Tobacco Documents Online

PRIVILEGED AND CONFIDENTIAL ATTORNEY - CLIENT' WORM PRODUCT DRAFT 3/20/94 [COURT'] COMMONWEALTH OF V~RGI.NIA PHILIP MORRIS. COMPANIES INC. a~nd : PHILIP MORRIS. INCORPORATED, : Plaintiffs, vs. AMERICAN BROADCASTING COMPANIES, COMPLK~NT INC., FORREST SAWYER, JOHN~ MARTIN, : WALT BOGDANICH, and JOHN/JANE : DOE(S) I-~V, : : Defendants. : Plaintiffs Philip Morris Companies Inc. and Philip Morris Incorporated, by and for their Complaint against defendants, allege: PARTIES ]~. Plaintiff Philip Morris Compan~ies Inc. ("Philip Morrls Companies")i is a publicly held: corporation organized and existing under the laws of the Commonwealth of Virginia, with its principal p~ace of business in New York, New. York. Philip Morris Companies is a holding company whose stock is publicly traded on the New York Stock Exchange. Its subsidiary c~mpa- nies a~e primarily engaged in the £obacco, food and beer busi- nesses, and own many of the bes~-known brand names in the world, ~nclud:ing Marlboro cigarettes, Kraft food products, and: Miller beer.

2. Plaintiff Philip Morris Incorporated ("Philip Morris USA") ~s a corporation organized: and existing under the laws of the Commonwealth of virginia with its principal place of business in. New York, New York. Philip Morris USA is a wholly-owned subsidiary of Philip, Morris ~ompan%es, ~s engaged in the domestic tobacco business and is ~he ~arge~t tobacco company ~n the United States. As. is hereinafter set forth, the defamatory sta~tements made by defendants were made without specification as between PhilipMorris Companies and Philip Mor~s USA and "P~.ilip Morris" was used ind~iscrim.inately by defendants to. refer both to Philip. Morris Companies and Philip Morris USA. ~ccordingly, except as otherwise indicated, the term "Philip Morris,' is use~ in this Complaint in£erchangeably to refer to bot~ Philip Morris Companies and Philip Merr~s USA. 3. Defendant American Broadcasting Companies, Inc. (~"ASC") ~s a corporation organized~ and existing umder the laws of the State of Delaware, with its principal place of business ~n ~ew York, New York. AHC, a wholly-owned subsidiary of Capi- tal Cities/ABC, Inc., operates the ABC Television Network, a maj.or Amer~ca:m~ broadcast network with. over 2~80 affiliated sta- tions reaching 99.9% of all United States television house- holes. ABC's ~elecasts are regu,larly broadcast in a:nd into the Commonwealth of Virginia by numerous stations, ~ncluding but ~o~ limited to ABC affil~ate Stations in, R~chmond, --2¸--

Virgin~ia, and WJLA in, the District of Colu~bia, and [ABC"s owned and operated station in. Raleigh-Durham, North Carolina]. ABC's telecasts are widely viewed in the Commonwealth of Virginia and throughout the United~ States and ABC derives s~bstantial revenue from its broadcasts and other activities in Virginia. Among programs produced by ABC News for broadcast on ABC owned and operated and affiliated stations is the news magazine program '"Day One". 4. De~endant Forrest Sawyer is the anchor of "Day One" a:nd was the anchor for the Day One segments on cigarettes and nicotine on February 28 and March 7, 1994. [Upon information and belief, he is a citizen of .] 5. Defendant J~ohn Martin is a "Day One" reporter, led Day One's "investigation" into nicotine in cigarettes, and appeared on the February 28~ and March 7, 1994 broadcast segments of Day One regarding cigarettes and nicotine. [~on Information and belief, he ~s a citizen o~ .] 6. Defendant Walt Bogdanich is the producer or co- producer of the February 28 and March 7, 1994 Day One segments on cigarettes and n~c~tine. [Upon information and belief, he i~s a citizen, of .] 7. [Possible other individual defendants] -3-

8. De~endants John and Jane Doe are persons who g~t~ere~ information, investigated and participated in the preparation of the February 28 and March 7, 1994 Day One cigarettes and nicotine segments. JURISDICTION AND VENUE 9. This Court has j:urisdiction over this action pursuant to Va. Code § 8. O~-328.1(a) (4).. i0. Venue i.s proper in, this Court pu,rsuant to Va. Code § 8.01-2.6.2. NATURE OF THE ACTION ii. This is an action to redress the massive harm caused to plaintiffs by the knowingly and/or recklessly false and defamatory, statements made by defendants on the nationally televised maga.zine format news show "Day One" on, February 28 and March, 7, 1994 as well as on other ABC News programs. Announcing tha.t they had "uncovered" the tobacco indastry's "las~ best secret" "never before disclosed to consumers or the government", and asserting that their discoveries "could compl~etely cha~nge the tobacco ~nd~stry", defendants, ~hrough the ~se of sensationalized false and reckless allegatio~s, told vlewers across the ~ation, that tobacco companies, including Phililp Morris, are artifZcially "spiking" their cigarettes sold

in the United: States with extraneous nicotine for the purpose o.f keeping: smokers hooked. 12. Following this Day One b~oadcast, foreseeably, the national networks and ~!9~s ~ccepted as true Day One's supposed "revelation" that the tobacco industry "spikes" its cigarettes with extra n~co~ine, and repeated these cha;ges virt~ally daily. In what can only be described as a public ~renzy, reporters, the public, government regu,la.tors and Congressmen, "aston,ished" and "shocked" by Day One's "revelation", called for investigation and possible new regulation. Andl th__e___s~o~ 9~.pl@~D~i~ Phi~i~ Morris Companies and other companies having businesses engaged in ~he tobacco industry ~ell dramatically in reaction ~o Day One's charges and the regulators' reaction, thereto. But ~he frenzy whipped up by Day One is based~ on, a. totally false and ~efamatory premise made sp of whole cloth: that Philip Morris and other ~obacco companies intentionally add extra,aeous nicotine to the tobacco used in the c~garette manufa~ct~ring process in order to. keep smokers hooked. As set forth below, Phil~p Morris does no such thing and, upon infoz-mation and belief, neither do the other American, tobacce companies. ~

The Defaaatory. Day One Broadcasts 13. On February 28, 1994, ABC-TV aired the televi- sion program "-Day One" from 8:80 p.m. to 9:00 p.m. (ESTg. An- chor Forrest Sawyer opened the program with great fan,are., announcing: "Tonight, a Day One investigation that could change the tobacco industry forever". He went on-to say, "Cigarettes -- they'll hook you. fast and it is not just an accident of nature", a6cusing the cigarette companies of "artificially spik~ng: [their]l cigarettes with nicotine". H~ told the audience that for nearly, a year, Day One had been inves£igating nicotine, and that when. word of Day One's "investigation" got out, the "Food and Drug Administration announced that it ~s now considering whether to regulate cigarettes as drugs". Then, expose style, John Martin, the Day one reporter who led the nicotine "investigation", told the television audience that Day One. was about to reveal the tobacco industry's "last best secret" "never before disclosed". That "secret" turned out to be the false and defamatory claim - - k~owing~y and/or recklessly made by defendants -- that Philip Morris and: other ciga.ret~e manufacturers intent~onally spike their c~garettes w~th extra n,i~otine during the manufacturing -6- process to keep smokers hooked.

14. False and defamatory statements knowingly and/or recklesslly made or endorsed by defendants during the course of the February 28, 1994 Day One segment included the following: (a) A Day One ~nvestigat~on that oou~d change the tobacco industry ~orever. (b) ciqarettes -- they'l~ hook you fas~ and it is not just an, accident o~ nature. (c) Why are you. artificially spikinq you,r ciq~rettes with nicotine? (d) Now, a lengthy Day One bnvestigation has uncovered perhaps the tobacco industry's last best secret -- how it artificially adds n~cotine to ciqarettes to keep people smok~nq and boost profits .... The methods the cigarette companies use to control the me~hods of n~cotine is something that ~as never before been disclosed to consumers or the government. (e) Martin.: It was here in Winston-Salem NDrth Carol~na that the manufacturing: process began to change. The RJ Reynolds Tobacco Company p~oneered a two-step process to make cigarettes more cheaply and to control the leve~ of nicotine. Step one: it developed: reconstituted tobacco, wh~ch~ is made of stalks and stems and other waste that it used to throw away. • Even though reconstituted tobacco allows the companies to produce cigarettes more cheaply, there are problems -- poor taste and less ndcotine, so here's what the companies do in step two -- they apply a powerful tobacco extrac~ containinq nicotine and flavor to ~he reconstituted tobacco. This process, too,. is meant %o be secret. -7-

(:g) (J) (k) Martin.: . H~ told us how they make this concentrated extrac~ that is r~ch in nicotine. Ao Martin: Why would the tobacco companies use th~is nicotine rich syrup? Unidentified Former RJR Manager: They put nicotine in the form. of tobacco extract eo Ao into a~ product to keep the consumer Nappy. Martin: They're fort~fyinq the product witN nicotine. Is that correct? Unidentified Former RJR Manager: The waste-filler -- yes they are. Martin: Why are you addinq nicotine to your ci, qarettes? Martin: But how much nicotine is added? The compan~ies control the dosaqe preci.sely accordinq to th,is former ~TR manaqer. (.To manager) In commercially sold cigarettes, what percentage of tobacco extract is nicotine? Unidentified Former RJR Manager: That really depends on what level the process calls for. In other words, I can, say to you, I want it at one percent, I wan~ it at five percent, I want it at ten percent, I want it at fifty percent. Mart~n: ~t's this ability to control the exact dosaqe of nicotine wi, th tobacco extract that is so alarming to Dr. Grog Connelly, a Massachusetts health official. c~iff Douglas {American Cancer Society): Th___~e publZc doesn't know that the industry -8-

manipulates n~icotine, takes it out, puts it back in, uses it as if it were sugar beinq put in, candv. They don't have a clue. Martin.: Neither, apparently, do: members of Congress. (i)~ Martin~: There's another way nicotine is added to cigarettes. And it begins, perhaps surprisingly, at docks like this. one in Newark, New Jersey. It is here that nearly pure n.ico~ine is brought ashore to be combined with alcohol. ~t's cal~ed denaturing. The m~xture can then be applied to tobacco during the manufacturing prg~ess for, among other things, flavoring. As these truckinq records show, Philip Morris, fgr example, received thousands qf.qallons of this alcohol mixture durinq the 1980s. The cigarette makers say this m~xture Leaves only a tiny amount of nicotine on. the tobacco.. Still, any kind of nicotZne manipulation disturbs critics like Cliff Douglas, of the American Cancer Society. (m) Martin: Were you aware of that? Synar: No, I wasn't. They don't want anybody ~ooking a~ their product, an~ the reason is exactly what you just went through. So that they can doctor it, theY ~ alter it, they can do aaythinq with it, and they can literally j,eopardize the health of t~e American public without having any consequences. (,Emphasis added.) 15. ~n March 7., 1994, Day One again aired on ABC-TV from 8:00 p.m. to 9~:00, p.m. (EST). Anchor Forrest Sawyer, opened the show with the comment, "We begin, tonight with ou~ continuing inv~stigatiion inae cigarettes and what's inside ~ them". Fallse and defamatory statements knowingly and/or ~ -9-

recklessly made or endorsed by defendants during the course of ~he March 7, 1994 Day One segment included the following: (a) Last week, we brought you new evidence about [howl tobacco companies are manipulating nicotine in cigarettes to keep smokers smoking. (b) Martin.: Last week, Day One reported for the first time evidence that cigarette companies manipu.late levels of nicotine, a highly add~ictive drug, to keep people smoRinq. We found manufacturers add nicotine ~n carefully calibrated doses to. fortify the tobacco waste products they insert in cigarettes and to re- plenish n.icoti, ne lost in processing. (c) Cliff Douglas: [tllhe public doesn't know that the industry manipulates nicotine -- takes ~t out, puts it back in, uses it as if it were sugar being put into candy. They don.'t have a clue. (d), Martin: Day One has learned that £wo of those thirteen additives should have tipped off the qovernmen£ to the tobacco industry's manipu- lation of nicotine in cigarettes. Those two ingredients are tobacco extracts, which frequently is rich in nicetine, and n,i~ot~ne sulfate., or salt. (:Emphasis added. 16. These knowingly and/or recklessly false and defamatory statements o~ and concerning plaintiffs made during the February 28 and March 7, 1994 Day One broadcasts were in~ended to be understood to mean, and were understood to mean., thaz during the manufacturiing process Philip Morris and other c~ga~ette manufa.cturers spike their cigarettes by adding s~gnificant and extraneous nicotine to their product, and: that magnitude and seriousness of this offense was such that Day -10-

One's '"revelation" of its "secret" "could: ~hange the tobacco industry forever" by. bringing upom the industry draconian regulatory or congressional action. 17. Defendants' accusations thet Philip, Morris "spikes" its tobacco during the manu,facturing process is entirely false. Philip Morri, s does not d~ that a~d, upon informstion and belief, neither do the other American cigarette manufacturers. 18. As set forth above, Day One on its programs re~erred to the process involved ~n creating reconstituted tobacco, the adding of tobacco extract, and the use of denatured alcohol as supposedly being ~mplicated in the "spiking" of cigarettes with nicotine: (a.) The productiom of reconstituted tobacco -- This process, which ~as been used th.roughout the cigarette manufacturing industry since World War II, involves the. utilization of the stem, portion o~ the tobacco, leaf as we~l as small pieces of the leaf itself broken off during the ste~uming process ~ create tobacco sheets. (The stem portion of the tobacco lea~ contains far less nicotine than the leaf materia~ itself -- approximately __% as much.) In order to p~ess these tobacco materials into sheets, it is -11-

necessary, first to extract from the tobacco materials solubles, ~ncluding nicotine, which would otherwise interfere with the sheet-making process. Th~s is accomplished by adding large quantities of water in order to. dissolve these solubles and separate them from the stem and lea£ materials. The stem and leaf materials, are then pulped and, using standard paper-making process, mil~ed out as sheets. At this point the solub~es (less potassium nitrate which has been removed, and plu~ certain f~avors no__t containi, ng any nicotine which have been added) are recombined with the sheets. This process is an entirely closed one: no nicotine whatsoever not found ~n the original material is ~ntroduced in the production of the reconstituted tobacco sheets. I~deed, the reconstituted tobacco~ shee~s contain approximately __%. less nicotin~ ~han the stem and ~eaf fragments which are used in the process because substantia~l nicotine is lost in the process and is not replaced. Upon emerging from the presses, ~he s~eets are chopped into small pieces and tra~nsported to the cigarette manufacturing plant to be blended with natural tobacco leaves in the production of -12-

cigarettes. Because, as set forth above, stems naturally contain only approximately __% of the nicotine contained in the lea~ port,on of the tobacco plant, and because, as further set forth above, substantia~ nicotine is lost in the reconstitution process, reconstituted tobacco sheets contain far less nicotine than natural tobacco leaf and the use of such reconstituted' tobacco sheet in. the ultimate tobacco blend serves sign.ificantly to lower the nicotine content o6 cigarettes. And contrary to Day One's claim, no "powerfu~l 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 and~ widely written, abou~ in the literature, [including in the Surgeon General's Report in __]. (, b.) Tobacco extract -- During the course of the c~garette manufacturing process, a. number of ~lavors are sprayed: onto the cut tobacco -- which consists of a blend of predominantly nataral leaf with some reconstituted ~obacco mixed in. The particular flavors used are -13-

(c) 4istinc~ive for each cigarette brand. Prior to the end: of 1993, with ~espect to a single flomes~ic brand only -- Merit Ultra, a 10%4- nicotine brand contain.ing __ mg nicotine per cigarette -- one such flavor used by Philip Morris was tobacco extract. The addition of tobacco extract flavoring to Meri~ Ultras resulted in an infin.itesimal increase in the amount of nicotine otherwise nat~.rally in the tobacco. Tobacco extract is not "nicotine rich". To the contrary, it contains, only [2.5] pare per million of nicotine or less than 1/3,000 o£ a percent by weight of the toDacco blend (cigarette tobacco blends contain 2 to 3% nicotine by weight). Philip Morri, s no longer uses any tobacco, extract ~n any of its domestic brands. And as before, t~e fact that ciqerett~ compa.nies have used tobacco extract during the manufacturing process of cigarettes has long been a matter of public record; it is no secret at all. Denetured 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 manufact~[ing

process. Because pure alcohol is subject to stringent and cumbersome regulations by the Bureau of Alcohol, Tobacco and Firearms, Philip Morris ~and, upon information and belief, t~e other ~merican tobacco companies)i use alcohol which has beem d~natured w.ith minute amounts of nicotine to render it undrinkable. Such denatu.red alcohol ~s purchased by Philip. Morris from outside suppliers. The amount of nicotine contained in such denatured alcohol ~s minute -- on the order of i__l ~ per mill~on, or less than i/I,000 of a percent by weight of the tobacco blend. The flavors that are then dissolved in this denatured alcohol themselves contain n_Ro nicotine. The amount of additional nicotine ~hat resu~s from the spraying of the alcohol-dissolved flavors on the blended tobacco ~s again infinitesimal. A~d once again, there is nothing "secret" ~ere. It has long been a matter of public record that the Bureau of Alcohol, Tobacco and Firearms has approved t~e use of nicotine i,n denatured alcoho~ for this purpose, see 27 Code of Federal Regulations § 2'~.38, and indeed, alcohol denatured with nicotine is the only form, -15-

of denatured alcohol approved by the federal government ~or use in the manufacture o~ cigarettes. 19. Thus, except for the [minute] [tra~e] amounts of nicotine involved in the processes described in Paragraph 15(c) above, Philip Morris adds no n~cotine whatsoever ~n, the process of manufacturing cigarettes. Indeed, between the arriva.l ef tobacco at p~aint~ff's plants and its departure from the plant as packaged cigarettes, there is a very substantia~ los~s in the percentage of nicotine in the tobacco. ~n addition, ~pon in~ormatien an~ belief, no other A~erican tobacco company adds any extraneous n~icot~ne ~uring the manufacturing processes described above except for the [minute] [trace] amounts of nicotine as described above in paragraph 15(b). and ~5(c). By no. stretch o~ the imagination do these processes involve the "artificial spiking" o~ cigarettes w~th nicotine "to keep people smoking". 20. The false a:sd defamatory statements contained~ i~ Day One's broadcasts were made knowingly, recklessly, and with malice. Among other things, defendants first published, and then ~ep~blis~ed these de~ama~ory accusations ~otwithstanding having, been expressly advised by members, of the tobacco industry incllu~ing Phil, ip Morris, of their falsity. ' -16-

21. These false and defamatory statements were broadcast and publishedl in and into the Commonwealth of Virginia and throughout the United States on. the ABC Telev.~sion Network, inc~uding~ being broa4cast on [£he ABe-owned station in Raleigh-Durham~ North Carolina and] the ABC affiliates in Richmond, Virginia and the District of Columbia. Other ABC publications o.~ defamatory statements 22. On February 25, 1994~, on the ABC-TV program World News Tonight, [aired from 6:30 - 7:00 p.m~. (EST).,] anchor Peter Jenning~ previewed Day One's ~alse and: defamatory purperted expose and promised viewers "a good deal more" "this Monday evening". Jennings introduced John. Martin, the ~eatured reporter on the February 28 and March 7 Day One programs: Peter ~ennings: The U.S. government is considering a major frontal assault on the tobacco industry. ~he commissioner of the Food~ and ~rug A~m~inistration sa~d today that he is looking~ into whether cigarettes might be regulate4 as an addictive ~rug. Here is what's changed. There is now evidence that cigarette manufacturers carefully manipulate the nicotine conten~ of their product to assure each cigarette packs a certa~n punch. T~e evidence has been uncovered by John Martin, who's been investigating the story for the ABC news program Day One. John Martin: The i~nvestigation found that tobacco compan.ies are adding to cigarettes, waste products fortified with an extract that contains nicotine. As a resalt, the companies are able to. manipulate ~he nicotine levels in cigarettes. The Surgeon general has determined tha~ nicotine is a highly addictive drug. A former R.J. Reyno3ds manager, who requested. anonymity, exp.lained why the companies con~ro~ the amount of n.icotine in~ cigarettes.

R.J. Reynolds Manager (Unident~fied)~: They put nicotine in the form of tobacco extract, into the produc£ to keep the consumer happy. Martin: They're fortifying the product wi, th. nicotine, is that correct? RJR Manager: The waste filler: Yes, they are. (.Emphasis added.). 23. On Februa:ry 25, 1994~, on, the ABC-TV program "20/2'0", aired ~rom I0::00 - II:00 p.m,. (EST)., co-hos~ Hugh Downs i~troduced Forrest Sawyer, the host of Day One: Forrest Sawyer: You'll be surprised when you lea~rn wha.t tobacco companies are doing with. the nicotine in your ciga~rette. Representative Mike Synar (Democrat, Oklahoma): They can doctor it, they can alter it, and they can literally j~eopardize the health of the American public withou~ having any consequence. Forrest Sawyer: A "Day One" investigation Monday. Downs: '"Day One" Mondays at eight. (Emphasis added.) 24.. On February 28, 1994, the ABC-TV 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 prog:ram. Jennings introduced John Martin.: John Mart~n: The "Day One" investigation shews tobacco companies manipulate nicotine, strongly suggesting they want smokers to get the drug in controlled dDses. The FDA said Fr~da~ this may be just the evidence it needs to regulate cigarettes. On Wall Street today, four major tobacco company -18-

s~ocks a~l Lost value. RJ Reynolds and Philip Morris were the two most heavily traded stocks o~ all those bought and sold. (Emphasis added.) 25. On March 9, 1994, on the ABC-TV program "Nightline", hosted~ by Ted Koppel from 11:30 p.m. to 12:08 a.m. (EST), additiona~l false and: defamatory statements were made and endorsed by defendants as follows: ~a) Bury: An investiqation by the ABC News Broadcast Day One found that ciqarette compani, es carefully control the amount of nicotine in their ciqarettes, by addinq precise amounts of tobacco extract which contains nicotine. (b) Un.identified Former RJR Manager: They put nicotine in the ~orm of tobacco extract into a product to keep the consuger happy. (.c) cliff Douglas (~American Cancer Society): Th__~e public doesn't know that the industry manipulates nicotine -- it takes out, puts it back in, uses it as. if it were suqar beinq pu~ in candy. ~d) Ted Koppel: Our sister-program, Day One a couple days ago, did a report on the tobacco, industry and the revelation of that proqram -- and that is that you folks have actually been add~nq nicotine to the product, to the tobacco as a means of causinq people ~o become more add~icted to the product. (e) Matthew Myers ~Coalition on Smoking or Health): The recent ABC Da~ One ~eport revealed substantial new information, that, combimed wit~ FDA's own invest~qation, has brouqh£ the who}e issue into a new. focus. We now know that the tobacco industry consciously man,ipulates the level of nicotine in tobacco products to insure that they're addictive. (.f) Bury: The revelation that ciqarette companies manipulate the nicotine in their products has led FDA Commissioner Kessler to conclude t~at cigarette -19-

manu,fac~urers may in£ead that their products contain ni, cotine to saZisfy an addiction, on the part of some of their customers. (Emphasis added.) 26. The statements detailed ~n Paragraphs 22 through 25 were false and: 4efamatory; were of and concerning plaintiffs; were intended: to be understood to mean and were understood to mean tha~ during the manufacturing process. Philip Morris and other cigarette manufacturers spike their cigarettes by adding, signfficant and extraneous nicot£ne to their product, and that the magnitude and seriousness of this offense was such that Day One's "revelation" of its "secret" wou~d be "just the evidence [the FDA] needs to regulate cigarettes" and wou~id subject the ~ndustry to draconian regulatory or congressional action. 27. These false and defamatory statements were made ~nowi~g~y, recklessly and with me~ice. Among other th.ings, defendants published and republished t~ese statements notwithsta.mdiRg having been expressly advised by members of the tobacco industry, ~ncluding Philip Morris, of their falsity. 28. These false and defamatory statements were broadcast and pub~i~shed in and into the Commonwealth. ~f Virginia and throughout the United States on the ABC Television ~etwork, including being broadcast on, [~he ABC-owned station in -20~

~eigh-Durham, North Carolina and] the ABC affiliates in. ~ichmond:, Virginia and the District of Columbia. The March 17 ABC World News broadcast 29. On March 17, 1994~, J~ohn Ma~rtin appea.red: on: ABC World News This Morning, which aired at 5:45 a.m. (EST), discussing the FDA and the tobacco industry. During the broadcast, Mr. Martin stated: Commissioner Kessler told the sub-committee he cannot regulate cigarettes unless investigators prove tobacco companies purposely manipulate nicotine levels. BuG, sub-committee chairman Richard Du~bin said proo£ was at hand. He read a ~etter from Philip. Morris President William~ Campbell who said h~is company does not add nicotine but has actually lowered it more than 50% in the last 48: years. That %n ~tself, said Congressman Durb&n, shows cigarettes are not a so-called natural product and that the nicotine level in them can and has been manipulated. Representative Durbin, replied: I think the statement that Mr. Campbell is making in his defense, in fact, is enough, to: convict him. They have, with the tobacco and. their process, the ability to set the level of nicotine in. the cigarette. A~ter Representative Du.rbin's remark, Thalia Assuras, anchor, stated: Aske4 for comment by A.BC News, Fhil~p Morris had no immediate respense. (Emphasis added.): 30. Thils statement wa~s knowingly and recklessly false and defamatory. On.ly the previous afternoon, John. Martin had spoken with a representative of Philip Morris USA. At that

t~me Mr. Martin asked, among other things, for a reaction to statements made earlier ~n the day by Rep. Richard~ Durbin and FDA Commfssioner David Kessler relating to Ph,ilip Morris President W.~lliam Campbell's March 3, 1994, letter to Congress. The representative of Philip Morris responded~ to him on the record ~about the comments of both Congressman Durbin and Cemmissioner Kessler as well as to questions regarding nicotine levels in our cigarettes]. Nonetheless, ABC anchor Assuras, with Mr. Mar~in, s~tting by, claimed: exactly the opposite -- that Philip Morris, "w~en asked for comment", "had no immediate response" Th~s statemen~ was k~owingly and/or recklessly false and defamatory in, that i~ was in~ended to be understood, and was ~nderstood, to mean that Philip Morris ~S~ was not in a position ~o den~ Congressman Durbin's charges against it. 3.~. Thbs false a:nd defamatory statement was broadcast and published in and imto the Commonwealth oZ virginia and t~roughout the United States on the ~BC Television ~et~ork, including beisg broadcast on [the ABC-owned station in Ra.leig~-Durham, North Carolina] and~ the ABC affiliates ~n Richmond, V~rg~nia an~ the Distr~ct of Col~mb~a. -22-

The harm caused to p~aintiffs by defendants' ~alse and de@amatory statements 32. All of the defamatory statements specified in. Paragraphs 1 through 31 above were made and broadcast with ac- tual malice by defendants inasmuch as defendants knew of their 9a]sity or had a reckless disregard for their truth or fa~isity. As a direct a~nd proximate result of the publication of these knowingly and/or recklessly ~alse and defamatory s~a~ements, pla~intiffs ha~e suffered great harm to ~hei@ re~utations, trade '-and~ bus~ness. 33. A substantial portion of the population, inc~ud~ ing: the investment community, understood defendants' statements referring to "t~e tobacco companies", "cigarette manufactur- ers", or "Philip Morris" or the cigarette brands manufactured by plaintiff Philip Morris USA to be statements of and concern- ing Philip M~r~is Companies Inc. 34. A substantial portion of the population, includ- ing @0vernment regulators and members of Congress, understood defendants' statements referring to. the "tobacco companies", "cigarette manufacturers", "Philip Mo=ris" or the cigarette brands manufactured by Philip Morris USA to be statements of and~ concerning Philip Morris USA.. 35. Plaintiffs have suffered severe harm to their reputations, business and trade by virtue of defendants' false -23-

and defamatory statements. That harm is continuing. These defamatory statements (a,) as to plaintiff Philip Morris Companies Inc., have resulted in the stock of such plaintiff b' tall~ng sharply and have otherwise damaged p3aimtiff in the conduct of its trade or business, causing it i~jury in an amount not presently accurately ascertainable but believed to be not less than $2 b~llion. (, b ,) as to plaintiff Philip Morris USA, 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 ii ~n regulatory and congressional inqui.~ies, heightens, the prospect of regulatory or congressional action severely detrimental to plaintiff's business, heightens the prospect of ~assage by. Congress of major increases in ~obacco taxes severely detrimental to ,p~aintiff's business, will tend to spawn j/additional litigation against plaintiff, and have otherwise damaged plaintiff in the conduct of its ~rade and business -- all~ causing it -24-

injury in an amQunt not presently accurately ascertainable but bel~eve4 to be not less than $5 billion. fOUNT ONE - DEFAMATIQN 36. Pla~ntiffs repeat and reallege each and every allegation in paragraphs 1 through. 35 hereof. 37. 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 Para- graphs 13 and: 14 hereof of a~,d concerning plaintiffs, and en- gaged in the publication of those statements. 38. Such statements were made and endorsed by defen- dan,ts with knowledge of their falsity and/or reckless disregard for the truth amd have caused damage to plaintiffs as set forth above. 39. Defendants' conduct, as aforesaid:, constituted defamation as against plaintiffs. COUN~ TWO - DEFAMATION 40:. Flaintif£s repeat and reallege each and every a~legation iin paragraphs 1 through 39 hereof.

4~. DefendaNts, on the March 7., 1994 broadca:st of Day One,. made and endorsed false and defamatory statements as set forth a~bove in Paragraph 15 hereof of and concerning plaintiffs, and: engaged in the publication of those statements. 42. Such statements were made by defendants with knowledge of their falsity and/or reckless disregard for the truth and: have caused damage to plaintiffs as set forth above. 43. Defendants' conduct, as a~foresaid, constituted defamation a.s. against pla:~ntiffs. COUNT' THREE - DEFAMATION' 44. Plaintiffs repeat and rea~lege each and every allegation, in, paragraphs ~ through 43 hereof. 45. Defendants, on the February 25, 1994 broadcast o~t ~orZd News Tonight, made, caused to be made, and endersed false and defamatory statements as set forth above in Paragraph 22 hereof of and concerning plaintiffs, and engaged in the publlcation of those statements. 4.6. Such statements were made by defendants with. knowledge of their falsity and/or reckless disregard for the t~:th, and have caused ~amage to plaintiffs as set ~orth above. 4,7. De~endants" condu~t, as aforesaid, constituted defa~atio~ as against plai, ntiffs. -26-

COUNT FOUR - DEFAIV[ATION' 48. Plaintiffs repeat and reallege each and every allegation in paragraphs ~ through 47 hereof. 49. Defendants, on the February 25, 1994 broadcast of 20/20, made, caused to be made, and endorsed f~ise and defamatory statements as set ~orth above in, Paragraph 23 hereof o~ a~d concerning plaintiffs., and engaged in the publication of those statements. 50. Such statements were made by defendants with knowledge of their falsity and/or reckless disregard for the truth and have caused damage to plaintiffs as set forth above. 51. Defendants' conduct, as aforesaid:, constiltu~ed defamation as against plaintiffs. COUN~ FIVE - DEF;u~tA~ION 52. Plaintiffs repeat and reallege each and every allegation in paragraphs I through 51 hereof. 53. Defendants, on the February 28, 1994 broadcast of Worl~ News Tonight, made, caused to be made, and en4orsed false and defamatory statements as set ferth above in Paragraph 24 hereef of and concerning plaintiffs, and engaged in the pub~icatien o~ those statements. -27-

54. Such statements were made by defendants with knowledge of their falsity a~nd/or reckless disregard for the t;u,th and have caused d~mage to plaintiffs as set forth above. 55. Defendants' condUct, as aforesaid, constituted defamation as against plaintiffs. COUNT SIX - DEFAMATION 56. Plaintiffs repeat and reallege each and every allegation in paragraphs I through, 55 hereof. 57. Defendants, on the Marc~ 9, ~994~ broadcast of Nightline, made, caused ~o be made, and endorsed false and defamatory statements as set forth above in Paragraph 29 hereof of and concern.ing plaintiffs, and engaged in the publication Qf those statemen{s. 5s. Such statements were made by defendants with knowledge of their fa.lsi~y and/or reckless d~isregard: for the truth and have caused damage to plain,tiffs as set forth a~bove. 5.9. Defendants' conduct, as aforesaid, constituted defamation as against p~aintiffs.

COUNT SEVEN - DEFAMATION (as aqainst defendants ABC and John Martin) 60. Plaintiffs repeat and~ rea~lege each and every allegation in paragraphs i through 59 hereof. 61. On March 17, defendants ABC and John. Martin, on ABC World News, made, caused to be made and~ endorsed a knowingly-and/or recklessly false and defamatory statement as set forth above in Paragraph 29 hereof. 62. Such statement was made by such defendants with knowledge of t~eir falsity and/or reckless disregard for the truth. 63. Such Defendants' conduct, as aforesaid, constituted; defamation as against plaintiffs. COUNT EDGHT - PUNITIVE ~AMAGES 64. Plai, ntiffs repeat and reallege each and every al~eqatiion in paragraphs i through 63 hereof. 65. By virtue of their malicious conduct as afore- said, defendants are l~able for punitive damages. WHEREFORE, plaintiffs PhiLip Morris Companies Inc. and Phiilip Morris Incorporated demand judgment against defendants: -29-

III. IV. V. In favor of plaintiff Philip Morris Companies Inc. for compensatory damages in an, amount not less than $2 bil3ion; In favor of plaintiff Philip. Morris Incorporated for compensatory damages in an, amount not less than $5 b~l~ion: In favor o£ both plaintiffs, for punitive dam- ages in the amount o£ [ ] billion; For attorneys' fees and costs of suit; For such other relief as the Court may deem just and equitable. Dated: Richmond¢ Virginia March 24, 9994 HUNTON & WDLLIAMS By: Lewis T. Booker 0,~ Counsel: Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia 23219 Telephone: (304) 788-8200 Facsimile: (304) 788-8218 WACHTELL, klPTON, ROSEN & KATZ Herbert M. WacN~ell Norman Redlich Barbara Robbins Meir Feder 51 west 5.2nd Street New York, New York 10019 Telephone: (212) 403-1000 Facsimile: (212). 402-2080