Mar. 21 2003
Washington, D.C. — Today's $10.1 billion verdict against Philip Morris in an Illinois case concerning the deceptive marketing of light cigarettes is an appropriate response to one of the most harmful consumer frauds of our time. The penalty is severe, but it is warranted by the massive scope of the deception the Court found was perpetuated by Philip Morris and the tremendous toll in health, lives and money that has resulted from its wrongful marketing and sale of light cigarettes.
As documented in a November 2001 report by the National Cancer Institute (NCI), Philip Morris has known from its own research that light cigarettes were no safer than regular brands, but for decades has deceptively marketed these cigarettes as reducing smokers' health risks. Based on internal tobacco industry documents, the NCI report also found that tobacco companies intentionally manipulated the design of their light cigarettes to produce less tar when tested by government testing machines, but not when smoked by actual smokers who changed their smoking habits to maintain nicotine levels. Many smokers switched to these brands in a false belief they were reducing their health risk. Today's ruling holds Philip Morris accountable for this irresponsible, harmful conduct, which continues even today as the company opposes legislative proposals in the United States and internationally to ban deceptive terms such as "light," "low-tar" and "mild."
While this ruling is an important step in holding the tobacco industry accountable, it is not a substitute for a national tobacco policy designed to reduce the number of kids who start and the number of people who die from tobacco use. The powerful evidence of tobacco industry wrongdoing that produced this verdict cries out for Congress to give the U.S. Food and Drug Administration effective authority to regulate tobacco products. Among other things, the FDA should have the authority to ban deceptive terms such as "light", "mild" and "low-tar" that convey the false impression that one tobacco product is less harmful than others. Despite opposition from Philip Morris and other tobacco companies, the European Union recently acted to ban such terms. Consumers in the U.S. should be protected as well.
The need for Congressional action is greater than ever because the tobacco industry is threatening a repeat of the low-tar public health disaster by introducing a new generation of tobacco products with unproven claims that they are safer. These include R.J. Reynolds' Eclipse, Brown & Williamson's Advance and Vector's Omni and Quest products. Until Congress acts, smokers of these products will continue to be human guinea pigs in a tobacco industry science experiment.
It is also critical that the Bush Administration aggressively pursues the federal government's racketeering lawsuit against the tobacco industry. The industry's deceptions about low-tar cigarettes are a critical aspect of the government's case. This case has great potential to fundamentally reform the industry's harmful practices.
Finally, Illinois' Governor and legislators should resist Philip Morris' efforts to obtain special legal protection in the form of legislation that would limit the amount of bond money the company has to post in appealing this case. Philip Morris should not be protected from the legal consequences of the harmful conduct that resulted in today's verdict. This verdict is simply a reflection of the magnitude of the fraud engaged in by Philip Morris. In addition, the specter of bankruptcy raised by Philip Morris is a red herring. As shown by the 1998 state tobacco settlement, Philip Morris and other tobacco companies are more than capable of paying large legal verdicts without risk of bankruptcy. According to its 2001 annual report, Philip Morris had assets of nearly $85 billion and earnings of more than $8.5 billion, making it easy for them to borrow massive amounts of money as needed. They can also raise large amounts of additional revenue by raising their cigarette prices, as they have done to pay the state settlement. Financial analysts who follow the tobacco industry have estimated that tobacco companies are capable of posting appeal bonds in the tens of billions of dollars without risk of bankruptcy.