Tobacco.org

• Germans win right to light up after court ruling on smoking 

In stark contrast to Australia — where smokers have become a much maligned social group — the German High Court has just overturned smoking bans in small bars and restaurants, making Germany one of the last havens for smokers in Europe.

The ruling came after the owners of two small bars claimed their businesses had been unfairly hit by the smoking ban. They claimed that because of their bars' small size, they were unable to provide a cordoned-off smoking area, which created a competitive disadvantage. The constitutional court agreed.

The ruling means that German states must ban smoking in all pubs or restaurants or offer exceptions for single-room establishments.

The court ruled that the previous rather modest smoking ban proposed by Chancellor Angela Merkel's coalition of conservatives and Social Democrats was unconstitutional. It found that the law went against the rights of the state governments to impose their own regulations.

This latest ruling is part of an ongoing tussle in Germany, where the forces of civil libertarianism and corporate tobacco industry interests have become unlikely bedfellows. . . .

History may play a role here too.

The Nazi Party was strongly opposed to smoking and, after 1945, smoking became a symbol of postwar freedoms and progressive values.

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• Tobacco case set to resume Monday  

The trial on claims by the state of Vermont that R.J. Reynolds Co. misled consumers about the health risks of smoking a new kind of cigarette resumes Monday at Chittenden Superior Court in Burlington after a two-month hiatus.

The state, which is arguing the case on behalf of 36 states, contends that Reynolds has marketed Eclipse, a cigarette that heats rather than burns tobacco, as safer than conventional cigarettes despite having no scientific evidence to back its advertising claims.

Judge Dennis Pearson presided over 20 days of testimony in the case in October and, in a ruling late last month, said he will allow Reynolds five more days to wrap up its defense against the state's claims.

Based on recent court filings, Reynolds lawyers intend to focus part of this week's testimony on an 11-year-old statement by the Attorney General's Office that criticized the company for not doing more to promote Premier, another "safer" cigarette it had developed.

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Fiscal courts to weigh-in on smoking ban in 2009  

Supporters of a tri-county smoking ban in public places are hoping officials can work out their differences early in 2009 - any longer and the issue could be delayed indefinitely, said Kenton County Commissioner Dan Humpert.

Humpert hopes to put a smoking ban before the fiscal courts as soon as possible before some supporters decide to table the issue. Boone County Judge-Executive Gary Moore said he would support tabling the issue if the debate goes on much longer:

"I believe it's either time to pass something or put it on the shelf for a while because it just seems to be an item that is taking staff time and concentration away from other projects," he said.

Northern Kentucky fiscal courts have been attempting to hammer together a three-county-wide smoking ban since June, but debates over allowing exemptions have dragged discussion on.

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• Big Tobacco’s New York Black Market 

New York's 70-year-old tobacco black market exploded after 2002, as cigarette tax hikes encouraged smuggling from out of state and through reservations. . . .

It remains unclear whether Paterson will be any different from his predecessors. . . .

And then there's the role of the big tobacco companies themselves, who in the past have shown a marked reluctance to ensure their products are not smuggled. "Cigarette manufacturers should not be expected to police the trade in untaxed cigarettes," Lorillard, a leading tobacco firm, said in a December 9 statement. . . .

Patrick Fleenor, who has studied the evolution of this underground economy as chief economist at the Tax Foundation, a nonpartisan tax research group, said New York's black market dates back to the city's first cigarette tax of one cent, in 1938. While in the 1960s and '70s cigarette bootlegging in New York was controlled by a handful of organized crime groups, including the Mafia, today the trade is much more fragmented, with groups including Dominican tax-stamp counterfeiters, African-American smugglers, and Middle Eastern vendors from Jordan and Yemen competing for the profits. "The potential for volatility is much greater," Fleenor said. . . .

The problem is not exclusive to New York. Officials across the country are wrestling with cigarette smuggling from Indian reservations . . .

A group of seven cigarette wholesalers, all but one in New York state, is responsible for supplying more than 90 percent of all cigarettes sold on Indian land . . .

"R.J. Reynolds, Lorillard, and Philip Morris come in monthly and change signs, check that no product is out of date, that kind of thing," said Doogie's owner Sally Snow, who heads an organization comprised of the Seneca Nation's 234 smoke shops, gas stations, and mail-order cigarette outlets . . .

Proshansky, the attorney for New York City, said the big tobacco companies are keeping a close eye on all the legal maneuvering, watching to see if they are implicated. "It's a delicate game," he said.

In fact, for years, America's three largest tobacco companies -- Lorillard, Philip Morris, and R.J. Reynolds -- have flooded New York Indian reservations with their untaxed cigarettes, despite ample evidence that those sales fueled a billion-dollar black market, an investigation by the International Consortium of Investigative Journalists (ICIJ) has found.

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Cigarette manufacturers should not be expected to police the trade in untaxed cigarettes.
Dec. 9, 2008 Lorillard statement.

R.J. Reynolds, Lorillard, and Philip Morris come in monthly and change signs, check that no product is out of date, that kind of thing.
Sally Snow, owner of Doogies, one of many smoke shops on the Seneca's western New York reservations.

1990s: 10 key events 

1998: LAWSUIT EXPOSES TRUTHS OF TOBACCO

It's only appropriate that Minnesota, the state that pioneered clean indoor air, was a leader in the landmark legal action that brought the tobacco industry to its knees. The state, along with Blue Cross and Blue Shield of Minnesota, reached a $6.1 billion settlement and that money has been used to gild attorneys' offices as well as pay for smoking cessation programs.

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• John Middleton Sues to Overturn Single-Sale Ban 

John Middleton Co. joined other cigar companies in asking a Maryland circuit court to overturn a recently enacted Prince George's law that bans the sale of single cigars. In its filing, the companies are asking the court to enjoin enforcement of the law and ultimately declare it invalid under state and federal law. The law is scheduled to take effect January 12, 2009.

The Prince George's law is similar to legislation enacted last year by the City of Philadelphia that was struck down on state preemption grounds by Pennsylvania courts.

"We believe there are other more effective ways of advancing the general policy goals that motivated this law without penalizing adult cigar smokers who frequently purchase single cigars," said Craig Schwartz, General Manager, John Middleton Co. "We are prepared to work with legislators at the state level to address these concerns," added Schwartz.

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• Decision opens door to Wisconsin smoker suits  

In light of the U.S. Supreme Court opinion last week in Altria Group v. Good, Wisconsin consumers can plausibly sue tobacco companies under at least two different statutory provisions, sec. 100.20 and sec. 100.18.

Section 100.20, entitled "Methods of competition and trade practices", provides generally, "(1) Methods of competition in business and trade practices in business shall be fair.

Unfair methods of competition in business and unfair trade practices in business are hereby prohibited."

This is, for all material purposes, identical to the Maine statute at issue, which provides, "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful." Me.Rev.Stat.Ann., Tit. 5, sec. 207.

However, sec. 100.18 of the Wisconsin statutes, entitled "Fraudulent representations," is even more applicable to suits alleging that the marketing of light cigarettes is misleading . . .

The downside to suing under sec. 100.18 is that it contains a three-year statute of repose, and the discovery rule does not apply, limiting the potential damages, and the number of potential plaintiffs. . . .

One problem consumers are likely to face should they bring similar suits in Wisconsin is that the "unconscious" and "unknowing[]" behaviors described above are frequently not unconscious or unknowing.

Many smokers of light cigarettes who engage in these nicotine-enhancing behaviors do so "unconsciously" only in the respect that, having consciously done so for so many years, the behaviors become subconscious.

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• Indian merchants reap huge profits on untaxed tobacco sales  

And Tara Sundown, a tobacco merchant who sells cigarettes without state taxes on the Tonawanda Band of Senecas Reservation in Basom, made $16.8 million during that same three-year period.

Those figures come from monthly sales reports that tobacco wholesalers file with New York's Department of Taxation and Finance, released for the first time in a federal lawsuit in New York City.

The Buffalo News took those figures, used as a profit margin the $7 price difference between what the Senecas pay for most cigarettes and what they charge, and came up with what the cigarettes sellers may have grossed. Salaries, utility costs and other overhead expenses come out of those revenues.

Actual profit figures are known only by the individual merchants, and they do not disclose those. A congressional report last year put the figure at $3 a carton, but several non-native cigarette distributors told The News that profit margin was too low. . . .

Maybee, a Canisius College graduate, sells more native brand cigarettes than most Seneca merchants. Maybee, through his attorney, refused to confirm his purchases, as reported to the New York State Department of Taxation and Finance.

The millions of dollars in profits show the high stakes involved in the state's attempts at levying taxes on Indian cigarette sales to non-natives. . . .

Tobacco wholesalers, including Milhelm Attea & Bros. of Buffalo, the biggest seller of tax-free cigarettes in the state, and their Indian retailer customers "have parlayed that limited exemption into a multibillion dollar loophole," argued New York assistant corporation counsel Eric Proshansky.

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Elizabeth P. "Liza" Kessler to Become Partner-in-Charge of Jones Day Columbus Office  

The international law firm Jones Day announced today that Elizabeth P. "Liza" Kessler, will take over as Partner-in-Charge (PIC) of the Firm's Columbus office effective January 1, 2009. Ms. Kessler becomes the fifth woman PIC to currently lead one of Jones Day's 14 US offices. She succeeds Fordham E. Huffman who has spent 14 years as PIC in Columbus. Mr. Huffman will lead a new practice group focused on insurance liability and coverage litigation. He will continue to serve on the Firm's Advisory Committee.

"Liza is not only an extremely talented lawyer and dedicated advocate for her clients, but also a leader on so many important Firm and civic initiatives," said Stephen J. Brogan, Managing Partner of Jones Day. "Ford has built a formidable presence in Columbus - now nearly 80 lawyers strong - and we have great confidence that Liza will enhance that presence and continue to provide the very highest service levels to our clients."

Ms. Kessler practices primarily in the area of product liability. Her significant litigation experiences include representation of R.J. Reynolds Tobacco Company in complex product liability cases around the United States. Her trial representation includes a Sacramento jury trial entitled Lucier v. Philip Morris, et al. (2003), which resulted in a complete defense verdict on all claims after a four-month trial. In the years preceding the Lucier trial, plaintiffs had won six straight jury verdicts in tobacco product liability trials on the West Coast, each with punitive damages ranging from tens of millions to billions of dollars. Ms. Kessler was trial counsel for R.J. Reynolds in Rose v. American Tobacco Co. (2005), the first smoking and health case to be tried in Manhattan. After a six-week trial, the jury returned a verdict in favor of R.J. Reynolds.

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Court ruling could stop reservation tax collections  

A temporary restraining order issued Christmas Eve is being considered ''the first round in an anticipated legal battle challenging the legality of a law that could allow for state tax collections on cigarettes sold to non-Indians on reservations.

''The first round goes to us; we'll see what the second round shows,'' said Margaret Murphy, attorney for Day Wholesale and Scott Maybee, Native American retailer, who is asking just what obligations they have under a law recently signed by state Gov. David Paterson.

The law, signed Dec. 15, states wholesalers have to certify they have sold cigarettes to retailers, who will not resell them if untaxed unless to Native Americans. Ms. Murphy has questioned the law, however. She said if consumers purchase more than two cartons on reservations, the purchasers are already supposed to pay taxes.

''There is no change in the law,'' she said, adding that is what was argued before Judge Rose Sconiers on Dec. 24 when a temporary restraining order barring the law's implementation was put in place by Sconiers until a hearing for a preliminary injunction that could stop the state's efforts is heard Jan. 27.

The law was not to go into effect until mid-February, 60 days after it was signed by Paterson. . . .

Ms. Murphy said the law requiring non-Native American consumers to pay for more than two cartons of cigarettes bought on reservations has been on the books for more than 70 years. Therefore, she said, there are no burdens on wholesalers or reservation sellers, who, she said, are already complying with state taxation law, as it is the burden of the consumer to report tax-free sales.

''It's a misinterpretation of who has what obligation,'' she said, adding Judge Sconiers has been asked to clarify who needs to do what under the new law and whether it is necessary or redundant. ''Taxes should be collected but not by the retailer or wholesaler.''

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Fitch: No Rating Action on Altria v. Good U.S. Supreme Court Ruling 

While the ruling may negatively affect Altria Group, Inc. (Altria) and the tobacco industry, Fitch Ratings assesses the credit risk from legal rulings in the context of probability of adverse monetary judgment in the near- to intermediate-term. At this stage, it is too early to determine if, as a result of the Supreme Court's ruling, any adverse monetary judgment is likely to be entered against tobacco industry participants which could impact their credit profiles.

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Ruling bars cigarette tax on sales by Indians 

The state is facing a new legal hurdle in its effort to collect taxes on cigarettes sold on Indian reservations.

A judge has issued a ruling that would temporarily block the state from enforcing a new tax policy.

An attorney for a Seneca tobacco retailer and a northern New York tobacco wholesaler said State Supreme Court Justice Rose H. Sconiers issued a temporary restraining order Wednesday. The ruling directs state officials to appear in court again Jan. 27 to explain why the judge shouldn't issue an injunction barring the tax collection.

Margaret A. Murphy, a former Buffalo city judge who is representing Seneca tobacco merchant Scott Maybee and Day Wholesale of Tupper Lake, said she is not surprised by the ruling. Murphy played a key role last year in derailing New York's last attempt to collect taxes on tobacco sold on Indian reservations.

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SUPREME COURT DECISION PROMPTS MOVE TO RE-OPEN PHILIP MORRIS LAWSUIT 

On Thursday, December 18, 2008, St. Louis attorney Stephen Tillery of Korein Tillery filed a motion in the case of Price v. Philip Morris (Madison County, Illinois Circuit Court, cause No. 00-L-112) to re-open the $10.1 billion judgment in Price v. Philip Morris based on a decision of the U.S. Supreme Court rendered earlier this week. . . .

“The final order dismissing the Price case was not actually entered until December 18, 2006. When it ruled earlier this week, the U.S. Supreme Court decision came just a couple of days before the two year deadline under Illinois law which allows challenges to set aside judgments,” said Stephen Tillery.

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Americans Split on Light Cigarette Court Ruling 

Adults in the United States are divided over a recent Supreme Court decision, according to a poll by Rasmussen Reports. 42 per cent of respondents believe smokers should be able to sue tobacco makers for advertising claims related to light cigarettes, while 45 per cent disagree.

In addition, 22 per cent of respondents believe cigarette companies should be held financially liable for health problems that develop if someone smokes a cigarette today.

On Dec. 15, the U.S. Supreme Court ruled--in a 5-4 decision--that smokers can seek legal action against tobacco companies in state court for making fraudulent claims related to light cigarettes, which purportedly have lower tar and nicotine levels. Justice John Paul Stevens wrote that the companies that sold these products had a "duty not to deceive" the public through advertising or marketing. . . .

The Supreme Court ruled on Monday that smokers could sue tobacco makers for advertising claims over so-called "light" cigarettes that they claim are fraudulent. Do you agree or disagree with this ruling?

Agree

42%

Disagree

45%

Not sure

12%

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Altria Ruling Ignites Legal Moves  

Mr. Tillery says the U.S. Supreme's Court's 5-4 decision "eviscerates" the legal basis for the Illinois court's ruling and could breathe new life into his case. He was nearing a final deadline for finding a basis to revive the suit.

Altria spokesman Jack Marshall said the Illinois plaintiffs have tried once before to have the case reopened and were rebuffed by the state Supreme Court. "We believe the plaintiffs' second attempt is also meritless and will be rejected by the Illinois courts," Mr. Marshall said. . . .

"An entire class of litigation has been revived thanks to [the] ruling," said Edward Sweda, an attorney with the Northeastern University's Tobacco Products Liability Project. "Those lawsuits were on the precipice of being eliminated."

Mr. Sweda said there are roughly 40 cases pending in 22 states. The Illinois case that Mr. Tillery is attempting to revive is the only one that has gone to trial, Mr. Sweda said.

Adding to those numbers, a new class-action lawsuit making similar allegations was filed in New York federal court Thursday by a Flushing, N.Y., man seeking economic damages on behalf of New York smokers of Marlboro Lights.

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