| Contingencies | Contingencies Legal proceedings covering a wide range of matters are pending or threatened in various U.S. and foreign jurisdictions against Altria and its subsidiaries, including PM USA and USSTC, as well as their respective indemnitees and Altria’s investees. Various types of claims may be raised in these proceedings, including product liability, unfair trade practices, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution and claims of competitors, shareholders or distributors. Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending or future cases. An unfavorable outcome or settlement of pending tobacco-related or other litigation could encourage the commencement of additional litigation. Damages claimed in some tobacco-related and other litigation are or can be significant and, in certain cases, have ranged in the billions of dollars. The variability in pleadings in multiple jurisdictions, together with the actual experience of management in litigating claims, demonstrate that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. In certain cases, plaintiffs claim that defendants’ liability is joint and several. In such cases, Altria or its subsidiaries may face the risk that one or more co-defendants decline or otherwise fail to participate in the bonding required for an appeal or to pay their proportionate or jury-allocated share of a judgment. As a result, Altria or its subsidiaries under certain circumstances may have to pay more than their proportionate share of any bonding- or judgment-related amounts. Furthermore, in those cases where plaintiffs are successful, Altria or its subsidiaries may also be required to pay interest and attorneys’ fees. Although PM USA has historically been able to obtain required bonds or relief from bonding requirements in order to prevent plaintiffs from seeking to collect judgments while adverse verdicts have been appealed, there remains a risk that such relief may not be obtainable in all cases. This risk has been substantially reduced given that 47 states and Puerto Rico limit the dollar amount of bonds or require no bond at all. As discussed below, however, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well. Such challenges may include the applicability of state bond caps in federal court. States, including Florida, may also seek to repeal or alter bond cap statutes through legislation. Although Altria cannot predict the outcome of such challenges, it is possible that the consolidated results of operations, cash flows or financial position of Altria, or one or more of its subsidiaries, could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome of one or more such challenges. Altria and its subsidiaries record provisions in the condensed consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except to the extent discussed elsewhere in this Note 12 . Contingencies : (i) management has concluded that it is not probable that a loss has been incurred in any of the pending cases; (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any of the pending cases; and (iii) accordingly, management has not provided any amounts in the condensed consolidated financial statements for unfavorable outcomes, if any. Litigation defense costs are expensed as incurred. Altria and its subsidiaries have achieved substantial success in managing litigation. Nevertheless, litigation is subject to uncertainty and significant challenges remain. It is possible that the consolidated results of operations, cash flows or financial position of Altria, or one or more of its subsidiaries, could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation. Altria and each of its subsidiaries named as a defendant believe, and each has been so advised by counsel handling the respective cases, that it has valid defenses to the litigation pending against it, as well as valid bases for appeal of adverse verdicts. Each of the companies has defended, and will continue to defend, vigorously against litigation challenges. However, Altria and its subsidiaries may enter into settlement discussions in particular cases if they believe it is in the best interests of Altria to do so. Overview of Altria and/or PM USA Tobacco-Related Litigation Types and Number of U.S. Cases Claims related to tobacco products generally fall within the following categories: (i) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs; (ii) health care cost recovery cases brought by governmental (both domestic and foreign) plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits; (iii) e-vapor cases alleging violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), fraud, failure to warn, design defect, negligence and unfair trade practices; and (iv) other tobacco-related litigation described below. Plaintiffs’ theories of recovery and the defenses raised in tobacco-related litigation are discussed below. The table below lists the number of certain tobacco-related cases pending in the U.S. against PM USA and, in some instances, Altria as of July 24, 2020, July 26, 2019 and July 23, 2018: July 24, 2020 July 26, 2019 July 23, 2018 Individual Smoking and Health Cases (1) 116 90 97 Health Care Cost Recovery Actions (2) — 1 1 E-vapor Cases (3) 621 Other Tobacco-Related Cases (4) 4 4 6 (1) Includes 24 cases filed in Massachusetts and 49 non- Engle cases filed in Florida. Does not include individual smoking and health cases brought by or on behalf of plaintiffs in Florida state and federal courts following the decertification of the Engle case (these Engle progeny cases are discussed below in Smoking and Health Litigation - Engle Class Action ). Also does not include 1,471 cases brought by flight attendants seeking compensatory damages for personal injuries allegedly caused by exposure to environmental tobacco smoke (“ETS”). The flight attendants allege that they are members of an ETS smoking and health class action in Florida, which was settled in 1997 ( Broin ). The terms of the court-approved settlement in that case allowed class members to file individual lawsuits seeking compensatory damages, but prohibited them from seeking punitive damages. In March 2018, 923 of these cases were voluntarily dismissed without prejudice. (2) See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below. (3) Includes 25 class action lawsuits, 561 individual lawsuits, 24 state or local government lawsuits and 11 lawsuits filed by school districts relating to JUUL e-vapor products. JUUL is an additional named defendant in each of these lawsuits. (4) Includes two inactive smoking and health cases alleging personal injury or seeking court-supervised programs or ongoing medical monitoring and purporting to be brought on behalf of a class of individual plaintiffs, including one case in which the aggregated claims of a number of individual plaintiffs are to be tried in a single proceeding, and two inactive class action lawsuits alleging that use of the terms “Lights” and “Ultra Lights” constitute deceptive and unfair trade practices, common law or statutory fraud, unjust enrichment, breach of warranty or violations of RICO. International Tobacco-Related Cases As of July 24, 2020, PM USA is a named defendant in 10 health care cost recovery actions in Canada, eight of which also name Altria as a defendant. PM USA and Altria are also named defendants in seven smoking and health class actions filed in various Canadian provinces. See Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement between Altria and Philip Morris International Inc. (“PMI”) that provides for indemnities for certain liabilities concerning tobacco products. Tobacco-Related Cases Set for Trial As of July 24, 2020, no Engle progeny cases or individual smoking and health cases against PM USA are set for trial through September 30, 2020. Cases against other companies in the tobacco industry may be scheduled for trial during this period. Trial dates are subject to change and some trials have been postponed due to the COVID-19 pandemic. Trial Results Since January 1999, excluding the Engle progeny cases (separately discussed below), verdicts have been returned in 69 tobacco-related cases in which PM USA was a defendant. Verdicts in favor of PM USA and other defendants were returned in 44 of the 69 cases. These 44 cases were tried in Alaska ( 1 ), California ( 7 ), Connecticut ( 1 ), Florida ( 10 ), Louisiana ( 1 ), Massachusetts ( 4 ), Mississippi ( 1 ), Missouri ( 4 ), New Hampshire ( 1 ), New Jersey ( 1 ), New York ( 5 ), Ohio ( 2 ), Pennsylvania ( 1 ), Rhode Island ( 1 ), Tennessee ( 2 ) and West Virginia ( 2 ). Of the 25 non- Engle progeny cases in which verdicts were returned in favor of plaintiffs, 20 have reached final resolution, and one case ( Gentile ) that was initially returned in favor of plaintiff was reversed post-trial and remains pending. See Smoking and Health Litigation - Engle Progeny Trial Results below for a discussion of verdicts in state and federal Engle progeny cases involving PM USA as of July 24, 2020. Judgments Paid and Provisions for Tobacco and Health Litigation Items (Including Engle Progeny Litigation) After exhausting all appeals in those cases resulting in adverse verdicts associated with tobacco-related litigation, since October 2004, PM USA has paid judgments and settlements (including related costs and fees) totaling approximately $753 million and interest totaling approximately $216 million as of June 30, 2020. These amounts include payments for Engle progeny judgments (and related costs and fees) totaling approximately $327 million and related interest totaling approximately $54 million . The changes in Altria’s accrued liability for tobacco and health litigation items, including related interest costs, for the periods specified below are as follows: For the Six Months Ended June 30, For the Three Months Ended June 30, (in millions) 2020 2019 2020 2019 Accrued liability for tobacco and health litigation items at beginning of period (1) $ 14 $ 112 $ 10 $ 20 Pre-tax charges for: Tobacco and health litigation 39 (2) 40 17 25 Related interest costs 3 5 1 3 Payments (1) (34 ) (3) (144 ) (6 ) (35 ) Accrued liability for tobacco and health litigation items at end of period (1) $ 22 $ 13 $ 22 $ 13 (1) Includes amounts related to the costs of implementing the corrective communications remedy related to the Federal Government’s Lawsuit discussed below. (2) Includes approximately $12 million related to pre-trial resolution of approximately 200 tobacco and health cases. (3) Includes approximately $12 million in payments related to above-mentioned pre-trial resolution of approximately 200 tobacco and health cases and $2 million for pre-trial resolution of other tobacco and health cases that was accrued in 2019 but not paid until 2020 . The accrued liability for tobacco and health litigation items, including related interest costs, was included in accrued liabilities on Altria’s condensed consolidated balance sheets. Pre-tax charges for tobacco and health litigation were included in marketing, administration and research costs on Altria’s condensed consolidated statements of earnings (losses). Pre-tax charges for related interest costs were included in interest and other debt expense, net on Altria’s condensed consolidated statements of earnings (losses). Security for Judgments To obtain stays of judgments pending appeal, PM USA has posted various forms of security. As of June 30, 2020, PM USA has posted appeal bonds totaling approximately $68 million , which have been collateralized with restricted cash that are included in assets on the condensed consolidated balance sheet. Smoking and Health Litigation Overview Plaintiffs’ allegations of liability in smoking and health cases are based on various theories of recovery, including negligence, gross negligence, strict liability, fraud, misrepresentation, design defect, failure to warn, nuisance, breach of express and implied warranties, breach of special duty, conspiracy, concert of action, violations of unfair trade practice laws and consumer protection statutes, and claims under the federal and state anti-racketeering statutes. Plaintiffs in the smoking and health cases seek various forms of relief, including compensatory and punitive damages, treble/multiple damages and other statutory damages and penalties, creation of medical monitoring and smoking cessation funds, disgorgement of profits, and injunctive and equitable relief. Defenses raised in these cases include lack of proximate cause, assumption of the risk, comparative fault and/or contributory negligence, statutes of limitations and preemption by the Federal Cigarette Labeling and Advertising Act. Non-Engle Progeny Litigation Summarized below are the non- Engle progeny smoking and health cases pending during 2020 in which a verdict was returned in favor of plaintiff and against PM USA. Charts listing certain verdicts for plaintiffs in the Engle progeny cases can be found in Smoking and Health Litigation - Engle Progeny Trial Results below. Principe : In February 2020, a jury in a Florida state court returned a verdict in favor of plaintiff and against PM USA, awarding approximately $11 million in compensatory damages. There was no claim for punitive damages. PM USA’s appeal is pending in the Third District Court of Appeal. Greene : In September 2019, a jury in a Massachusetts state court returned a verdict in favor of plaintiffs and against PM USA, awarding approximately $10 million in compensatory damages. In May 2020, the court ruled on plaintiffs’ remaining claim and trebled the compensatory damages award to approximately $30 million . PM USA plans to file post-trial motions. Laramie : In August 2019, a jury in a Massachusetts state court returned a verdict in favor of plaintiff, awarding $11 million in compensatory damages and $10 million in punitive damages. PM USA and plaintiff have appealed. Gentile : In October 2017, a jury in a Florida state court returned a verdict in favor of plaintiff, awarding approximately $7.1 million in compensatory damages and allocating 75% of the fault to PM USA (an amount of approximately $5.3 million ). PM USA appealed. In September 2019, the Florida Fourth District Court of Appeal reversed the judgment entered by the trial court, granted PM USA judgment on certain claims and remanded for a new trial on the remaining claims. Plaintiff has petitioned the Florida Supreme Court for further review. Federal Government’s Lawsuit : See Health Care Cost Recovery Litigation - Federal Government’s Lawsuit below for a discussion of the verdict and post-trial developments in the United States of America health care cost recovery case. Engle Class Action In July 2000, in the second phase of the Engle smoking and health class action in Florida, a jury returned a verdict assessing punitive damages totaling approximately $145 billion against various defendants, including $74 billion against PM USA. Following entry of judgment, PM USA appealed. In May 2003, the Florida Third District Court of Appeal reversed the judgment entered by the trial court and instructed the trial court to order the decertification of the class. Plaintiffs petitioned the Florida Supreme Court for further review. In July 2006, the Florida Supreme Court ordered that the punitive damages award be vacated, that the class approved by the trial court be decertified and that members of the decertified class could file individual actions against defendants within one year of issuance of the mandate. The court further declared the following Phase I findings are entitled to res judicata effect in such individual actions brought within one year of the issuance of the mandate: (i) that smoking causes various diseases; (ii) that nicotine in cigarettes is addictive; (iii) that defendants’ cigarettes were defective and unreasonably dangerous; (iv) that defendants concealed or omitted material information not otherwise known or available knowing that the material was false or misleading or failed to disclose a material fact concerning the health effects or addictive nature of smoking; (v) that defendants agreed to misrepresent information regarding the health effects or addictive nature of cigarettes with the intention of causing the public to rely on this information to their detriment; (vi) that defendants agreed to conceal or omit information regarding the health effects of cigarettes or their addictive nature with the intention that smokers would rely on the information to their detriment; (vii) that all defendants sold or supplied cigarettes that were defective; and (viii) that defendants were negligent. In August 2006, PM USA and plaintiffs sought rehearing from the Florida Supreme Court on parts of its July 2006 opinion. In December 2006, the Florida Supreme Court refused to revise its July 2006 ruling, except that it revised the set of Phase I findings entitled to res judicata effect by excluding finding (v) listed above (relating to agreement to misrepresent information), and added the finding that defendants sold or supplied cigarettes that, at the time of sale or supply, did not conform to the representations of fact made by defendants. In February 2008, the trial court decertified the class. Pending Engle Progeny Cases The deadline for filing Engle progeny cases expired in January 2008, at which point a total of approximately 9,300 federal and state claims were pending. As of July 24, 2020, approximately 1,400 state court cases were pending against PM USA or Altria asserting individual claims by or on behalf of approximately 1,800 state court plaintiffs. Because of a number of factors, including docketing delays, duplicated filings and overlapping dismissal orders, these numbers are estimates. While the Federal Engle Agreement (discussed below) resolved nearly all Engle progeny cases pending in federal court, as of July 24, 2020, four cases were pending against PM USA in federal court representing the cases excluded from that agreement. Engle Progeny Trial Results As of July 24, 2020, 134 federal and state Engle progeny cases involving PM USA have resulted in verdicts since the Florida Supreme Court Engle decision. Seventy-eight verdicts were returned in favor of plaintiffs and four verdicts ( Skolnick , Calloway , Oshinsky-Blacker and McCoy ) that were initially returned in favor of plaintiffs were reversed post-trial or on appeal and remain pending. Forty-eight verdicts were returned in favor of PM USA, of which 43 were state cases. In addition, there have been a number of mistrials, only some of which have resulted in new trials as of July 24, 2020. Four verdicts ( Pearson, D. Cohen , Collar and Chacon ) that were returned in favor of PM USA were subsequently reversed for new trials. Juries in two cases ( Reider and Banks ) returned zero damages verdicts in favor of PM USA . Juries in two other cases ( Weingart and Hancock ) returned verdicts against PM USA awarding no damages, but the trial court in each case decided to award plaintiffs damages. One case, Pollari, resulted in a verdict in favor of PM USA following a retrial of an initial verdict returned in favor of plaintiff. Appeals by plaintiff and defendants are pending. Three cases, Gloger, Rintoul ( Caprio ) and Duignan , resulted in verdicts in favor of plaintiffs following retrial of initial verdicts returned in favor of plaintiffs. Post-trial motions or appeals are pending. One case, Freeman , resulted in an appellate reversal of a jury verdict in favor of plaintiff, and a judgment in favor of PM USA. The charts below list the verdicts and post-trial developments in certain Engle progeny cases in which verdicts were returned in favor of plaintiffs. The first chart lists such cases that are pending as of July 24, 2020 where PM USA has recorded a provision in its consolidated financial statements because PM USA has determined that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated; the second chart lists other such cases that are pending as of July 24, 2020 but where PM USA has determined an unfavorable outcome is not probable and the amount of loss cannot be reasonably estimated; and the third chart lists other such cases that have concluded within the previous 12 months. Unless otherwise noted for a particular case, the jury’s award for compensatory damages will not be reduced by any finding of plaintiff’s comparative fault. Further, the damages noted reflect adjustments based on post-trial or appellate rulings. Currently Pending Engle Cases with Accrued Liabilities (rounded to nearest $ million) Plaintiff Verdict Date Defendant(s) Court Compensatory Damages (All Defendants) Punitive Damages (PM USA) Appeal Status Accrual (1) Berger ( Cote ) September 2014 PM USA Federal Court - Middle District of Florida $6 million $21 million The Eleventh Circuit Court of Appeals reinstated the punitive and compensatory damages awards and remanded the case to the district court. PM USA’s challenge to the punitive damages award was denied by the district court. PM USA’s appeal to the Eleventh Circuit Court of Appeals is pending. $6 million accrual in the fourth quarter of 2018 Santoro March 2017 PM USA, R.J. Reynolds and Liggett Group (2) Broward $2 million (<$1 million PM USA) <$1 million The Fourth District Court of Appeal affirmed the compensatory damages award and reinstated the punitive damages award. Defendants’ motion for rehearing was denied. PM USA plans to appeal. <$1 million accrual for compensatory damages award in the second quarter of 2020 (1) Accrual amounts include interest and associated costs, if applicable. For cases with multiple defendants, if any, accrual amounts reflect the portion of compensatory damages PM USA believes it will have to pay if the case is ultimately decided in plaintiff’s favor after taking into account any portion potentially payable by the other defendant(s). (2) References to “R.J. Reynolds,” “Lorillard” and “Liggett Group” are to R.J. Reynolds Tobacco Company, Lorillard Tobacco Company and Liggett Group, LLC, respectively. Other Currently Pending Engle Cases with Verdicts Against PM USA (rounded to nearest $ million) Plaintiff Verdict Date Defendant(s) Court Compensatory Damages (1) Punitive Damages Appeal Status Duignan February 2020 (2 ) PM USA and Pinellas $3 million $12 million Defendants’ post-trial motions pending. Cuddihee January 2020 PM USA Duval $3 million $0 Defendant’s post-trial motions denied. Defendant plans to appeal. Rintoul ( Caprio ) November 2019 (2) PM USA and R.J. Reynolds Broward $9 million ($5 million PM USA) $74 million Defendants’ post-trial motion pending. Gloger November 2019 (2) PM USA and R.J. Reynolds Miami-Dade $15 million ($5 million PM USA) $11 million Appeal by defendants to Third District Court of Appeal pending. McCall March 2019 PM USA Broward <$1 million (<$1 million PM USA) <$1 million New trial ordered on punitive damages. Neff March 2019 PM USA and R.J. Reynolds Broward $4 million $2 million Appeals by plaintiff and defendants to Fourth District Court of Appeal pending. Frogel March 2019 PM USA Palm Beach <$1 million (<$1 million PM USA) $0 Appeals by plaintiff and defendant to Fourth District Court of Appeal pending. Mahfuz February 2019 PM USA and R.J. Reynolds Broward $12 million $10 million Appeals by plaintiff and defendants to Fourth District Court of Appeal pending. Holliman February 2019 PM USA Miami-Dade $3 million $0 Defendant’s appeal to Third District Court of Appeal pending. Other Currently Pending Engle Cases with Verdicts Against PM USA (rounded to nearest $ million) Plaintiff Verdict Date Defendant(s) Court Compensatory Damages (1) Punitive Damages Appeal Status Chadwell September 2018 PM USA Miami-Dade $2 million $0 Third District Court of Appeal affirmed the compensatory damages award. PM USA petitioned Florida Supreme Court for review. Case stayed pending decision in Prentice. Kaplan July 2018 PM USA and R.J. Reynolds Broward $2 million $2 million Appeals by defendants and plaintiff to Fourth District Court of Appeal pending. R. Douglas November 2017 PM USA Duval <$1 million $0 Awaiting entry of final judgment by the trial court. Sommers April 2017 PM USA Miami-Dade $1 million $0 Third District Court of Appeal affirmed compensatory damages award and granted new trial on punitive damages. Defendant petitioned Florida Supreme Court for review. Cooper (Blackwood) September 2015 PM USA and R.J. Reynolds Broward $5 million $0 Fourth District Court of Appeal affirmed judgment and granted a new trial on punitive damages. D. Brown January 2015 PM USA Federal Court - Middle District of Florida $8 million $9 million Appeal by defendant to U.S. Court of Appeals for the Eleventh Circuit pending. Dean (Kerrivan) October 2014 PM USA and R.J. Reynolds Federal Court - Middle District of Florida $16 million $16 million U.S. Court of Appeals for the Eleventh Circuit affirmed the judgment. Defendants’ motion for rehearing pending. Harris July 2014 PM USA, Federal Court - Middle District of Florida $2 million (<$ 1 million PM USA) $0 Appeals by plaintiff and defendants to U.S. Court of Appeals for the Eleventh Circuit pending. (1) PM USA’s portion of the compensatory damages award is noted parenthetically where the court has ruled that comparative fault applies. (2) Plaintiff’s verdict following a retrial of an initial verdict in favor of plaintiff. Engle Cases Concluded Within Past 12 Months (1) (rounded to nearest $ million) Plaintiff Verdict Date Defendant(s) Court Accrual Date Payment Amount (if any) Payment Date Landi (2) June 2018 PM USA and R.J. Reynolds Broward Second quarter of 2020 $10 million July 2020 Theis (3) May 2018 PM USA and Sarasota First quarter of 2020 $17 million February 2020 Alvarez Del Real September 2019 PM USA Miami-Dade Fourth quarter of 2019 <$1 million October 2019 Zingaro May 2019 PM USA and Broward Third quarter of 2019 <$1 million October 2019 (1) In four cases in which PM USA paid the judgments more than a year ago, Naugle, Gore , M. Brown and Jordan , plaintiffs were awarded approximately $8 million , $2 million , $9 million and $4 million in fees and costs, respectively. PM USA has appealed in all of these cases. In another case concluded more than a year ago, Wallace , PM USA paid $2 million in fees and other costs in July 2020. (2) In June 2020, the Fourth District Court of Appeal affirmed the compensatory damages award. As a result, in the second quarter of 2020, PM USA recorded a pre-tax provision of approximately $10 million for the judgment plus interest and paid this amount in July 2020. (3) In February 2020, the Florida Second District Court of Appeal denied PM USA’s petition for review. As a result, in the first quarter of 2020, PM USA recorded a pre-tax provision of approximately $17 million for the judgment plus interest and paid this amount. Florida Bond Statute In June 2009, Florida amended its existing bond cap statute by adding a $200 million bond cap that applies to all state Engle progeny lawsuits in the aggregate and establishes individual bond caps for individual Engle progeny cases in amounts that vary depending on the number of judgments in effect at a given time. Plaintiffs have been unsuccessful in various challenges to the bond cap statute in Florida state court. No federal court has yet addressed the constitutionality of the bond cap statute or the applicability of the bond cap to Engle progeny cases tried in federal court. From time to time, legislation has been presented to the Florida legislature that would repeal the bond cap statute; however to date, no legislation repealing the statute has passed. Other Smoking and Health Class Actions Since the dismissal in May 1996 of a purported nationwide class action brought on behalf of allegedly addicted smokers, plaintiffs have filed numerous putative smoking and health class action suits in various state and federal courts. In general, these cases purport to be brought on behalf of residents of a particular state or states (although a few cases purport to be nationwide in scope) and raise addiction claims and, in many cases, claims of physical injury as well. Class certification has been denied or reversed by courts in 61 smoking and health class actions involving PM USA in Arkansas ( 1 ), California ( 1 ), Delaware ( 1 ), the District of Columbia ( 2 ), Florida ( 2 ), Illinois ( 3 ), Iowa ( 1 ), Kansas ( 1 ), Louisiana ( 1 ), Maryland ( 1 ), Michigan ( 1 ), Minnesota ( 1 ), Nevada ( 29 ), New Jersey ( 6 ), New York ( 2 ), Ohio ( 1 ), Oklahoma ( 1 ), Oregon ( 1 ), Pennsylvania ( 1 ), Puerto Rico ( 1 ), South Carolina ( 1 ), Texas ( 1 ) and Wisconsin ( 1 ). See Certain Other Tobacco-Related Litigation below for a discussion of “Lights” and “Ultra Lights” class action cases and medical monitoring class action cases pending against PM USA. As of July 24, 2020, PM USA and Altria are named as defendants, along with other cigarette manufacturers, in seven class actions filed in the Canadian provinces of Alberta, Manitoba, Nova Scotia, Saskatchewan, British Columbia and Ontario. In Saskatchewan, British Columbia ( two separate cases) and Ontario, plaintiffs seek class certification on behalf of individuals who suffer or have suffered from various diseases, including chronic obstructive pulmonary disease, emphysema, heart disease or cancer, after smoking defendants’ cigarettes. In the actions filed in Alberta, Manitoba and Nova Scotia, plaintiffs seek certification of classes of all individuals who smoked defendants’ cigarettes. In March 2019, all of these class actions were stayed as a result of three Canadian tobacco manufacturers (none of which is related to Altria or its subsidiaries) seeking protection under Canada’s Companies’ Creditors Arrangement Act (which is similar to Chapter 11 bankruptcy in the U.S.). The companies entered into these proceedings following a Canadian appellate court upholding two smoking and health class action verdicts against those companies totaling approximately CAD $13 billion . See Guarantees and Other Similar Matters below for a discussion of the Distribution Agreement between Altria and PMI, which provides for indemnities for certain liabilities concerning tobacco products. Health Care Cost Recovery Litigation Overview In the health care cost recovery litigation, governmental entities seek reimbursement of health care cost expenditures allegedly caused by tobacco products and, in some cases, of future expenditures and damages. Relief sought by some but not all plaintiffs includes punitive damages, multiple damages and other statutory damages and penalties, injunctions prohibiting alleged marketing and sales to minors, disclosure of research, disgorgement of profits, funding of anti-smoking programs, additional disclosure of nicotine yields, and payment of attorney and expert witness fees. Although there have been some decisions to the contrary, most judicial decisions in the U.S. have dismissed all or most health care cost recovery claims against cigarette manufacturers. Nine federal circuit courts of appeals and eight state appellate courts, relying primarily on grounds that plaintiffs’ claims were too remote, have ordered or affirmed dismissals of health care cost recovery actions. The United States Supreme Court has refused to consider plaintiffs’ appeals from the cases decided by five federal circuit courts of appeal. In addition to the cases brought in the U.S., health care cost recovery actions have also been brought against tobacco industry participants, including PM USA and Altria, in Canada ( 10 cases), and other entities have stated that they are considering filing such actions. Since the beginning of 2008, the Canadian Provinces of British Columbia, New Brunswick, Ontario, Newfoundland and Labrador, Quebec, Albert |
