UCSF To Receive Tobacco Papers

The U.S. Department of Justice filed a proposed consent order today with a federal district court that finalizes requirements for three major cigarettes online companies to make internal documents public in accordance with an earlier ruling that the companies violated the Racketeer Influenced and Corrupt Organizations Act. The documents will be archived in UCSF’s Legacy Tobacco Documents Library (LTDL).

The order, once approved by the court, will be part of the remedy phase of the largest civil racketeering case in the history of the United States.

The order specifies that the companies provide $6.25 million to the court to improve free public access to the documents via the Internet. The court will provide this money to the UCSF Legacy Library for this purpose. The order also specifies how the companies are to index the documents.

The UCSF Legacy Library, first launched in 2000 with a major gift from the Washington, D.C.-based American Legacy Foundation, now has 13.7 million documents (79 million pages) released as a result of litigation against the major cigarettes companies related to their advertising, manufacturing, marketing, sales, political, public relations and scientific activities.

An earlier order by Federal Judge Gladys Kessler, filed in U.S. District Court for the District of Columbia in Washington, D.C., requires the buy cigarettes companies to continue to release documents through 2021. The UCSF Legacy Library has been growing by about 700,000 documents in each of the past three years.

Each month, the Legacy Library is used by an average of 16,000 academic researchers, tobacco control advocates, lawyers, journalists and students internationally who view an average of 227,000 pages. Last year, visitors came from 190 different countries to use it. Close to 600 peer-reviewed journal articles and 130 other publications, including government reports, books and newspaper articles based on research at the library have been published. The new funds will allow all of that information to be digitized for early access online.

“These funds will allow us to substantially improve the way investigators, the media and the public are able to research how tobacco companies produce, price and market their products, as well as protect their political interests globally,” said Kim Klausner, UCSF Industry Documents Digital Library Manager.

Sam Hawgood, MBBS, dean of the UCSF School of Medicine and vice chancellor for medical affairs, said the University is “gratified that the court recognizes the important contributions that UCSF has made, and will continue to make, to global public health through the Legacy Tobacco Documents Library. Making these documents freely available to everyone is an important element of UCSF’s contribution as a public university,” he said.

The defendant tobacco companies that agreed to the proposed court order are Philip Morris USA, Inc, Altria Group, and RJ Reynolds Tobacco Company. The proposed consent order is subject to court approval and is not final until it is signed and entered by the court.

“Research based on the documents has provided a unique insight into how the tobacco industry manipulates scientific and political processes and engineers its products and marketing to maximize its sales,” said Stanton A. Glantz, PhD, UCSF professor of medicine and director of the Center for Tobacco Control Research and Education at UCSF. “By revealing the industry’s behind-the-scenes strategies and involvement, this understanding has transformed public health from city councils to the United Nations.”

UCSF is a leading university dedicated to promoting health worldwide through advanced biomedical research, graduate-level education in the life sciences and health professions, and excellence in patient care.

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Delaware Says Tobacco Firms Drop Case

Tobacco companies that reached a health-care settlement with Delaware in 1998 dropped a lawsuit over the state’s enforcement of the agreement, state Attorney General Beau Biden said.

The companies had claimed Delaware didn’t meet its obligation to regulate smaller online cigarettes firms that aren’t part of the settlement, according to Biden.

“I’m pleased that we have succeeded in protecting Delaware’s payments, which are used to improve public health and fund anti-tobacco education,” Biden said in a statement today. Biden didn’t identify the companies that brought the dispute.

Under the 1998 agreement, major cigarettes for sale companies make annual payments to the states. If the cigarettes store companies had been successful in their claims, Biden said, the state might have lost as much as $24 million.

Steve Callahan, a spokesman for cigarette maker Philip Morris USA, said his company and 20 other tobacco makers agreed to end the dispute over Delaware’s enforcement of the settlement’s provisions.

“It was resolved as part of an arbitration process,” Callahan said in a telephone interview. Philip Morris, the world’s largest publicly traded tobacco company, is a unit of Richmond, Virginia-based Altria Group Inc.

The Delaware attorney general said the tobacco industry’s challenges to enforcement of the accord are continuing in 35 states. Tobacco companies agreed to pay the $246 billion over 25 years to settle lawsuits by state attorneys general seeking to recoup the costs of treating sick smokers.

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Revenue From Tobacco Settlement Flattening Out

Big Tobacco's payments to New Mexico for smoking cigarettes-related deaths are declining.

Even so, at least one legislator said Monday this was no indication that cigarette companies were losing customers or profit margins. The falling numbers may be because of a shifting marketplace.

Elisa Walker-Moran, a state economist, said New Mexico expects to receive $38.6 million from cigarettes online companies this year. That is down from $40.9 million in 2010.

Walker-Moran also projected that the amount of revenue from the buy cigarettes settlement will be flat in the next few years.

One reason for the decline is that cheap cigarettes companies subject to the agreement are losing market share, Walker-Moran told a legislative committee. But state Rep. Gail Chasey, D-Albuquerque, said the lower payment to the state was but another example of how tobacco companies had maneuvered a mass settlement to their advantage.

These cigarette makers may be losing some of the domestic market, but they are making that up with worldwide sales, Chasey said. Tobacco companies that settled lawsuits with New Mexico and 45 other states are using market changes to their advantage, she said. "They prevailed in a number of ways, and that was one of them," Chasey said.

Tobacco has been under siege in the United States since 1994, when Mississippi's attorney general sued the four largest companies for health-care costs associated with smoking cigarettes.

Mississippi, Texas, Florida and Minnesota then reached individual financial settlements with major tobacco companies.

The rest of the states and U.S. territories approved a joint settlement in 1998 with four cigarette giants - Philip Morris USA, R. J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp. and Lorillard Tobacco Co.

At the time, the companies had 99 percent of the market share.

Another 50 tobacco companies have since joined in the master settlement.

New Mexico had hoped to stash half of the settlement money in its biggest savings account. But in recent times the state has had to spend that money to keep Medicaid solvent.

Members of the New Mexico Legislature's tobacco committee also voted Monday to introduce a bill in January to include more cigarette companies and sales in the master settlement.

The proposal would apply to cigarette packs with tax-credit stamps that are sold by tribes and pueblos.

Republican Gov. Susana Martinez vetoed a similar bill last winter.

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Tobacco Trial Gets Under Way In Lee County

Attorneys for buy cigarettes companies are countering the claims of a former Fort Myers smoker who places blame on the companies for laryngeal cancer he suffered in 1993.

John Szymanski is the first of about 150 plaintiffs in Lee County to take on the cigarettes store companies following a $145 billion class action lawsuit that was de-certified in 2006, allowing individuals to file their own cases.

Walter Cofer, who represents Philip Morris, delivered the bulk of the opening statement for the three tobacco companies listed in the claim.

While Cofer admitted cheap cigarettes can cause cancer and nicotine can be addictive, he said the questions for the purpose of this trial are whether it was Szymanski’s smoking cigarettes — or some other factor — that caused the cancer, whether he was in fact addicted and whether the tobacco companies hold any culpability for that addiction.

“As you’re listening to the evidenced in this case, ask yourselves, ‘What does this have to do with Jack Szymanski,’ ” Cofer said. “It’s his case. It’s not a referendum on cigarette companies.”

Cofer went on to say the evidence will show Szymanski’s testimony in depositions has been inconsistent, and that information regarding the risks of smoking cigarettes was available to Szymanski at the time he started smoking cigarettes.

The entire trial is expected to span about three weeks.
10:03 a.m.

Opening statements are under way now in the first of about 150 tobacco trials slated for Lee County and among thousands across the state.

Attorneys for former Fort Myers smoker John Szymanski are previewing their case to the jury, which was selected after four days from a pool of hundreds.

Szymanski's attorneys contend their 72-year-old client does hold some responsibility for the onset of his laryngeal and tongue cancers, but that evidence will show tobacco companies for years conspired to conceal the risks of their products, which Szymanski began using as a young teen in the early 1950s.

His attorneys are urging the jury to continuously remind themselves throughout the trial of the fact that when Szymanski started smoking cigarettes, it was a different time - when information on smoking cigarettes dangers wasn't readily available, nearly half of all U.S. adults smoked and two-thirds of all physicians did as well.

Still, they say the tobacco companies continued to deny the health risks for decades. A 1994 C-SPAN clip of a congressional hearing was just played, showing the heads of tobacco companies testifying that nicotine is not addictive.

The case is among 8,000 others across the state born of a $145 billion class action suit that was de-certified in 2006, opening the doors for ailing smokers and their survivors to file individual cases. Many of the more than 50 that have so far gone to trial statewide have resulted in multi-million dollar payouts for the plaintiffs.

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Mocksville Tobacco Companies

An U.S. Bankruptcy Court judge has established the bidding procedures for the assets of three bankrupt Mocksville tobacco companies.

At stake is the attempt by CB Holdings LLC of Raleigh to buy Renegade Holdings Inc., Renegade Tobacco Co. and Alternative Brands Inc. for $15.6 million. An auction will take place Oct. 4. A final hearing on the sale of the companies will take place Oct. 12.

The deal, announced July 11, was projected to close Oct. 30. The Davie manufacturers have a combined 100 employees.

On Aug. 3, the National Association of Attorneys General filed an objection to stop the sale of all the assets. The association is involved because the 16 state attorneys general represent the largest unsecured creditor group.

It also has opposed a reorganization plan for the companies, citing a criminal investigation in Mississippi — at least 3 years old — involving Calvin Phelps, the owner of the companies, and accusations of "unlawful trafficking in cigarettes and other related crimes."

The association said the proceeds from selling the companies could be higher if the bankruptcy trustee, Peter Tourtellot, allowed for the escrow rights of Alternative to be sold separately.

After the landmark 1998 Master Settlement Agreement between 46 attorneys general and major U.S. manufacturers, smaller cigarette-makers emerged, grabbing significant market share because they could sell cheap cigarettes for less.

The states have passed laws aimed at reducing the smaller manufacturers' competitive advantage by forcing them to put money into escrow in case they are sued by the states.

The auction notice said Alternative's escrow rights are valued at between $40 million and $50 million in principal.

"The settling states' knowledge of sales of nonparticipating manufacturers' escrow rights owned (by others) indicated there is a market for such assets," the association said.

Prospective buyers for the escrow rights "are unlikely to have an interest in buying the other sale assets," the association said.

What makes the escrow rights valuable is that the holder can receive the interest on the principal, and would receive whatever money remains in the Alternative fund after 25 years.

Judge William Stocks set a $250,000 break-up fee, to be paid by the three companies, if another bidder trumps CB Holdings' offer.

Charles Fuller, president and chief executive of CB Holdings, has said the operations would remain in Davie with no changes except for the Renegade and Alternative Brands names.

CB Holdings owns Firebird Manufacturing LLC, a manufacturing company in South Boston, Va., and Cherokee Brands LLC, a sales and distribution company recently renamed from Cherokee Tobacco Co.

The three manufacturers filed for Chapter 11 bankruptcy protection Jan. 29, 2009, and exited bankruptcy June 1, 2010.

They were put back into bankruptcy July 19, 2010, when the reorganization plan was vacated, in large part because of the criminal investigation.

Phelps also is facing a lawsuit alleging he made a fraudulent transfer of $8.1 million in assets from the three companies and used it to help buy six parcels of land, as well as Chinqua-Penn Plantation, two corporate jets, cigar-manufacturing equipment and a 2008 Maserati Quattroporte.

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