Widow's $27b win rattles tobacco bosses

By Peter Huck

Jury did not like industry's predatory marketing which US Cancer Society says has caused huge loss of life

A Florida jury has slammed R.J. Reynolds Tobacco Co. Photo / AP
A Florida jury has slammed R.J. Reynolds Tobacco Co. Photo / AP

Even by the standards of American court payouts the US$23.6 billion ($27.5 billion) jury award to Cynthia Robinson, the widow of a long-term smoker, is a jaw-dropping sum.

Robinson filed suit in Florida in 2008 alleging R.J. Reynolds, America's second-biggest cigarette firm, deliberately hid the addictive nature and health risks posed by its products from her late husband, Michael Johnson.

Reynolds, which makes Camel, Pall Mall, Kool, Winston and other brands, vowed to appeal against what it calls a "runaway" verdict.

"The damages awarded are grossly excessive and impermissible under state and constitutional law," said Jeff Raborn, vice-president and assistant general counsel for Reynolds. He said the verdict went "far beyond the realm of reasonableness and fairness" and was confident it "will not be allowed to stand".

Naturally, the victors saw things differently. "The jury was outraged with the concealment and the conspiracy to conceal that smoking was not only addictive but that there were deadly chemicals in cigarettes," Christopher Chestnut, one of Robinson's legal team, told the New York Times.

And Chris Hansen, president of the American Cancer Society Cancer Action Network, said the judgment showed "jurors, much like the public itself, did not think the tobacco industry has paid its share for its unconscionable record of public deception, fraud and predatory marketing that has resulted in massive loss of life".

The verdict is the largest single award dating from a US$145 billion class action verdict against Big Tobacco, rejected by Florida's Supreme Court in 2006. But that ruling came with a caveat which has been a boon for litigants. The court accepted that smoking caused disease and tobacco firms were negligent. If plaintiffs can prove addiction and that smoking led to death or sickness, they have a case.

Although Robinson's payout may be reduced on appeal, her win could signal death by a thousand cuts for Big Tobacco. Johnson, a hotel shuttle bus driver, began smoking at 13 and was a chain smoker, repeatedly failing to give up. He died in 1996, aged 36, leaving two children, one of 20 million Americans to succumb in the past half-century, according to the Cancer Society. Despite a 1964 warning by the US Surgeon-General that smoking causes lung cancer, the tobacco industry proved invulnerable against litigants, insisting smoking and cancer were not linked.

In fact, its own research proved the opposite. In 1961 Helmut Wakeham, research director with Philip Morris, said carcinogens were found in "practically every class of compound in cigarette smoke". Despite this and other internal proof that smoking was lethal, in 1994 the heads of America's top seven cigarette companies testified to Congress that they believed "nicotine is not addictive".

This fiction was debunked by whistleblower Jeffrey Wigand, the vice-president of research and development at Brown & Williamson. He revealed the US firm enhanced addiction by adding chemicals to cigarettes and genetically modified tobacco. Wigand's expose provoked national outrage and 46 states filed suit.

In 1998 they won US$368 billion to recoup smoking-related health costs. The Master Settlement Agreement (MSA) also released 14 million internal industry documents, cached in the Legacy Tobacco Documents Library at the University of California San Francisco. Besides Wakeham's comments, time bombs include the Sub-Culture Urban Marketing project, or SCUM, targeted at gays, lesbians and homeless people in the 1990s.

"That information, which is egregious, has been used in multiple trials, including the Florida one," says Chris Bostic, deputy director for policy at Action on Smoking and Health (ASH). He suggests the jury wanted to punish Reynolds "so they would rethink if this was a profitable business to be in".

Nonetheless, despite legal reversals, including a 2006 US case that convicted cigarette companies of racketeering for their acts of fraud and deception, using laws normally designed to fight the Mafia, and tighter legal restraints, such as the 2009 Tobacco Control Act, which gives the US Food and Drug Administration authority over the industry, Big Tobacco remains very profitable.

In 2012 the industry, dominated internationally by British American Tobacco, Philip Morris, Imperial and Japan Tobacco, had a retail value of US$697 billion, with over 5.8 trillion cigarettes sold worldwide. Many are puffed in Latin America, Africa and Asia as the industry seeks new markets, using World Trade Organisation rules and buyouts to vanquish old state-based monopolies.

And with cigarette sales forecast to decline in the US, the industry is aggressively wooing new customers with electronic cigarettes.

Philip Morris alone has spent US$650 million on "next generation cigarettes". The FDA has yet to rule if e-cigarettes -- reusable metal tubes that heat nicotine and release vapours -- are harmful. But anti-smoking groups fear they will "re-normalise" the habit, so kids think smoking is glamorous. A public comment period for FDA rules ends in August, with the earliest date for regulation seen as 2017, leaving states and cities to fill the vacuum with their own ordinances.

Today, 18 per cent of US adults smoke, as some states levy high cigarette taxes and adopt aggressive laws against second-hand smoke. This shift is less evident in the South -- home to Johnson -- and the Midwest, so that in Kentucky, for example, the adult smoking rate is 30 per cent. And though the MSA bans advertising aimed at "youth", Bostic says Big Tobacco targets the "young" market.

The "sweet spot" to entice new smokers is 15 to 18 -- in nations without public health campaigns, such as Indonesia, it is 5 to 8 -- and ASH argues youngsters are incapable of gauging the long-term health impacts.

Meanwhile, the industry spends big -- around US$1 million an hour goes on advertising -- and courts powerful pals. Each year the industry contributes over US$1.6 million to federal candidates and spends some US$16.6 million lobbying Congress, says ASH. Even more is spent at state and local level, while public relations firms and front groups work to depict the industry in a benign light.

One billion people smoke worldwide. The six million who die each year include five million smokers and 600,000 who breathe their fumes. By 2030 the death toll is expected to reach eight million a year, with 80 per cent in the global south.

And while tobacco killed 100 million in the 20th century it is predicted to kill one billion this century. It is the only legal product that, when used as intended, kills.

"Tobacco use alone costs the world 1 to 2 per cent of its GDP each year," former New Zealand Prime Minister Helen Clark told the UN this month. Global GDP in 2013 was US$75 trillion, with 1 per cent worth US$575 billion -- more than the GDP of all low-income nations.

Countering the industry has become a global chess game. Opponents want to exclude it from the rights that will accrue under the proposed Trans-Pacific Partnership and ASH is lobbying the 12 nations involved. While Malaysia has come on board, the US has fought ASH's proposals.

20 million Americans have died of smoking-related diseases in 50 years, according to the US Cancer Society

US$1m spent every hour on tobacco advertising

18 per cent of US adults smoke

- NZ Herald

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