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UPDATE: State Lawsuits Against the Tobacco Industry


September 1996


According to papers filed on July 10 in the Minnesota lawsuit against tobacco companies, R.J. Reynolds (RJR) concluded in a 1984 secret report that it needed to pitch smoking to young adults to "replace" other smokers (Amy Kuebelbeck, "Cigarette firm saw need to aim at young adults," Buffalo News, July 11, 1996, p. A1).

The 77-page secret marketing report was filed by RJR as part of the discovery process in the Minnesota lawsuit. Citing federal research which showed that smokers begin smoking as early as age 12 and rarely start the habit after age 25, the report suggested that the company aggressively market its products toward younger people. "Younger adult smokers are critical to RJR's long term performance and profitability. Therefore, RJR should make a substantial long-term commitment ... to younger adult smoking programs," the report said.

RJR spokeswoman Peggy Carter stressed that the report defined young smokers as aged 18 to 24. She added that since the report was written, RJR's market share of 18- to 24-year-old smokers has dropped from 20% to less than 13%.

Minnesota Attorney General Hubert Humphrey III said the document was central to the state's case. The suit accuses tobacco companies of intentionally trying to maintain its markets by making cigarettes appealing to children and teenagers. Minnesota is seeking to recover Medicaid costs spent on treating smoking-related illnesses.


On June 27, the Florida Supreme Court in Tallahassee cleared the way for Florida to proceed with a lawsuit against cigarette manufacturers ("Florida Court Gives Go-Ahead For a Cigarette Liability Suit," New York Times, June 28, 1996, p. A24).

In a 4-to-3 ruling, the court upheld a state liability law widely viewed as a legal threat to the tobacco industry. The 1994 law called the Medicaid Third-Party Liability Act strips the tobacco industry from using the legal defense that smokers assume part of the risk of cigarette smoking. This cleared the way for Governor Lawton Chiles to proceed with his lawsuit that seeks to reclaim the cost of treating Medicaid patients who have cancer, emphysema or other diseases related to tobacco use. The state is expected to seek more than $1 billion from the tobacco industry. Trial is expected to begin in August 1997 at a West Palm Beach circuit court, said Harold Lewis, the Governor's inspector general. Experts say the Florida lawsuit is particularly strong due to the state liability law.

But the court ruled that the state would have to identify every Medicaid recipient in the lawsuit, which could complicate the state's suit. "We are delighted that the Florida Supreme Court has agreed with our position that this lawsuit must focus on individual Medicaid recipients," said Charles R. Wall, a senior vice president for Philip Morris U.S.A.


On June 13, State District Judge Joe Hart refused to block Texas' federal lawsuit to recover $4 billion in Medicaid costs (Clay Robison, "State judge won't block tobacco suit," Houston Chronicle, June 14, 1996).

The tobacco industry had petitioned the court to block the federal lawsuit filed by Attorney General Dan Morales. The industry contends that Morales lacked the authority to sue for Medicaid reimbursement on behalf of the general public, rather than for specific clients. Judge Hart did not dismiss the petition, but delayed action on it until the federal court hears some of the case. "It makes no sense whatsoever for two different courts to decide different but major issues in what should be one lawsuit. ... All of the causes of action can be heard in federal court" said Judge Hart.

"We now have the green light to proceed in federal court," Morales said. Morales contends that the industry violated state and federal laws, including racketeering, antitrust and consumer protection statues. The suit filed in Texarkana in March seeks to reclaim Medicaid costs associated with smoking-related illnesses in Texas since 1980.


Arizona, Kansas and Michigan joined the list of ten other states who are suing tobacco firms to recoup billions of dollars in costs for treating smoking-related illnesses. Arizona and Kansas filed lawsuits on August 20 and Michigan filed on August 21 (Associated Press, "3 States Join 10 Suing Tobacco Firms," Washington Post, August 22, 1996, p. A12).

Arizona's lawsuit seeks $500 million from the tobacco industry for the state's Medicaid program. Approximately $300 million would pay for the costs paid by the state in treating illness related to smoking and the rest would go to future expenses. In addition, Arizona asks the court to forbid smoking advertisements designed to attract young people. "It is time to hold the tobacco companies responsible for the misery they have caused the citizens of the state of Arizona," said Arizona Attorney General Grant Woods.

Michigan Attorney General Frank Kelley said his state's lawsuit seeks $14 billion. The Michigan suit also asks tobacco companies to stop advertising their products to children, to fund public education campaigns, and to disclose information on the effects of cigarette smoking to human health. "It demands that the tobacco industry pay for the consequences of its actions," said Kelley.

Kansas is suing to recoup three years of Medicaid costs related to smoking. Attorney General Carla Stovall estimates that smoking-related illnesses cost Kansas about $100 million a year. Kansas is seeking a ban on youth-oriented advertising as well.

Tobacco company officials called the new lawsuits an attempt by these states to board "the politically correct bandwagon." Defendants named in the suits include R.J. Reynolds Tobacco Co., Philip Morris Inc., Brown and Williamson Tobacco Corporation and its owner, B.A.T. Industries, the Liggett Group, Lorillard Tobacco Co., the American Tobacco Co., the Council for Tobacco Research and the Tobacco Institute Inc.


On August 22, Oklahoma filed a 98-page lawsuit demanding tobacco companies repay more than $1 billion in costs for Medicaid and other public health programs. Attorney General Drew Edmondson accuses the tobacco companies of manipulating nicotine levels to get smokers addicted and targeting children in their advertising. His lawsuit also demands that the tobacco industry stop advertising to children, disclose smoking-related health information and fund public education campaigns (Associated Press, "Oklahoma Sues Tobacco Firms," Washington Post, August 24, 1996, p. A8).