Tobacco Documents Online

i ; tobacco sheet in the ultimate tobacco blend serves significantly to 1 wer the nicotine content of cigarettes. And contrary to Day One's claims, no "powerful extract containing nicotine and flavor" or any other nicotine substance is added in the process. Nor is there anything at all "secret" about the reconstitution process: it has long been widely used in the industry, publicly known, described in books and articles about cigarette manufacturing going back at least as far as 1967, and, indeed, is even fully described in the 1979 Surgeon General's Report on Smoking and Health, p. 14-27. b. Tobacco extract - During the course of the cigarette manufacturing process, certain flavors are sprayed onto the cut tobacco - which consists of a blend of predominantly natural leaf with some reconstituted tobacco mixed in. The particular flavors used are distinctive for each cigarette brand. In recent years, a flavor package containing tobacco extract has been used by Philip Morris in a single domestic brand - Merit. This use ended at December 31, 1993, and flavor packages containing tobacco extract have not since been used in any Philip Morris domestic brand. Moreover, contrary to Day One's claim, the tobacco extract that was used was not "nicotine rich" at all. Rather, the amount of nicotine ending up in the cigarette attributable to the inclusion of tobacco extract in the flavor package ~ ~ ~ -1 ...~

i was miniscule to the extreme. Thus, for example, the amount of nicotine in a Merit Ultra Light menthol cigarette that was attributable to the use of such flavor package represented 1/4,500 (or 0.00021) of the nicotine otherwise in the tobacco used in the cigarette - a trace amount which is so small as not even to be measurable by standard analytical methods. This infinitesimal trace amount of nicotine did not remotely constitute the "spiking," "fortifying" or "manipulation" of the nicotine content of these cigarettes. And as before, the fact that cigarette companies have used flavor packages containing tobacco extract during the manufacturing process of cigarettes has long been -a -matter of.-public-record..--it is no :: - "secret" at all. c. Denatured Alcohol - Certain flavors that are not soluble in water must be dissolved in alcohol in order to be sprayed onto the cut tobacco blend during the cigarette manufacturing process. Because pure alcohol is subject to stringent and cumbersome regulations by the Bureau of Alcohol, Tobacco and Firearms, Philip Morris uses alcohol which has been denatured with minute amounts of nicotine to render it undrinkable. Such denatured alcohol is purchased by Philip Morris from outside suppliers. The amount of nicotine contained in such denatured alcohol is minute - only 0.0002 by weight, t~g,, only one part per 5,000. The flavors that are dissolved in this denatured - 12-

ii I alcohol themselves contain M nicotine, and the combination of these flavors with the denatured alcohol further dilutes the minute amount of nicotine present. As a result, the amount of nicotine that results from the spraying of the alcohol-dissolved flavors on the blended tobacco is again infinitesimal. By way of example, the amount of nicotine in a Merit Ultra Light menthol cigarette attributable to the use of the denatured alcohol represents 1/7,000 (or 0.00013) of the nicotine otherwise in the tobacco used in the cigarette - again, merely a trace amount which is so small as not even to be measurable by standard analytical methods. Thus, once again, the use of denatured alcohol as a flavor solvent does not remotely constitute the "spiking," "fortifying" or "manipulation" of the nicotine content of the cigarettes. And once again, there is nothing "secret" here. It has long been a matter of public record that the Bureau of Alcohol, Tobacco and Firearms has approved the use of nicotine in denatured alcohol for this purpose, see 27 Code of Federal Regulations § 21.141; that alcohol denatured with nicotine is the only form of denatured alcohol approved by the federal government for use in the manufacture of cigarettes; and indeed, that the amount of nicotine that is contained in the alcohol is actually fixed by law at the .0002 level of dilution. -13-

14. Thus, contrary to the false and defamatory statements by defendants, except for the infinitesimal trace amounts of nicotine resulting from the processes described in Paragraphs 13(b) and (c) above, Philip Morris never has, and does not now add any nicotine whatsoever in the process of manufacturing cigarettes. To claim that these processes constitute the "spiking" or "fortifying" of cigarettes with nicotine to "hook" smokers, to "keep people smoking" is an egregious falsehood. To the contrary, between the arrival of tobacco at Philip Morris' plants and its departure from the plants as packaged cigarettes, there is a very substantial loss in the percentage of nicotine in the tobacco. Thus, the only adjustment of the nicotine content of cigarettes that is involved in the manufacturing process is the r i n of nicotine levels. I 15. The false and defamatory statements contained in Day One's broadcasts were made knowingly, recklessly, and with malice. Among other things, defendants first published, and then republished these defamatory accusations notwithstanding having been expressly advised by members of the tobacco industry, including Philip Morris, of their falsity. 16. These false and defamatory statements were broadcast and published in and into the Commonwealth of Virginia and throughout the United States on the ABC Television Network. Additional ABC Publications of Defamatot-y Statements 17. On Friday, February 25, 1994, on the ABC Television Network program World News Tonight, aired from 6:30 - 7:00 p.m. (EST), anchor Peter Jennings -14-

previewed Day One's false and defamatory purported expos6 and promised viewers "a good deal more" "this Monday evening." Jennings introduced John Martin, the featured reporter on the February 28 and March 7 Day One programs: a. Jennings: The U.S. government is considering a major frontal assault on the tobacco industry. The Commissioner of the Food and Drug Administration said today that he is looking into whether cigarettes might be regulated as an addictive drug. Here is what's changed. There is now evidence that ciaarette manufacturers carefully manipulate the nicotine content of their product to assure each cigarette packs a certain punch. The evidence has been uncovered by John Martin, who's been investigating the story for the ABC news program Day One. b. Martin: The investigation found that tobacco companies are addina to cigarettes waste products fortified with an extract that contains nicotine As a result the companies are able to manipulate the nicotine levels in cigarettes. The Surgeon General has determined that nicotine is a highly addictive drug. A former R.J. Reynolds manager, who requested anonymity, explained why the companies control the amount of nicotine in cigarettes. c. R.J. Reynolds Manager (unidentified): They put nicotine in the form of tobacco extract into the product to keep the consumer happy. d. Q. Martin: They're forti~inQ the product with nicotine, is that rr c? A. R. J. Reynolds Manager (unidentified): The waste filler: Yes, they are. (Emphasis added.) 18. On February 25, 1994, on the ABC Television Network program "20/20," aired from 10:00 - 11:00 p.m. (EST), co-host Hugh Downs introduced Forrest Sawyer, the host of Day One: a. Sawyer: You'll be surprised when you learn what tobacco companies are doing with the nicotine in your cigarette. -15-

b. Representative Mike Synar (Democrat, Oklahoma): They can doctor it, they can alter it, and they can literally jeopardize the health of the American public without having any consequence. (Emphasis added.) _ 19. On February 28, 1994, the ABC Television Network program World News Tonight, aired from 6:30 - 7:00 p. m. (EST), was once again the vehicle for attracting an audience to that evening's Day One program. Jennings introduced John Martin: Martin: The Day One investigation shows tobacco companies manipulate nicotine, strongly sug esting they want smokers to get the drug in controlled oose Sawyer: A Day One investigation Monday. Downs: Day One Mondays at eight. The FDA said Fridav this _mav be iust th oe n I f1~~ I t regulate figarettes. On Wall Street today, four major tobacco company stocks all lost value. R. J. Reynolds and Philip Morris were the two most heavily traded stocks of all those bought and sold. (Emphasis added. ) ; i 20. On March 9, 1994, on the ABC Television Network program "Nightline," hosted by Ted Koppel from 11:35 p.m. to 12:00 a.m. (EST), additional false and i -defamatory statements were made and endorsed by defendants as follows: a. Koppel: . . . jt1here is new evidence that the tobacco industry may be chemically stacking the deck. .., b. Bury (an ABC reporter): An investigation by the ABC News broadcast Day One found that cigarette companies carefully control - the amount of nicotine in their cigarettes by adding precise amounts of tobacco extract which contains nicotine. c. Former R. J. Reynolds Manager (unidentified): They put nicotine in the form of tobacco extract into a product to keep the consumer haDOV. ~ - 16 - ~, ~ ~ ~ ~ ~ -:~ ~

d. Cliff Douglas (American Cancer Society): The public doesn't know that the indust_r-ti manipulates nicotine - it takes out, puts it back in, uses it as if it were sugar being put in candy. e. Koppel: Our sister-program, Day One, a couple days ago, did a report on the tobacco industry and the revelation of that program - and. I must say it astonished me - and that is that you folks have actually been adding nicotine to the product. to the tobacco as a means of causing =ple to become more addicted to the product. f. Matthew Myers (Coalition on Smoking or Health): The recent ABC Day One re,pQrt revealed substantial new information thatd combined with FDA's own investigation, has brought the whole issue into a new focus. We now know that the tobacco industrv consciously manipulates the level of nicotine in tobacco products to insure they thev're addictive. Bury: The revelation that cigarette companies manipulate the nicotine in their nroducts has led FDA Commissioner Kessler to conclude that cigarette manufacturers may intend that their products contain nicotine to satisfy an addiction on the part of some of their customers. (Emphasis added.) 21, These knowingly and/or recklessly false and defamatory statements of and concerning Philip Morris set forth in Paragraphs 17 through 20 were intended to be understood to mean, and were understood to mean that during the manufacturing process Philip Morris (as well as other cigarette manufacturers) "fortified" its cigarettes by adding significant amounts of extraneous nicotine to its product, and that the magnitude and seriousness of this offense was such that Day One's "revelation" of this "secret" would be "just the evidence [the FDA] needs to regulate cigarettes" and would subject the industry to draconian regulatory or congressional action. I ~ -17- ~ ~ ~ ~ ~ C3~ .? G.~

22. These false and defamatory statements were made knowingly, recklessly and with malice. Among other things, defendants published and republished these statements notwithstanding having been expressly advised by members of the tobacco industry, including Philip Morris, of their falsity. 23. These false and defamatory statements were broadcast and published in and into the Commonwealth of Virginia and throughout the United States on the ABC Television Network. The Harm Caused to Philip Morris by Defendants' False and Defamatory Statements 24. All of the defamatory statements specified in Paragraphs 8 through 10 and 17 through 20, above, were made and broadcast with actual malice by defendants inasmuch as defendants knew of their falsity or had a reckless disregard for their truth or falsity. Defendants John Martin and Walt Bogdanich are employees or agents of ABC. All acts, statements and omissions of ABC employees and agents, including but not limited to defendants Martin and Bogdanich, in connection with the preparation and broadcast of these programs, were in the course of, and within the scope of, their employment or agency with ABC. 25. A substantial portion of the population, including the investment community, understood defendants' statements referring to the "tobacco companies," the "tobacco industry,." the "cigarette manufacturers," the "cigarette companies," or "Philip Morris" to be statements of and concerning Philip Morris Companies. -18-

26. A substantial portion of the population, including the government regulators and members of Congress, understood defendants' statements referring to the "tobacco companies," the "tobacco industry," the "cigarette manufacturers," the "cigarette companies," or "Philip Morris" to be statements of and concerning Philip Morris U.S.A. 27. As a direct and proximate result of the publication of the knowingly and/or recklessly false and defamatory statements set forth above, plaintiffs have suffered great harm to their reputations, trade and business. That harm is continuing. These defamatory statements: a. As to plaintiff Philip Morris Companies, have resulted in the stock of such plaintiff falling sharply and have otherwise damaged plaintiff in the conduct of its trade or business, causing it injury in an'amount not presently accurately ascertainable but believed to be not less than $2 billion. b. As to plaintiff Philip Morris U.S.A., have precipitated and fueled a climate of public, media, regulatory and congressional reaction against the tobacco companies, including such plaintiff, which threatens to embroil plaintiff in regulatory and congressional inquiries, heightens the prospect of regulatory or congressional action severely detrimental to plaintiff's business, heightens the prospect of passage by Congress of major increases in tobacco taxes severely detrimental to plaintiff's business, will tend to spawn additional -19- I

litigation against plaintiff, undermines confidence in plaintiff's products affecting sales, and have otherwise damaged plaintiff in the conduct of its trade and business - all causing it injury in an amount not presently accurately ascertainable but believed to be not less than $3 billion. COUNT ONE - DEFAMATION 28. Plaintiffs repeat and reallege each and every allegation in Paragraphs 1 through 27 hereof. 29. Defendants, on the February 28, 1994, Day One broadcast segment on nicotine in tobacco, made and endorsed false and defamatory statements as set forth above in Paragraphs 8 and 9 hereof of and concerning plaintiffs, and engaged in the publication of those statements. 30. Such statements were made and endorsed by defendants with knowledge of their falsity and/or reckless disregard for the truth and have caused damage to plaintiffs as set forth above. 31. Defendants' conduct, as aforesaid, constituted defamation as against plaintiffs. COUNT TWO - DEFAMATION 32. Plaintiffs repeat and reallege each and every allegation in Paragraphs 1 through 31 hereof. ZZ) -20- C> 4;;h ~ ~ ~ ~