US Tobacco Firms Hit By $289bn Demand

19 March 2003

The US Justice Department is demanding an eyewatering $289 billion (€272bn; £185bn) from major tobacco firms for over fifty years of allegedly fraudulent marketing.

In the latest development in a lawsuit launched under the Clinton administration, the Department has filed over 1,400 pages of documents accusing tobacco companies of lying to consumers about the perils of smoking and targeting children in their ads. Such practices, it argues, have been taking place for half a century and continue today.

The mammoth damages claim is based on the federal government’s estimates of cigarette firms’ “ill-gotten gains”: the proceeds from 30 million smokers who took up the habit underage from 1954, the year the industry allegedly started colluding.

There are five main defendants in the lawsuit: Lorillard Tobacco; Brown & Williamson; Philip Morris; R J Reynolds; and Liggett Group.

The Justice Department quotes extensively from documents submitted by these firms to support its case. For example, a 1982 memo from R J Reynolds officials reveals the company was well aware that supposedly ‘low-tar’ cigarettes were as harmful as their regular-tar equivalents, since users tend to smoke more of them and inhale more deeply.

“Such cigarettes,” read the memo, “while deceptive in the extreme, would be very difficult for the consumer to resist, since they would provide everything that we presently believe makes for desirable products: taste, ‘punch,’ ease of draw and ‘low FTC tar’.”

Another damning document is a 1981 Philip Morris report that showed the best time to win a smoker was in their teens. “Today's teenager is tomorrow's potential regular customer,” it read, “and the overwhelming majority of smokers first begin to smoke while still in their teens.”

The Justice Department argues the tobacco industry continues to research teen smoking and market to underage consumers.

Its claim for $289bn – which could be enough to bankrupt the industry – is the first time the federal government has set a figure for damages. The sum is higher than the $206bn the tobacco firms agreed to pay 46 states in a 1998 settlement.

The announcement shows the Department is pushing ahead with the case even though its attorney general John Ashcroft voiced opposition to the suit before he took office.

However, the tobacco firms do not take the accusations lying down. The federal government, they argue, has been a partner in any conspiracy by making billions of dollars in tax from cigarette sales. The case goes to trial next year.

Data sourced from: New York Times; additional content by WARC staff