Cigarette Companies Take A Hit

Wall Street Blows Smoke

In an August 17 2006 ruling Federal District Court Judge Gladys Kessler ordered tobacco companies to stop labeling their product as "low tar, light, natural" or any other "deceptive brand descriptors which implicitly or explicitly convey to the smoker and potential smoker that they are less hazardous to health than fullflavor cigarettes.”

The New York Times calls Judge Kessler’s 1,742-page "a detailed history of the efforts of the industry — and, notably, its lawyers — over almost 50 years to confuse the public about a danger that was evident to the health professions."

The Washington Post notes Judge Kessler’s finding that the Tobacco industry engaged in racketeering and her "pointed comments for the lawyers who have represented the tobacco industry over the past 50 years."

. . . over the course of more than 50 years, defendants lied, misrepresented and deceived the American public, including smokers and the young people they avidly sought as ‘replacement smokers,’ about the devastating health effects of smoking and environmental tobacco smoke.

[The companies] suppressed research, they destroyed documents, they manipulated the use of nicotine so as to increase and perpetuate addiction . . . and they abused the legal system in order to achieve their goal — to make money with little if any regard for individual illness and suffering, soaring health costs, or the integrity of the legal system.

At every stage, lawyers played an absolutely central role in the creation and perpetuation of the Enterprise and the implementation of its fraudulent schemes," she wrote. They "hid the relationship between . . . witnesses and the industry; and they devised and carried out document destruction policies and took shelter behind baseless assertions of the attorney client privilege.

What a sad and disquieting chapter in the history of an honorable and often courageous profession.

AdAge outlines some details of what it calls "the most punishing ruling ever against the industry . . ."

  • the use of the terms "low tar," "light," "ultra light," "mild" and "natural" are banned;
  • for two years, big tobacco is required to buy full-page corrective advertising monthly in the Sunday editions of more than two dozen major newspapers with the schedule alternated so the ads appear at least weekly;
  • major tobacco makers are ordered to run 15-second corrective TV spots once a week during prime time for a year;
  • packaging and in-store signs must carry new corrective advertising.

AdAge noted that "sweeping advertising sanctions could set a precedent for other industries, including food and alcohol, leaving little doubt that the ad industry will move to involve itself in the appeal, probably through friend-of-the-court briefs," as it did when the Clinton Justice Department filed the current action in 1999.

Meanwhile the Times reports that while the Judge found that Big Tobacco profits from "selling a highly addictive product which causes diseases that lead to a staggering number of deaths per year, an immeasurable amount of human suffering and economic loss and a profound burden on our national health care system,” Wall Street as personified by Morgan Stanley’s David Adelman is OK with that: "There’s nothing in this ruling that is going to hurt the profitability of the businesses."

Mr. Adelman did acknowledge however that the ruling affects the future of the 50+ percent of total cigarette sales in the US that are "light" brands.

But that doesn’t mean he’s concerned that consumers will punish the companies for their deception. “This industry is not a bunch of Boy Scouts,” he told the Times. “It’s an industry that was not well regarded by the public, anyway. So I don’t think there are significant public relations or legal ramifications from the decision.”

Apparently he was correct.

The decision was issued after American stock markets closed August 17. In early after-hours trading, the stocks of Altria, Reynolds American and other tobacco makers rose in a trend that continued August 18 when Forbes reported that R.J. Reynolds going up 1.4 percent and Altria jumping 4.0 percent.

To which we can only add . . . never mind; you can finish it yourself.

Post a Comment

Your email is never published nor shared.