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9
JUN

Tobacco execs launch attack on anti-smoking ads

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USA Today, 2003-06-09


LOS ANGELES — After smoldering for years, tobacco executives are asking courts to ban anti-smoking ads that portray them as callous killers who try to get kids addicted to nicotine.



At issue are aggressive campaigns aimed at teenagers and funded by 13 state governments and an anti-tobacco foundation. Tobacco companies say they don't mind radio and TV spots that say smoking is unhealthful. But in a lawsuit filed in California, the companies say that nasty personal attacks are unfairly tipping juries against them in smokers' personal-injury suits.



In a Delaware complaint, one company says that Delaware, California and 44 other states promised they wouldn't pillory cigarette makers when the states signed a $206 billion settlement in 1998 that repaid their Medicaid costs of treating sick smokers.



Health officials have been calling tobacco moguls manipulative evildoers since 1990, when California targeted youths with that theme.



"The ads are saying to kids, 'Do you want to rebel? Then rebel against the tobacco industry that's been marketing to you,' " Vermont Attorney General William Sorrell says.



The tobacco industry's legal counterattack is part of a war over the next generation of smokers. The implied question in the two lawsuits is whether cigarette companies, with smoking rates falling across the USA, will gain a veto over the content of messages aimed at cutting the number of young tobacco consumers.



Why have tobacco firms waited until now to sue? Because their long streak of defeating smokers in civil jury trials has been broken. The companies are blaming a string of courtroom setbacks on the advertising onslaught that paints them, in the words of their California complaint, as "loathsome persons motivated by cynicism, greed and malevolence."



About 95% of smokers' cases still are dismissed before trial, but smokers suing as individuals have won 14 verdicts and lost six in eight states and Puerto Rico since 1996. (Big Tobacco has a better record defending class-action suits; cigarette makers' latest win came last month, when a Florida appeals court overturned a $145 billion punitive damages judgment and ruled that 700,000 smokers were not entitled to sue as a class.)



In the federal suit they filed in April in Sacramento, tobacco giants R.J. Reynolds and Lorillard allege that the California attacks "prejudice potential jurors." This wasn't an issue before 1997, when the Legislature repealed a law that immunized cigarette makers from smokers' claims. Since then, juries have voted big awards for plaintiffs in four of five California trials.



In Delaware, Lorillard alleges that the American Legacy Foundation, formed by the National Association of Attorneys General, has unlawfully demonized tobacco executives in nationwide radio and TV spots since 2000.



To score with teenagers, anti-smoking ads must be hard-hitting and "edgy," health activists say. California spends more than any other state on anti-smoking ads — $21 million a year — and produces the most provocative campaigns. One billboard shows a Marlboro Man-type cowboy telling a buddy, "I miss my lung, Bob."


But it's California's TV spots that go too far, tobacco companies say. Some examples:


  • A cynical executive tells colleagues that the tobacco industry needs 3,100 new smokers a day because 2,000 Americans quit smoking, "and another 1,100 also quit. Actually, technically, they die."
  • Cigarettes fall from the sky onto a playground, wowing preteens. "We have to sell cigarettes to your child," a voice-over says. "We need a half-million new smokers a year just to stay in business."


Daniel Dohahue, R.J. Reynolds senior vice president and general counsel, says, "California has put its rather heavy thumb on the plaintiffs' side of the scale of justice." Surveys show that the ads "have a corrosive effect on the incoming attitude of jurors," he says.


Ed Sweda, senior attorney at the Tobacco Products Liability Project at Northeastern University School of Law in Boston, says jurors have been influenced far more by internal documents showing that the companies have long been aware of smoking's dangers.


The American Legacy Foundation launched its campaign in 2000 with an ad titled "Body Bags." Young people haul 1,200 body bags off trucks and stack them outside a purported tobacco company. An angry kid with a bullhorn then says that tobacco kills 1,200 Americans a day.


A foundation radio ad provoked Lorillard to sue. Dramatizing the point that tobacco contains the chemical urea, a youth calls Lorillard at its Greensboro, N.C., headquarters, pretending to be a dog walker and offering the company dog urine. (The company declined.) "Outrageous," says Ronald Milstein, Lorillard vice president.


The two sides are far apart on free-speech issues. "The leitmotif in these cases is an effort to limit speech," says Ellen Vargyas, general counsel of the American Legacy Foundation. Reynolds' Donahue says anti-smoking forces have no right to "attack on an ad hominem basis, in a fictionalized setting, the executives of these companies, and portray fiction as fact."


Making the insult worse, cigarette companies say, is that the firms pay for them. California's anti-smoking messages are financed through a 25-cent-a-pack tax on tobacco sellers. The American Legacy Foundation has received $1.2 billion that tobacco firms paid under their settlement with 46 states in 1998. The settlement's terms allow ads about tobacco's risks but forbid "vilification" of sellers.


Manufacturers aren't suing to squelch state ads outside of California. That's because most states have shifted from an anti-industry approach to softer anti-smoking messages — teenagers reasoning with friends. Teens were starting to view the villain-bashing as "predictable and preachy," says Lynn Deml of the Minnesota Department of Public Health. California health Director Diana Bonta says the in-your-face attack ads truthfully reveal "deceptive" cigarette marketing tactics.


Officials credit the ads, as well as tax increases on tobacco products, with reducing smoking in the state. California's adult smoking rate, down from 22.9% in 1988 to 16.6% now, is second-lowest in the USA, behind Utah's 13%. The state's 5.9% youth smoking rate is the nation's lowest, health officials say.


At a hearing today in Sacramento, a federal judge likely will decide whether to ban broadcasts of 49 tough ads produced by California. The Delaware case could reach trial next spring.

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8
JUN

1,500 Retailers Face Suits Over Fake Smokes

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Los Angeles Times, 2003-06-08


Ramping up the fight against counterfeit smokes, tobacco giant Philip Morris is preparing to sue about 1,500 more Los Angeles-area merchants, along with importers it says were caught illegally trying to sneak millions of fake Marlboros in through Long Beach Harbor.


In a case to be filed in U.S. District Court in Los Angeles as early as Monday, company officials said they would bring claims of trademark infringement against local retailers who recently sold knockoff Marlboros to an army of undercover buyers.


And for the first time since it launched the legal assault last year, Philip Morris also plans to sue five import businesses linked to recent U.S. Customs seizures of about 43 million phony Marlboros, or 2.15 million packs.


The company said its claims against the importers stem from six customs seizures, one of a shipment from South Korea and five from China, where an estimated 85% of counterfeit cigarettes are produced. Company officials declined to identify the firms.


In suing the importers, Philip Morris is aiming for much higher links in the supply chain than the mostly mom-and-pop retailers who have been targeted so far.


Eager to guard the immense cash flow from its powerhouse brand, Philip Morris has sued hundreds of tobacco retailers in a nationwide dragnet featuring undercover buys at thousands of stores. But though the counterfeits have been a mere trickle in many parts of the country, they appear to be flooding the California market, particularly the Los Angeles area.


To date, suits have been filed against 612 defendants — 608 tobacco retailers and four distributors. Of the defendants, 566, or more than 90%, are California firms, including 356 in Greater Los Angeles, said John E. "Jack" Holleran, Philip Morris vice president for brand integrity.


The new filings will bring the cast of defendants to more than 2,100, about 1,850 of them in the Southland.


Holleran said that, over the last several months, undercover buys have been made at 11,700 Los Angeles-area stores — meaning that nearly one in six was stocking counterfeit smokes. He acknowledged that figure might not reflect the full scope of counterfeit sales, because fakes also may be sold by street vendors or from the back of vans.


Philip Morris has hired an army of investigators, including some from Pinkerton Consulting & Investigations Inc., to make the buys.


Counterfeiters target Marlboro because it is the best-selling brand in the United States and the world. Marlboro commands a 38% share of the U.S. market and generated about $25 billion in retail sales last year, including taxes.


Lorillard Tobacco Co. is also trying to stamp out counterfeit versions of its Newport cigarettes. In recent months the company has sued about 75 retailers in five states, said Steve Watson, Lorillard vice president. At least 26 of the defendants are Los Angeles-area stores.


State and federal treasuries have been major victims because counterfeit rings don't bother to pay cigarette taxes, often covering their tracks with fake tax stamps.


In California, each pack of contraband smokes represents a tax loss of about $1.81 — the federal cigarette excise tax of 39 cents, the California tax of 87 cents, and about 55 cents to the states as part of the tobacco industry's settlement of lawsuits by attorneys general.


California is losing as much as $270 million a year to various cigarette tax-evasion schemes, said Gil Haas, chief of investigations for the State Board of Equalization. Most of the loss stems from the use of phony tax stamps on both counterfeit and genuine brands.


"It's a very significant problem," Haas said.


In the cases filed so far, Philip Morris has not sought economic damages. Rather it has squeezed retailers for information about their suppliers and for a pledge not to sell counterfeits again.


Despite the wide availability of fake Marlboros, Holleran said the company's legal strategy is working.


Of a group of 400 retailers who had been caught selling counterfeits, he said follow-up buys showed that 85% were selling the real thing. Of 43 retailers who signed settlement agreements — including a pledge to refrain from counterfeit sales — he said none was found to be selling fakes.

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5
JUN

Pack To The Future

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New York Post, 2003-06-05


But there's nothing like the allure of the city's new discreet but decidedly busy "smoke-easies," where, if you keep your cigarette low and don't blow it in the barman's face, you'll meet a blind eye.


It harkens back to the now-romanticized days of Prohibition.


"If it's a busy bar or club and you keep it down, you're going to get away with it," says an East Villager who calls himself DJ Bravo. . .


The new New York smoking scene may be Manhattan's most democratic social demographic yet, comprising everyone from waiters to the celebrities they attend, models to mechanics, publishing moguls to newspaper vendors.


Silvano Marchetto, chef and owner of Da Silvano on Sixth Avenue, with its outdoor patio, says, "Even Graydon [Carter] has to smoke outside," referring to the Vanity Fair editor. "There is a real scene out there, and a lot of butts all over the sidewalk." . .


One East Village hipster at a small late-night club, holding his cigarette below his waist, insists, "It's not worth their time [to enforce]. What are they going to do? Get rid of all their customers? It's well known: The people who want to go out and party, they smoke."


Put another way, a smoking New Yorker who can't find some place to smoke in the city is either not much of a smoker - or not much of a New Yorker.


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