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Geanacopoulos v. Philip Morris USA, Inc.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

February 19, 2016

Thomas Geanacopoulos [1] on Behalf of a Class
v.
Philip Morris USA, Inc No. 132896

          Filed Date February 24, 2016

          FINDINGS OF FACT AND CONCLUSIONS OF LAW AFTER TRIAL

          Edward P. Leibensperger, Justice of the Superior Court.

         INTRODUCTION

         Were purchasers of Marlboro Lights cigarettes during the class period of 1994-1998 deceived or misled by Philip Morris USA, Inc. with respect to whether Marlboro Lights were less harmful or safer than Marlboro regular cigarettes? If so, did the purchasers suffer a cognizable injury as a result of the deceitful conduct that may be compensated by damages? These are the two basic questions presented by this action filed in 1998 and litigated extensively over seventeen years, culminating in a five-week trial before this court. What follows is a brief recitation of the litigation history and my findings of fact and conclusions of law after trial.

         BACKGROUND

         Plaintiffs filed their complaint on November 25, 1998, alleging that the conduct of Philip Morris with respect to the advertising, marketing, and sale of Marlboro Lights cigarettes was deceptive in violation of G.L.c. 93A (" c. 93A"), the Massachusetts consumer protection statute. Specifically, they claimed that Philip Morris engaged in practices prohibited by that statute " by misleading the public into believing that their product, Marlboro Lights, would deliver lower levels of tar and nicotine, when [the company] knew the truth to be otherwise and, in fact, intentionally designed the product so that most smokers of Marlboro Lights would receive as much, or more, tar and nicotine than if they had smoked regular cigarettes." Aspinall v. Philip Morris Co., Inc., 442 Mass. 381, 382, 813 N.E.2d 476 (2004) ( Aspinall I ). In 2001, a class consisting of purchasers of Marlboro Lights in Massachusetts during the four years preceding the filing of the complaint on November 25, 1998, was certified. That certification was affirmed by the Supreme Judicial Court in 2004. Id. at 402. Subsequently, in December 2005, the class definition was modified by a decision of this court (Lauriat, J.) to include " Massachusetts residents and residents of surrounding states [Connecticut, Maine, New Hampshire, New York, Rhode Island and Vermont] who regularly purchased Marlboro Lights in Massachusetts during the class period." Aspinall v. Philip Morris Cos., Inc., 20 Mass. L. Rptr. 300 (Mass.Super.Ct. 2005). The court then approved notice to the class members. The certified class is seeking recovery for economic injuries, only; not for personal injuries.

         The Supreme Judicial Court addressed this case again in 2009 when it held that plaintiffs' claims were not preempted by Federal law precluding states from requiring additional warnings about smoking and health. The Court also held that plaintiffs' claims were not barred by § 3 of c.93A prohibiting an action based on conduct permitted by Federal law. Aspinall v. Philip Morris. Inc., 453 Mass. 431, 437, 902 N.E.2d 421 (2009) ( Aspinall II ).

         In 2014, this court (Kaplan, J.) issued a decision regarding potential remedies available to plaintiffs. Aspinall v. Philip Morris Cos., Inc., 32 Mass. L. Rptr. 75 (Mass.Super.Ct. 2014) (" Aspinall-Remedies Decision "). The court noted the Supreme Judicial Court's approval in Aspinall I of the following measure of actual damages: The difference between the price paid by purchasers of Marlboro Lights and the true market value of the " misrepresented' cigarettes actually received." Aspinall I at 399. Actual damages might possibly be doubled or trebled if the court finds that the use or employment of the unfair and deceptive acts was a willful or knowing violation of the statute. If plaintiffs are unable to prove actual damages, " they will be entitled to recover statutory damages under G.L.c. 93A, § 9 (3)." Aspinall I at 400. Justice Kaplan held that such statutory damages would be $25 per class member, as opposed to $25 for each purchase of Marlboro Lights. In addition, he held that plaintiffs could not recover an additional amount over actual damages or statutory damages for disgorgement of profits from Philip Morris.

         In 2015, Philip Morris moved for summary judgment based on the argument that plaintiffs are not only unable to prove actual damages, but are also unable to prove any compensable injury cognizable under c. 93A. As a result, Philip Morris argued, plaintiffs may not recover even the statutory damages of $25. In a decision dated August 10, 2015, this court, by the undersigned, denied the motion. Aspinall v. Philip Morris USA, Inc., 2015 WL 9999126 (Mass.Super.Ct. 2015) (" Aspinall-Summary Judgment Decision ").

         FINDINGS OF FACT AND CONCLUSIONS OF LAW AS TO LIABILITY

         I. Undisputed Facts

         The parties presented certain agreed upon or stipulated statements of fact that provide background for the dispute.

         Philip Morris first manufactured and sold Marlboro Lights cigarettes in 1971. It marketed, distributed and sold Marlboro Lights to its direct customers for ultimate resale to consumers purchasing cigarettes in Massachusetts and throughout the United States from 1972 through June 2010. From the introduction of the product in 1971 until the first quarter of 2003, every pack of Marlboro Lights bore the descriptors " Lights" and " Lowered Tar & Nicotine."

         In 1967, the Federal Trade Commission (" FTC") began measuring the tar and nicotine yield of cigarettes using a standardized test method known at various times as the " Cambridge Filter Method" or the " FTC Method." The FTC Method measured the tar and nicotine yields of cigarettes when " smoked" by a machine under standard protocols. From 1994 through 1998, Marlboro Lights and Marlboro regular cigarettes, known as " full-flavor" or " Marlboro Reds, " showed the following tar and nicotine yields when measured according to the FTC method:

Year

Marlboro Reds Tar/Nicotine

Marlboro Lights Tar/Nicotine

(mg. per cigarette)

(mg. per cigarette)

1994

16/1.1

10/0.8

1995

16/1.1

11/0.8

1996

16/1.1

10/0.8

1997

16/1.1

11/0.8

1998

15/1.1

11/0.8

         After the end of the class period, in October 1999, Philip Morris included on its website a statement that " Philip Morris does not imply in its marketing, and smokers should not assume, that lower-yielding brands are 'safe, ' or are 'safer' than full-flavor brands." Beginning in late 2002 and continuing in at least one quarter every year through 2008, Philip Morris placed a threefold onsert--or pamphlet--on some packs of Marlboro Lights. The onserts were titled " Information for Smokers." The onserts stated " You should not assume that cigarette brands using descriptors like 'Ultra Light, ' 'Light, ' 'Medium' or 'Mild' are less harmful than 'full flavor' cigarette brands or that smoking such cigarette brands will help you quit smoking." In 2009 and 2010, Philip Morris used a tear tape on all " lights" brands, including Marlboro Lights, that contained printed text informing consumers that " 'Lights' does NOT mean safer."

         In the first quarter of 2003, Philip Morris removed " lowered tar and nicotine" as a descriptor from packages of Marlboro Lights, and in mid-2010, removed the " Lights" descriptor entirely. Since that time, Philip Morris continues to market and sell the cigarettes formerly known as Marlboro Lights as " Marlboro Gold." Beginning in 2011, and continuing to today, every pack of Marlboro Gold has a tear tape that reads, " Nothing about this cigarette, packaging, or color should be interpreted to mean safer."

         II. Phillip Morris Represented Marlboro Lights To Be a Less Harmful or Safer Cigarette

         In 1964, the U.S. Department of Health Education and Welfare issued a landmark report entitled " Smoking and Health: Report of the Advisory Committee of the Surgeon General of the Public Health Service." The report affirmatively linked smoking with causing lung cancer and other adverse health consequences. In the aftermath of that report, and earlier published studies going back for decades regarding the adverse health effects of smoking, Philip Morris recognized the need, in order to preserve its business, to develop and market a " healthier" cigarette. For example, in a 1966 " special project" entitled " Market Potential of a Health Cigarette" the company noted that " [i]f we could develop a medically and governmentally endorsed 'healthy' cigarette that tasted exactly like a Marlboro, delivered the nicotine of a Marlboro, and was called a Marlboro, it would probably become the best selling brand." This prescient statement predicted the development and release by Philip Morris of Marlboro Lights in 1971.

         Plaintiffs presented the testimony of Dr. Robert Proctor, a professor of the history of science at Stanford University. Dr. Proctor holds a Ph.D. in the history of science from Harvard University. Dr. Proctor has specialized in the history of the cigarette industry in the United States, including the design and marketing of cigarettes. He has authored and published peer-reviewed articles and books relating to the marketing and sale of cigarettes. He was a senior scientific reviewer for the 2014 Surgeon General's report on the health consequences of smoking. He has reviewed hundreds of thousand of documents produced by the tobacco industry including internal Philip Morris documents produced in litigation. Based on those documents and his review of the scientific literature, Dr. Proctor offered opinions regarding the state of scientific knowledge in the wake of the link between smoking and cancer publicized in the 1950s and in the 1964 Surgeon General's report and the marketing strategy undertaken by Philip Morris. I find that Dr. Proctor's testimony aided the court in understanding and interpreting the state of scientific knowledge at various times and the importance of documents presented from Philip Morris' internal files. I find that he is well qualified and that his testimony was supported by the evidence.

         Dr. Proctor's testimony and the Philip Morris documents persuasively demonstrated that Marlboro Lights cigarettes were developed, designed and marketed by Philip Morris as a " health reassurance" product. Philip Morris was concerned about people quitting smoking as well as attracting new smokers in light of the " health scare." Numerous Philip Morris documents reflect the company's desire to develop a product for the health conscious marketplace. This motivation led to the creation of " Project Gold."

         Project Gold was the code name for what became Marlboro Lights. James Morgan was the Philip Morris executive in charge of the project. He became the brand manager for Marlboro Lights and, later, the CEO of Philip Morris. Mr. Morgan testified by way of a videotaped deposition taken in 2002. Mr. Morgan admitted that Marlboro Lights were marketed to people seeking a low tar and nicotine cigarette, including those who might want to switch to low tar from a full flavor cigarette. He conceded that at least the " majority" of people seeking a low tar and nicotine cigarette were doing so because of health concerns. Philip Morris was aware that those people believed that low tar meant less harmful. Mr. Morgan also conceded that the descriptor " Lights" conveyed to consumers, and was perceived as meaning, lower tar and, thus, less harmful. Philip Morris' own research from as early as 1974, concluded that with respect to the lowered tar and nicotine descriptor on each pack of Marlboro Lights, " [t]he 'lowered' line clearly means less tar . . . and better for your health . . ." Mr. Morgan acknowledged the company's awareness of that perception. He testified that the company did nothing to counter that perception.

         Other Philip Morris executives whose testimony was offered by plaintiffs through depositions confirmed that the raison d'étre of Marlboro Lights, and the aim of the continued marketing of the brand from 1971 through the class period, was to offer a cigarette perceived by smokers as less harmful than Marlboro Reds. Marlboro Lights was described as an " extension" of the Marlboro brand providing a similar flavor with the same aura projected by Marlboro Reds advertising. For example, in one advertisement Marlboro Lights was described as " the Spirit of Marlboro in a low tar cigarette." If there had not been a desire and plan by Philip Morris to market a " light" cigarette so as to capture the market of consumers seeking a less harmful cigarette, then Marlboro Lights would likely never have come into existence. In fact, the introduction of Marlboro Lights cut into the market share of Marlboro Reds. As health conscious behavior by consumers grew, Marlboro Lights became the leading cigarette brand in the United States (in terms of market share) by the time of the class period. As described by a former vice-chairman of Philip Morris (Ross R. Millheiser), the low tar cigarette was advertised and marketed because it was perceived to be safer, and consumers would purchase it because it would be better for them. This is exactly what Philip Morris was told by its survey experts. In a 1979 study to assess the low tar market, prepared for Philip Morris by The Roper Organization, the company was told " [t]he appeal of low tars is simple and single--better for you, less harmful, easier on the lungs, throat, etc."

         Philip Morris' intent and plan to market Marlboro Lights as a less harmful or safer cigarette is confirmed in its Strategic Plan for the period 1992-1996 (a time that includes a portion of the class period). In that document, there is a summary of the company's knowledge and rationale for low tar and nicotine cigarettes: " An analysis of the cigarette market over the last 50 years suggests that there have been only two major influences on smokers buying patterns; namely, smokers seeking to address their perceived health concerns and smokers seeking price relief." The document then confirms that the company's development of the " low tar segment" was a change in design " driven by perceived health concerns."

         Dr. Proctor offered the opinion that Philip Morris' plan was to convey " safety" with the descriptors " Lights" and " Lowered Tar & Nicotine" on each pack of Marlboro Lights. I agree based upon the Philip Morris documents and the testimony of its executives. My finding is that Philip Morris, intentionally, knowingly and willfully, conveyed through the use of the descriptors for more than thirty years that Marlboro Lights cigarettes were less harmful, and therefore safer, than Marlboro Reds and other full flavor cigarettes.

         III. The Representation by Philip Morris That Marlboro Lights Was Less Harmful or Safer Than Marlboro Reds Was Material To Purchasers' Decisions To Buy Marlboro Lights During the Class Period

         The logical inference from the success of the Philip Morris strategy to develop and market Marlboro Lights is that the " less harmful" representation by the company was material to the decision to buy Marlboro Lights. If consumers were not motivated by the promise of a " less harmful" cigarette, it is reasonable to conclude that they would have continued to buy Marlboro Reds. Marlboro Lights would not have overtaken Marlboro Reds as the leading brand.

         Whether the purchaser was originally a Marlboro Reds smoker, a smoker who was trying to quit by reducing his or her intake of nicotine, or a new smoker, his or her reasonable choice was to purchase a less harmful cigarette that delivered a similar taste and conveyed a similar image as Marlboro Reds. That is what Philip Morris expected and that is what the market research contracted for by Philip Morris confirmed, including research conducted during the class period. Based on the reported research, Dr. Proctor concluded that " a lot of people who might otherwise have quit" shifted to a cigarette they thought was safer because it was lower in tar and that " people bought the myth [that Marlboro Lights cigarettes were less harmful], acted on it, and Marlboro Lights becomes the best selling cigarette in the country as a result of these descriptors."

         At trial, Philip Morris attempted to rebut the conclusion that the " less harmful" message was material to consumers' choices to buy Marlboro Lights by introducing into evidence various articles, news reports and public service advertisements (the " reports") going back to the 1930s, and increasing in intensity in the 1980s and 1990s. The gist of the reports was that cigarettes lower in tar and nicotine may not be better for you because the smoker will compensate; i.e., puff harder and longer, inhale deeper and smoke more cigarettes to obtain the level of tar and nicotine the smoker desires. Philip Morris offered this evidence, at least in part, to suggest that plaintiffs in the class period could not have bought Marlboro Lights on the premise that the cigarettes were less harmful.

         This attempt at rebuttal is unpersuasive and counter-productive to Philip Morris.[2] Isolated reports in journals and magazines, and even news reports and public service announcements about the phenomenon of compensation, hardly overcomes the implied message of " less harmful" that was featured on every pack of Marlboro Lights. Dr. Proctor testified that the public health community and the public in general did not have sufficient information, including information from the files of Philip Morris, to understand the depth, and completeness, of compensation until 2001. According to Dr. Proctor, the " sales of Lights showed the continuing misunderstanding [of Marlboro Lights being less harmful]." Even Philip Morris' CEO during most of the class period, Mr. Morgan, acknowledged that it was " very unlikely that consumers, or at least the vast majority of consumers" would know about the phenomena of compensation. I find that a reasonable, objective consumer would continue, throughout the class period, to view the health reassurance message conveyed on each pack of Marlboro Lights as a material factor in choosing to buy Marlboro Lights.

         IV. Philip Morris Knew That Marlboro Lights Cigarettes Were Just As Harmful, if Not Potentially More Harmful, to Smokers Than Marlboro Reds

         A. Philip Morris Knew That People Smoke To Get Nicotine and Compensate To Satisfy Their Need for Nicotine by Adapting Their Smoking Behavior

         Philip Morris knew that nicotine is addictive. In contrast to its public denial of the addictive nature of nicotine, an internal document from 1963 acknowledged that " nicotine is addictive" and stated " we are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms." The company's research confirmed that " the primary motivation for smoking is to obtain the pharmacological effect of nicotine." A Philip Morris document from 1972 noted that the " psychological response to nicotine can readily be elicited by cigarettes delivering in the range of 1 mg. of nicotine" and that attempts to introduce low nicotine brands into the market were not successful in capturing a substantial segment of the market.

         Dr. Peter Shields was called as an expert witness for plaintiffs. Dr. Shields is a medical doctor specializing in lung cancer research and treatment. He has concentrated his career on the connection between smoking and lung cancer, has published more than 200 articles in peer-reviewed journals and has been employed by, and then served as an advisor to, the National Cancer Institute. I find that Dr. Shields is a highly qualified expert witness whose testimony was credible and persuasive.

         Dr. Shields explained that individual smokers, whether long-time smokers or new smokers, develop a " nicotine thermostat " The thermostat measures their internal need to obtain the benefits of nicotine such as elevation of mood, relaxation, suppression of appetite, etc. A smoker will smoke to obtain the level of nicotine necessary to obtain his or her satisfaction on the nicotine thermostat. The smoker will do so largely in a subconscious manner. If presented with a cigarette that does not deliver nicotine in an amount to satisfy the smoker's nicotine thermostat, the smoker subconsciously compensates by taking deeper puffs, holding the smoke longer, smoking the cigarette closer to the butt, or smoking more cigarettes. This behavior, known as compensation or titration, was well known to Philip Morris as evidenced by numerous documents in the company's files.

         Philip Morris internal documents from the 1970s recognize that " smokers develop a daily nicotine quota for tar and nicotine" and will change " the duration and volume of their puffs" to reach the quota. " The smoker is going to get the amount of tar he wants regardless of how many he smokes and regardless of the tar delivery of the cigarette . . . It may well be that the Marlboro smoker today gets as much from his cigarette as the Philip Morris non-filter smoker got 20 years ago by puffing and inhaling more efficiently so that a greater proportion of that made available to him is gotten over into his system."

         It is on the basis of Philip Morris' knowledge of the addictive nature of nicotine and the phenomenon of smoker compensation that Philip Morris' design of Marlboro Lights must be evaluated.

         B. Philip Morris Designed Marlboro Lights Knowing That The Design Allowed If Not Encouraged a Smoker To Obtain the Same Tar and Nicotine As Marlboro Reds

         Dr. William Farone, a high-level Philip Morris employee from 1976 to 1984, testified for plaintiffs, both live and by deposition transcript. Dr. Farone was the Director of Applied Research at Philip Morris. He was involved in the design of Philip Morris cigarettes and, in that capacity, attended weekly meetings with the top executives of ...


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