United States District Court for the District of Columbia

¶UNITED STATES OF AMERICA, :

: Plaintiff, : : Civil Action No. 99-2496 (GK) and : :

¶TOBACCO-FREE KIDS ACTION FUND, : AMERICAN CANCER SOCIETY, : AMERICAN HEART ASSOCIATION, : AMERICAN LUNG ASSOCIATION, : AMERICANS FOR NONSMOKERS' RIGHTS,: and NATIONAL AFRICAN AMERICAN : TOBACCO PREVENTION NETWORK, :

: Intervenors, : : v. : :

¶PHILIP MORRIS USA, INC., : (f/k/a Philip Morris, Inc.), et al., :

: Defendants. :

AMENDED FINAL OPINION¹¹ This Amended Memorandum Opinion corrects the citation on page 1536, line 11 to read: United States v. Local 1084-1, Int'l Longshoremen's Ass'n., 812 F. Supp. 1303, 1310-15 (S.D.N.Y. 1993); and deletes the last sentence on page 1552, n. 23.

I. INTRODUCTION — 1
A. Overview — 1
B. Preliminary Guidance for the Reader — 5
II. PROCEDURAL HISTORY — 10
III. CREATION, NATURE, AND OPERATION OF THE ENTERPRISE — 15
A. Pre-1953 Overview–The Rise in American Smoking and the Status of Scientific Research on Smoking and Health — 16
B. Creation of the Enterprise — 18
C. TIRC/CTR -- Tobacco Industry Research Committee/Council for Tobacco Research-USA — 26
1. Selection and Approval of TIRC's Scientific Advisory Board Members and Scientific Director — 37
2. Research Activities of TIRC/CTR — 43
3. Public Relations Activities of TIRC/CTR — 50
4. Publications and Public Statements of TIRC/CTR — 55
a. TIRC/CTR Annual Reports — 55
b. TIRC/CTR Newsletters — 59
c. TIRC/CTR Press Releases and Other Public Statements — 62
D. Tobacco Institute — 65
1. Formation of the Tobacco Institute — 65
2. Relationship Between the Tobacco Institute and TIRC/CTR — 73

3. Tobacco Institute Press Releases, Public Statements, Advertisements, Brochures, and Other Publications — 81
4. Tobacco Institute Committees — 93
a. Committee of Counsel and Outside Counsel — 94
b. Tobacco Institute Executive Committee — 99
c. Tobacco Institute Communications Committee — 101
5. Tobacco Institute College of Tobacco Knowledge — 103
6. Tobacco Institute Testing Laboratory — 110
E. Joint Research Activity Directed by Defendants' Executives and Lawyers — 110
1. Witness Development — 110
2. CTR Special Projects — 119
a. Nature of CTR Special Projects — 119
b. Lawyers' Involvement with CTR Special Projects — 124
c. Scientists Funded Through CTR Special Projects — 135
3. Lawyers' Special Accounts — 136
a. Special Account No. 3 — 137
b. Special Account No. 4 — 138
c. Special Account No. 5 — 146
d. Institutional Grants — 147
F. Committees — 149
1. Research Review Committee, Research Liaison Committee, and Industry Research Committee — 149

2. Industry Technical Committee — 154
3. Tobacco Working Group — 157
G. Coordinated Smoking and Health Literature Collection and Retrieval — 163
H. Defendants' Organizations Focused on ETS Issues — 168
I. International Organizations, Committees, and Groups — 170
1. Overview — 170
2. TMSC -- Tobacco Manufacturers' Standing Committee — 176
3. TRC -- Tobacco Research Council — 180
4. TAC -- Tobacco Advisory Council — 182
5. ICOSI -- International Committee on Smoking Issues — 187
6. INFOTAB -- International Tobacco Information Center — 193
7. TDC -- Tobacco Documentation Centre — 198
8. CORESTA -- Center for Cooperation in Scientific Research Relative to Tobacco/Centre de Coopération pour les Recherches Scientifiques Relatives au Tabac — 200
9. Tobacco Institute Interaction with Overseas and International Groups — 201
J. Dissolution of CTR and the Tobacco Institute — 210
1. CTR — 210
2. Tobacco Institute — 212
IV. THE DEFENDANTS ARE ENGAGED IN AND THEIR ACTIVITIES AFFECT INTERSTATE AND FOREIGN COMMERCE — 213
A. Philip Morris Companies — 214

B. Philip Morris — 214
C. R.J. Reynolds — 214
D. Liggett — 214
E. Lorillard — 215
F. BATCo — 215
G. Brown & Williamson — 215
H. American — 215
I. Tobacco Institute — 216
J. TIRC/CTR — 218
V. DEFENDANTS DEVISED AND EXECUTED A SCHEME TO DEFRAUD CONSUMERS AND POTENTIAL CONSUMERS OF CIGARETTES IN MOST, BUT NOT ALL, OF THE AREAS ALLEGED BY THE GOVERNMENT — 219
A. Defendants Have Falsely Denied, Distorted and Minimized the Significant Adverse Health Consequences of Smoking for Decades — 219
1. Cigarette Smoking Causes Disease — 219
2. Scientific Research on Lung Cancer up to December 1953 — 222
a. Scientists Investigating the Rise in the Incidence of Lung Cancer Linked Smoking and Disease before 1953 — 222
b. By 1953, Defendants Recognized the Need for Concerted Action to Confront Accumulating Evidence of the Serious Consequences of Smoking — 232
3. Developments Between 1953 and 1964 — 236

a. Between 1953 and 1964, the Evidence Demonstrating that Smoking Causes Significant Adverse Health Effects Grew Although No Consensus Had Yet Been Reached — 236
b. Before 1964, Defendants Internally Recognized the Growing Evidence Demonstrating that Smoking Causes Significant Adverse Health Effects — 251
c. In the 1950s, Defendants Began Their Joint Campaign to Falsely Deny and Distort the Existence of a Link Between Cigarette Smoking and Disease, Even Though Their Internal Documents Recognized Its Existence — 259
4. The 1964 Surgeon General Report Represented a Scientific Consensus that Smoking Causes Disease — 269
a. The Process and Methodology of the Surgeon General's Report — 269
b. The Conclusions — 275
5. Post-1964 Research on the Adverse Health Effects of Smoking and Defendants' Persistent Denials Thereof — 278
a. Following Publication of the 1964 Report, the Scientific Community Continued to Document the Link Between Smoking and an Extraordinary Number of Serious Health Consequences — 278
b. Defendants' Internal Documents and Research from the 1960s, 1970s, and Beyond Reveal Their Continued Recognition that Smoking Causes Serious Adverse Health Effects and Their Fear of the Impact of Such Knowledge on Litigation — 279
c. Despite Their Internal Knowledge, Defendants Continued, From 1964 Onward, to Falsely Deny and Distort the Serious Health Effects of Smoking — 293

6. As of 2005, Defendants Still Do Not Admit the Serious Health Effects of Smoking Which They Recognized Internally Decades Ago — 324
7. Conclusions — 330
B. The Addictive Properties of Nicotine — 332
1. Introduction — 332
2. Cigarette Smoking Is Addictive and Nicotine Is the Primary Element of that Addiction — 333
a. How Nicotine Operates within the Body — 333
b. Evolving Definitions of "Addiction" and Classification of Nicotine — 336
c. Consequences of the Addictiveness of Nicotine — 346
d. Conclusion — 349
3. Defendants Were Well Aware that Smoking and Nicotine Are Addictive — 350
a. Philip Morris — 352
b. R.J. Reynolds — 374
c. BATCo — 385
d. Brown & Williamson — 422
e. Lorillard — 436
f. American Tobacco Company — 441
g. CTR — 443
4. Defendants Publicly Denied that Nicotine Is Addictive and Continue to Do So — 445
a. Philip Morris — 447

b. R.J. Reynolds — 451
c. BATCo — 456
d. American Tobacco Company — 459
e. Brown & Williamson — 459
f. Lorillard — 461
g. Liggett — 463
h. Tobacco Institute — 463
i. CTR — 473
j. Defendants' Conduct Continues — 474
5. Defendants Concealed and Suppressed Research Data and Other Evidence that Nicotine Is Addictive — 479
a. Philip Morris — 481
b. BATCo — 493
c. Brown & Williamson — 495
d. American Tobacco Company — 504
e. Tobacco Institute — 505
f. CTR and Other Defendant Funded Research Groups — 505
6. Conclusions — 512
C. Nicotine "Manipulation": Defendants Have Falsely Denied that They Can and Do Control the Level of Nicotine Delivered In Order to Create and Sustain Addiction — 515
1. For Decades, Defendants Have Recognized that Controlling Nicotine Delivery, in Order to Create and Sustain Smokers' Addiction, Was Necessary to Ensure Commercial Success — 516

¶-viii-

a. Defendants Recognized the Need to Determine "Minimum" and "Optimum" Nicotine Delivery Levels in Order to Provide Sufficient "Impact" and "Satisfaction" to Cigarette Smokers — 517
(1) Philip Morris — 519
(2) R.J. Reynolds — 521
(3) Brown & Williamson and BATCo — 525
(4) Lorillard — 526
(5) Liggett — 527
b. Defendants Have Long Recognized that Controlling the Nicotine to Tar Ratio Would Enable Them to Meet Minimum and Optimum Nicotine Delivery Levels — 528
(1) Philip Morris — 528
(2) R.J. Reynolds — 535
(3) Brown & Williamson and BATCo — 546
(4) American — 552
(5) Lorillard — 553
(6) Liggett — 560
c. Defendants Understood the Correlation Between Nicotine Delivery and Cigarette Sales — 561
(1) Philip Morris — 561
(2) R.J. Reynolds — 562
(3) Brown & Williamson and BATCo — 564
(4) Lorillard — 566

2. Defendants Researched, Developed, and Utilized Various Designs and Methods of Nicotine Control to Ensure that All Cigarettes Delivered Doses of Nicotine Adequate to Create and Sustain Addiction — 567
a. Defendants Recognized the Need to Design Cigarettes that Would Produce Low Nicotine and Tar Measurements under the FTC Method While Also Delivering the Minimum Nicotine Levels to Create and Sustain Addiction — 570
b. Leaf Blend and Filler: Defendants Controlled the Amount and Form of Nicotine Delivery in Their Commercial Products by Controlling the Physical and Chemical Make-Up of the Tobacco Blend and Filler — 572
(1) Philip Morris — 575
(2) R.J. Reynolds — 578
(3) Brown & Williamson and BATCo — 580
(4) American — 583
(5) Lorillard — 587
(6) Liggett — 589
c. Nicotine to Tar Ratio: Defendants Have Used Physical Design Parameters to Increase the Nicotine to Tar Ratio of Their Cigarettes — 589
(1) Filter Design — 592
(2) Ventilation and Air Dilution — 593
(3) Paper Porosity and Composition — 594
d. Smoke pH and Ammonia: Defendants Altered the Chemical Form of Nicotine Delivered in Mainstream Cigarette Smoke for the Purpose of Improving Nicotine Transfer Efficiency and Increasing the Speed with Which Nicotine Is Absorbed by Smokers — 596

(1) Scientific Overview — 596
(2) Individual Defendants' Documents — 605
(a) Philip Morris — 605
(b) R.J. Reynolds — 610
(c) Brown & Williamson and BATCo — 617
(d) American — 627
(e) Lorillard — 628
(f) Liggett — 631
e. Other Additives: Defendants Researched the Use of Other Additives to Control Nicotine Delivery — 633
3. Defendants Have Made False and Misleading Public Statements Regarding Their Control of the Nicotine Content and Delivery of Their Products — 636
a. The Waxman Hearings — 637
b. Defendants' False and Misleading Public Statements Continued After the Waxman Hearings — 646
c. Testimony Consistent with Fraudulent Public Statements — 651
4. Conclusions — 653
D. The Government Has Failed to Prove by a Preponderance of the Evidence that Defendants Deliberately Chose Not to Utilize or Market Feasible Designs or Product Features that Could Produce Less Hazardous Cigarettes — 655
1. Introduction — 655
2. Defendants Have Long Acknowledged Internally the Existence of a Market for a Genuinely Less Hazardous Cigarette — 656

3. Defendants Received Conflicting Messages From the Government and the Public Health Community About Their Efforts to Create and Market Less Hazardous Cigarettes — 658
4. As Part of the Effort to Make Less Hazardous Cigarettes, Defendants Experimented with General and Selective Reduction — 663
a. General Reduction — 663
b. Selective Reduction — 667
(1) Defendants' Efforts to Reduce Benzo(a)pyrene — 668
(2) Defendants' Efforts to Reduce Phenols Through Use of Charcoal Filtered Cigarettes — 669
(a) Philip Morris — 672
(b) RJ Reynolds — 673
(c) Lorillard's York Cigarette — 675
(3) Defendants' Efforts to Reduce Ciliastats — 676
(4) Defendants' Efforts to Reduce Delivery of Tobacco-Specific Nitrosamines — 677
5. Defendants' Efforts to Develop/Market Potentially Less Hazardous Non-Conventional Products — 682
a. Philip Morris — 682
(1) Accord — 682
(2) Next — 685
(3) Nicotine Analogue Program — 687
b. RJ Reynolds — 688
(1) The Multijet Filter — 688
(2) Heated Tobacco Products — 690

(a) Premier — 690
(b) Eclipse — 703
(3) EW/Winston Select — 712
c. BATCo and Brown &Williamson — 721
(1) FACT Cigarette — 721
(2) Project Ariel — 722
(3) Project Airbus — 723
(4) Advance — 726
d. Lorillard's Zero Tar and PMO Projects — 731
e. Liggett's Project XA — 732
6. The Government Has Not Proven by a Preponderance of the Evidence that Defendant Had a "Gentleman's Agreement" Not to Develop a Less Hazardous Cigarette and Not to Do In-House Biological Research on the Hazards of Smoking — 734
7. Conclusions — 738
E. Defendants Falsely Marketed and Promoted Low Tar/Light Cigarettes as Less Harmful than Full-Flavor Cigarettes in Order to Keep People Smoking and Sustain Corporate Revenues — 740
1. Low Tar/Light Cigarettes Offer No Clear Health Benefit over Regular Cigarettes — 742
a. History of Health Claims — 742
b. The FTC Method — 746
c. The FTC Method Does Not Measure Actual Tar and Nicotine Delivery — 750

d. The Public Health Community Has Concluded that Low Tar Cigarettes Offer No Clear Health Benefit — 765
2. Based on Their Sophisticated Understanding of Compensation, Defendants Internally Recognized that Low Tar/Light Cigarettes Offer No Clear Health Benefit — 786
a. Defendants Internally Recognized that Low Tar Cigarettes Are Not Less Harmful Than Full-Flavor Cigarettes — 786
(1) Philip Morris — 786
(2) RJ Reynolds — 770
(3) Brown & Williamson — 791
(4) BATCo — 793
(5) Lorillard — 793
(6) Liggett — 794
b. Internally, Defendants Had an Extensive and Sophisticated Understanding of Smoker Compensation — 794
(1) Philip Morris — 796
(2) RJ Reynolds — 806
(3) Brown & Williamson — 809
(4) BATCo — 811
(5) American Tobacco — 817
(6) Lorillard — 817
3. Defendants Internally Recognized that Smokers Switch to Low Tar/Light Cigarettes, Rather than Quit Smoking, Because They Believe They Are Less Harmful — 819
a. Defendants Recognized that Smokers Choose Light/Low Tar Cigarettes for a Perceived Health Benefit — 822

(1) Philip Morris — 822
(2) R.J. Reynolds — 831
(3) Brown & Williamson — 834
(4) BATCo — 838
(5) American Tobacco — 840
(6) Lorillard — 842
b. Defendants Internally Recognized that Smokers Rely on the Claims Made for Low Tar/Light Cigarettes as an Excuse/ Rationale for Not Quitting Smoking — 843
(1) Tobacco Institute — 843
(2) Philip Morris — 843
(3) R.J. Reynolds — 850
(4) Brown & Williamson — 855
(5) BATCo — 858
(6) American Tobacco — 861
(7) Lorillard — 862
(8) Liggett — 864
4. Despite Their Internal Knowledge, Defendants Publicly Denied that Compensation Is Nearly Complete and that the FTC Method is Flawed — 864
a. Tobacco Institute — 871
b. Philip Morris — 872
c. RJ Reynolds — 874
d. Brown & Williamson — 875

e. BATCo — 876
f. American Tobacco — 877
g. Lorillard — 877
5. 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 — 877
a. Philip Morris — 887
(1) Philip Morris's Low Tar Cigarette Marketing Techniques — 887
(2) Philip Morris's Research on the Low Tar Cigarette Category — 907
(3) Philip Morris's Public Statements About Low Tar Cigarettes — 911
b. R.J. Reynolds — 916
(1) R.J. Reynolds's Low Tar Marketing Techniques — 916
(2) R.J. Reynolds's Research on the Low Tar Cigarette Category — 926
(3) RJR's Public Statements About Low Tar Cigarettes — 929
c. Brown & Williamson — 930
(1) Brown & Williamson's Marketing of Low Tar Cigarettes — 930
(2) Brown & Williamson's Research on the Low Tar Cigarette Category — 935
(3) Brown & Williamson's Public Statements About Low Tar Cigarettes — 944
d. BATCo — 946

(1) BATCo's Research on the Low Tar Cigarette Category — 946
(2) BATCo's Public Statements About Low Tar Cigarettes — 951
e. American Tobacco Marketing of Low Tar Cigarettes — 952
f. Lorillard — 959
(1) Lorillard's Marketing of Low Tar Cigarettes — 959
(2) Lorillard's Research on the Low Tar Cigarette Category — 966
g. Liggett — 970
6. Conclusions — 970
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 — 972
1. Definition of Youth — 972
2. The Defendants Need Youth as Replacement Smokers — 973
3. Defendants' Marketing Is a Substantial Contributing Factor to Youth Smoking Initiation — 980
a. Development of the Link Between Marketing and Youth Smoking — 980
(1) No Single-Source Causative Factor Can Describe the Complex Link Between Marketing and Youth Smoking — 980
(2) Public Health Authorities Have Found that Marketing Is a Substantial Contributing Factor to Youth Smoking Initiation — 981

(3) Independent Studies Have Found that Marketing Is a Substantial Contributing Factor to Youth Smoking Initiation — 986
(4) Credible Expert Witnesses Have Found that Marketing Is a Substantial Contributing Factor to Youth Smoking Initiation — 989
b. The Ubiquity of Defendants' Marketing Normalizes and Legitimizes Smoking for Youth — 997
c. Risk Perception: The Inability of Youth to Grasp the Full Implications of Smoking — 1000
4. Tracking Youth Behavior and Preferences Ensures that Marketing and Promotion Reach Youth — 1006
a. Defendants Track Youth Behavior and Preferences — 1006
(1) Philip Morris — 1007
(2) Lorillard — 1031
(3) American Tobacco, BATCo, and Brown & Williamson — 1039
(4) R.J. Reynolds — 1054
b. Defendants' Marketing Employs Themes Which Resonate with Youth — 1071
(1) Philip Morris — 1072
(2) Lorillard — 1082
(3) Brown & Williamson — 1087
(4) R.J. Reynolds — 1096
c. Defendants Continue Price Promotions for Premium Brands Which Are Most Popular with Teens — 1112
(1) Philip Morris — 1114

(2) Liggett — 1119
(3) Lorillard — 1119
(4) Brown & Williamson — 1120
(5) R.J. Reynolds — 1120
5. Defendants' Marketing Successfully Reaches Youth — 1122
a. Defendants' Spending on Marketing and Promotion Has Continually Increased — 1122
b. Defendants Advertise in Youth-Oriented Publications — 1125
(1) Philip Morris — 1126
(2) Liggett — 1134
(3) Lorillard — 1135
(4) Brown & Williamson — 1137
(5) R.J. Reynolds — 1139
c. Defendants Market to Youth Through Direct Mail — 1143
(1) Philip Morris — 1143
(2) Lorillard — 1146
(3) Brown & Williamson — 1148
(4) R.J. Reynolds — 1149
d. Defendants Market to Youth Through an Array of Retail Promotions — 1149
e. Defendants' Promotional Items, Events and Sponsorships Attract Youth — 1156
(1) Events — 1156

(2) Sponsorships — 1158
(3) Promotional Items — 1163
6. Defendants' Youth Smoking Prevention Programs Are Not Designed to Effectively Prevent Youth Smoking — 1164
7. Despite the Overwhelming Evidence to the Contrary, Defendants' Public Statements and Official or Internal Corporate Policies Deny that Their Marketing Targets Youth or Affects Youth Smoking Incidence — 1173
a. Defendants Claim They Restrict Their Marketing to People Twenty-one and Older — 1173
(1) The 1964 Advertising Code — 1174
(2) Official Corporate Policies — 1177
b. Defendants Deny Their Marketing Influences Youth Smoking Initiation; Defendants' Explanation for Their Marketing Practices Is Not Credible — 1180
(1) Tobacco Institute — 1181
(2) Philip Morris — 1190
(3) Liggett — 1195
(4) Lorillard — 1195
(5) BATCo and Brown &Williamson — 1198
(6) RJ Reynolds — 1202
8. Conclusions — 1207
G. Defendants Have Publicly Denied What They Internally Acknowledged: that ETS Is Hazardous to Nonsmokers — 1210
1. Introduction — 1210

2. The Consensus of the Public Health Community Is that ETS Causes Disease in Nonsmokers — 1211
a. The Development of the Consensus — 1215
b. The Consensus — 1230
3. Internally, Defendants Recognized that ETS Is Hazardous to Nonsmokers — 1239
a. ETS Research at Philip Morris's Institut für Biologische Forschung (INBIFO) — 1240
b. Defendants' Recognition of the Validity of the Hirayama Study — 1253
c. Other Internal Research and Statements Revealing Defendants' Knowledge of the Health Risks of Passive Smoking — 1255
4. Internally, Defendants Expressed Concern that the Mounting Evidence on ETS Posed a Grave Threat to Their Industry — 1259
5. Defendants Made Public Promises to Support Independent Research on the Link Betwen ETS and Disease — 1264
6. Defendants Undertook Joint Efforts to Undermine and Discredit the Scientific Consensus that ETS Causes Disease — 1266
a. Defendants Acted Through a Web of Coordinated and Interrelated International and Domestic Organizations — 1266
(1) 1975-1980: The Tobacco Institute ETS Advisory Group — 1266
(2) 1977-1991: "Operation Berkshire" — 1273
(3) 1987: Operation Downunder — 1282
(4) 1988-1999: The Center for Indoor Air Research (CIAR) — 1287
(a) CIAR Applied Projects — 1294

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

b. Defendants and Their Paid Consultants Controlled ETS Research Findings — 1364
(1) The 1995 Japanese Spousal Study — 1364
(2) The 1989 Malmfors/SAS Airline Study — 1372
(3) The 1992 HBI 585 Building Study — 1377
(4) The 2003 Enstrom/Kabat Study — 1380
7. Defendants Made False and Misleading Public Statements Denying that ETS Is Hazardous to Nonsmokers — 1384
8. Defendants Continue to Obscure the Fact that ETS is Hazardous to Nonsmokers — 1397
a. Websites and Other Public Statements — 1397
b. The Philip Morris External Research Program (PMERP) — 1402
c. Other Initiatives — 1405
9. Conclusions — 1406
H. At Various Times, Defendants Attempted to and Did Suppress and Conceal Scientific Research and Destroy Documents Relevant to Their Public and Litigation Positions — 1407
1. Suppression and Concealment of Scientific Research — 1408
a. R.J. Reynolds — 1409
b. BAT Group — 1414
c. Philip Morris — 1424
d. Lorillard — 1432
2. Document Destruction Policies — 1432
a. BAT Group — 1432

b. R.J. Reynolds — 1463
3. Improper use of Attorney-Client and Work Product Privileges — 1464
a. BAT Group — 1465
b. R.J. Reynolds — 1471
c. Liggett — 1472
d. Findings by Other Courts — 1473
4. Conclusions — 1477
VI. THE PROVISIONS AND IMPLICATIONS OF SETTLEMENT AGREEMENTS BY DEFENDANTS — 1478
A. Liggett's Settlement Agreement with Various States — 1478
B. The Master Settlement Agreement — 1481
1. Provisions of the MSA — 1481
2. Enforcement of the MSA — 1486
3. Developments Since the MSA — 1492
VII. DEFENDANTS HAVE VIOLATED 18 U.S.C. 1962(c) — 1498
A. Introduction — 1498
B. Defendants Engaged in a Scheme to Defraud Smokers and Potential Smokers — 1501
1. Defendants Falsely Denied the Adverse Health Effects of Smoking — 1505
2. Defendants Falsely Denied that Nicotine and Smoking Are Addictive — 1508

3. Defendants Falsely Denied that They Manipulated Cigarette Design and Composition so as to Assure Nicotine Delivery Levels Which Create and Sustain Addiction — 1512
4. Defendants Falsely Represented that Light and Low Tar Cigarettes Deliver Less Nicotine and Tar and, Therefore, Present Fewer Health Risks than Full-Flavor Cigarettes — 1514
5. Defendants Falsely Denied that They Market to Youth — 1518
6. Defendants Falsely Denied that ETS Causes Disease — 1522
7. Defendants Suppressed Documents, Information, and Research — 1526
C. Defendants Established an Enterprise — 1528
1. Applicable Legal Standards — 1528
2. Defendants' Enterprise Had a Common Purpose — 1530
3. The Enterprise operated through both formal and informal organization — 1532
4. The Enterprise Has Functioned as a Continuous Unit — 1534
D. The Enterprise Engaged in and Its Activities Affected Interstate and Foreign Commerce — 1536
E. Each Defendant Was Associated with, but Distinct from, the Enterprise — 1539
1. Each Defendant Is Associated with the Enterprise — 1539
2. Each Defendant is Distinct from the Enterprise — 1542
F. Each Defendant Participated in the Conduct of the Enterprise — 1542
G. Each Defendant Carried Out Its Participation in the Conduct of the Enterprise by Engaging in a Pattern of Racketeering Activity — 1548

1. The Government Has Proven that Defendants Caused Mailings and Wire Transmissions, in Furtherance of the Scheme to Defraud, in Violation of 18 U.S.C. § § 1341 and/or 1343 — 1548
a. Defendants' Routine Mailing Practices — 1552
(1) Philip Morris — 1553
(2) Lorillard — 1553
(3) Liggett — 1553
(4) R.J. Reynolds — 1554
(5) The Tobacco Institute — 1554
(6) Council For Tobacco Research — 1554
b. Prior Stipulations and Admissions Establish the Mailings and Wire Transmissions Underlying 79 of the Alleged 145 Racketeering Acts — 1555
c. The Mailings and Wire Transmissions Underlying the Alleged Racketeering Acts Which Involve Defendants' Press Releases and Advertisements Were Disseminated to the Public Via the United States Mails and Wire Transmissions — 1555
d. Defendants Caused Wire, Radio, and Television Transmissions Underlying the Racketeering Acts — 1557
e. The Mailings and Wire Transmissions Involving Communications Were Sent or Received by Defendants or their Representatives — 1558
f. The Cigarette Company Defendants Are Liable for the Mailings and Wire Transmissions Underlying the Racketeering Acts Committed By Defendants CTR and TI — 1560
2. The First Amendment Does Not Protect Defendants' False and Misleading Public Statements — 1562

a. Noerr-Pennington Protects Only Those Defendants' Statements Made in the Course of Petitioning the Legislature; It Does Not Immunize Statements Made with the Purpose of Influencing Smokers, Potential Smokers, and the General Public — 1563
b. The Government Has Met the Necessary Standard of Proof to Show that Defendants' Actions Are Fraudulent — 1564
3. Defendants Engaged in a Pattern of Racketeering Activity in Furtherance of the Scheme to Defraud — 1566
a. Each Defendant Committed at Least Two Racketeering Acts, the Last One of Which Occurred Within Ten Years from the Commission of the Prior Racketeering Act — 1566
b. The Racketeering Acts Are Related and Continuous — 1568
(1) The Racketeering Acts Are Related — 1568
(2) The Racketeering Acts Have Been Continuous — 1570
4. Defendants Acted with the Specific Intent to Defraud or Deceive — 1571
a. Defendants Are Liable for the Acts of Their Officers, Employees, and Agents — 1572
b. Defendants Are Deemed to Possess the Collective Knowledge of Their Officers, Employees, and Agents — 1575
c. Specific Intent May Be Established by the Collective Knowledge of Each Defendant and of the Enterprise as a Whole — 1578
5. Defendants' False and Fraudulent Statements, Representations, and Promises Were Material — 1583
VIII. DEFENDANTS HAVE VIOLATED 18 U.S.C. §1962(d) — 1588
A. Applicable Case Law — 1588
B. Each Defendant Is Liable for the RICO Conspiracy Charge Because Each Entered into the Requisite Conspiratorial Agreement — 1591

C. Liggett Withdrew from the Conspiracy — 1597
IX. ALTRIA IS LIABLE FOR ITS VIOLATIONS OF 18 U.S.C. §1962(c) and (d) — 1599
X. THERE IS A LIKELIHOOD OF PRESENT AND FUTURE VIOLATIONS OF RICO — 1601
A. Applicable Law — 1601
B. The Enterprise's Scheme to Defraud Presents Continuing Opportunities for Defendants to Commit Violations of 18 U.S.C. 1962 (c) and (d) — 1606
C. The MSA Has Not Sufficiently Altered Defendants' Conduct to Justify Not Imposing Appropriate Remedies — 1609
D. As to Certain Defendants, There is Not a Reasonable Likelihood of Future Violations of 18 U.S.C. § 1962 (c) and (d) — 1613
1. CTR — 1613
2. The Tobacco Institute — 1615
3. Liggett — 1618
XI. REMEDIES — 1620
A. Legal Standards Governing Remedies — 1620
B. Specific Remedies — 1627
1. Prohibition of Brand Descriptors — 1627
2. Corrective Communications — 1631
3. Disclosure of Documents and Disaggregated Marketing Data — 1636
a. Depositories — 1638
b. Websites — 1640
c. Privilege Claims — 1641

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

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

AMENDED FINAL OPINION11 This Amended Memorandum Opinion corrects the citation on page 1536, line 11 to read: United States v. Local 1084-1, Int'l Longshoremen's Ass'n., 812 F. Supp. 1303, 1310-15 (S.D.N.Y. 1993); and deletes the last sentence on page 1552, n. 23.

TABLE OF CONTENTS

INTRODUCTION

AMENDED FINAL OPINION¹¹ This Amended Memorandum Opinion corrects the citation on page 1536, line 11 to read: United States v. Local 1084-1, Int'l Longshoremen's Ass'n., 812 F. Supp. 1303, 1310-15 (S.D.N.Y. 1993); and deletes the last sentence on page 1552, n. 23.