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19 2 2005350 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

The Yifth Circuit Cour= of Appeals in New Orleans has just upheld a verdict in favor the The ~erican Tobacco Company in the Green lung cancer case. This S!.5 =if!ion sui~ was decided by a j~:~ 2, 1960. Co.-._-.ent on =he Appeals Cour'- opinion iR favor of the co.-_pan'.~.'.--s made b~' ~-.ul ..~..U.ahn, ~.'es!den~. of The A.-..e.-ican Tobacco Co.-...can?, as follows: lung canoe: case has been upheld by ~he Fifth CourT of Appeals. "This decision affirms the finding for the pany made by ~he firs= jury to consider and render a ve:dict in a lung cancer cas~ involv;ng smoking." ~n an opinion affirming the verd~c=, Judge Rives, speaking fc: the Appeals Court, said tobacco company "could no~ be held liable as an absolute insurer aga;ns~. . consequences of "~;-~-,.... no developed human skill and foresish~ could afford knowledge." One judge dissented. 2. !O-Ks and Annual Repo:'.s (1954-1952): 1970 10-K: Registrant and o~he: leading cigarette =anufac- turers have been sued by par~ies seeking daaages for cancer and other ailments claimed to have cesul=ed ~rom smokin~ cigarettes. A~ Ha:oh I$, 1971, a to~al o~ 82 such actions, ~2 of them involving Registrant, h~ve been disposed o~ without recovery by the plain- ti~s. Only seven such cases agalns~ manufacturers have come ~o t:!al and each resulted in a. jury verdict ~o¢ the de~endant or de~endanTs. At Ma:¢h 15, 1971, Regist:an~ was a defendant in 10 pending cases, wherein claimed damages range from exceeding $I0,000 to $8,500,000; Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

de~endan~ in the ochecs. Registcan~'$ counsel, ths~, in theic opinion, on ~he basis of ~heic lnves- cla~s o~ th~s chacacte~, Registrant has defenses to t~e a~ove*~en:ione~ actions-. The actions wil~ be vi~o:cuslF ~e~en~ed on the !97! 10-.~ : ae~s~:ant and ot~er leading cigaret~e ~anufac- tu:e:s have ~een sue~ ~ pac~ies seeMin~ damages cancer an~ other ailments clalae~ to have ~o~ s~o~!~g ciga:et~es. ~ ~a~ch 12~ Ig72~ ha~e hee~ dls~ose~ o~ v~mhout :ecovecF by the plaAn- :~s. On1~ 7 such cases against manu~actu~e=s have come.to t:ia! and each resulted in a ~y ~he-ein c~ai~ed damages ~ange ~o~ exceedin~ Pa:~e, ~hites~e ~ Wol~, have advised that, ~heir opinion, on the basis o~ the~: inves~iga=ions generall~ an~ wi:h respec~ to suits an~ claims o~ this cha:a:~er, ~e~is~cant has meritorious ~e~enses ~o ~he a~o~e-men:ioned actions. The actions will be vigorously de~en~ed on the me~i~s. ~e~ist:an~ and othe: lea~inq ciga:et~e =anu~ac- ~u:e~s have been sue~ b~ pa:ties seeming ~a=ages ~o~ cancer an~ othec aAl:en~s claiaed ~o have cesul~e~ ~:o~-snoking c~ga:ettes. ~t Hatch 20, 1973 a total o~ 95 such actions, 47 o~ them ~nvolving Registrant, have been disposed o~ ~i~hogt cecove=~ by the plain- ~i~s. Onl~ 8 such cases against manuEac=uce=s have cone to t:lal and each resulted in a ve=dic~ ~o¢ the de~en~an~ o~ ~e~en~an~s. At ~arch 20, 1973, Registran~ ~as the de~en~ant ~n 7 pen~ing cases, whe:ein claimed danages ~ange ~on exceeding $10,000 to $6,~00,000. ~egistrant's counsel, Chad~ou~ne, Parke, ~hites~de & Wolff, have a~vised that, in thei~ opinion, on the basis of rhea: investigations ~enecal!y an4 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et aL v. Philip Morris, et al.

wi~h ces?ec~ ~o sui:s and claims o~ ~his cSa~ac~ec, Regis~an~ has me:i~o:ious defenses to ~e above- men~ione~ actions. ~he actions will ~e vigocous!y de~ended on ~he me:its. ~eg£s=:a~= and other leading tobacco =anu~ac- have ~een s:ed by pac~es seeking damages cance: and ochec ai:l:encs cla~me~ to have ~e- sulmed ~o~,to~acco ~se. At Pebcuacy l, 1974, Re~is- t~an~ has d~s~osed oE S1 such actions, and the in~us~:~ a ~otal o~ 10!, a!1 wichou~ ~ecove~y by the plain~i~s. Onl~ 8 such cases a~a£ns~ ~anufac~ucecs have come ~o t~ial a~d eac~ cesu!~ed in a ~u~en~ ~oc ~he de~endan~ oc ~e~en~anms. ~m Pebcua=y I, 1~74, Re~s~an~ ~as ~he de~endan~ in 3 ~en~£ng cases, ~he~ein cla~me~ ~a~es ~A~ no~ excee~ SlO,IO0,O00 ~n ~he One such action vas c~ence~ ~.Hay 1966 Su~ceme Cou:~, S~a~e'o~ ~ev ~ock,~ Coun~M o~ ~t~ ~o~.~~ one was co~ence~ ~n Feb[ua~y 1970 ~n ~he Cou~ o~ Co~.~on Pleas, County of Philadelphia, ~he o~he~ was co~.~ence~ ~n ~ovembe~ 1970 Su~e=e Co'~:~, S~a~e of ~e~ Yo~, County of Albany. Reg.s~an~ s co~nse., Chad.ou~ne, ~a~ke, ~h~.es~de ~ wol~, have advised ~ha~ ~n ~heic opinAon, on mhe bas~s o~ mheA: ~nves~!qamions generally and ~h :espec= ~o suits and cla~s o~ ~h£s cha~ac~e:, Reg~s~:an= has me:i~o~ious defenses mo ~he a=cve- mentioned ac=~ons. The actions v~ll be vi~ocous!~ ~e~ended on ~he ;974 !0-~: Regis~:ant and othec leading tobeacco =anu~ac- cucers have been sued by pac~ies seeking ~a~ages foc cancec and o~hec ail=en~s claimed to have cesul~ed fcc~ ~obacco use. AC Febcuacy 10, 1975, ReglsCcanc has disposed o~ 51 such actions0 an~ the industcy a total o~ 104, all ,i~houc cecovecy by the plain:i~es. only $ such cases against manu~actucecs have come co" C~£a1 an~ each cesu!ce~ in a ~udgmenc de~endan~ oc de~endants. At Febcuac~ 10, 1975, • Regls~can~ ~as ~he ~e~endanc in 3 pending cases, -hecein claA~ed da=ages did noc exceed in the ag~cega~e. One suc~ action ~as com.~enced 2 0053 3 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

In Hay 19E6 in the Supreme Cou~t, State of Mew ¥O:k, County o~ ~e~ ~o:k; one was co~enced ~n February 1970 In the Court o~ Common Pleas, County of ~hila~elphia, EennsyZvania; the o~he~ was commence~ in ~ove~e~ 1970 in t~e Supreme Cou~t, S~ate o~ ~ew ¥o~k, County o~ ~l~any. Regist~ant's counseZ, Chadbou~ne, ?a~ke, ~hi~eside ~ ~o1~, have advise~ ~ha~, in ~hei~ oginion, on the basis o~ their lnvestleations generally and wit5 respec~ ~o suits an~ cla~]$ of t~ls characte:, Regis~ran~ has ~e:~o~ious defenses to ~he a~ove-=en- tioned ac~Lons. ~he archons ~11 =e v~o~ousl~ de~en~e~ on t~e me:~s. !)75 10-R: Reg;.s'_:an~. and o'.het leading tobacco .~anufac- ~ucets have ~.een sued by pa=~es seekin~ damages fo: cance: and ocher a~l=en~s cla~=e~ ~o have :e- sul~ed f:o~ ~obac~ use. A~ Ha~ch I, 1976 has disoosed of 51 such actions, and:¢h~ ~ndus¢:y Only eigh~ such cases a~ains~ ~anu~ac~ure~s have come to ~rial and each resul.e~ in a jud~men~ got de~endant o: ~efendan~s. A~ Ha:oh 1, 1976 Reg.s~.an, "was ~he de~en~an= in ~ou~ pen~in~ cases, wherein claime~ ~a~ages did no~ excee~ S~2,600,00~ in a~g~e~ate. One s~ch action was commenced tn May !96~.~. ~ ~n ~he S~p~e~e Cou~, S~a~e of Ne~ York, County cf New Yo:~; one was co~enced ~n ~eb~ua~y 1970 ~he Cou~ of Co~on pleas, County of P~lade!phia, Pennsylvania; one was co~enced ~n Novem~e~ 1970 in ~he Supreme Cou:t, S~a~s o~ New Yo~k, County of Albany; and the mos: ~ecen~ action ~as commenced in Dece~be~ !9~5 ~n the Ci~cui~ Cou~ o~ ~he of Richmond ~n V~:g~n~a. Re~s=:an~'s counsel, ChadbouEne, Parke, Whites~de & WoZff, have a~vised ~ha~, ~n. ~he~ opinion, on ~he ~asis of ~e~: inves- ~i~a:~ons gene~aliy and with :espec~ ~o su~s and cla~ms of ~h~s cha~ac~e:, Reg~s~:ant has de~enses ~o ~he above-mentioned actions. The actions ~i11 be v~go~ously ~efended on ~he 1977 10-g: Regis~cant and other leadln~ ~obacco manufacmumecs have been sued ~y pac~es see~An~ damages foc cance~ 252005354 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al~.

~obacco use. At ~a~¢~ 1, 1977, Regis~:an~ had dis- pose~ of 52 such ac:ions, and the ~ndus~y a o~ 105, all without recovery ~y ~he On!y e~t such cases a~ains~ ~an~fa¢~urecs have cone to tr~a! and each resulted in a ~uSgmen~ for the de~endan: or de~endants. A= Hatch 1, 1977, Registrant ~as the ~e~en~ant ~n three pen~ng cases, where~ c!a~ed ~a~a~es ~id no: excee~ $10,100,000 the a~grega~e. One suc~ action was co~ence~ ~n Hay 19S6 Ln ~he Supreme Coup=, S=a~e o~ ~e~ Yoc~, County o~ ~e~ York: one ~as co:.~ence~ ~n Yeb~uacy 1970 Ln Ln ~h~ S~re~e Co~r~, Sta~e o~ ~e~ ¥or~, Count~ ~l~an~. ~eg~s~ran~'s counsel, Chadbourne, ~h~tes~e & ~o!ff, have advised tha~, in o~nio~, on t~e basis o~ their investigations gene- ral1? and w~h respect ~o suL:s and claims o~ this c~at~c~e:, Re~s:rant has meritorious de~enses to thea.ove-...e...ione~~ - -" ac~i&ns~ ~he actions wild-be v~orousl~ de~ended on the 1977 10-K: ~e~istran: and othe~ lea~ing tobacco ~anufac- taters have been sued by pa:~ies seeking damages for cancer and other ailments claimed to have salted ~rom ~obac:o use. At March l, 1978, Registrant had disposed of 52 such actions, and the indust:y a total of 10?, all withou~ recovery by the only nine such cases a~ain3~ manufacturers have Regis:rant was ~he defendant in =hree pen~inq cases, wherein claime~ ~ages ~Id not excee~ in ~he a~gregate. One such action was co~ence~ in May 1966 in the Sup[eme Court, State of New York, County of New York; one was co~ence~ in 1970 in ~he Court o~ Common ~eas, County of ~hi!a- ~el~hia, Pennsylvania; an~ one was co.~mence~ in No~ember 1970 in the Supreme Court, State of New York, County of Albany. In addition, in October .1977 an action in trespass and assumpsit was co~ence~ in the Court of Co~on Pleas, County o~ Allegheny, Pennsylvania, against Registrant and another tobacco manufacturer. There is no 252005355 : Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

statement of the nature of the action, nor any state- ment of the damages claimed, but it is believed thac ~laintiff may be seeking damages £or ailments claimed to have resulted fro= tobacco use. Regis- trant's counsel, Chadboucne, Pac~e, Whiteside wolff, have advised that, in their opinion, on the basis of their investigatlo~s generally an~ wit~ respect to suits and claims of this character, Regis- trant has meritorious defenses to the above-mentioned at:ions. T~e actions will be visorously ~efen~ed on the 1973 Regis=:an= and other leading tobacco manufac~ tutors have be~n sued by parties seekin~ damages for cancer and other ailments c!aime~ to have suited from tobacco use. At Match I, 1979, ~egis- tran: had disposed of 53 such actions, and the industry a total Of 109, all without recoveryby the plaintiffs. Only nine such cases against manu- facturers have come to trial and each resulted in a judgment for the defendant or defendants. At March i, 1979, ~egis=:ant was the defendant in six pending cases, wherein claimed damages did not exceed $13,275,000 in the aggregate. In the most recent case, filed in November 1978, Registrant has been joined as a de~endant with members of the asbestos industry and it is alleged that the combination of smoking and exposure to asSestos produced lung disease, including cancer. Registran~'s counsel, Chadbourne, Pa:ke, Whiteside & wolff, have advise~ that, in thei: opinion, on the 5asis of their inves- tigations generally and with :esCort to suits and claims of this character, Registrant has meritorious defenses to the above-mentioned actions. The actions will be Vigorously defended on the merits. 1979 10-K: -~ Registrant and other leading tobacco turers have been sued by parties seeking damages cancer and other ailments claimed to have resulted from tobacco use. At March 15, 1980, ~egist:ant had disposed of 57 such actions, and the a total of ll~, all without recovery by the plain- ZSZOO5366 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders In State of Minnesota, et al. v. Philip Morris, et al.

tiffs. Only nine such cases against manufacturers have come to trio! and each resulted in a judgment for the defendant or defendants. At Hatch 15, 1980, Registrant was the defendant tn five pending cases, wherein claimed damages did not exceed $11,075,000 in the aggregate. In two pending cases, Registrant has been joined as a defendant with members of the asbestos indust:~ and it ~s alleged ~ha~ ~he com- bination o~ s~o~i~g and exposure ~o asbestos lung d£sease, including cancer. Re~istrant's Chadbourne, ~a:~e, Whiteside ~ Wolff, have advised that, in their opin£on, on the basis of the£r [nves- tigat~ons ~enera~ly and ~th respect to suits and c~a~s o~ th~s character, ~eg~st:ant has defenses ~o t~e a~ove-~entioned actions. The uill be v~oco~s~l de~ended on the Reg~st:ant and othe= leading tobacco manufac- turers have been sued by parties seeking damages for cancer and other ailments claimed to have resulted from tobacco use. At ~arch 30, 1981, Regist:ant had disposed of 57 such actions, and the industry a total of liB, all without recovery by the plaintiffs. Only nine such cases against manufacturers have come to trial and each resulted in a judgment for the or defendants. At Match 30, 19Bl, Registrant was the de,enfant in six pending cases. In two such cases, ~egistran: has been joined as a defendant with me:be:s of the asbestos industry and it is alleged that the combination of smoking and exposure to asbestos pro- duced lung disease, including cancer. Registrant and other leading tobacco manufacturers have been n~:ed as cross-de~endants in Ii cases by one asbestos manu- facturer, in two cases by another asbestos manufacturer and in one case by a thir~ asbestos manufacturer, who have been sue4 for cancer and other ailments claime~ tO have resulted from exposure to asbestos. Each as- bestos manufacturer seeks an unspecified amount in Inde...-nity from the thi=d-party defendants for the amount of the asbestos manufacturer's liability to plaintiff in excess of its percentage of fault. ~egistrant's counsel, Chadbourne, ~arke, Whiteside & Wolff, have advised that, in their opinion, the s~eci~ied damages claimed in pending actions, which approximate $!!2,585,000 in the aggregate, are exam- Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

gerated and £nclude a clai~ for $i00,000,000 punitive ~a~a~es wh~c~ ~s ~ossly ~eg~strant's counsel also have adv~se~ that, in the~ o~nion, on the bas~s of thei~ investigations ~ene~ally and w~th respect to su~ts and claims ~is cha~ac=er, ~eg~s~:ant has ~erltorious defenses [sic.] 1981 i0-~: Regis::an~ and ocher leading tobacco manufac- turers have ~een sued by parties see~ing damages foc cancer and other a~!~en~s c!a~ed to have resulted f~c~ tobacco use. A~ ~a:ch I~, 1982, Registrant had disposed of 59 such actions, a~ the ~ndust~y a :oral of 120, all without recovery by the plain- tiffs. Onl'! ~i~e su=h cases a~aLnst manufacturers have co=e to trial and each ~esulted in a judgmen= for the defendant or defendants. At Ma~ch 19, 19~2, Registrant was a defendant or third-party ~efendant in six pending cases. In one such case, Re, is:rant has been joined as a defendant with anothe~ tobacco manufacturer and members of the asbestos industry, and it is a!~eged that the com~ination of smoking and exposu=e to asbestos p~oduced lung disease, including ca:ce~. Regis:rant and other leading tobacco manufac:urers are named as cross-defendants in nine cases by one asbestos manufacturer who has been sued fo~ canoe= and othe= ailments claimed to have resulted from exposure to asbestos. On May Ii, 1981, the court severed and ~ismissed without 9~ejudice eight of these nine c~oss-conplaints, as well as abou: 150 si3ilar cross-complaints agains= Registrant and others, inc!udin~ the other leading tobacco manufac:ucecs, which had been filed by anothe~ asbestos manufacturer but never serve~. ~oth asbestos manufacturers have appealed. Each asbestos manufacturer seeks an unspecifie~ amount in indemnity f~oa the third-~arty defendants for the amount of the asbestos manufacturer's liability to plaintiff in excess of its percentage of fault. In 29 comparable third-gaff7 actions, Registrant an~ the industry have disposed of eight, and the third-~arty asbestos ~laintiff has moved for dis- missal without prejudice £n 21, all without ~ecove=y by the third-~a~ty asbestos plaintiffs. Registrant's counsel, Chadbcurne, Pa~e, whiteside & Wolff, hav~ Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.

claimed ~n pend~n~ actions, which appcoxi~a~e $119,58S,000 ~n t~e aggregate, ace exag~eca~ed and ~nclude a clai~ foc $100,000,000 £n ~uni=ive damages which is ~cossly exaggerated. Regist~ant's counsel also have advised that, in theic opinion, on the bas~s oF the~ investigations ~ene:ally and with respect to suits and claims of th~s character, aegis~r~nt has meritorious defenses to the above- mentioned at:ions. The actions w~l be v~orous~y defen~ed on the medics. Registrant and other lead~n~ tobacco manufac~ ture:s have been sued by parties seeking damages ~o~ cancer and other ailments claimed to have resulted ~rom tobacco use and b~ three asbestos manufacturers seeking unspecified &mounts ~n Indemnit~ o~ contribu- tion in thi~d- o: fourth-patty actions against all ~he ma~o: domestic tobacco manufacturers. &~ Ha~ch 1~, 1~83, Registrant had disposed of 103 actions, and ~he industry a tota~ of 1~2, all w~thout recover~ p~aintif~s, gine cases have come to t~ial, all against manufacturers as direct defendants, and each cesulted in a jud~men~ for the defendant or defendants. A~ Match 16, 1983, Registrant was a defendan~ in eight pending cases. $~ one case, Registrant has been joined as a defendant with another tobacco manufac- turer and membecs of the asbestos ~ndustEy, and i~ is a!lege~ that the comoination of smoking and exposure ~o a~estos produced lung disease, ~ncludi~g cance~. Re~istEant's counsel, Chadbou~ne, Packe, Whites~de & Wolff, have advised that, £~ their opinion, the specif£ed d~ma~es claimed in pend£ng actions, which app~oxlmate $107,535,000 in the aggregate, ace exaggerated an~ IncSude a c~a~m for $i00,000,000 in punitive damages which is ~rossl~ exaggerated. Reg~stran~'s counsel also have advised that, in their opinion, on the basis of ~heir ~nves~igations ge~e.rally and with respect to su~ts and claims of this character, Registrant has meEitorious defenses co the above-mentioned actions. The actioos w~ll be vigorously defended on the merits. 282OO5389 Subject to Claims of Privilege and Confidentiality: Produced Pursuant to Court Orders in State of Minnesota, et al. v. Philip Morris, et al.