Reports that Matter

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

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

Section 71 of 129

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).

  1. 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

  1. 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).

  2. 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).

  3. 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:

[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.

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  1. 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).

  1. 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
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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*).

  1. 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*).

  1. 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
  1. 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).

  1. 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).

  1. 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
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Reassurance." 676038502-8796 at 8573, 8578, 8590 (US 53923).

  1. 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).

  1. 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

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  1. 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:

[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.

973
  1. 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).

  1. 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

  1. 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).

  2. 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).

  3. 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.

(3) 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

  1. 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).

  2. 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.

  3. 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.

  4. 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.

  5. 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.

d. BATCo

(1) BATCo's Research on the Low Tar Cigarette Category

  1. 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.

  2. 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.

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  1. 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).

  2. 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).

  3. 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).

  1. 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
978

  1. 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).

  2. 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."

  3. 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.

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. . . 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).

  1. 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).

  1. 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).

  1. 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
  1. 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).

  1. 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).

  2. 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:

[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

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smoking experience[.] All, bar quitters, welcome proposition -- more fun/enjoyment, less harm.

321628040-8076 at 8056, 8059, 8061 (US 22060).

  1. 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).

  2. 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).

(2) 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.

982

e. American 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.

  1. 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).

  1. 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
  1. 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).

  1. 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.

  1. 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).

1978: "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

984

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).

  1. 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,

985

  1. 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).

  2. 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.

  3. 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).

  4. 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:

Our 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

986

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).

  1. 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).

  2. 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:

If 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

987

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).

  1. 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).

  1. 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).

1994: "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).

988

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).

  1. 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.

  2. 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

989

  1. 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.

  2. 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).

  3. 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).

  4. 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).

f. Lorillard (1) 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
  1. 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).

  1. 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:
991

As 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).

  1. 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).

  1. 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

Kent 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

992

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).

  1. 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).

  1. 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).

  2. 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

  1. 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).

  2. 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
  1. 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).

  1. 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).

  1. Lorillard's True advertisements from the mid-1970s portrayed True as an acceptable alternative to quitting smoking, as the following examples show:

1974: "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

995

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.

  1. 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).

  1. Several other True advertisements from 1974-1975 emphasized True's FTC method tar and nicotine measurements:
996

U.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).

  1. 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).

(2) Lorillard's Research on the Low Tar Cigarette Category

  1. 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

  1. 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).

  2. 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).

  1. Lorillard's "CONFIDENTIAL" 1976 "DOMESTIC CIGARETTE MARKETING 5 YEAR PLAN 1976-1980" stated:

Consumer 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.

998

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.

  1. 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).

  2. 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.

  1. A June 14, 1978 Lorillard document stated:

There 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

999

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).

  1. 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).

  2. 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).

  1. 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).

  2. 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.

1000

g. Liggett 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.

  1. 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.

  2. The evidence set forth above overwhelmingly establishes the following facts.

1001

  1. 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.

  2. 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.

  3. 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.

1002

F. From 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

  1. 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."

  2. 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.

  3. 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.

  4. 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