Brown & Williamson Statement
British American Tobacco PLC
5 June 2001
BROOKLYN JURY CLEARS TOBACCO INDUSTRY
OF ALL FRAUD AND FEDERAL CLAIMS
The following statement was released by our US subsidiary, Brown & Williamson
Tobacco Corporation, in response to the jury's verdict in the Empire Blue
Cross & Blue Shield trial in Brooklyn, New York. Two other Group subsidiaries
were also defendants in the case. B.A.T Industries p.l.c. was dismissed
earlier and British American Tobacco (Investments) Limited was held to be not
liable on all counts by the jury.
LOUISVILLE, KY - A Brooklyn, N.Y. jury has rejected all fraud and federal
racketeering claims against the tobacco industry in a suit brought by one of
the largest non-profit health insurer in the country.
Empire Blue Cross & Blue Shield originally had sought billions of dollars in
damages against the U.S. cigarette manufacturers. Instead, the 12-member jury
only found in favour of the plaintiffs under the consumer protection act
statute that is specific to New York State. The award against the industry was
$17.7 million.
'We are pleased that the jury saw through these broad sweeping fraud
allegations that have absolutely no merit,' said Kevin Dunne, an attorney for
Brown & Williamson Tobacco Corporation. 'The one claim upheld by the jury
dealt with a law specific to New York and we believe the Second Circuit Court
of Appeals will erase even this one claim.'
If the jury award was distributed to all of Empire Blue Cross Blue Shield's
4.1 million present subscribers, each would receive slightly more than $4. The
total award is probably not even going to cover what Empire spent on the case,
Brown & Williamson said.
The plaintiffs claimed that the companies purposefully misled their
subscribers by stating positions on smoking and health issues contrary to the
Surgeon General and by selling low-tar cigarettes knowing smokers compensated
to get higher tar.
In the trial held before Senior U.S. District Judge Jack B. Weinstein in his
Eastern District of New York court, the defendants argued that the companies
acted lawfully and responsibly. Specifically, the companies asserted that they
had developed the safest possible products. The companies said Empire's
subscribers were not misled, and that epidemiological studies show that
low-tar cigarettes actually are safer and were encouraged by the government.
Case Went On Despite Many Higher Court Rulings
The Empire case was one of three Blue Cross Blue Shield cases filed against
the tobacco industry in 1998. The other two were dismissed after federal
circuit courts determined the claims had no legal merit. In November 1999, the
Seventh U.S. Circuit Court of Appeals in Chicago ordered the dismissal of the
Arkansas Blue Cross & Blue Shield case, and on February 28, the Ninth U.S.
Circuit Court of Appeals in San Francisco affirmed the dismissal of the
Regence BCBS case. The Empire case was originally filed April 29, 1998.
In April 1999, the Second U.S. Circuit Court of Appeals issued its decision in
Laborers Local 17 dismissing, on grounds of remoteness, an essentially
identical claim for reimbursement of health insurance payments caused by the
tobacco industry.
Judge Weinstein denied the defendants' motion to dismiss the Empire Blue Cross
case on the same grounds. The companies sought discretionary review in the
Second Circuit of Appeals and the court said it would not review the case
before the trial was completed. The federal appellate courts rarely grant
discretionary review and the decision does not indicate support for the Empire
Blue Cross case.
Brown & Williamson Tobacco Corporation is the nation's third largest
manufacturer of cigarettes. Based in Louisville, Ky., its major brands include
KOOL, Lucky Strike, Pall Mall, GPC, Misty and Capri.
*** ENDS ***
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