direction we forecast in 1976 -- toward brands responsive to the cigarette controversy." The plan further pointed out: "The success rate of new products . . . is again on the uptrend with the emergence of products responsive to very specific and tightly focused concerns about the cigarette controversy." 904100641-0706 at 0642, 0646 (US 74853).
¶2618. A January 26, 1977 Lorillard memorandum from Dick Smith to J.R. Ave stated:
The Nowland Research strongly confirms the rightness of Lorillard's marketing concentration in the area of health concern. Smokers are extremely and increasingly health concerned. And these smokers are actively interested in better ways to lessen/eliminate this concern -- while continuing to smoke. More specifically, our going projects are on target. . . . I suggest that both the Kent and TRUE Brand Groups analyze the complete Nowland Report. Our established health concern brands should be able to develop specific strategic and executional actions from this rich, diagnostic research.
¶01244406-4408 (US 74669); Orlowsky WD, 66:10-67:5.
¶2619. A June 14, 1978 Lorillard document stated:
999There is a major opportunity for a brand which can simultaneously satisfy smokers and address the concerns arising from the cigarette controversy. 1. Very low tar products -- line extensions and independent brands -- have been the fastest growing cigarette segment during the last two years which indicates that an ever increasing number of 'concerned' smokers are striving to go as low in tar as possible while still getting acceptable taste. There is no reason to believe that these smokers have found their ultimate reduced tar brand. More likely, they are prime candidates to move even lower over time. Comparing 1976 with 1977 sales, the ultra low tar segment grew 14% and is now accounting for a total of 24 billion
units. We project that by 1981, the category will increase to 47 billion units, a growth of 96%."
¶00138232-8233 at 8232 (US 74655) (emphasis in original).
¶2620. A January 31, 1980 Lorillard memorandum from Larry DuLude to fellow consumer researcher Gordon Flinn stated, under the heading "Consumer Attitudes toward Smoking": "Increasing interest in Low Tar . . . Increased number of health-concerned smokers." 01782312-2322 at 2313 (US 74959).
¶2621. A Lorillard document circa 1984 reported that Laurence Tisch, who served on Lorillard's Board of Directors in 1969 and 1985, and who from 1959 was the Chairman of the Board of Loew's which merged with Lorillard in 1968, stated at a New York State Department of Insurance hearing:
Lorillard was the leader in the so-called health cigarettes, the low tar, the low nicotine cigarettes. They first introduced Kent with the micronite filter ten or fifteen years ago. It was a very successful entry because that was when the health scare first came into vogue. They followed that with the successful entry of True by Lorillard. . . . We feel that we make cigarettes that are healthier than other cigarettes -- low in tar and nicotine.
¶91780361-0398 at 0362-0363, 0375, 0394 (US 85024).
¶2622. A Lorillard document discussing its three-year plan for 1985-1987 stated, below the "Influence of Low Tar" heading: "More smokers will continue to see low tar brands as a way of dealing with the smoking controversy. Reduced Tar volume now represents 48% of the total industry, up from 37% in 1979." 80403362-3376 at 3362 (US 55377).
¶2623. According to Stephen Jones, a Lorillard chemist who worked for Lorillard for more than twenty-eight years and participated in the design of almost all the Lorillard cigarette brands, including Newport, Kent Golden Lights, Kent III, Triumph, Maverick, Style, Old Gold, and Max, Lorillard's marketing plans sought to address what the company thought consumer preferences would be. Jones believed that consumers felt that there was a health advantage to smoking reduced tar or filtered cigarettes and that, by and large, smokers of all ultra low tar cigarettes, including Lorillard's True brand, perceived such cigarettes to be more healthy. Jones PD, Reed v. Philip Morris, 4/22/97, 136:5-139:21;Jones PD, Reed, 4/27/97, 141:12-141:18; 143:12-143:15.
1000Liggett
¶2624. On September 5, 2001, Dr. Anthony Albino, Executive Vice President, Strategy, Communication and Consumer Contact at Vector Tobacco, Inc., sent an e-mail to a number of recipients, including Bennett LeBow, Chairman of the Board and Chief Executive Officer of Vector Group, Ltd., and VGR Holding Inc., admitting that: "the adoption of 'light' cigarettes over the past 25 years was mainly due to the PERCEPTION of safety." VDOJ6743-6744 at 6743 (US 64727) (emphasis in original); LeBow TT, 4/4/05, 17594:24-17596:17.
¶2625. Liggett sold its Chesterfield, Lark, and L & M brands to Philip Morris in 1998. The Liggett Group Inc. continues to market light cigarettes under its brands Class A, Eve, Jade, Liggett Select, Montego, Pyramid, and under a generic Private Label. Bennett LeBow admitted that his company continues to market light cigarettes under these brand names because Liggett could not cease marketing light cigarettes and remain in business. LeBow asserted that every cigarette manufacturer in the industry must continue to sell light cigarettes in order to survive. (no bates) (US 93254); LeBow WD, 66:10-12; LeBow TT, 4/4/05, 17597:6-17598:16, 17600:4-17603:2.
Conclusions
¶2626. The evidence set forth above overwhelmingly establishes the following facts.
1001¶2627. It is clear, based on their internal research documents, reports, memoranda, and letters, that Defendants have known for decades that there is no clear health benefit from smoking low tar/low nicotine cigarettes as opposed to conventional full-flavor cigarettes. It is also clear that while Defendants knew that the FTC Method for measuring tar and nicotine accurately compared the nicotine/tar percentages of different cigarettes, they also knew that that Method was totally unreliable for measuring the actual nicotine and tar any real-life smoker would absorb because it did not take into account the phenomenon of smoker compensation. Defendants also knew that many smokers were concerned and anxious about the health effects of smoking, that a significant percentage of those smokers were willing to trade flavor for reassurance that their brands carried lower health risks, and that many smokers who were concerned and anxious about the health risks from smoking would rely on the health claims made for low tar cigarettes as a reason, or excuse, for not quitting smoking.
¶2628. Despite this knowledge, Defendants extensively -- and successfully -- marketed and promoted their low tar/light cigarettes as less harmful alternatives to full-flavor cigarettes. Moreover, Defendants opposed any changes in the FTC Method which would more accurately reflect the effects of compensation on the actual tar and nicotine received by smokers, denied that they were making any health claims for their low tar/light cigarettes, and claimed that their marketing for these cigarettes was based on smokers' preference for a "lighter," "cleaner" taste.
¶2629. By engaging in this deception, Defendants dramatically increased their sales of low tar/light cigarettes, assuaged the fears of smokers about the health risks of smoking, and sustained corporate revenues in the face of mounting evidence about the health dangers of smoking.
1002From the 1950s to the Present, Different Defendants, at Different Times and Using Different Methods, Have Intentionally Marketed to Young People Under the Age of Twenty-One in Order to Recruit "Replacement Smokers" to Ensure the Economic Future of the Tobacco Industry
Definition of Youth
¶2630. There is much confusion, both in the internal documents of Defendants and the various kinds of evidence introduced in this trial, over the definition of the term "youth."
¶2631. In most states, the legal age at which a person can purchase cigarettes is eighteen. The exceptions are Alabama, Alaska, and Utah, where the legal age is nineteen, and Massachusetts, where the legal age is twenty. Defendants argue that so long as they are marketing to persons over the legal age, they are not marketing to "youth." That approach is both simplistic and inaccurate.
¶2632. Defendants' own internal documents make constant reference to eighteen to twenty-one year olds as "youth." Defendants' public utterances often use the word "youth" to refer to those under the age of eighteen, as well as to those between eighteen and twenty-one. The expert witnesses on both sides also used the term interchangeably to refer to those under eighteen and those between eighteen and twenty-one. In short, no uniform and consistent definition of the term was used by any party to define the age parameters for the term "youth." Moreover, it is clear from the evidence that the eighteen to twenty-one year age bracket encompasses young people transitioning to adulthood who are deciding whether or not to experiment with smoking, who are still immature and at their most vulnerable to the blandishments of advertising and marketing, and who are usually not yet addicted, heavy smokers.
¶2633. Given this background, and Defendants' repeated assertions that their marketing is directed at maintaining brand loyalty and attracting brand "switchers" rather than inducing "youth" to initiate smoking, the Court finds that defining the term "youth" to include those twenty-one and under is the most appropriate definition, as well as the one used most frequently by the parties.
1003