The Tobacco Institute

The Tobacco Institute

¶The Master Settlement Agreement ("MSA") provided for cessation by TI of operations and for dissolution of TI. Section III (o)(2) of the MSA provides:

The Tobacco Institute, Inc. ("TI") (a not-for-profit corporation formed under the laws of the State of New York) shall, pursuant to a plan of dissolution to be negotiated by the Attorney General of the State of New York and the Original Participating Manufacturers in accordance with Exhibit G hereto, cease all operations and be dissolved in accordance with the laws of the State of New York and under the authority of the Attorney General of the State of New York (and with the preservation of all applicable privileges held by any member company of TI).

¶MSA § III(o)(2) US 64359 (at VXA 104 0635). Following the execution of the MSA, TI immediately began winding down its operations and arranging for severance of its employees. W. Adams, USA Dep., 6/18/02 at 22:19-23:9, 42:10-23. TI ceased its public relations, lobbying and other ongoing trade association functions. Id. at 42:10-43:7.

¶With the execution of the MSA, TI ceased issuing press releases or otherwise making public statements or comments concerning tobacco issues. Id. at 75:7-19. In January 31, 1999, TI discharged its operating employees except for a skeleton staff which was retained to perform administrative, closedown and litigation support functions. Id. at 22:7-23:9, 42:10-43:7.

¶The limited TI staff retained after January 31, 1999 were engaged solely in closing out TI's affairs in accordance with the MSA. (See id. at 22:7-23:9, 42:10-43:7). Their functions were limited to activities such as vacating TI's former office space, disposing of office furnishings and equipment, making arrangements for TI employees' medical and pension plans to be carried out, and placing TI records in storage. Id.

¶In accordance with Section III(o)(2) of the MSA, a final Plan of Dissolution for TI was prepared by TI and approved by the Attorney General of New York. The Plan of Dissolution was then presented to the Supreme Court of New York for approval. On August 31, 2000, that court entered an Order Approving TI's Plan of Corporate Dissolution and Certificate of Dissolution. See (no bates) (JE 022000) and (no bates) (JD 080768).

¶Under the terms of the Plan as entered and approved by the New York court, TI is obligated to "promptly wind up its non-litigation affairs" and "shall not perform any function or activities not contemplated by this Plan." See TI1491-0989 at 0900-0901 (JE 022000). The only functions or activities permitted by the Plan are winding up TI's affairs and defense of litigations. (Id. at 0901).

¶The only employees or consultants TI is permitted to have are those "reasonably needed for the conduct of litigation activities," Id. at 0902, 0905, which is defined as "the right [of TI] to defend itself against any claims threatened or asserted against it now or in the future." Id. at 0904. Upon the conclusion of litigation against it, TI is required to terminate any remaining employees and consultants and "cease all function." Id. at 0905. Once all litigation against TI has been concluded, TI will cease to exist entirely. W. Adams, United States Dep., 6/18/02, at 14:19-15:2.

¶TI is also directed by the Plan of Dissolution, after making all payments and distributions referred to in the Plan, to deliver all its remaining assets "to one or more not-for-profit health or child welfare organizations selected by TI and agreed to by the Attorney General." TI14910898-0918 at 0813 (JE 022000).

¶TI's Plan also contains an express blanket prohibition on public statements concerning tobacco. Section 5.6 of the Plan provides:

No Public Statements. Upon entry of an order approving this Plan, neither TI nor any of its employees or agents acting in their official capacity on behalf of TI will issue any statements, press releases, or other public statements concerning tobacco, except as necessary in the course of litigation defense as set forth in section 5 of this Plan.

¶TI14910898-0918 (JE 022000).

¶TI's last employee was released on November 30, 2000. W. Adams, United States Dep., 6/18/02, at 21:16-19. Since then, TI has had no employees and no consultants other than a Senior Vice President-Administration, William Adams, who remains an officer of TI solely to support its litigation defense and handle any remaining administrative matters. Id. at 16:7-23. Once litigation against TI as been concluded, Mr. Adams will cease to have any role at all. Id.

¶TI has no office, no telephone, and no funds or other liquid assets. W. Adams Dep., 6/18/02, at 19:5-23. TI's sole assets consist of an appeal bond posted by TI in connection with the pending appeal of a trial court judgment entered against TI in a Florida case, Engle v. R.J. Reynolds Tobacco Co., et al. Id. at 14:4-7.

¶Accordingly, even though TI is liable for past violations of 18 U.S.C. § 1962 (c) and (d), there is no reasonable likelihood of future violations, and therefore no remedies will be entered against TI.