Tobacco firms liable for 'hiding dangers of smoking'

WASHINGTON - A US federal judge has ruled that cigarette makers are liable for a decades-long conspiracy to hide the dangers of smoking.

But the judge declined to impose major monetary penalties on tobacco companies, such as funding a large anti-smoking campaign, as the government had sought.

US District Judge Gladys Kessler found that the government had proved its case that accused cigarette makers of a conspiracy to hide the dangers.

But Kessler said a previous ruling by an appeals court prevented her from slapping the companies with monetary penalties.

"Cigarette smoking causes disease, suffering, and death. Despite internal recognition of this fact, defendants have publicly denied, distorted, and minimised the hazards of smoking for decades," she said in the 1,653-page opinion.

She ordered the companies to make corrective statements about the health effects and addictiveness of smoking, and banned them from using terms describing cigarettes in ways that convey health claims.

Targeted in the 1999 lawsuit were Altria Group Inc. and its Philip Morris USA unit; Loews Corp.'s Lorillard Tobacco unit, which has a tracking stock, Carolina Group; Vector Group Ltd.'s Liggett Group; Reynolds American Inc.'s R.J.

Reynolds Tobacco unit and British American Tobacco unit British American Tobacco Investments Ltd.

Several tobacco stocks rose in extended trading after the ruling came out. "Although they lost, they won. It's a victory for the tobacco companies," said Tim Ghriskey, chief investment officer at Solaris Asset Management.

The ruling was seen as the last major hurdle to be cleared before Altria decides when it will spin off its Kraft Foods Inc. business.

During an eight-month trial that ended in June 2005, the government called scientists, economists and tobacco industry whistle-blowers who described a decades-long campaign by tobacco companies to deny or obscure the hazards of smoking - even as its ill effects became increasingly clear.

Tobacco companies offered testimony from their own scientists, economists and company executives. They denied any conspiracy to promote smoking and said the government had no grounds to pursue them after they drastically overhauled marketing practices as part of a 1998 states' settlement.

Kessler ordered each company to post on its website all documents it submitted to prosecutors in the case and transcripts of letters and depositions of former employees about the health impacts of cigarette smoking or research. The material must remain on their websites until 2016.

In February 2005, the US Court of Appeals for the District of Columbia Circuit barred the government from seeking US$280 billion in past industry profits, depriving the government of its biggest potential weapon in the case.

The appeals court said civil racketeering remedies must focus on the prevention of future misconduct, not punishment of past misdeeds.

Lawyers for the Justice Department eventually asked the judge to require tobacco companies to fund a 10-year, US$14 billion anti-smoking program if the government prevails.

But tobacco company lawyers argued proposals such as requiring their clients to finance a stop-smoking program were still beyond the bounds of the appeals court ruling.

- REUTERS

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