Tobacco Witness: Health Info Has Little Effect On Smoking
Lawsuit’s Cost to Smokers Ignored
June 19, 2005
What the government and the news media fail to consider in the debate over the multibillion-dollar federal lawsuit against the tobacco industry is the punishing cost to 50 million smokers who have been virtually eliminated from having a voice in the endless tobacco issue (“Shift in Tobacco Suit Is Assailed,” June 9).
Anti-smoking zealots, including the media and the government, have been so blindly obsessed with holding smokers up to public hatred and ridicule, treating them as social outcasts and demonizing the tobacco industry, that they have buried the plight of beleaguered smokers under the hanging tree.
It can’t be only smokers who know that the tobacco industry hasn’t paid the billions of dollars in settlement costs to the states because it immediately passes those costs along to smokers before the money is paid.
It doesn’t matter that most smokers make $30,000 or less a year and can least afford the ever-increasing cost of cigarettes, that anti-smoking forces lie about secondhand smoke and that the media fall for deeply flawed fear statistics such as: Smoking-related illnesses kill 400,000 people each year. And it doesn’t matter whether smokers pay much more for health and life insurance or that some are losing jobs because of it.
No one stands up for smokers, not even the American Civil Liberties Union, simply because it’s the social engineering way, and it’s not popular among the elites.
Daniel B. Jeffs
Apple Valley
?
http://www.latimes.com
?
?Tobacco Witness: Health Info Has Little Effect On Smoking
?
May 24, 2005
WASHINGTON (Dow Jones)–For three weeks, government witnesses assumed as fact that tobacco companies fraudulently denied the health risks of smoking over decades and, based on that assumption, outlined well over $100 billion in smoking cessation and corrective advertising remedies.
Tuesday, the industry’s first witness in its remedies defense to civil racketeering, or RICO, charges said that, even if the government were right, no remedies are called for since no material harm was done from the alleged wrongdoing.
“Defendants’ alleged information-based RICO violations – their alleged suppression and misrepresentations of the health risks of smoking, including addiction – had essentially no causal effect on either adolescent initiation or smoking cessation,” Donald Rubin, statistics professor at Harvard University, said in direct testimony Tuesday.
DOJ lawyer Patrick Klein countered in cross examination, “Isn’t it possible that the reason there’s no causal effect of increased information is that ( smokers) are addicted?”
The line of defense described by Rubin has been repeated by industry lawyers since the start of the fraud trial in September. Since smokers don’t rely on cigarette companies for information about smoking and health, any alleged misstatements would have had no material effect, lawyers say.
The main two defense strategies have been to deny past fraud – though attorneys admit some past “wrongheaded” behavior – and to say a 1998 settlement with states that included a $246 billion payout over 25 years fundamentally changed the industry and makes future fraud impossible.
Rubin said the government’s plan to force companies to spend billions of dollars on cessation and youth-prevention advertising wouldn’t work, since providing additional information about smoking risks “makes essentially no difference to youth smoking initiation.”
In a cross examination that was at times highly academic – the DOJ lawyer asked at one point, “does a counter-factual world exist?” – Klein pointed out that the 2004 Surgeon General’s report found smoking-prevention programs at schools had a strong short-term effect on youth smoking. Klein also suggested that Rubin’s conclusions are in conflict with testimony from defendant Philip Morris USA’s own youth-smoking-prevention coordinator.
The DOJ lawyer attacked Rubin’s credibility by citing his strong financial ties with the tobacco industry. Klein cited deposition testimony from 2002 in which Rubin testified he earned between $1.5 million and $2 million in consulting fees from tobacco from 1997 to 2002. For this case, he’s billing $1, 250 per hour for consulting and $1,600 per hour for testifying. Rubin said Tuesday his “ballpark” estimate is that he has worked “several hundred hours” on this case.
In direct examination, Rubin contradicted testimony from a key DOJ witness, Michael Fiore of the University of Wisconsin Medical School. Fiore outlined a remedy to District Court Judge Gladys Kessler, who is hearing the nonjury trial, that would require defendants to spend $130 billion over 25 years on smoking- cessation programs, advertising and training.
Rubin testified that Fiore’s figures “are not based on statistically valid or reliable analyses of data,” backing tobacco lawyers’ criticism of Fiore’s and other remedies as being grounded in sloppy science.
DOJ also seeks greater industry funding of youth-smoking-prevention campaigns, penalties for missing youth-smoking targets and industry monitors with the power to fire tobacco executives.
The government’s attempt to disgorge $280 billion in past industry profits – the financial centerpiece of its case – was thwarted three months ago by a D.C. appeals court, which ruled that the backward-looking remedy wasn’t available under fraud statutes. Kessler has suggested that the appeals court’s standard threatens DOJ’s other remedies as well.
She split the liability and remedies phases of the trial in the wake of the disgorgement ruling in February in order to give the government time to revamp its remedies case, which concluded last week. The trial, which included seven months of liability testimony on whether cigarette makers committed racketeering fraud over decades and pose a risk to do so in the future, is expected to end in early June.
Defendants include Altria Group Inc.’s (MO) Philip Morris USA; R.J. Reynolds Tobacco Holdings Inc. and Brown & Williamson, which have merged to form Reynolds American Inc. (RAI); British American Tobacco PLC (BTI); Vector Group Ltd.’s ( VGR) Liggett Group Inc.; and Loews Corp.’s (LTR) Lorillard Inc.
-By Brian Blackstone, Dow Jones Newswires; 202-828-3397; brian.blackstone@ dowjones.com
?
http://money.excite.com
Tobacco Witness Rebuts DOJ’s Exec-Firing Fraud Remedy
May 27, 2005
WASHINGTON (Dow Jones)–A tobacco industry witness on Friday said removing senior executives would be an ineffective way at combating future fraud and that corporate boards are better than courts at monitoring executive behavior.
University of Chicago Law School Professor Daniel Fischel was called to rebut testimony from a Justice Department witness, Harvard Business School Professor Max Bazerman.
Bazerman testified earlier this month in the government’s civil fraud, or RICO, case against cigarette makers that, assuming the industry is found to have engaged in racketeering fraud and poses a risk to do so in the future, the court should “appoint monitors who will have the authority … to review all aspects of defendants’ businesses and make particularized and specific recommendations for structural changes.”
Those changes include “removing senior management” and changing compensation and promotion practices, said Bazerman, an expert on organizational behavior.
DOJ filed suit in 1999 alleging a five-decade scheme to defraud the public on the dangers of smoking and market to teens that persists today. Tobacco lawyers deny past fraud and say that a 1998 settlement with states that included a $246 billion payout over 25 years and tight monitoring makes future wrongdoing impossible.
Fischel said in written direct testimony that “future managers will face the same alleged incentives to increase market share and profits and to avoid misconduct as do current managers. As a result, Dr. Bazerman does not show that removal of senior managers will prevent future unlawful conduct.”
Bazerman’s proposal gained importance in the wake of a February D.C. Appeals Court panel’s ruling that disallowed disgorgement of $280 billion in past cigarette profits, which had been the centerpiece of the government’s case, as a possible remedy. The 2-1 ruling, which the full court declined to revisit, stated that disgorgement is “a remedy aimed at past violations” and “does not so prevent or restrain” future fraud.
District Court Judge Gladys Kessler, who split the nonjury trial’s liability and remedies phases following the ruling, has suggested that the disgorgement standard could threaten other DOJ remedies as well. The government also wants cigarette makers to fund a $130 billion national smoking cessation program and pay for youth-smoking prevention ads.
“This is a Civil RICO case, not a symposium for the government to throw out a variety of policy initiatives,” said Dawn Schneider, spokeswoman for Altria Group Inc. (MO), parent company of Philip Morris USA.
Use of court monitors would be a novel remedy against what is, after all, a legal industry. But Bazerman’s proposal would appear, unlike other remedies like cessation funding, to better fit the D.C. Appeals Court’s instruction that RICO penalties be aimed at future behavior and not past conduct. Indeed, the Harvard professor was contacted by DOJ about this remedy following the disgorgement ruling.
And tobacco lawyers have strongly attacked the industry-monitor remedy ever since, calling it in court filings “a mockery” and asking Kessler to reject Bazerman’s proposal on the grounds that it didn’t meet scientific standards required by courts.
Kessler herself expressed concerns about Bazerman’s testimony, but ultimately rejected tobacco’s motion to strike it.
DOJ Lawyer Leo Wise similarly attacked the tobacco witness’s credibility Friday, telling Fischel, “you’re not an expert on court-appointed monitors, you’ve never served as a Special Master, you’ve never testified on institutional reform behavior.”
Challenging Fischel’s assertion that corporate boards could act to remove executives – without court intervention – in response to litigation or allegations of wrongdoing, Wise asked, “you didn’t investigate whether any tobacco executive was ever removed because of litigation?” Fischel replied that he hadn’t.
Wise also cited a 1982 article co-written by Fischel that suggested corporate managers may violate regulations when it’s profitable to do so. That clearly struck a chord with Kessler, and Brown & Williamson lawyer David Bernick conceded the citation was an “eye-popper.”
Under re-direct from Bernick, Fischel said that “efficient breach” theory is common in economics and doesn’t apply to areas like health and safety. Bernick also noted in re-direct that Bazerman himself didn’t do the type of analysis of past tobacco industry activities that Fischel was cross-examined about.
Tobacco lawyers should wrap up their remedies defense next week. The trial, which began in September, is expected to conclude in early June.
Defendants include Altria Group’s Philip Morris USA; R.J. Reynolds Tobacco Holdings Inc. and Brown & Williamson, which have merged to form Reynolds American Inc. (RAI); British American Tobacco PLC; Vector Group Ltd.’s (VGR) Liggett Group Inc.; and Loews Corp.’s (LTR) Lorillard Inc.
-By Brian Blackstone; Dow Jones Newswires; 202-828-3397; brian.blackstone@ dowjones.com
http://money.iwon.com/
?
?
Read more about the RICO Trial
?
