446. In the 1980s as the tobacco companies prepared to disclose internal documents for the first time in Cipollone v. Liggett, et al., Docket No. 83-CV-2864 (D.N.J.), a subcommittee of litigation lawyers from the law firms of Arnold & Porter and Shook, Hardy & Bacon – who combined have represented Tobacco Institute, Philip Morris, Lorillard, R.J. Reynolds, and Brown & Williamson (see Section I.B. above) and have acted on behalf of all Defendants – met to discuss the import of the documents that might be released to the public. The lawyers realized that the documents would disclose that the Cigarette Company Defendants employed document destruction programs used to prevent production of adverse documents to potential plaintiffs. As such, as they prepared to produce documents, the Defendants' lawyers drafted anticipated press inquiries such as "Is it true that formal document destruction programs were instituted to cover up potentially damaging information?"

447. Defendants R.J. Reynolds, Philip Morris, BATCo, Brown & Williamson, Liggett, Lorillard, and CTR destroyed and concealed evidence to further the goals of the Enterprise to limit liability in lawsuits, to avoid statutory and regulatory limitations, and to further the scheme to defraud by suppressing evidence of the truth about the adverse health effects of smoking and its addictiveness.

(a) R.J. Reynolds

448. Defendant R.J. Reynolds destroyed documents, including scientific research documents, to prevent the disclosure of documents which it believed would likely be sought in litigation and in federal regulatory proceedings and would provide information to the public on the adverse impact of smoking on health.

449. While federal litigation was anticipated and, in fact, pending against R.J. Reynolds, company representatives destroyed on October 17, 1968 numerous Special Reports written by Alan Rodgman, one of R.J. Reynolds's chief scientists. Most of these documents concerned smoking and cancer causation, the very subject of the pending litigation.

450. In 1969, R.J. Reynolds's research department confirmed to the legal department that it would destroy documents to protect the company's position in smoking and health litigation. The research department indicated that it did "not foresee any difficulty in the event a decision is reached to remove certain reports from Research files. Once it becomes clear that such action is necessary for the successful defense of our present and future suits, we will promptly remove all such reports from our files . . . . As an alternative to invalidation, we can have the authors rewrite those sections of the reports which appear objectionable."

451. In 1991, at the same time or shortly before the FTC initiated proceedings against R.J. Reynolds's Joe Camel advertising campaign, R.J. Reynolds persuaded employees of the advertising agency of Young & Rubicam to destroy documents concerning the Joe Camel advertising campaign with the intent to prevent the documents from being available for use in the FTC's proceedings. This plan was confirmed in a November 1, 1991 facsimile cover sheet and letter sent form Young & Rubicam to R.J. Reynolds stating "[a]s we discussed . . . [t]his is what I'm going to destroy. . . . Also, under our current scrutiny, a wise move to rid ourselves of developmental work!!" The letter set forth a list of documents related to the Joe Camel campaign which were destroyed.

(b) Philip Morris

452. Defendant Philip Morris concealed documents, including scientific research documents, by secreting the documents at a foreign affiliate in order to prevent the disclosure of documents which it believed would likely be sought in litigation and in federal regulatory proceedings, and would provide information to the public on the adverse impact of smoking on health.

100. By 1960, R.J. Reynolds believed that there was a clear, strong, inherent risk from smoking of not only lung cancer, but also emphysema and COPD.

101. Lorillard conducted research which pointed to cigarette smoking as a cause of
cancer and other diseases. In the early 1960s, Lorillard conducted in-house experiments on animals that showed ciliastatic effects of tobacco smoke on the respiratory tract.

102. Philip Morris researchers and senior executives knew that cigarette smoking
caused disease as early as the 1950's.

103. A July 20, 1956 confidential memo to Philip Morris President and Chief
Executive Officer O. Parker McComas, Executive Vice President Joseph F. Cullman, III, and Vice Presidents George Weissman, W.H. Hatcher, and R.N. DuPuis concerning new product designs demonstrated Philip Morris's knowledge that smoking caused disease. In the memo, titled "Confidential memo re: new product advantages for ventilated cigarettes," Philip Morris scientists observed:

Decreased carbon monoxide and nicotine are related to decreased harm to the circulatory system as a result of smoking. . . . [C]arbon dioxide, although non-toxic in small amounts, is a respiratory contaminant, and its reduction in smoking is desirable. . . . [D]ecreased irritation is desirable . . . as a partial elimination of a cancer hazard. Decreased carbon monoxide and nicotine are related to decreased harm to the circulatory system as a result of smoking. . . . [I]ncreased oxygen content, according to the Warbury theory, means less chance of depriving cells of oxygen and of starting a possible chain of events leading to the information of a cancer cell.

104. A July 24, 1958 memorandum written by C. Mace, head of research for Philip
Morris, admitted that Philip Morris was aware that smoking was a causal factor for lung cancer. The Mace memorandum described a 1958 memorandum sent by a Philip Morris researcher to the company vice president of research and development – who later became a member of its Board of Directors – stating that "the evidence . . . is building up that heavy cigarette smoking contributes to lung cancer either alone or in association with physical and physiological factors."

105. Dr. Helmut Wakeham, a high ranking Philip Morris scientist, recognized the cancer-causing effect of cigarette smoke in a September 22, 1959 memorandum: "One of the main reasons people smoke is to experience the physiological effects of nicotine on the human system. Nicotine, to the best of present knowledge, does not produce cancer. Hence, in theory one could achieve the major advantage of smoking without the hazard of cancer. But Nicotine in tobacco smoke is present in the tar phase."

106. One Philip Morris report from the late 1950s notes that there were already eleven studies demonstrating "an association between mortality (death) or morbidity (illness) from cardiovascular disease and cigarette smoking." In this same report, summarizing an AHA statement, noted that since coronary disease was "the foremost cause of death in the American population" the number of individuals suffering from this disease would have to be "many millions." The report noted the "convincing evidence which causally relates cigarette smoking to an obstructive diseases of the arteries" and that "many physicians" believe that "certain patients should not smoke."

107. Wakeham offered a proposal on November 15, 1961, made to the Philip Morris Research & Development Committee in New York, to investigate the possibilities of reducing carcinogens in smoke. The proposal listed fifteen carcinogens, or tumor starters, and twenty-four co-carcinogens, or tumor promoters, in cigarette smoke. Wakeham also cited the belief that "cardiovascular ailments that may arise from smoking are due to the physiological effects of nicotine," noting, in particular, nicotine's "[s]pecific effects on the adrenal medulla, causing it to discharge epinephrine, a hormone which accelerates the heartbeat, contracts the peripheral blood vessels, and raises the blood pressure." Philip Morris identified 84% of the more than 400 gas and particulate compounds in cigarette smoke, including those that he specifically recognized as carcinogens, in sidestream, or secondhand, smoke. Wakeham informed his superiors at Philip Morris that "a medically acceptable low-carcinogen cigarette may be possible," but indicated that it would take "money, time and unfaltering determination."

108. On April 20, 1962, Wakeham recommended diversification of Philip Morris's business at a greater rate due to the evidence that smoking leads to disease.

109. At the very time that Defendants worked in concert to disparage meticulously conducted scientific investigations, their advertisements offered unverifiable reassurances from "medical specialists." At the same time that industry researchers, such as Rodgman of R.J. Reynolds and Wakeham of Philip Morris, were detailing carcinogenic substances in cigarettes and potential strategies for their removal, TIRC put out a press release asserting: "Chemical tests have not found any substance in tobacco smoke known to cause human cancer or in concentrations sufficient to account for reported skin cancer in animals."

618. Not only did Defendants' conduct and research reflect a sophisticated understanding of nicotine and its role in smoking addiction, but they also deliberately withheld such information from the general public. It is clear that Defendants attempted to withhold and did withhold from public dissemination, and from public health authorities, accurate information regarding the addictiveness of nicotine in cigarettes.

619. Defendants accomplished this through the suppression of their own critical and corroborative research findings and by fostering controversy about the scientific knowledge concerning nicotine and its addictive effects that was publicly available.

620. Defendants have offered a remarkable misrepresentation of the history of tobacco-dependence related research in that it would seem to imply that the scientific basis for understanding tobacco dependence was known for many decades, if not centuries, and that until recent years, organizations which considered the question appropriately concluded that the evidence was not sufficient to draw such conclusions.

621. In fact, Defendants themselves possessed, from their own experiences and research, non-public information that led them to conclude, long before public health bodies did, that the primary reason people keep smoking cigarettes is to obtain nicotine, which has addictive drug effects. Defendants intentionally withheld this data (including many of studies on the physiological effects of nicotine in animals and humans, and much of its research on the determinants of nicotine dosing in cigarettes) when there were major public efforts to review and synthesize all available information, such as Surgeon General's Reports or congressional investigations. Instead, they engaged in a public relations offensive, relying on a long-discarded definition of addiction, to deny the consensus conclusion that smoking is addictive primarily because cigarettes effectively deliver nicotine.

622. Defendants publicly denied the addictiveness of smoking and nicotine's role
therein, because they feared that public acknowledgment of what was so well documented and
widely accepted internally would potentially expose them to governmental regulation and
adverse liability judgments from addicted smokers. Defendants thus took steps to limit the
nature and dissemination of nicotine-related research.

623. A September 9, 1980 Tobacco Institute internal memorandum revealed that the
tobacco companies recognized the fact that if they publicly admitted that nicotine was addictive,
they would undermine their litigation defense that a person's decision to smoke is a "free choice":
"[T]he entire matter of addiction is the most potent weapon a prosecuting attorney could have in
a lung cancer/cigarette case. We can't defend continued smoking as 'free choice' if the person
was 'addicted.'"

624. The following are examples of documents that reveal the scope of Defendants'
actions in limiting the nature and dissemination of nicotine-related research.

(a) Philip Morris

625. Discussing Philip Morris's research into the pharmacological effect, William
Dunn wrote to Research & Development Vice President Helmus Wakeham on February 19,
1969: '[D]o we really want to tout cigarette smoke as a drug? It is, of course, but there are
dangerous F.D.A. implications to having such a conceptualization go beyond these walls."

626. In a November 3, 1977 memorandum, Philip Morris's Principal Scientist William
Dunn described its strategy of concealing unfavorable research results. Regarding a nicotine
study to be undertaken by Scientist Carolyn Levy, Dunn stated, "If she is able to demonstrate, as she anticipates, no withdrawal effects of nicotine, we will want to pursue this with some vigor.
If, however, the results with nicotine are similar to those gotten with morphine and caffeine, we
will want to bury it."

627. In a November 29, 1977 memorandum, Philip Morris researcher Thomas Osdene
stated his concerns with the direction CTR was taking with its research into nicotine, saying that
with "the progress that has been claimed, we are in the process of digging our own grave," adding
that he feared that "the direction of the work being taken is totally detrimental to our position and
undermines the public posture we have taken to outsiders."

628. In March 1980, Dunn produced an internal memorandum discussing Philip Morris
research concerning the psychopharmacology of nicotine. The research was "aimed at
understanding that specific action of nicotine which causes the smoker to repeatedly introduce
nicotine into his body." The internal memorandum noted that it was "a highly vexatious topic"
that company lawyers did not want to become public because nicotine's drug properties, if
known, would support regulation of tobacco by the federal Food and Drug Administration
("FDA"). Consequently, the memorandum observed that while Philip Morris would continue its
research program 'to study the drug nicotine, we must not be visible about it. . . . Our attorneys . .
. will likely continue to insist on a clandestine effort in order to keep nicotine the drug in low
profile."

629. In a December 4, 1981 article, George Macklin, Director of Sales for Philip
Morris, UK summarized and published a presentation he had made to a Retail Confectioners and
Tobacconists convention. In the article, he said that "cigarettes are not just habit forming – the
body builds up a requirement for them," and that if it was raining, a smoker would still stop to
buy cigarettes because "he is addicted to cigarettes." In response to an angry inquiry about this public admission from Don Hotel of industry counsel Shook, Hardy & Bacon, Jules Hartog at
Philip Morris Europe wrote that he had explained to Macklin's boss that "this sort of mistake
could create a lot of problems for us" and that he had been promised that "such unfortunate
incidents will not happen again" in the future.

630. A March 16, 1983 memorandum from researchers James Charles and Victor
DeNoble concerning their critiques of the Public Health Service's Report titled "Why People
Smoke," acknowledged that Philip Morris had research with implications contrary to Philip
Morris's publicly stated opinions on nicotine, but that Philip Morris had not disseminated its
findings publicly: "Recent experiments in Vic's [DeNoble's] project have shown that there is a
behavioral component to tolerance (a learned phenomenon), but this work has not been
published."

631. In at least one case, Philip Morris threatened to take legal action against scientists
who sought to publish their research on addiction....

(ii) R.J. Reynolds

672. By 1971, R.J. Reynolds was also searching for the optimal amount of nicotine to deliver to smokers.

673. In 1971, R.J. Reynolds's Assistant Director of Research, Claude Teague, wrote of the danger to the industry of providing too little nicotine to smokers. Teague expressed his concern about the issue as one of profound and grave danger to R.J. Reynolds's ability to stay in business, writing "if we meekly accept the allegations of our critics and move toward reduction or elimination of nicotine in our products, then we shall eventually liquidate our business. If we intend to remain in business and our business is the manufacture and sale of dosage forms of nicotine, then at some point we must make a stand."

674. The "stand" Teague advocated was the delivery of an "attractive dosage" of nicotine. Teague wrote on April 14, 1972: "In a sense, the tobacco industry may be thought of as being a specialized, highly ritualized and stylized segment of the pharmaceutical industry. Tobacco products, uniquely, contain and deliver nicotine, a potent drug with a variety of physiological effects. . . . Nicotine is known to be a habit forming alkaloid, hence the confirmed user of tobacco products is primarily seeking the physiological "satisfaction" derived from nicotine and perhaps other active compounds. . . . Our Industry is then based upon design, manufacture, and sale of attractive dosage forms of nicotine. . . ." Later, Teague put a number to his theory, suggesting that "[n]icotine should be delivered at about 1.0-1.3 mg/cigarette, the minimum for confirmed smokers."

....

(iii) BATCo

679. BATCo recognized as early as 1959 that public health concerns could create consumer demand for lower yield cigarettes, a demand that presented the need for the company to determine an "optimum offer" of nicotine to deliver to smokers. In particular, BATCo recognized that reducing the nicotine per cigarette as much as possible to satisfy possible consumer demand "might end in destroying the nicotine habit in a large number of consumers and prevent it ever being acquired by new smokers."

680. By 1963, B&W and BATCo recognized they could design cigarettes to deliver optimum doses of nicotine. A 1963 letter from B&W to BATCo discussed "optimum levels" for nicotine and correlated the nicotine level in cigarettes with consumer acceptance. The letter recognized the nicotine level of B&W cigarettes was not obtained by "accident" and admitted that "even now . . . we can regulate, fairly precisely, the nicotine and sugar levels to almost any desired level management might require."

681. BATCo understood by 1976 that the trend in cigarettes would continue towards reduced tar and nicotine delivery products. BATCo recognized this trend could pose a threat to the industry: "There is a danger in the current trend of lower and lower cigarette deliveries-i.e. the smoker will be weaned away from the habit . . . . [I]f the nicotine delivery is reduced below a threshold 'satisfaction' level, then surely smokers will question more readily why they are indulging in an expensive habit." BATCo also recognized that there were methods of dealing with this trend, however. Recommended solutions varied from the political (insuring "every opportunity is taken to separate tar and nicotine in the minds of consumers and legislators"), to product modifications, such as filters, that could be used to "take advantage of the opportunities." 682. In 1985, BATCo research circulated a report about research being conducted to determine how to "make smaller amounts of nicotine work harder."

(d) Other Additives

809. Cigarette smoke also contains chemicals that can act synergistically to produce
effects that might be even more reinforcing than those of nicotine alone. For example, levels of acetaldehyde (a chemical involved in alcohol dependence) in smoke can be manipulated so as to
produce a mixture of acetaldehyde and nicotine that studies by Philip Morris indicated would be
more addictive than either drug alone.

810. Philip Morris studied the compound acetaldehyde during the 1980s. In 1982, a
Philip Morris scientist wrote that acetaldehyde readily penetrates the blood-brain barrier. In
1983, Philip Morris determined that acetaldehyde could enhance the positive reinforcing effect of
nicotine, and Philip Morris set as a goal finding the ratio of acetaldehyde to nicotine that would
have "optimal reinforcing effects." Philip Morris scientists even charted the effect of the
presence of acetaldehyde upon sales.

811. Former B&W Director of Research Dr. Jeffrey S. Wigand has testified
acetaldehyde is an impact booster that B&W knowingly used to augment the effect and transport of nicotine.

831. Defendants researched other sophisticated methods of manipulating the addictive potential of cigarettes. In 1977, BATCo scientists discussed the drug etorphine, noting that it "is 10,000 times as effective an analgesic as morphine and has addictive characteristics," noting that "[p]erhaps a regular dose of 0.2 ug/day would generate an addictive craving for the source. If so, 6 ug in, say, 30 cigarettes would provide such a dose . . . . Do you think the possibility that competitors might use such a route to create brand allegiance for low delivery cigarettes ought to be discussed at the Research Managers Conference?"

832. By the early 1980s, at least two of the Cigarette Company Defendants had
developed ways to remove all or nearly all nicotine from tobacco.
833. By 1981, R.J. Reynolds was denicotinizing burley tobacco. This tobacco may
have then been added back into certain tobacco blends to help control nicotine levels.

834. By 1982, Philip Morris had the ability to manufacture experimental cigarettes
containing very low amounts of nicotine. Consumer acceptance of these cigarettes in consumer
studies was very low. Based on these tests, Philip Morris concluded consumers would not accept
cigarettes with a minimum amount of nicotine over a long period of time. Nicotine-free
cigarettes were therefore determined to be "most unacceptable." Philip Morris revived the idea
of a nicotine-free cigarette in the late 1980s. After a period of test marketing, it was withdrawn
from the market.

835. Defendants extensively researched nicotine analogues, compounds similar to
nicotine which might produce the same effects as nicotine. By 1988, Reynolds was studying
hundreds of analogues for their pharmacological effects, including their effect on the same
receptors in the brain which are affected by nicotine.

836. The tobacco companies also investigated stereoisomers of nicotine – which have
the same chemical formula as nicotine, with the molecules arranged in a different fashion – for
their pharmacological activity.

837. Even research conducted in and around the early 1990s, at the time when the Food
and Drug Administration ("FDA") was investigating the industry's nicotine manipulation and its
implications for product regulation (discussed further below), evidenced a greater understanding
of nicotine manipulation than that testified to in 1994 by the companies' officials.

838. For instance, R.J. Reynolds's research on smoke pH and nicotine transfer
efficiency continued on even as the Congressional tobacco hearings were taking place. A 1994
Research Summary copied to in-house attorney Charles Blixt from R.J. Reynolds researchers
discussed efforts to "determine the effects of the addition of K2CO3 [potassium carbonate] (a
base) to tobacco on smoke nicotine transfer."

839. [Redacted]

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