LEGAL MATTERS: A Written Apology From Big Tobacco
Wednesday, January 15, 2014
Years ago the U.S. Justice Department filed a lawsuit against the major tobacco companies accusing them of violating the Racketeer Influenced and Corrupt Organizations Act (RICO). After a seven year fight that ended in 2006, the Department won. The Court ruled the tobacco companies defrauded the public for years by:
- Lying about how badly smoking was for your health;
- Lying about how addictive the nicotine they added to their products was;
- Falsely touting "low tar" and "light" cigarettes as healthier than regular cigarettes;
- Deliberately keeping their customers hooked by using chemicals to make cigarettes as addictive as possible; and
- Spending millions trying to hide what they knew were the dangers of secondhand smoke.
The Court did not hit the companies with a huge financial penalty but it did order them to fess up to their despicable conduct by making “corrective statements."
The companies then spent seven more years unsuccessfully fighting the verdict. Last Friday they (mostly) gave up and unveiled a tentative agreement with the Justice Department that spells out just how they plan to make the statements.
It will be hard to miss the mea culpa ’s – TV ads will run in prime time every week for a year, the statements will be on the web for 12 years, and there will be dozens of full-page newspaper ads.
The print ads are where we really get to see the lawyers’ handiwork. Each will begin with this statement:
“A Federal Court has ruled that Philip Morris USA, R.J. Reynolds Tobacco, Lorillard, and Altria deliberately deceived the American public about the addictiveness of smoking and nicotine, and has ordered those companies to make this statement.”
Thirty-six words instead of two simple ones: “We lied.”
Black Market Cigarettes in New England
Scholars at Michigan's Mackinac Center for Public Policy have analyzed tobacco sales data to estimate smuggling rates for each state.
The report uses 2011 data and finds that smuggling rates generally rise in states after they adopt large cigarette tax increases. Smuggling rates have dropped in some states, however, often where neighboring states have higher cigarette tax rates.
This means that people are buying cigarettes in lower-taxed states legally, and bringing them into nearby higher-taxed states to sell at a lower price with higher profits.
See which New England states have the highest percentage of smuggled cigarettes in the slides below:
Source: Mackinac Center for Public Policy; Tax Foundation.
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