RJR Files Proposed Corrective Statements

October 18, 2006 2:46 am by Gene Borio

Defendants propose the following as a corrective statement on environmental tobacco smoke:

The Surgeon General has concluded:

Exposure to environmental tobacco smoke has been proven to cause premature death and disease in children and in adults who do not smoke. Children exposed to secondhand smoke are at an increased risk for sudden infant death syndrome (SIDS), acute respiratory infections, ear problems, and more severe asthma.

Smoking by parents causes respiratory symptoms and slows lung growth in their children. Exposure of adults to secondhand smoke has immediate adverse effects on the cardiovascular system and causes coronary heart disease and lung cancer. The scientific evidence indicates that there is no risk-free level of exposure to secondhand smoke.

This message is furnished by [Defendant] pursuant to a Court Order and is taken from the 2006 Surgeon General’s Report.

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

Text of:

RJR Correctives, October 16, 2006

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

And

TOBACCO-FREE KIDS ACTION FUND,

et. al.,

Plaintiff-Intervenors,

v.

PHILIP MORRIS USA INC. (f/k/a

PHILIP MORRIS INCORPORATED),

et al.,

Defendants.

Civil Action No. 99-CV-2496 (GK)

Next Scheduled Court Appearance: None

Certain Joint Defendants’ Submission of Proposed Corrective Statements Pursuant to Order #1015

Defendants R.J. Reynolds Tobacco Company and Brown & Williamson Holdings, Inc.,1 (collectively “Defendants”) pursuant to Order #1015, § II.B.5 hereby submit proposed corrective

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1 Effective July 30, 2004, Brown & Williamson Tobacco Corporation’s United States cigarette and tobacco business was merged with R.J. Reynolds Tobacco Company. Contemporaneously, Brown & Williamson Tobacco Corporation changed its name to Brown & Williamson Holdings, Inc. (See Notice of Name Change [Dkt. No. 3860].) Although still remaining as a Defendant in this case, Brown & Williamson Holdings, Inc. (“B&W Holdings”) no longer manufactures, researches, sells, distributes, advertises, markets, or promotes cigarettes in the United States for domestic consumption. Because B&W Holdings no longer operates a United States tobacco business, it does not have retail merchandising contracts, it no longer maintains a website containing public positions on smoking and health issues or cigarette marketing, nor does it otherwise engage in communications with the U.S. public regarding tobacco or cigarette issues. However, the District Court’s Final Judgment and Remedial Order applies to “each of the Defendants,” [Dkt. No. 5733, p.2], including “Brown & Williamson Tobacco Co.” (See Final Opinion, Dkt. No. 5732, p. 10 n.4). To the extent the Final Order and Opinion is construed as imposing liability on or otherwise applying to and/or requiring affirmative actions in connection with the ongoing conduct of tobacco business in the United States, B&W Holdings no longer conducts any tobacco business in the United States; such business has been acquired by R.J. Reynolds Tobacco Company.

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statements on the five topics identified in the Court’s Order and supporting materials.2 Each proposed corrective statement is set forth below along with a brief explanation of the basis upon which the Defendants formulated the proposed text.

A. Background

The Court has ordered the submission of one corrective statement for each of five topics (for a total of 5 statements): “(a) the adverse health effects of smoking; (b) the addictiveness of smoking and nicotine; (c) the lack of any significant health benefit from smoking ‘low tar,’ ‘light,’ ‘ultra light,’ ‘mild’ and ‘natural,’ cigarettes; (d) Defendants’ manipulation of cigarette design and composition to ensure optimum nicotine delivery; and (e) the adverse health effects of exposure to secondhand smoke (also known as environmental tobacco smoke, or ETS).” Order #1015 at § II.B.5.

Defendants looked to the Court’s Amended Opinion for guidance as to what those statements should include, particularly pages 1635 and 1636 where the Court provided parenthetical descriptions of each corrective statement. Defendants then looked to the major conclusions of several Surgeon General’s Reports in formulating the specific text of the proposed corrective statements. To the extent Defendants’ proposals depart from the language of

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2 This submission is made subject to and without waiving Defendants’ objections to the Court’s Order. Defendants object to the corrective statements remedy for reasons set forth in Joint Defendants’ Proposed Findings of Fact, and the Corrected Post Trial Brief of Joint Defendants. Defendants also object on the basis of the holding in United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001). Defendants have also objected to the imposition of this remedy in the Motion to Stay the Final Judgment and Remedial Order Pending Appeal and the Memorandum of Points and Authorities in Support thereof. Nothing in this submission is intended to waive Defendants’ objections to the corrective statements remedy, or to the final content of any required statements.

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the Surgeon General, as occurs in a few instances, the reasons for those departures are set forth below.3


B. The Proposed Corrective Statements

1. Adverse Health Effects of Smoking

Defendants propose the following corrective statement regarding the “adverse health effects of smoking”:

The Surgeon General has concluded that cigarette smoking causes the following diseases and adverse health effects:

Bladder cancer, cervical cancer, cancers of the esophagus, renal cell and renal pelvis cancers, cancer of the larynx, acute myeloid leukemia, lung cancer, cancers of the oral cavity and pharynx, pancreatic cancer, gastric cancers, abdominal aortic aneurysm, atherosclerosis, stroke, coronary heart disease, chronic obstructive pulmonary diseases such as emphysema and chronic bronchitis, pneumonia, respiratory effects in utero, respiratory effects in children, adolescents, and adults, respiratory symptoms among adults including coughing, phlegm, wheezing, and dyspnea, poor asthma control, fetal death and stillbirths, reduced fertility in women, fetal growth restrictions and low birth weight, pre-mature rupture of the membranes, placenta previa, placental abruption, preterm delivery and shortened gestation, cataracts, diminished health status/morbidity, hip fractures, low bone density in postmenopausal women, and peptic ulcer disease.

This message is furnished by [Defendant] pursuant to a Court Order and is taken from the 2004 Surgeon General’s Report.

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

* * * *

The Court’s Amended Opinion regarding the corrective statement addressing the “adverse health effects of smoking” requires that the statement set forth “all the diseases which

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3 As indicated in Order #1015, § II.B.5, Defendants acknowledge that there also may need to be “[s]light variations in the corrective communications” to “accommodate the media or format utilized,” depending on the content of the statements actually adopted by the Court.

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smoking has been proven to cause.” Amended Opinion at 1635. The 2004 Surgeon General’s Report’s Executive Summary identifies the diseases which the Surgeon General had concluded were “caused”4 by smoking. 2004 Surgeon General’s Report Executive Summary, Table 1.1, at 2-6 (attached at Exhibit 1). Defendants note that the Court’s Amended Opinion concludes that smoking causes uterine cancer and liver cancer. Amended Opinion at ¶¶ 531-32 (citing to Samet WD at 104:10-106:9). These diseases are not presently among those the Surgeon General has concluded are caused by smoking. 5 Defendants, therefore, omitted these two diseases from the proposed corrective statement but they can be added if the Court so directs.6

2. Addictiveness of Smoking and Nicotine

Defendants propose the following corrective statement on the addictiveness of smoking and nicotine:

The Surgeon General has concluded:

Cigarettes and other forms of tobacco are addicting. Nicotine is the drug in tobacco that causes addiction.

This message is furnished by [Defendant] pursuant to a Court Order and is taken from the 1988 Surgeon General’s Report.

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

* * * *

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4 The Surgeon General’s exact phraseology is that “[t]he evidence is sufficient to infer a causal relationship between smoking and [disease or adverse health effect].” Based on statements in the Court’s Opinion, Defendants propose substituting the word “cause” for the wording the Surgeon General employs.

5 Dr. Samet testified that the Surgeon General had not concluded that cigarette smoking causes liver cancer. Samet WD at 105:16-21. Defendants could not locate evidence in the record that cigarette smoking causes uterine cancer. The Surgeon General states that “current smoking reduces the risk of endometrial cancer in postmenopausal women.” 2004 Surgeon General’s Report at Chapter 1, page 26.

6 Defendants note that the list of diseases and conditions contained in this proposed corrective statement is substantively the same as those submitted by Lorillard, although there are variations in the manner in which each party summarized Table 1.1 from the 2004 Surgeon General’s Report’s Executive Summary from which these lists were derived.

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Defendants turned to the 1988 Surgeon General’s Report, for the language proposed above. One of the 1988 Surgeon General’s Report’s major conclusions is that “[c]igarettes and other forms of tobacco are addicting. Nicotine is the drug in tobacco that causes addiction.” 1988 Surgeon General’s Report at 9 (attached at Exhibit 2).

3. Low-Tar/Lights

Defendants propose the following corrective statement regarding the lack of any significant health benefit from smoking “low tar,” “light,” “ultra light, “mild” and “natural” cigarettes:

The Surgeon General has concluded:

Smoking cigarettes with lower machine-measured yields of tar and nicotine (including those that have been labeled “low tar,” “light,” “ultra light, “mild” and “natural”) provides no clear benefit to health in comparison to smoking cigarettes with higher machinemeasured yields of tar and nicotine.

This message is furnished by [Defendant] pursuant to a Court Order and is derived from the 2004 Surgeon General’s Report.

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

* * * *

Defendants turned to the 2004 Surgeon General’s Report for the language proposed above. That report compares lower and higher yield cigarettes and reaches a conclusion that “[s]moking cigarettes with lower machine-measured yields of tar and nicotine provides no clear benefit to health.” 2004 Surgeon General’s Report Executive Summary, at 8 (attached at Exhibit 3). However, this statement, when repeated apart from the context of the 2004 Surgeon General’s Report, may not be entirely clear. In keeping with the Court’s directive that it be apparent that the referenced comparison is to full-flavor cigarettes – i.e., those with higher

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machine-measured levels of tar and nicotine – additional language has been added to the Surgeon General’s conclusion to make such a comparative statement. Finally, given the Court’s Order that the use of the terms “low tar,” “light,” “ultra light, “mild” and “natural” be discontinued, Defendants included a reference to those terms in the proposed corrective statement as well believing that to be the Court’s preference.

4. Nicotine Manipulation

Defendants propose the following as a corrective statement on nicotine manipulation:

A United States District Court has found that:

“Cigarettes are specifically designed to deliver a range of nicotine doses so that a smoker can obtain her optimal dose from virtually any cigarette on the market, regardless of that cigarette’s nicotine delivery level as measured by the FTC method.” “Cigarette manufacturers controlled the amount and form of nicotine delivery in commercial products by controlling the physical and chemical make-up of the tobacco blend and filler.” This message is furnished pursuant to a Court Order by [Defendant].

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

* * * *

Defendants were unable to identify a comparable conclusion in any recent Surgeon General’s Report. Accordingly, Defendants looked to the Court’s Amended Opinion, at pages 567 and 572, for the specific content of this proposed corrective statement.

5. Environmental Tobacco Smoke

Defendants propose the following as a corrective statement on environmental tobacco smoke:

The Surgeon General has concluded:

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Exposure to environmental tobacco smoke has been proven to cause premature death and disease in children and in adults who do not smoke. Children exposed to secondhand smoke are at an increased risk for sudden infant death syndrome (SIDS), acute respiratory infections, ear problems, and more severe asthma.

Smoking by parents causes respiratory symptoms and slows lung growth in their children. Exposure of adults to secondhand smoke has immediate adverse effects on the cardiovascular system and causes coronary heart disease and lung cancer. The scientific evidence indicates that there is no risk-free level of exposure to secondhand smoke.

This message is furnished by [Defendant] pursuant to a Court Order and is taken from the 2006 Surgeon General’s Report.

You should rely upon your medical provider and the Surgeon General in making decisions regarding smoking.

* * * *

The Court’s Amended Opinion regarding the corrective statement addressing the “the adverse health effects of exposure to secondhand smoke” requires that the statement set forth “all the diseases which exposure to ETS has been proven to cause.” Amended Opinion at 1635.

Defendants turned to the 2006 Surgeon General’s Report for the requested list of diseases and conditions caused by exposure to ETS. That report identifies six major conclusions, four of which directly address the health effects of ETS and the diseases the Surgeon General has concluded are caused by exposure to ETS. 2006 Surgeon General’s Report at 11 (attached at Exhibit 4).7

C. Compliance with the February, 2007 Deadline

The Court’s Order requires that Reynolds present the corrective statements through onserts starting in February, 2007. As Reynolds has already advised the Court, the placement of onserts on the packaging imposes significant costs and presents logistical challenges and cannot

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7 The remaining two major conclusions do not directly address the health effects of exposure to ETS and were omitted from the proposed corrective statement for that reason.

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be fully implemented by the February deadline. See Declaration of J. Brice O’Brien, at ¶ 29.

Nonetheless, to maximize Reynolds’ ability to comply with the Court’s February, 2007 deadline for shipment of cigarettes with package onserts for retail distribution and to minimize the disruption of Reynolds’ business operations, Reynolds respectfully requests that the Court advise the Defendants of the content of the corrective statements as soon as possible.

D. Conclusion

The foregoing proposed corrective statements are submitted pursuant to, and as required by, Order #1015. For the reasons set forth above, Defendants believe the proposed corrective statements comply with the requirements of the Court’s Order.

Dated: October 16, 2006

Respectfully submitted,

/s/ Geoffrey K. Beach

Robert F. McDermott (D.C. Bar No. 261164)

Peter J. Biersteker (D.C. Bar No. 358108)

Geoffrey K. Beach (D.C. Bar No. 439763)

JONES DAY

51 Louisiana Avenue, N.W.

Washington, D.C. 20001-2113

Telephone: (202) 879-3939

Fax: (202) 626-1700

Paul G. Crist

JONES DAY

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114-1190

Telephone: (216) 586-3939

Fax: (216) 579-0212

Attorneys for Defendant

R.J. Reynolds Tobacco Company

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/s/ Geoffrey K. Beach for

David E. Mendelson (D.C. Bar No. 471863)

KIRKLAND & ELLIS LLP

655 15th Street, N.W., Suite 1200

Washington, D.C. 200005

Telephone: (202) 879-5000

Fax: (202) 879-5200

David M. Bernick

Stephen R. Patton

Renee D. Smith

KIRKLAND & ELLIS LLP

200 East Randolph Drive, Suite 5900

Chicago, Illinois 60601

Telephone: (312) 861-2000

Fax: (312) 861-2200

Attorneys for Defendant

Brown & Williamson Holdings, Inc.

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