WASHINGTON -- Seeking the
largest-ever civil damage award in U.S. history, the Bush
administration has opened its landmark $280-billion (U.S.)
racketeering case against the tobacco industry by accusing cigarette
makers of conspiring for decades to hide the dangers of smoking from
"This case is about a 50-year pattern of misrepresentation,
half-truths and lies," U.S. Justice Department lawyer Frank Marine
said yesterday during opening arguments in a Washington court.
Exploiting a civil fraud law normally used to pursue mobsters,
federal prosecutors accused cigarette makers of spending hundreds of
millions of dollars on dubious research to rebut growing evidence of
smoking's lethal side effects, including cancer and respiratory
"Why did the defendants pursue this course of action? Money, pure
and simple," Mr. Marine, a veteran prosecutor of racketeering cases,
said as he outlined 145 alleged acts of fraud.
The "massive scheme" began at a clandestine 1953 summit of
industry executives and public relations consultants at New York's
Plaza Hotel, Mr. Marine told the court. At the meeting, company
officials agreed to jointly fund industry organizations, whose
agreed mission was to push the bogus research and dupe the public,
he said, citing internal industry documents.
"The problem was not that their product was killing people," he
explained. "The problem to them was that the public might stop
smoking because of health concerns."
If successful, the high-stakes lawsuit would dramatically alter
the country's tobacco laws and push much of the industry to the
brink of bankruptcy.
The defendants in the case are Philip Morris USA Inc.; its parent
the Altria Group; Reynolds American Inc.'s R.J.
Reynolds Tobacco Co. unit; Brown & Williamson Tobacco
Corp., Loews Corp. subsidiary, Lorillard Tobacco Co.;
British American Tobacco (Investments) Ltd.; the Liggett
Group Inc. as well as two industry groups, Counsel for Tobacco
Research-U.S.A. and the Tobacco Institute.
The defendants deny engaging in a conspiracy and blame the
government for overzealously pursuing an industry that has
dramatically changed its ways, particularly since a landmark
$246-billion out-of-court settlement with U.S. states in 1998. As a
result of that deal, the industry has limited its marketing
activities and acknowledged its products are dangerous and
Philip Morris USA lawyer William Ohlemeyer said the government
will have a tough time proving that the industry deliberately
deceived smokers to sell them cigarettes.
"Fraud is a very high bar," he told the Associated Press.
The $280-billion sought by the government represents years of
allegedly "ill-gotten" profits.
The government is attempting to show a pattern of fraud, using
the Racketeer Influenced and Corrupt Organizations Act.
The start of the non-jury trial comes after nearly five years of
legal sparring, including a hefty fine imposed on Philip Morris for
allowing potentially important internal e-mails to be destroyed.
The suit, launched by the Clinton administration in 1999, almost
never got this far because of initial reluctance on the part of U.S.
President George W. Bush. U.S. Attorney-General John Ashcroft now
says the case is a key part of the administration's efforts to
uphold integrity in U.S. boardrooms.
"The government's case against the tobacco industry is an
important effort to prevent fraudulent activity and uphold corporate
integrity," he said.
The Justice Department has already spent $135-million pursuing
the case, easily eclipsing the estimated $30-million to $60-million
it spent on the Microsoft Corp. antitrust case.
Part of the high cost of prosecution stems from the colossal
number of records involved. The Justice Department has amassed a
document archive of some 80 million pages that it may use over the
course of the trial, which is expected to last at least six
The two sides are expected to call as many as 100 witnesses as
well as relying on statements or previous testimony from as many as
One of the government's star witnesses is likely to be former
Food and Drug Administration Commissioner David Kessler. He is
expected to chronicle the industry's pursuit of youth smokers in the
1990s and its efforts to manipulate nicotine levels to hook
Anti-smoking activists hailed the opening of the trial as a key
milestone toward making the industry more accountable.
"For years, [they] claimed publicly that
cigarettes never cause disease, and now they should
pay the price," said Patrick Reynolds, president
of the California-based Foundation for a Smokefree
America and grandson of the founder of R.J. Reynolds
An eventual tobacco industry defeat in the United States could
embolden the Ontario government to try to recoup smoking-related
health care costs via the courts, argued Garfield Mahood,
executive-director of the Toronto-based Non-Smokers' Rights
"This is one of the most significant lawsuits ever undertaken
against the international tobacco industry," Mr. Mahood said. "It
will put tremendous pressure on Ontario to act."
Industry lawyers are scheduled to make their opening statement