Tobacco Products Liability Project
[Memorandum: "B&W's Public Issue Environment"]
Abstract
Outlines the public issue environment over the coming 3 to 5 years. Of the current 32 pending tobacco cases of which 7 are against B&W, some are expected to go to trial and depending on their outcome to more litigation. B&W will strongly litigate each case. The BAT group has to mainitain its independence so as not to be brought into cases by plaintiffs' counsels. More restrictions and taxes are to be expected at both the federal and local governemntal levels, and the Congress may abolish the tobacco price suport program. Members of Congress may also make public disclosures made by the industry under the Comprehensive Education Act of 1984. B&W fac es a significant risk of financial loss in litigation and governmental restrictions. Marketing propositions offering benefits will in the long term pose risk for business as industry adversaries will be hostile to such claims. B&W documents during the planning period will be obtained by plaintiffs' lawyers and leaked to press. The litigation by Philip Morris is moving to trial and expected to lead to settlement.
Fields
- Type
- Memorandum
- Copied
- Pepples, Ernest, J.D. (BW General Counsel and Sr. VP)
- Sachs, Robert H. (B&W Former Asst Gen. Counsel)Robert H. Sachs is former Assistant General Counsel for Brown & Williamson. (PMI's Introduction to Privilege Log and Glossary of Names, Estate of Burl Butler v. PMI, et al, April 19, 1996)
- Named Organization
- *British American Tobacco PLC London (Parent of Brown & Williamson Tobacco Co. in the U.S.)
- *Health and Human Services (HHS) (use United States Department of Health and Hum (US)
- Philip Morris & Co. Ltd. (Cigarette manufacturer, incorporated in U.S. in 1902)Philip Morris & Co. Ltd.., was incorporated in New York in April of 1902; half the shares were held by the parent company in London, and the balance by its U.S. distributor and his American associate. Its overall sales in 1903, its first full year of U.S. operation, were a modest seven million cigarettes. Among the brand offered, besides Philip Morris, were Blues, Cambridge, Derby, and a ladies favorite name for the London street where the home companies factory was located - Marlborough.
- Author (Organization)
- Brown & Williamson Tobacco Corporation (B&W)Subsidiary of BAT U.S., located in Louisville, KY.
- BATUS Inc. (Parent of B&W)BATUS Inc. is a subsidiary of B.A.T. Industries P.L.C. It is the parent corporation of Brown & Williamson Tobacco Corporation in Louisville, KY.
- Author
- Wells, John Kendrick, III (BW, Assistant General Counsel)In a 1/17/85 memo, BWT corporate counsel J. Kendrick Wells said he had advised Earl Kornhorst, BWT's VP for research, development and engineering, on the need to prune scientific reports from his files. Wells marked certain reports with an X to designate those that were "deadwood in the behavioral and biological studies area". The Janus studies--secret program of biological research on the effects of smoking which showed tumor growth in animals--should be treated as "deadwood". These documents should be segregated, boxed and put in the basement for possible shipment to BAT Industries in England, but no one "should make any notes, memos or lists of the documents" (LAT 8/2/94).
- Date Loaded
- 08 Jan 2003
- Recipient
- Olges, TrinaDefense
Document Images
DOC 433
M~O R. AND~M
TO:
ROM:
.qTE:
Tr£na O1ges
J. Kendrick Wells,
Corporate Counse~
July 22, 1985
Ecnie asked me Co gave you the attached "B&W's Public Issue
Environment.-
Attachment
cc: E. Pepp~es
R.H. Sachs
J. K. W.
UCSF11658
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Subject to Claims of Privilege and Confidentiality:
Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.
B&w'S PUBLIC ISSUE ENVIRONMENT
RESTRICTED
This paper will 01scuss toe O~ooaole 8&w puol/c issue
environment over t~e next t~ee to five years anO ~mp~cstions
manufacturers (7 against 8aw) ~nicn cla£m oamages against the
manufacturers as compensation for personal injuries ~hicn ~he
~laln~lrrs allege were cause~ by ~elr own cigarette smowlng.
One of the cases incluOes a claim ~a~ ~he clgaze~e smoke of
ot~e~s in the air contriouteO to the smoker's injury.
The lavsuits lncluOe allegations that the manufacturers Old not
Olsclose t~el¢ O£ological an~ "safe~" pro~uc~ research to the
puolic; thaC cigarette a0vertislng con~a£ns safety assurances
in ~he rolm of exgllci~ statements aria ~ctorial
representations; an~ ~at cigarettes are a~Olctive.
Any of six cases (none involving 8~W) could be tried during the
fall or winte~ of 19851198~ Ou~ it is likely that none or the
cases -111 reach ~rial 0afore early 198S. Several cases rill
~e trieO in 1986. The numoe~ of cases ~ill increase
lnc~ementa11~ until t~e results of t~e first ray ~r/als are
known.
We oelieve BAW and the other manuracture=s can v/n each smoking
be ~=ieO, t~e cu¢:en~ pZain~lrrs' lawyers a~e SK/ZZ~Ul, changes
In ~o:¢ lay such as compa=a~Lve fault verdicts lean tova:o the
¢lalntlrfs, and In litigation t~e:e Is alva,s a se:lous
cigare~e manufactu~e~ In a smoking anO health dase ~ould oe an
ominous, highly puOlicized ~evelo~men¢ Ino wouZO somevha¢
1no,ease the p¢ooao*ll¢¢es o~ ease cases anO mo~e losses.
HOwever, assuming ~ha¢ one case goes aga/ns~ a manufactu~e~,
~he forecast of suosequen¢ events would include s~l~lngly
OIrre¢en¢ scenar/os. The gossloLl*Cles range ream lay 4ollar
amounC veroLcCs Ln a small gercencage or ~he" cases ~¢*ed
leading Co perhaps 100 cases naClon~/oe ~o, on C~e ocher ~anO,
or roe rl=s¢ ~ound or cases leaolng ~o ~housanOs of active
cases (the Su¢geon General claims that c,ga¢ertes cause )~0,000
excess ~earhs per yea=).
8Sw rill continue the strategy of intensive litigation or eac~
case vL~h ~be ooJec[lve of exploLElng eac~ case's favoraole
rac~o~s an4 a policy of no payments ~o plaintiffs In se~tlemen~
or cases. Zn the event =anura~urers expe~lence losses Zn t~e
uCSF11659
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Subject to Claims of Privilege and Confidentiality:
Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.
-2-
smoking and hea~th cases, the selectlon oF contingency strategy
would aeoena uOon the sco~e or the losses. Outing the 01annln~
~et~oa the most atttact£ve strategy Oro~aoly ~ZIZ de to
continue Intensive l£t£gatlon oF the cases ~Lth no settlement
~ayments ana tne acceptance or losses as charges against
£ncome. The current £nsu~ance coverage or $1,000,000 would
au£ck~y oe aosotoea and the a~o~tlon nov oF Internal Financial
s~uctu~es to ru~a losses couZa de • negative £nF1uence on
Juries. Such structures s~oul= ~e re-evaluated IF losses
occur. A possible contingent strategy or settlement also
should De ~eassessea on an o~ortun/st&c oasis. Pressure v£11
develo~ in the Congress rot superFuna leg*slatlon a0~l*caole to
smoking and health lawsu£ts'lr large scale ~la*ntLFF v~ctor*es
occur; such a tuna wouZd de Financed by contt£~utl=ns From
cigarette manufacturers amounting to a large ~e~centage or
The 8AT G~ouD MUSt preserve the Independent corporate status or
8&w. A smoking an~ healt~ ~lalnt£tr could Orang 8~'s ~arent
o~ ~arents into a case t~ the 9a~ent exercised such cont~oZ
ove~ 8~W as wouZd support a pZalnt~rr,s a~gument tha~
not an lnoeoenaent ousiness entity. 8~w's net assets should
not ~e =educea ~elov a level commensurate vltn 8&~'s operations'
as an Independent ent£ty. $*m*Za=ly any suostantlal
o~ a£1ut,on or pension ~lan assets, or
assets, wouZo Invite a cou~t to pierce the 8~ corporate entlty
and hol~ BATU$ o~ even 8AT ~es~ons£OZe
AZso, 8ATUS' o~ BAT's deta*ZeO O£=ect*on or 8~#'s marketing
plans coula leaa a cou~t to the same ~esult.
Other PuOIIc Zssues
A sk~ZZrully o~chest~eted coaZit£on or ant£-smo~ln9 g=ou9s,
Congress£onal act£v~sts and reaeraZ agenc£es, como~ned with a
gene~aZZy ~ost£1e meo£a, w111 press the reoe~aZ gove~nmen~ to
pZace a~a/tLonaZ =est~Lct£ons on cigarette advertising.
P~o~osals v111 lncZuOe a oan on ciga~e~ts p~,nt and outOoo~
advertising, eZ£mZnit~on of human moOeZs, mandatory copy on the
state and ZocaZ leg£sla~£on on cigarette packaging and
aave:tlsLn9. The maJo: theme or the p~otagOnis~s ~111 oe that
c£gs~e~e ma~ke~/n9 uses yout~ apceaZ aria health assurances ~o
at~ac~ teenage~s~ vhO oecome aoo£c~ed.
A comu£natLon or revenue need and antZ-smokLng motivation v111
~oduce Intense pressure ro~ lnc~ease~ c,gazette taxon/on st
al1 levels or government. The federal exc£se ~ate ~Lll ~eeain
1~ pe~ ~ackage af~e~ 0ctobet, 1~85 and ~he Congress ptooaoly
~111 /no,ease the excLse 0y 8~dltlonaZ 8 tO 10~ ~uz/n9 the
pZannlng ge~oa. There =tlI de strong ptessuce in the
UCSF11660
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Subject to Claims of Privilege and Confidentiality:
Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.
-3-
a domino eFrec~ .ould follow among ot~er s~a~es.
La=ge numbers of local governments ~111 aOoo~ smoking
~estrlctlons *h£cn reauire segregation OF smokers In indoor
a~eas ~th Ouol~c access ana government oFF~ce au~Za~ngs.
suOstan~aZ numoer oF restr£ct~ons ~ZZ ~DOZy to oFF£ce areas
and a gro~£ng numoe¢ ~lZZ aDDZy tO Factories. A minority
t~e res~=ictions ,£11 virtually D~onioi~ SmOk~ng~ v~n the
severity aria lncloence or ~est~*ct*ons varying Oy geogra~nLtal
~eglon. The t~end or ~£vate Ous*nesses ~o adopt smok*nQ
rest~lctlons.anO cessa~*on.~og~ams For emOloyees
accelerate. The Federal gove~nmen~ v111 a~opt ~lgh~ smoking
~estr,ctlons For its offices. The Insurance in=usUry
O~oaaen the a~llcatlon oF nonsmoke~ discounts, vhLcn
a~ea~ as a feature OF health ca~e ~lans. Few smokers
complain aOout these events and the ~ess ~lll continue
puollsn assessments tha~ smoking restrictions ate seen
pa~tles concerned as working veil.
Congressmen concerned "aoout oudgeta=y ~est~aint and
an~l-smok*n9 Interests vho v£sn ~o eZ£mLna~e all government
sanction or tooacco nave comoine~ and have developed solid
su~o~t For elimination oF toe ~ooscco ~=ice sug~ort 9~ogram.
Ir toe ~=og~am is no~ amender, i~ Faces =e~ectlon oy.~he
gcovers. Zr the ~cog~am Ls elim£na~ed, the a~vante;~ Fo~ U.$.
manufacturers In t~e Fore oF 1ove= cost U.S. leaf coulU oe
offset ~y legislation cest~£ct/ng lmpo~ts. The ma~o~
consequence to t~e industry vouZd Oe Cha~ ~oOaccO g~ovlng could
~ecome only ma~ginalZy p=otitaOZe and ca~aOle of supporting
~ewe~ g~ovecs, ~esuZ~/ng Ln a ru=Che~ e¢osion and splintering
or the ~oZit£caZ sC~eng~ oF t~e toOacco constituency in the
Cong=eSSo
~ues~Lon of fire-saFe cigarettes unoe~ 1S84 legislation v111
p~oduce s~a~emen~s and ~esearch vhich iS C~£tlCai Or the
cigarette eanufactu¢e¢s. The g~oups may conclude that while
the technology is no~ avalZaole to ptoOuce
~111 not Ignite any futnltu~e, means exls~ ¢o p¢oouce
c£ga~e¢¢es ,~lch show a teOuceO lgnl¢lon ~otenClal on ce¢¢aln
fu~nttute. The g¢oups vlll ~e~o~t FotmalZy to the Congress In
1987 and, ¢ega¢OZess of
Otessute Ln the Congtess to requite specific oeslgn
moaLt£ca¢lons rot a11 clga¢ettes even thoug~ the tequl~eeents
voula no~ solve
The manuractu=e~s v111 follow the mandate or the Co~p=ehens*ve
Smoking EOucatlon Act oF 1984 and-proviOe llsts or |11 chemical
suOstances a~oed to tooacco and cigarettes to HH5 in Octooe~,
UCSF11661
282002?92
Subject to Claims of Privilege and Confidentiality:
Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.
1085. Hemoers of Congress unrr£en0Zy to ~.ne ln~us~y -~11 soon
as~ ro~ ~e 11s~s ana alsclose ~e~ ~o ~e
Ant~-smo~ng g~ouos ~111 charge that severa~ suostances on the
list Increase the health Oange~s or c~ga~ette smoking.
The
~esu1~ -LI1 be D~essu~e rot government res~rLc~*ons on
c~9a~e~a aoe1~lves ana lnc~easea sensL~lv~y or ~ne c*9a~e~e
aes~gn ~ssue ~n. smo~ln9 •no ~ea~ O~oouc~s
1l~lga~lon.
ZmoZ~cat~ons For Strategy
Over the I=lannlng OerLoo, S6~ races a slgn*rLcant risk
flnanciaZ loss *n Zi~lga~Lo~ •no gove~nmen~ imOos~lon
~es~lc~ions on *~s Ous~ness. Anal-smoking leaoe~s among
OrLva~e g~ouos and eZec~eo oFFicials and
continue a~acks on ~e ~ssues or causation, social cost,
aave~ls~ng ~o you~, suooresslon or neaZtn ~nro~mat~on,
aOO~c~lon, aria o~he~ issues.
AOve~sa~es ~11 oe hostile ~o,a~O any claim or Oener~tS rot
cigarettes. Conseouently, marketing ~o~osit$ons ~h~cn
"~enerl~" In Ouolic Issues a~eas are likely
~un oayorr aria ~11 entail Zong ~e~m ~sks ro~ ~ne ousZness as
a consequence or cont=lOu~n9 ~o antl-tooacco actions.
examole, ~ne marketing or 1o~ "sLoe stream
"seZr-extingulsnlng" cigarettes ~111 only =elnrorce t~e cna~ge
~a~ cigarettes a~e socially unacceptable.
B6~ mus~ assume t~a~ Its documents, existing
t~e 91annlng De~lod, =efe~lng to ma~ketlng o~ smoking and
~eal~n ~!~1 oe oOta~ned Oy plaintiffs~ lawyers
Hacon ~xoanded ToOacco
Ln ~he year oe~o£o trLal, out ~e cannot greOlct nov whether •
continue to use the HET p~cess to proouce e-xpanOeO ~ooacco aria
~111 lnvoZve • significant cost to 8~ ~hlch say excee4 ~he
curtent $1,500,000 tesezve against payment or ~oyaltles.
UCSF11662
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Subject to Claims of Privilege and Confidentiality:
Produced Pursuant to Court Orders in State of Minnesota, et ah v. Philip Morris, et al.
