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93-572: Truth Initiative was founded in 1999 as a result of the Tobacco Master Settlement Agreement (MSA). The MSA was announced in 1998, resolving the lawsuits brought by 46 U.S. states, the District of Columbia and five territories against the major U.S. cigarette companies, to recover state Medicaid and other costs from caring for sick smokers. The four other states settled separately. The tobacco industry agreed to pay

186-504: A Medicaid suit against the tobacco industry, which led to a $ 368 billion settlement in health-related damages by the tobacco companies. Thousands of pages of B&W documents were donated unsolicited to the University of California San Francisco (UCSF) Tobacco Control Archives in 1994. These documents consist primarily of scientific studies on the addictive nature of nicotine and other health effects of tobacco smoke. Also included

279-517: A Model Statute attached to the MSA and enacted by all of the settling states. Most of the settling states have also voluntarily adopted "complementary" legislation to provide additional enforcement tools to compel compliance with the Model Statute. The original escrow statutes provided that NPM payments would remain in escrow for 25 years, but authorized an early release of any escrow amount which

372-588: A Nonparticipating Manufacturer (NPM). As an incentive to join the Master Settlement Agreement, the agreement provides that, if an SPM joined within ninety days following the Master Settlement Agreement's "Execution Date," that SPM is exempt ("exempt SPM") from making annual payments to the settling states unless the SPM increases its share of the national cigarette market beyond its 1998 market share, or beyond 125% of that SPM's 1997 market share. If

465-467: A biochemist with a career focus on health issues, who became the Vice President of Research & Development at Brown & Williamson in 1989. He was hired to research safer means of delivering nicotine by reducing the harm of other tobacco compounds. At the time, both the addictiveness of nicotine and the health hazards of cigarettes were well known by the company and the industry, but were kept

558-452: A few states. Because the originally enacted escrow statute refunded escrow funds to the extent those funds exceeded each state's "allocable share" of the national MSA payment, NPMs were able to obtain refunds of most of the monies they had paid into a state's escrow fund. To illustrate, if an NPM only sold cigarettes in Kansas in 2006, the Kansas escrow statute would require that NPM to pay into

651-517: A fiercely guarded secret. Wigand soon found his research and recommendations discouraged, ignored and censored, leading to confrontations with the CEO, Thomas Sandefur. Thwarted and frustrated, Wigand turned his attention to improving tobacco additives, some of which were designed for "impact boosting", using chemicals like ammonia to enhance absorption of nicotine in the lungs and affect the brain and central nervous system faster. Wigand believed this process

744-545: A grant program for community colleges and historically black colleges and universities to create tobacco-free campuses. Examples of youth activism programs include: These community engagement programs are often an "on the ground" extension of the Truth campaign's work. Supporters of the campaign are called upon to support other anti-tobacco issues, such as a 2017 rally outside a Walgreens shareholders meeting in New York that

837-615: A lawsuit against Big Tobacco brought by Mississippi Attorney General Mike Moore , a tactic designed to nullify his confidentiality agreement before revealing the truth in an interview with Mike Wallace for 60 Minutes . The tobacco interests responded by getting a Kentucky judge to issue a gag order that subjected Wigand to arrest upon returning to the Commonwealth. Wigand's best hope remained in Bergman's pledge to air his story on 60 Minutes . Brown & Williamson threatened CBS with

930-435: A lawsuit for tortious interference , which could spoil an imminent merger plan with Westinghouse . Instead of the original interview, CBS aired an edited version which did not disclose the crucial details. Bergman bitterly opposed the breaking of his word to Wigand, which eventually led to his resignation from 60 Minutes in 1998. Brown & Williamson still tried to sue Wigand for theft, fraud, and breach of contract after

1023-464: A participating manufacturer, the excess shall be released from escrow and revert to such tobacco product manufacturer. Thus, an NPM still has to pay annually into a state's escrow fund an amount calculated by multiplying the number of cigarettes the NPM sells in that state during the year in question by the same per-cigarette amount for that year as set forth in the state's escrow statute. The NPM can obtain

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1116-485: A partnership of George T. Brown and his brother-in-law Robert Lynn Williamson, whose father was already operating two chewing tobacco manufacturing facilities. Initially, the new partnership took over one of the elder Williamson's factories. In February 1894, the new company, calling itself Brown & Williamson, hired 30 workers and began manufacturing in a leased facility. In 1927, the Brown and Williamson families sold

1209-481: A payment equal to its "Allocable Share," a percentage of the funds held in escrow that has been agreed upon by the settling states and memorialized in the MSA. This "Allocable Share" (as measured by a percentage of the total funds in escrow) does not vary according to how many cigarettes are sold in a particular state in a given year. During the drafting of the MSA, the OPMs and the settling states contemplated that many of

1302-468: A producer for 60 Minutes , Wigand stated that he and his family were anonymously stalked, intimidated and threatened with death should he talk. At the time, it was thought that Brown & Williamson were behind these intimidation attempts, but, just before the movie The Insider was released, Brown & Williamson renewed its efforts to reduce Wigand's credibility, and the FBI published a search warrant that

1395-411: A refund to the extent those escrowed funds are greater than the amount that the NPM would have had to pay under the MSA for that same year, based upon that same number of cigarettes sold. By the middle of 2000, domestic NPMs and importers had begun to obtain greater market share. The NAAG noted that reductions in settlement payments which result from an overall reduction in cigarette consumption benefit

1488-485: A release from its Kansas escrow fund of more than 49 per cent of its full escrow payment. In other words, the original allocable share release provision created an unintended loophole: it only operated as intended if the NPMs distributed their products nationally. In that circumstance, the NPMs' total escrow obligations to all states with similar tobacco statutes approximately totaled the payments those NPMs would have made under

1581-406: A settling state's allocated payment—that is, the portion of the annual MSA payment that a particular state receives in a given year—could be reduced by applying a non-participating manufacturers ("NPM") adjustment. That adjustment lowers a state's allocated share of the annual MSA payment if the OPMs lose market share to NPMs and if "a nationally recognized firm of economic consultants" determines that

1674-503: A well-known fact that teenagers like sweet products. Honey might be considered." Brown & Williamson's Kool menthol cigarettes were deliberately marketed to teenagers, as revealed by internal documents, which has led to a lawsuit brought by 28 U.S. states plus the District of Columbia and Puerto Rico . Despite Jeffrey Wigand's commitment to honor the confidentiality agreement and his initial refusal to talk to Lowell Bergman ,

1767-488: Is documentation of $ 500,000 in payments to Sylvester Stallone for promoting B&W products in five of his films. B&W sought to permanently remove the disputed material from the library with a suit filed in San Francisco Superior Court. The university contended that all of the documents were in the public domain and should be available to scholars and other interested parties. On May 25, 1995,

1860-500: Is now part of Imperial Tobacco . B.A.T. and Brown & Williamson claimed that since Commonwealth was not one of the five major U.S. cigarette companies, it would meet requirements that Lorillard did not, particularly since Commonwealth would be more likely to compete as a discount manufacturer. The FTC approved the $ 36 million deal in October. A battle in the war between the tobacco industry and smokers began with Jeffrey Wigand ,

1953-463: Is thus in the interest of the State to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise. In light of that, the model escrow statute requires an NPM selling cigarettes in [*1122] a given state to do one of two things: 1) join

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2046-578: The Truth Initiative , that is responsible for such campaigns as Truth and maintains a public archive of documents resulting from the cases. The settlement also dissolved the tobacco industry groups Tobacco Institute , the Center for Indoor Air Research , and the Council for Tobacco Research. In the MSA, the original participating manufacturers (OPM) agreed to pay a minimum of $ 206 billion over

2139-429: The 14 states that grow flue-cured and burley tobacco used to manufacture cigarettes are eligible to receive payments from the trust fund. The states are Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. At the time the Master Settlement Agreement became effective, the OPMs collectively controlled approximately 97% of

2232-534: The 1980s, tobacco companies claimed contributory negligence as they asserted adverse health effects were previously unknown or lacked substantial credibility. In the mid-1990s, more than 40 states commenced litigation against the tobacco industry, seeking monetary, equitable, and injunctive relief under various consumer-protection and antitrust laws. The first case was declared in May 1994 by Mississippi Attorney General Mike Moore . The general theory of these lawsuits

2325-481: The 46 settling states (including Kansas) have enacted these statutes. See K.S.A. § 50-6a04. The Kansas Attorney General is charged with enforcing the Escrow and Contraband Statutes. Brown %26 Williamson Brown & Williamson Tobacco Corporation was a U.S. tobacco company and a subsidiary of multinational British American Tobacco that produced several popular cigarette brands . It became infamous as

2418-467: The Ad Council to combat opioid addiction. Truth Initiative's signature program is its Truth campaign, a youth smoking prevention mass media public education program that has been widely credited with contributing to a significant drop in teen smoking. In 2000, 23% of American 8th, 10th and 12th graders smoked. As of 2016, that figure was 6%. The campaign exposes tobacco industry practices as well as

2511-659: The Allocable Share Release Repealer ("ASR Repealer"), a model statute which eliminated the ASR. In a memo dated September 12, 2003, Attorney General William H. Sorrell of Vermont, Chairman of the NAAG Tobacco Project, underscored the urgency of "all States taking steps to deal with the proliferation of NPM sales, including enactment of complementary legislation and allocable share legislation and consideration of other measures designed to serve

2604-729: The Attorneys General of the remaining 46 states, as well as of the District of Columbia, Puerto Rico, and the Virgin Islands, entered into the Master Settlement Agreement with the four largest manufacturers of cigarettes in the United States. ( Florida , Minnesota , Texas and Mississippi had already reached individual agreements with the tobacco industry.) The four manufacturers— Philip Morris USA , R. J. Reynolds Tobacco Company , Brown & Williamson Tobacco Corp. , and Lorillard Tobacco Company —are referred to in

2697-670: The Federal Tobacco Legislation Offset, the Litigating Releasing Parties Offset, and the offsets for claims over described in subsections XII(a)(4)(B) and XII(a)(8). The attorneys general did not have the authority to grant all this by themselves: the Global Settlement Agreement would require an act of Congress. Senator John McCain of Arizona carried the bill, which was much more aggressive than even

2790-448: The Kansas escrow fund $ .0167539 for each cigarette the NPM sold in that state. Pursuant to the refund provision in the originally enacted Kansas escrow statute, however, the NPM could obtain a refund of all but .8336712% of those payments. One commentator further explains that the calculations under the [originally enacted escrow] statutes were based on an assumption that a nonparticipating manufacturer sold cigarettes nationally. When this

2883-601: The MSA as the Original Participating Manufacturers (OPMs). This settlement process yielded two other national agreements: In the Smokeless Tobacco Master Settlement Agreement, which was executed at the same time as the Master Settlement Agreement, the leading manufacturer in the smokeless tobacco market (United States Tobacco Company, now known as U.S. Smokeless Tobacco Company ) settled with

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2976-532: The MSA provide these other tobacco companies with incentives to join the agreement. One such incentive, called the NPM Adjustment, provides that the payments by the PMs to the settling states may be adjusted according to the "NPM Adjustment Percentage." According to this provision, if a nationally recognized firm of economic consultants determines that the PMs have lost market share as a result of compliance with

3069-462: The MSA requires from OPMs and SPMs for sales which are not exempt. To the extent it differs, the OPMs pay slightly more than the SPMs, which pay slightly more than the NPMs. The escrow statute specifically requires that the NPM place into a qualified escrow fund by April 15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation)— Each state receives

3162-482: The MSA was "a significant factor contributing to the Market Share Loss for the year in question." The NPM adjustment does not apply to any state that has enacted and has in "full force and effect" a "qualifying" or model escrow statute. All settling states have enacted qualifying statutes. The escrow statute is premised on the legislative finding that, in light of the MSA settling the states' claims against

3255-432: The MSA within 90 days of its execution, the annual payments are determined by the number of cigarettes an SPM sells beyond the "grandfathered" volume—calculated as the higher of either the individual SPM's market share in 1998 (the year the MSA was executed) or 125% of the SPM's market share in 1997. If an SPM's sales volume or market share declines below the grandfathered amount, then it is not required to make any payments to

3348-401: The MSA, agreeing to "become a participating manufacturer (as that term is defined in section II(jj) of the [MSA]) and generally perform its financial obligations under the [MSA]," or 2) make similar annual payments into a state "liability reserve" escrow account, the funds of which can only be used to pay a judgment or settlement on a claim against the NPM. (After 25 years, any amount remaining in

3441-414: The MSA, the PMs' required payments to the settling states will be reduced to account for the loss. The NPM Adjustment therefore gives the settling states an incentive to protect the market dominance of the PMs, because [*551] otherwise the settling states themselves will receive less funds. The MSA also provides a safe harbor from the NPM Adjustment if a settling state "diligently enforces" the provision of

3534-492: The MSA. In addition, the congressional proposal would have mandated Food and Drug Administration oversight and imposed federal advertising restrictions. It also would have granted immunity from state prosecutions; eliminated punitive damages in individual tort suits; and prohibited the use of class actions, or other joinder or aggregation devices without the defendant's consent, assuring that only individual actions could be brought. The congressional proposal called for payments to

3627-448: The MSA. If an NPM concentrated its sales in a few state with low allocable share percentages, however, the NPM could obtain a refund of much of its escrow payments. Because the Kansas percentage was so low—roughly 0.8 per cent—NPMs concentrated their sales within Kansas and a few other states to receive immediate escrow refunds from those states. Rather than selling cigarettes nationally, several NPMs instead concentrated their sales in just

3720-616: The National Association of Attorneys General and the Majors jointly petitioned Congress for a global resolution. On June 20, 1997, Mississippi Attorney General Michael Moore and a group of other attorneys general announced the details of the settlement. The settlement included a payment by the companies of $ 365.5 billion, agreement to possible Food and Drug Administration regulation under certain circumstances, and stronger warning labels and restrictions on advertising. In exchange

3813-419: The OPMs have agreed to pay the settling states each year. Those annual amounts are subject to a number of adjustments. The OPMs each pay a portion of the total annual payment according to each OPM's "Relative Market Share" for the preceding year. For the SPMs (Subsequent Participating Manufacturers), the payments are determined by their relative market share as compared to other SPMs. For the SPMs that joined

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3906-404: The PMs are required to annually contribute to the states varies according to several factors. All payments are based primarily on the number of cigarettes sold. For the OPMs (Original Participating Manufacturers), the payments are determined in accordance with their relative market share as of 1997. The payment amount of a particular OPM is also dictated by the "Volume Adjustment," which compares

3999-423: The SPM's national cigarette sales for a given year. In addition to its annual payment obligations, in order [**9] to join the Master Settlement Agreement now, a non-exempt SPM must, "within a reasonable time after signing the" Master Settlement Agreement, pay the amount it would have been obligated to pay under the Master Settlement Agreement during the time between the Master Settlement Agreement's effective date and

4092-577: The Subsequent Participating Manufacturers (SPMs), are bound by the Master Settlement Agreement's restrictions and must make payments to the settling states as set forth in the Master Settlement Agreement. Collectively, the OPMs and the SPMs are referred to as the Participating Manufacturers (PMs). Any tobacco company choosing not to participate in the Master Settlement Agreement is referred to as

4185-576: The U.S. operations of B&W and BATUS, Inc. merged with R. J. Reynolds , creating a new publicly traded parent company, Reynolds American Inc. Some of its brands had been sold earlier in 1996 to the British tobacco company Imperial Tobacco and British American Tobacco . B&W was also involved in genetically modifying tobacco (notably the controversial Y1 strain). B&W was founded in Winston (today's Winston-Salem ), North Carolina, as

4278-473: The annual MSA payment among themselves according to each state's preset allocable share, rather than according to the volume of sales made in a particular state in a given year. An NPM's payments into a state's escrow fund, on the other hand, were dependent on the number of cigarettes that the NPM sold in that state in a given year. Nevertheless, the originally enacted escrow statute based any refund of those escrowed funds payments on that state's allocable share of

4371-479: The business to London-based British American Tobacco . The business was reorganized as the Brown & Williamson Tobacco Corporation. Manufacturing and distribution were expanded, and work on a new B&W factory in Louisville was begun. On April 26, 1994, British American Tobacco Industries, PLC announced an agreement to buy American Tobacco Company for $ 1 billion. A holding company, named " BATUS, Inc. "

4464-780: The collection of internal tobacco industry documents that its library already hosted; the collection was then named the Legacy Tobacco Documents Library. As of May 2017, the library contained 14.7 million internal documents (nearly 89 million pages) created by major tobacco companies related to their advertising, manufacturing, marketing, sales and scientific research activities. Truth Initiative provides individuals, coalitions, and organizations information and methods to reduce tobacco use in their communities. The organization trains and educates young people interested in tobacco control and partners with community-serving organizations to reduce tobacco use. This includes

4557-489: The companies would be freed from class-action suits and litigation costs would be capped. This proposed congressional remedy (1997 National Settlement Proposal (NSP), a.k.a. the "June 20, 1997 Proposal") for the cigarette tobacco problem resembled the eventual Multistate Settlement Agreement (MSA), but with important differences. For example, although the congressional proposal would have earmarked one-third of all funds to combat teenage smoking, no such restrictions appear in

4650-614: The company. The penalty for violating confidentiality was loss of his severance pay, potential lawsuits, and loss of medical coverage. At the time, his daughter suffered from a chronic illness which required continuous medical attention. Soon after this incident, the seven executives of " Big Tobacco " testified during congressional hearings that they believed "nicotine is not addictive". As early as 1972, Brown & Williamson reviewed concepts for flavored "youth cigarettes" , with flavors including cola and apple flavors. In one of their internal memos, Brown & Williamson advisers wrote "It’s

4743-527: The date on which the SPM joined the agreement. The addition of the Subsequent Participating Manufacturers meant that nearly all of the cigarette producers in the domestic market had signed the Multistate Settlement Agreement. Their addition was significant. The Majors allegedly feared that any cigarette manufacturer left out of a settlement (Non-Participating Manufacturers or NPMs) would be free to expand market share or could enter

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4836-455: The denominator in the calculation is the total OPM market share, not the total OPM and SPM market share." Furthermore, the parties agree that the amount the SPMs pay per cigarette is roughly the same as the per-cigarette amount that the OPMs pay under the MSA. To the extent the amount differs, the OPMs pay slightly more than the SPMs on a per cigarette basis. The payments from all the PMs are deposited into an escrow account until disbursement to

4929-439: The domestic market for cigarettes. In addition to these "originally settling parties" (OSPs), the Master Settlement Agreement permits other tobacco companies to join the settlement; a list of these "subsequently settling parties" (SSPs) is maintained by the National Association of Attorneys General. Since 1998, approximately 41 additional tobacco companies have joined the Master Settlement Agreement. These companies, referred to as

5022-422: The escrow account is returned to the NPM.) An NPM's annual escrow payments in a particular state are calculated by multiplying a per-cigarette amount, established by the state's legislature and set forth in the statute, by the number of cigarettes the NPM sold in that state in the year for which payment is being made. The parties agree that this per-cigarette amount is roughly equivalent to the per-cigarette amount

5115-438: The exempt SPM's market share in a given year increases beyond those relevant historic limits, the MSA requires that the exempt SPM make annual payments to the settling states, similar to those made by the OPMs, but based only upon the SPM's sales representing the exempt SPM's market share increase. SPMs joining the Master Settlement Agreement after this ninety-day exempt period must, instead, make annual payments based upon all of

5208-656: The first 25 years of the agreement. In September 1950, an article was published in the British Medical Journal linking smoking to lung cancer and heart disease. In 1954 the British Doctors Study confirmed the suggestion, based on which the government issued advice that smoking and lung cancer rates were related. In 1964 the United States Surgeon General 's Report on Smoking and Health likewise began suggesting

5301-606: The focus of investigations for chemically enhancing the addictiveness of cigarettes. Its former vice-president of research and development, Jeffrey Wigand , was the whistleblower in an investigation conducted by CBS news program 60 Minutes , an event that was dramatized in the film The Insider (1999). Wigand claimed that B&W had introduced chemicals such as ammonia into cigarettes to increase nicotine delivery and increase addictiveness . B&W had its headquarters in Louisville, Kentucky , until July 30, 2004, when

5394-472: The following: Tobacco Master Settlement Agreement The Tobacco Master Settlement Agreement ( MSA ) was entered on November 23, 1998, originally between the four largest United States tobacco companies ( Philip Morris Inc. , R. J. Reynolds , Brown & Williamson and Lorillard – the "original participating manufacturers", referred to as the "Majors") and the attorneys general of 46 states. The states settled their Medicaid lawsuits against

5487-543: The four states recovering a total of over $ 35 billion. Four states (Mississippi, Florida, Texas and Minnesota) settled with the OPMs before the MSA. The OPMs pay those four states (the "previously settled states") 17 per cent of the MSA per-cigarette payment amount for each cigarette sold in any state. Thus, the OPMs pay the settling and previously settled states 104.55 per cent of the per-cigarette amount for each cigarette sold. In 2005, OPM payments totaled about 2.2 cents per cigarette or 44 cents per box. On November 23, 1998,

5580-471: The global settlement. However, in the spring of 1998, Congress rejected both the proposed settlement and an alternative proposal submitted by McCain. While the proposed legislation was being discussed in Congress, some individual states began settling their litigation against the tobacco industry. On July 2, 1997, Mississippi became the first. Over the next year, Florida, Texas, and Minnesota followed, with

5673-531: The health effects and social consequences of smoking. Researchers in the Truth Initiative Schroeder Institute publish dozens of peer-reviewed research articles each year with the goal of identifying methods to minimize the harms of tobacco use, measure the effectiveness of interventions and identify best practices for tobacco control. Research is also done to assess the Truth campaign's efforts, both pre-and post-market, including

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5766-484: The interests of the States in avoiding reductions in tobacco settlement payments." He stressed that "NPM sales anywhere in the country hurt all States," that NPM sales in any state reduce payments to every other State," and that "[a]ll States have an interest in reducing NPM sales in every State." The "Allocable Share Release Repeal" ("ASR Repeal") revised the originally enacted escrow statute's refund calculation to remove

5859-529: The jurisdictions who signed the MSA, plus Minnesota and Mississippi. The next year, the major cigarette manufacturers settled with the tobacco-growing states to compensate tobacco growers for losses they were expected to suffer due to the higher cigarette prices resulting from the earlier settlements. Called the "Phase II" settlement, this agreement created the National Tobacco Growers' Settlement Trust Fund. Tobacco growers and quota holders in

5952-409: The major cigarette manufacturers, [i]t would be contrary to the policy of the State if tobacco product manufacturers who determine not to enter into such a settlement could use a resulting cost advantage to derive large, short-term profits in the years before liability may arise without ensuring that the State will have an eventual source of recovery from them if they are proven to have acted culpably. It

6045-464: The market with lower prices, drastically altering the Majors' future profits and their ability to increase prices to pay for the settlement. The Original Participating Manufacturers (OPMs) agreed to several broad categories of conditions: A section on enforcement gave jurisdiction to individual state courts to implement and enforce the term, and established a state enforcement fund ($ 50 million one-time payment). The participating manufacturers also paid

6138-426: The national MSA payment. This refund provision, then, assumed an NPM would sell its cigarettes nationally. If an NPM made the bulk of its sales in a few states, however, it could obtain a refund of those escrow payments in excess of what it would have paid each of those States had it been an SPM. For example, an NPM which made 50 per cent of its sales in Kansas (which has a relatively low allocable share) would obtain

6231-513: The number of cigarettes sold in each payment year to the number of cigarettes sold in 1997. If the number of cigarettes sold by an OPM in a given year is less than the number it sold in 1997, the Volume Adjustment allows that OPM to reduce its payment to the settling states. In other words, a reduction in the amount of cigarettes sold by the OPMs results in the settling states receiving less money. The MSA sets forth specific amounts that

6324-406: The organization. Examples of these programs include: Truth Initiative is led by a senior leadership team with representatives from each of its functional program areas. Headed by CEO and President Kathy Crosby, this team includes: In addition to awards for its Truth campaign , including being named among the top 10 ad campaigns of the 21st century, Truth Initiative has also been recognized with

6417-593: The reference to the enacting state's "allocable share" of the annual MSA payments. HN2The amended statute, therefore, now provides that an NPM will be entitled to a refund[t]o the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow, based on units sold in the state ... in a particular year, was greater than the [MSA] payments, as determined pursuant to section IX(i) of that agreement including, after final determination of all adjustments, that such manufacturer would have been required to make based on such units sold had it been

6510-696: The relationship between smoking and cancer. By the mid-1950s, individuals in the United States began to sue the companies responsible for manufacturing and marketing cigarettes for damages related to the effects of smoking. In the forty years through 1994, over 800 private claims were brought against tobacco companies in state courts across the country. The individuals asserted claims for negligent manufacture, negligent advertising, fraud, and violation of various state consumer protection statutes. The tobacco companies were successful against these lawsuits. Only two plaintiffs ever prevailed, and both of those decisions were reversed on appeal. As scientific evidence mounted in

6603-500: The sanitized interview was aired, and launched a 500-page smear campaign against him. However, his depositions at the Mississippi and Kentucky state courts were leaked, and were published by The Wall Street Journal as part of an investigative rebuttal to the attacks. CBS News, embarrassed, finally aired the full, original Wigand interview on 60 Minutes , leaving much of the nation in shock. Forty-six states ultimately filed

6696-427: The settling states' motivation was different from that of the OPMs, these states also were concerned about the effect of the tobacco companies that refused to join the MSA. The settling states worried that the NPMs would be able to regulate their sales so as to stay afloat financially while at the same time being effectively judgment-proof. As a result of these twin concerns, the OPMs and the settling states sought to have

6789-430: The settling states. The MSA includes a model escrow (or qualifying) act and provides strong incentives for settling states to adopt it. "[A] Qualifying Statute ... is one that effectively and fully neutralizes the cost disadvantages that the Participating Manufacturers experience vis-a-vis Nonparticipating Manufacturers within the state." The MSA encouraged settling states to adopt the model escrow act by providing that

6882-464: The settling states. SPMs that failed to join the MSA within 90 days of its execution do not receive the benefit of any grandfathered amount. Both exempt and non-exempt SPMs' annual payment obligations under the MSA are "calculated on the basis of the percentage of the four original participating manufacturers' total domestic market share represented by the SPM[s'] domestic market share. ... In other words,

6975-702: The six discount brands (Montclair, Malibu, Riviera, Crown's, Special 10's, and Bull Durham), but not the three premium brands ( Tareyton , Silva Thins, and Tall). In an out-of-court settlement in December 1995, the FTC also required Brown & Williamson to sell the Reidsville plant, but Lorillard did not want it and the company decided to close it. The FTC rejected the Lorillard deal on April 10, 1996, and B.A.T. and Brown & Williamson agreed July 25, 1996, to sell

7068-536: The six discount brands to Commonwealth Tobacco, LLC, a subsidiary of Commonwealth Brands, described as "a small cigarette maker based in Bowling Green, Kentucky , specializing in low-priced, unadvertised brands." The deal would require FTC approval. Commonwealth Brands, which would also buy the Reidsville plant, started as Commonwealth Tobacco Company in 1991 and changed its name in November of that year, and

7161-462: The smaller tobacco companies would choose not to join the MSA. This failure to join posed a potential problem for both the OPMs and the settling states. The OPMs worried that the NPMs, both because they would not be bound by the advertising and other restrictions in the MSA and because they would not be required to make payments to the settling states, would be able to charge lower prices for their cigarettes and thus increase their market share. Although

7254-481: The state unless the manufacturer becomes a PM under the MSA or is an NPM which makes all escrow payments required by the Escrow Statute. The model Contraband Statute imposes a criminal penalty on wholesalers who sell cigarettes made by NPMs who are not duly registered in the state and making full escrow payments. By the middle of 2002, only seven settling states had enacted Contraband Statutes. As of 2007, 44 of

7347-563: The states because health care costs imposed by each cigarette exceed the settlement payments. On the other hand, when reductions in settlement payments occur because NPM sales displace PM sales, the states receive no benefits if the NPMs do not make escrow payments. Therefore, in late 2000, the NAAG drafted a model Contraband Statute to ensure that NPMs made escrow payments on cigarettes. See PX 116. The model Contraband Statute provides that excise tax stamping agents may not stamp cigarettes for sale in

7440-621: The states billions of dollars in perpetuity, making the MSA the then-largest civil litigation settlement in U.S. history. The states directed that a portion of the money they received from the settlement should be used to establish a national public health foundation dedicated to prevent youth smoking and helping smokers quit: the American Legacy Foundation, now Truth Initiative. In 2018, the Truth Initiative partnered with Office of National Drug Control Policy and

7533-703: The states of $ 368.5 billion over 25 years. By contrast, assuming that the Majors would maintain their market share, the MSA provides baseline payments of about $ 200 billion over 25 years. This baseline payment is subject to the Inflation Adjustment, the Volume Adjustment, the Previously Settled States Reduction, the Non-Settling States Reduction, the NPM Adjustment, the offset for miscalculated or disputed payments described in subsection XI(i),

7626-663: The states' Attorney Fees. Generally, the participating manufacturers agreed not to "take any action, directly or indirectly, to target Youth within any Settling State in the advertising, promotion or marketing of Tobacco Products, or take any action the primary purpose of which is to initiate, maintain or increase the incidence of Youth smoking within any Settling State." (§III(a)) The restrictions specified included bans on outdoor billboards , advertising on transit vehicles, as well as restrictions on sports marketing, event sponsorships and promotional products. States were to receive over $ 206 billion over 25 years: The amount of money that

7719-417: The tobacco industry for recovery of their tobacco-related health-care costs. In exchange, the companies agreed to curtail or cease certain tobacco marketing practices , as well as to pay, in perpetuity, various annual payments to the states to compensate them for some of the medical costs of caring for persons with smoking-related illnesses. The money also funds a new anti-smoking advocacy group , called

7812-417: The total payments that such manufacturer would have been required to make in that year under the [MSA] ... had it been a participating manufacturer. This "Allocable Share Release Provision" was intended to create substantial equivalence between the escrow obligation of NPMs under the escrow statutes and the amounts the NPMs would have paid if they had they joined the MSA. The settling states agreed to divide

7905-426: The treatment of smoking-induced illnesses. Importantly, the defenses of personal responsibility that were so effective for the tobacco industry in suits by private individuals were inapplicable to the causes of action alleged by the states. Faced with the prospect of defending multiple actions nationwide, the Majors sought a congressional remedy, primarily in the form of a national legislative settlement. In June 1997,

7998-424: The use of the longitudinal Truth Longitudinal Cohort (TLC) survey of more than 10,000 young people and a continuous tracking study to assess campaign awareness and message receptivity. In the early 2000s the American Legacy Foundation (as the Truth Initiative was then known) gave around $ 10 million of the settlement funds it managed to the University of California San Francisco (UCSF) to help it formalize and expand

8091-578: Was a deliberate attempt to increase addiction to cigarettes. Wigand's disagreements with Sandefur reached a breaking point over a flavor enhancer called coumarin , which he believed to be a lung-specific carcinogen that the company continued to use in pipe tobacco. Wigand demanded its removal, but a successful substitute had not been found and Sandefur refused on the grounds that sales would drop. This argument led Sandefur to fire Wigand in 1993 and to force him to sign an extended confidentiality agreement forbidding him to speak of anything related to his work or

8184-635: Was created for this purpose. On October 31, 1994, the Federal Trade Commission filed suit in federal court in Manhattan to stop the deal. An April 1995 consent order required that to prevent antitrust violations, Brown & Williamson had 12 months to sell its Reidsville, North Carolina , plant and nine of the brands acquired in the American Tobacco purchase. Lorillard Tobacco Company agreed on November 28, 1995, to buy

8277-409: Was greater than the allocable share which that state would have received if the NPM had been an SPM. The originally enacted escrow statutes permitted an NPM to obtain a refund of the amount the NPM paid into the escrow fund to the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow in a particular year was greater than the State's allocable share of

8370-401: Was organized to pressure the pharmacy's board of directors to stop selling tobacco in its stores. The innovations center within Truth Initiative designs, builds and markets digital smoking cessation and prevention products that are centered around online social networks, text messaging and web and mobile applications. Any revenue generated by the innovations programs helps support other work at

8463-426: Was served on Wigand's home, strongly suggesting he fabricated the threats against himself. This claim is countered by an on the record interview by Wigand where he points out the local FBI field office was being used by Brown & Williamson via an ex-FBI agent to do dirty work for the company. Bergman provided him with armed bodyguards and, after legal consultation, urged him to testify for the State of Mississippi in

8556-551: Was that the cigarettes produced by the tobacco industry contributed to health problems among the population, which in turn resulted in significant costs to the states' public health systems. As Moore declared, "'[The] lawsuit is premised on a simple notion: you caused the health crisis; you pay for it.'" The states alleged a wide range of deceptive and fraudulent practices by the tobacco companies over decades of sales. Other states soon followed. The state lawsuits sought recovery for Medicaid and other public health expenses incurred in

8649-418: Was the case, the statutes functioned as intended, permitting the NPM to obtain a refund of excess amounts placed in escrow in each state. However, when an NPM followed a regional sales strategy, as several did, the original escrow statutes allowed the NPM to obtain a refund that was much larger than intended. To close this loophole, in late 2002, the National Association of Attorneys General ("NAAG") introduced

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