Exhibit 99.1
CERTAIN PENDING LITIGATION MATTERS AND RECENT DEVELOPMENTS
As described in Note 8. Contingencies of this Report on Form 10-Q, there are
legal proceedings covering a wide range of matters pending in various U.S. and
foreign jurisdictions against the Company, its subsidiaries and affiliates,
including PM Inc. and PMI, and their respective indemnitees. Various types of
claims are raised in these proceedings, including product liability, consumer
protection, antitrust, tax, contraband shipments, patent infringement,
employment matters, claims for contribution and claims of competitors and
distributors. Pending 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) smoking and health cases
alleging personal injury and purporting to be brought on behalf of a class of
individual plaintiffs, (iii) health care cost recovery cases brought by
governmental and non-governmental plaintiffs seeking reimbursement for health
care expenditures allegedly caused by cigarette smoking and/or disgorgement of
profits, and (iv) other tobacco-related litigation. Other tobacco-related
litigation includes class action suits alleging that the use of the terms
"Lights" and "Ultra Lights" constitutes deceptive and unfair trade practices,
suits by foreign governments seeking to recover damages resulting from the
allegedly illegal importation of cigarettes into various jurisdictions, suits by
former asbestos manufacturers seeking contribution or reimbursement for amounts
expended in connection with the defense and payment of asbestos claims that were
allegedly caused in whole or in part by cigarette smoking and various antitrust
suits. Governmental plaintiffs in the health care cost recovery actions include
the federal government, various cities and counties in the United States and
certain foreign governmental entities. Non-governmental plaintiffs in these
cases include union health and welfare trust funds ("unions"), Native American
tribes, insurers and self-insurers, taxpayers and others.
The following lists certain of the pending claims included in these categories
and certain other pending claims. Certain developments in these cases since May
10, 2002 are also described.
SMOKING AND HEALTH LITIGATION
The following lists the consolidated individual smoking and health cases as well
as smoking and health class actions pending against PM Inc. and, in some cases,
the Company and/or its other subsidiaries and affiliates, including PMI, as of
August 1, 2002, and describes certain developments in these cases since May 10,
2002.
Consolidated Individual Smoking and Health Cases
In Re Tobacco Litigation (Individual Personal Injury cases), Circuit Court, Ohio
County, West Virginia, consolidated January 11, 2000. In West Virginia, all
smoking and health cases alleging personal injury have been transferred to the
State's Mass Litigation Panel. The transferred cases include individual cases
and putative class actions. All pending individual cases as well as cases filed
in or transferred to the court by September 8, 2000 are to be included in a
single consolidated trial. Approximately 1,250 individual cases are pending.
The trial court's order provides for the trial to be conducted in two phases.
The issues to be tried in phase one are "general liability issues common to all
defendants including, if appropriate, defective product theory, negligence
theory, warranty theory; and any other theories supported by pretrial
development" as well as entitlement to punitive damages and a punitive damages
multiplier. Pursuant to the court's order, the individual claims of the
plaintiffs whose cases have been consolidated will be tried on an individual
basis or "in reasonably sized trial groups" during the second phase of the
trial. Trial is scheduled to begin in June 2003.
Flight Attendant Litigation
The settlement agreement entered into in the case of Broin, et al. v. Philip
Morris Companies Inc., et al., permitted members of the purported class to bring
individual suits as to their alleged injuries. As of August 1, 2002,
approximately 2,800 of these suits were pending in the Circuit Court of Dade
County, Florida against PM Inc. and three other cigarette manufacturers. In
October 2000, the court held that the flight attendants will not be required to
prove the substantive liability elements of their claims for negligence, strict
liability and breach of implied warranty in order to recover damages, if any,
other than establishing that the plaintiffs' alleged injuries
1
Exhibit 99.1
were caused by their exposure to environmental tobacco smoke and, if so, the
amount of damages to be awarded. In October 2001, the appellate court dismissed
defendants' appeal of the trial court's ruling. Defendants have appealed to the
Florida Supreme Court which has rejected defendants' appeal. To date, an
estimated 14 such cases are scheduled for trial through the end of 2003.
Domestic Class Actions
Engle, et al. v. R.J. Reynolds Tobacco Co., et al., Circuit Court, Eleventh
Judicial Circuit, Dade County, Florida, filed May 5, 1994. See Note 8.
Contingencies for a discussion of this case.
Norton, et al. v. RJR Nabisco Holdings Corporation, et al., Superior Court,
Madison County, Indiana, filed May 3, 1996. In July 2002, the court granted
plaintiffs' motion to voluntarily dismiss the case.
Scott, et al. v. The American Tobacco Company, et al., Civil District Court,
Orleans Parish, Louisiana, filed May 24, 1996. The court granted plaintiffs'
motion for class certification on behalf of Louisiana cigarette smokers seeking
the creation of funds to pay the costs of monitoring the medical conditions of
members of the purported class and providing them with smoking cessation
programs. In May 2001, the trial court issued a trial plan that calls for
adjudication of defendants' liability to the entire class based solely on
evidence of the two class representatives and defendants appealed to the
intermediate appellate court and the Louisiana Supreme Court seeking to vacate
the trial plan. In June 2001, the appeals were denied. Jury selection in the
case began in June 2001. Defendants filed writs challenging the trial court's
jury selection procedures with the intermediate appellate court and the
Louisiana Supreme Court, which were granted in part. In December 2001,
defendants again filed writs with the intermediate appellate court asserting
that there were errors in the jury selection. The writs were granted in part and
jury selection was reopened. In March 2002, the Louisiana Supreme Court granted
defendants' application for a supervisory writ and struck four jurors from the
panel due to possible bias. Jury selection is continuing.
In Re: Tobacco Litigation (Medical Monitoring cases) (formerly McCune, et al. v.
The American Tobacco Company, et al.), Circuit Court, Kanawha County, West
Virginia, filed January 31, 1997. In November 2001, the jury returned a verdict
in favor of all defendants. In January 2002, the court denied plaintiffs' motion
for a new trial, and plaintiffs have appealed.
Muncie (formerly Ingle and formerly Woods), et al. v. Philip Morris
Incorporated, et al., Circuit Court, McDowell County, West Virginia, filed
February 4, 1997.
Anderson, et al. v. The American Tobacco Company, Inc., et al., United States
District Court, Middle District, Tennessee, filed May 23, 1997.
Mahoney (formerly Fitz), et al. v. R.J. Reynolds Tobacco Company, et al., United
States District Court, Southern District, Iowa, filed June 20, 1997. In October
2001, the court denied plaintiffs' motion for class certification. In November
2001, the United States Court of Appeals for the Eighth Circuit denied
plaintiffs' motion for leave to appeal.
Badillo, et al. v. The American Tobacco Company, et al., United States District
Court, Nevada, filed October 8,1997. In July 2001, the court denied plaintiffs'
motion for class certification, and plaintiffs appealed to the United States
Court of Appeals for the Ninth Circuit. In April 2002, the Ninth Circuit denied
plaintiffs' petition for leave to appeal. In May 2002, the trial court dismissed
the case.
Young, et al. v. The American Tobacco Company, et al., Civil District Court,
Orleans Parish, Louisiana, filed November 12, 1997.
Jackson, et al. v. Philip Morris Incorporated, et al., United States District
Court, Central District, Utah, filed February 13, 1998.
2
Exhibit 99.1
Parsons, et al. v. A C & S, Inc., et al., Circuit Court, Kanawha County, West
Virginia, filed February 27, 1998.
Christensen, et al. v. Philip Morris Companies Inc., et al., United States
District Court, Nevada, filed April 3, 1998. In July 2001, the court denied
plaintiffs' motion for class certification, and plaintiffs have appealed to the
United States Court of Appeals for the Ninth Circuit. In April 2002, the Ninth
Circuit denied plaintiffs' petition for leave to appeal.
Cleary, et al. v. Philip Morris Incorporated, et al., Circuit Court, Cook
County, Illinois, filed June 3, 1998.
Cypret (formerly Jones), et al. v. The American Tobacco Company, et al., Circuit
Court, Jackson County, Missouri, filed December 22, 1998.
Simon, et al. v. Philip Morris Incorporated, et al., United States District
Court, Eastern District, New York, filed April 9, 1999. In September 2000, a
putative class action was filed which purports to consolidate punitive damages
claims in this case with certain other cases then pending in the federal courts
in New York and Pennsylvania. (See Simon, et al. v. Philip Morris Incorporated,
et al. (Simon II), discussed below.) In November 2000, the court denied
plaintiffs' motion for class certification, but indicated its intent to certify
a class in Simon II.
Julian, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Montgomery County, Alabama, filed April 14, 1999.
Decie, et al. v. The American Tobacco Company, et al., United States District
Court, Eastern District, New York, filed April 21, 2000. In September 2000, a
putative class action was filed which purports to consolidate punitive damage
claims in this case with certain other cases then pending in the federal courts
in New York and Pennsylvania. (See Simon, et al. v. Philip Morris Incorporated,
et al. (Simon II), discussed below.)
Ebert, et al. v. Philip Morris Incorporated, et al., United States District
Court, Eastern District, New York, filed August 9, 2000 (not yet served). In
September 2000, a putative class action was filed which purports to consolidate
punitive damages claims in this case with certain other cases then pending in
federal courts in New York and Pennsylvania. (See Simon, et al. v. Philip Morris
Incorporated, et al. (Simon II), discussed below.)
Vandermeulen, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Wayne County, Michigan, filed September 18, 2000.
Sims, et al. v. Philip Morris Incorporated, et al., United States District
Court, District of Columbia, filed May 23, 2001.
Johnson, et al. v. Newport Lorillard, et al., United States District Court,
Southern District, New York, filed October 31, 2001. In May 2002, the court
dismissed the case.
Lowe, et al. v. Philip Morris Incorporated, et al., Circuit Court, Multomah,
Oregon, filed November 19, 2001.
Trivisonno, et al. v. Philip Morris Incorporated, et al., United States District
Court, Northern District, Ohio, filed January 14, 2002. In July 2002, the court
granted defendants' motions to dismiss the case.
International Class Actions
Caputo (formerly LeTourneau) v. Imperial Tobacco Limited, et al., Ontario Court
of Justice, Toronto, Canada, filed January 13, 1995.
The Smoker Health Defense Association (ADESF) v. Souza Cruz, S.A. and Philip
Morris Marketing, S.A.,
3
Exhibit 99.1
Nineteenth Lower Civil Court of the Central Courts of the Judiciary District of
Sao Paulo, Brazil, filed July 25, 1995.
Anacont-Associacao Nacional de Assistencia ao Consumidor e Trebalhador v. Souza
Cruz S.A., et al., State Bankruptcy Court, Rio de Janiero, Brazil, filed March
10, 1998. During 2000, the court dismissed the action, and plaintiff appealed.
The appellate court rejected plaintiff's appeal, thereby concluding the case.
Fortin, et al. v. Imperial Tobacco Ltd., et al., Quebec Superior Court, Canada,
filed on or about September 11, 1998.
Conseil Quebecois sur le Tabac v. RJR-Macdonald Inc., et al., Quebec Superior
Court, Canada, filed November 20, 1998.
Yabin Galidi, et al. v. Dubek Ltd., et al., Tel Aviv-Yaffo Region Court, Israel,
filed July 12, 1999. In March 2002, the case was dismissed.
Ragoonanan, et al. v. Imperial Tobacco Limited, et al., Superior Court of
Justice, Ontario, Canada, filed January 11, 2000.
Asociacion Espanola de Laringectomizados y Multiados de la voz v. Altadis S.A.,
et al., Court of First Instance, Barcelona, Spain, filed January 3, 2001. In
April 2002, the court dismissed the case, and plaintiffs have appealed.
Asociacion Vallisoletana de Laringectomizados v. Altadis S.A., et al., Court of
First Instance, Valadolid, Spain, filed January 4, 2001. In February 2002, the
case was dismissed and plaintiff has appealed.
Asociacion Viscaina de Laringectomizados v. Altadis S.A., et al., Court of First
Instance, Bilbao, Spain, filed January 5, 2001.
Asociacion de Laringectomizados de Leon v. Altadis S.A., et al., Court of First
Instance, Leon, Spain, filed January 3, 2001.
HEALTH CARE COST RECOVERY LITIGATION
The following lists the health care cost recovery actions pending against PM
Inc. and, in some cases, the Company and/or its other subsidiaries and
affiliates as of August 1, 2002, and describes certain developments in these
cases since May 10, 2002. As discussed in Note 8. Contingencies in 1998 PM Inc.
and certain other United States tobacco product manufacturers entered into a
Master Settlement Agreement (the "MSA") settling the health care cost recovery
claims of 46 states, the District of Columbia, the Commonwealth of Puerto Rico,
Guam, the United States Virgin Islands, American Samoa and the Northern
Marianas. Settlement agreements settling similar claims had previously been
entered into with the states of Mississippi, Florida, Texas and Minnesota. The
Company believes that the claims in the city/county, taxpayer and certain of the
other health care cost recovery actions listed below are released in whole or in
part by the MSA or that recovery in any such actions should be subject to the
offset provisions of the MSA.
City/County Cases
County of Cook v. Philip Morris Incorporated, et al., Circuit Court, Cook
County, Illinois, filed April 18, 1997. In September 1999, the judge granted in
part and denied in part defendants' motion to dismiss the complaint. In August
2001, the trial court granted defendants' motion for judgment on the pleadings
and dismissed the case in its entirety, and plaintiffs have appealed.
City of St. Louis, et al. v. American Tobacco, et al., Circuit Court, City of
St. Louis, Missouri, filed November
4
Exhibit 99.1
23, 1998. In November 2001, the court granted in part and denied in part
defendants' motion to dismiss and dismissed three of plaintiffs' 11 claims.
County of St. Louis v. American Tobacco, et al., Circuit Court, City of St.
Louis, Missouri, filed December 3, 1998. The case is currently stayed.
County of McHenry, et al. v. Philip Morris Incorporated, et al., Circuit Court,
Cook County, Illinois, filed July 13, 2000. The case has been stayed pending the
outcome of the appeal in County of Cook v. Philip Morris Incorporated, et al.,
discussed above.
Department of Justice Case
The United States of America v. Philip Morris Incorporated, et al., United
States District Court, District of Columbia, filed September 22, 1999. See Note
8. Contingencies, for a discussion of this case.
International Cases
The Republic of Panama v. The American Tobacco Company, Inc., United States
District Court, District of Columbia, filed September 11, 1998. In July 2000,
the United States Court of Appeals for the Fifth Circuit vacated the ruling by
the United States District Court for the Eastern District of Louisiana that
granted plaintiff's motion to remand the case to the Civil District Court,
Orleans Parish, Louisiana. In November 2000, the case was transferred to the
Multidistrict Litigation Proceeding pending before the United States District
Court for the District of Columbia (see In re: Tobacco/Government Health Care
Cost Litigation (MDL No. 1279) (the "MDL Proceeding," discussed below)).
Plaintiff's motion to remand this case is pending before the court hearing the
MDL Proceeding.
Kupat Holim Clalit v. Philip Morris Incorporated, et al., Jerusalem District
Court, Israel, filed September 28, 1998.
The Republic of Bolivia v. Philip Morris Companies Inc., et al., United States
District Court, District of Columbia, filed January 20, 1999. In February 1999,
this case was removed to federal court by defendants and subsequently
transferred on the court's own motion to the federal district court for the
District of Columbia in March 1999. It is currently pending in the MDL
Proceeding discussed below.
The Republic of Venezuela v. Philip Morris Companies Inc., et al., Eleventh
Judicial Circuit, Dade County, Florida, filed January 27, 1999. In November
2001, the court dismissed the case, and plaintiff has appealed.
The Caisse Primaire d'Assurance Maladie of Saint-Nazaires v. SEITA, et al.,
Civil Court of Saint-Nazaires, France, filed June 1999.
In re: Tobacco/Governmental Health Care Costs Litigation (MDL No. 1279), United
States District Court, District of Columbia, consolidated June 1999. In June
1999, the United States Judicial Panel on Multidistrict Litigation transferred
foreign government health care cost recovery actions brought by Nicaragua,
Venezuela, and Thailand to the District of Columbia for coordinated pretrial
proceedings with two such actions brought by Bolivia and Guatemala already
pending in that court. Subsequently, the resulting proceeding has also included
filed cases brought by the following foreign governments: Ukraine; the Brazilian
States of Espirito Santo, Goias, Mato Grosso do Sul, Para, Parana, Pernambuco,
Piaui, Rondonia, Sao Paulo and Tocantins; Panama; the Province of Ontario,
Canada; Ecuador; the Russian Federation; Honduras; Tajikistan; Belize; the
Kyrgyz Republic and 11 Brazilian cities. The cases brought by Thailand and the
Kyrgyz Republic were voluntarily dismissed. The complaints filed by Guatemala,
Nicaragua, Ukraine and the Province of Ontario, have been dismissed, and the
dismissals are now final. The district court has remanded the cases brought by
Belize, Ecuador, Honduras, the Russian Federation, Tajikistan, Venezuela, the 10
Brazilian states listed and the 11 Brazilian cities to state courts. Subsequent
to remand, the Ecuador case was voluntarily dismissed. In
5
Exhibit 99.1
November 2001, the Venezuela and Espirito Santo actions were dismissed, and
Venezuela has appealed.
The State of Rio de Janeiro of the Federal Republic of Brazil v. Philip Morris
Companies Inc., et al., District Court, Angelina County, Texas, filed July 12,
1999.
The State of Goias of the Federal Republic of Brazil v. Philip Morris Companies
Inc., et al., Circuit Court, Eleventh Judicial Circuit, Dade County, Florida,
filed October 18, 1999.
The State of Sao Paulo of the Federal Republic of Brazil v. Philip Morris
Companies Inc., et al., Civil District Court, Orleans Parish, Louisiana, filed
February 9, 2000.
The State of Mato Grosso do Sul, Brazil v. Philip Morris Companies Inc., et al.,
Circuit Court, Eleventh Judicial Circuit, Dade County, Florida, filed July 19,
2000.
The Russian Federation v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed on August 25, 2000.
The Republic of Honduras v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed October 5, 2000.
The State of Tocantins, Brazil v. The Brooke Group Ltd. Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed October 24, 2000.
The State of Piaui, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed December 13, 2000.
The Republic of Tajikistan v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed January 22, 2001.
Her Majesty the Queen in Right of British Columbia v. Imperial Tobacco Limited,
et al., Supreme Court, British Columbia, Vancouver Registry, Canada, filed
January 24, 2001.
The Republic of Belize v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed April 5, 2001.
City of Belford Roxo, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Belo Horizonte, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Caripicuiba, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Duque de Caxias, Brazil v. Philip Morris Companies Inc., et al.,
Circuit Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8,
2001.
City of Joao Pessoa, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Jundiai, Brazil v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade
6
Exhibit 99.1
County, Florida, filed May 8, 2001.
City of Mage, Brazil v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Nilopolis-RJ, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Nova Iguacu, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Rio de Janiero, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
City of Sao Bernardo de Campo, Brazil v. Philip Morris Companies Inc., et al.,
Circuit Court, Eleventh Judicial Circuit, Dade County, Florida, filed
May 8, 2001.
State of Para, Brazil v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
State of Parana, Brazil v. Philip Morris Companies Inc., et al., Circuit Court,
Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
State of Rondonia, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed May 8, 2001.
State of Pernambuco, Brazil v. Philip Morris Companies Inc., et al., Circuit
Court, Eleventh Judicial Circuit, Dade County, Florida, filed December 28, 2001.
Junta de Andalucia v. Philip Morris Spain, et al., Court of First Instance,
Madrid, Spain, filed February 21, 2002.
Union Cases
Eastern States Health and Welfare Fund, et al. v. Philip Morris Incorporated, et
al., Supreme Court, New York County, New York, filed July 28, 1997. In March
2000, the court granted defendants' motion for dismissal. Plaintiffs have
appealed the dismissal.
Operating Engineers Local 12 Health and Welfare Trust Fund, et al. v. American
Tobacco, Inc., et al., Superior Court, San Diego County, California, filed
September 17, 1997. In March 2000, the court ruled that plaintiffs are not
permitted to use California's unfair business practices statute to seek monetary
damages for their claims. In April 2000, the plaintiffs voluntarily dismissed
the remaining claims with prejudice and appealed certain trial court rulings to
the state court of appeals. In October 2001, the California Court of Appeals
affirmed the trial court's ruling. Plaintiffs appealed to the California Supreme
Court, which has granted review but deferred further action pending disposition
of related issues in another case.
Puerto Rican ILGWU Health & Welfare Fund, et al. v. Philip Morris Incorporated,
et al., Supreme Court, County of New York, New York, filed September 17, 1997.
In March 2000, the court granted defendants' motion for dismissal. Plaintiffs
have appealed the dismissal.
IBEW Local 25 Health and Benefit Fund v. Philip Morris Incorporated, et al.,
Supreme Court, New York County, New York, filed November 25, 1997. In March
2000, the court granted defendants' motion for dismissal. Plaintiff has appealed
the dismissal.
7
Exhibit 99.1
IBEW Local 363 Welfare Fund v. Philip Morris Incorporated, et al., Supreme
Court, New York County, New York, filed November 25, 1997. In March 2000, the
court granted defendants' motion for dismissal. Plaintiff has appealed the
dismissal.
Local 138, 138A and 138B International Union of Operating Engineers Welfare Fund
v. Philip Morris Incorporated, et al., Supreme Court, New York County, New York,
filed November 25, 1997. In March 2000, the court granted defendants' motion for
dismissal. Plaintiff has appealed the dismissal.
Local 840, International Brotherhood of Teamsters Health and Insurance Fund v.
Philip Morris Incorporated, et al., Supreme Court, New York County, New York,
filed November 25, 1997. In March 2000, the court granted defendants' motion for
dismissal. Plaintiff has appealed the dismissal.
Long Island Regional Council of Carpenters Welfare Fund v. Philip Morris
Incorporated, et al., Supreme Court, New York County, New York, filed November
25, 1997. In March 2000, the court granted defendants' motion for dismissal.
Plaintiff has appealed the dismissal.
Day Care Council - Local 205 D.C. 1707 Welfare Fund v. Philip Morris
Incorporated, et al., Supreme Court, New York County, New York, filed December
8, 1997. In March 2000, the court granted defendants' motion for dismissal.
Plaintiff has appealed the dismissal.
Local 1199 Home Care Industry Benefit Fund v. Philip Morris Incorporated, et
al., Supreme Court, New York County, New York, filed December 8, 1997. In March
2000, the court granted defendants' motion for dismissal. Plaintiff has appealed
the dismissal.
Local 1199 National Benefit Fund for Health and Human Services Employees v.
Philip Morris Incorporated, et al., Supreme Court, New York County, New York,
filed December 8, 1997. In March 2000, the court granted defendants' motion for
dismissal. Plaintiff has appealed the dismissal.
Bergeron, et al. v. Philip Morris Incorporated, et al., United States District
Court, Eastern District, New York, filed September 29, 1999. In September 2000,
a putative class action was filed which purports to consolidate punitive damages
claims in this case with certain other cases then pending in federal courts in
New York and Pennsylvania (See Simon, et al. v. Philip Morris Incorporated, et
al. (Simon II), discussed below.) In July 2001, the court stayed this case
pending resolution of the appeal in Blue Cross and Blue Shield of New Jersey,
Inc. et al. v. Philip Morris Incorporated, et al., discussed below. In June
2002, the court denied plaintiffs' motion for class certification and
defendants' motion to dismiss, and also severed this case from Simon II. In
August 2002, the court entered the parties' stipulation of dismissal with
prejudice.
Native American Cases
Sisseton-Wahpeton Sioux Tribe v. Philip Morris Incorporated, et al., Tribal
Court of the Sisseton-Wahpeton Sioux Tribe, filed May 8, 1998. On December 1,
1999, the appellate court granted the parties' petitions for interlocutory
appeal from the trial court's order that granted in part and denied in part
defendants' motion to dismiss the complaint. The trial and appellate courts
subsequently stayed proceedings in this case until there was a ruling on
defendants' dismissal motion in Acoma Pueblo, et al. v. American Tobacco Company
Co., et al. (discussed below). In June 2002, the trial court stayed its
proceedings pending a decision by the appellate court.
Acoma Pueblo, et al. v. American Tobacco Co., et al., United States District
Court, New Mexico, filed June 16, 1999. In July 2001, the court granted
defendants' motion to dismiss the case without prejudice. In September 2001,
plaintiff moved for reconsideration of the court's order, which was denied in
November 2001.
Navajo Nation v. Philip Morris Incorporated, et al., District Court, Window
Rock, Arizona, filed August 11, 1999. In January 2002, the court granted in part
defendants' motion to dismiss the case and dismissed all of plaintiff's claims,
except one, and plaintiff has moved for reconsideration.
8
Exhibit 99.1
The Alabama Coushatta Tribe of Texas v. American Tobacco Co., et al., United
States District Court, Eastern District, Texas, filed August 30, 2000. In July
2002, the United States Court of Appeals for the Fifth Circuit affirmed the
trial court's August-2001 ruling that dismisses the case, and plaintiff has
petitioned for rehearing.
Insurer and Self-Insurer Cases
Group Health Plan, et al. v. Philip Morris Incorporated, et al., United States
District Court, Minnesota, filed March 11, 1998. In January 2002, the court
granted defendants' motion for summary judgment dismissing the case, and
plaintiffs have appealed. In April 2002, plaintiff-appellants moved to certify
certain questions of law to the Minnesota Supreme Court.
Blue Cross and Blue Shield of New Jersey, Inc., et al. v. Philip Morris
Incorporated, et al., United States District Court, Eastern District, New York,
filed April 29, 1998. In September 2000, the court severed the claims of one
plaintiff, Empire Blue Cross and Blue Shield ("Empire"), from those of the other
plaintiffs. Trial of Empire's claims commenced March 2001, and in June 2001, the
jury returned a verdict in favor of Empire on two of its claims and awarded
Empire up to approximately $17.8 million in compensatory damages, including $6.8
million against PM Inc., and no punitive damages. In July 2001, the court stayed
the remaining Blue Cross plans' cases pending the outcome of Empire's appeal,
and denied plaintiff's motion to treble the damage award. In October 2001, the
court denied defendants' post-trial motions challenging the verdict, and in
November 2001, entered judgment. In February 2002, the court awarded plaintiff
approximately $38 million for attorneys' fees. PM Inc. has appealed.
Betriebskrankenkasse Aktiv, et al. v. Philip Morris Incorporated, et al., United
States District Court, Eastern District, New York, filed September 28, 2000. In
February 2002, upon the stipulation of the parties, the case was dismissed
without prejudice subject to plaintiffs being able to refile the case in the
event the Blue Cross and Blue Shield case discussed above is ultimately resolved
in favor of plaintiffs in that case.
Taxpayer Cases
Temple, et al. v. The State of Tennessee, et al., United States District Court,
Middle District, Tennessee, filed September 11, 2000. Plaintiffs' complaint
seeks class certification of those individuals who are Medicaid/TennCare
recipients who have allegedly suffered from smoking-related injuries. Plaintiffs
claim that the MSA funds belong to individuals under Tennessee's "made wide"
doctrine and they further seek a declaration that the MSA is unconstitutional.
Plaintiffs' motion for a preliminary injunction seeking to enjoin the State of
Tennessee from receiving the MSA payments and asking that the MSA proceeds be
paid into the court was denied in March 2002. Also in March 2002, the court
granted the defendants' motion to stay the action pending resolution of an
appeal before the United States Court of Appeals for the Sixth Circuit
addressing an issue similar to one raised by the defendants in this case.
Defendants' motion to dismiss for failure to state a claim is pending.
Other Cases
Perry, et al. v. The American Tobacco Company, et al., United States District
Court, Eastern District, Tennessee, filed September 30, 1996. In April 2001, the
court granted defendants' motion to dismiss the case, and plaintiffs have
appealed.
Mason, et al. v. The American Tobacco Company, et al., United States District
Court, Eastern District, New York, filed December 23, 1997. In September 2000, a
putative class action was filed which purports to consolidate punitive damages
claims in this case with certain other cases then pending in federal courts in
New York and Pennsylvania. (See Simon, et al. v. Philip Morris Incorporated, et
al. (Simon II), discussed below.) In July 2002, the court denied plaintiffs'
motion for class certification, and granted defendants' motion to dismiss the
case. Plaintiffs have appealed.
9
Exhibit 99.1
A.O. Fox Memorial Hospital, et al. v. The American Tobacco Company, et al.,
Supreme Court, Nassau County, New York, filed March 30, 2000. In December 2001,
the court dismissed the case for failure to state a claim. Plaintiffs have
appealed.
CERTAIN OTHER TOBACCO-RELATED ACTIONS
The following lists certain other tobacco-related litigation pending against the
Company and/or various subsidiaries and others as of August 1, 2002, and
describes certain developments since May 10, 2002.
Lights/Ultra Lights Cases
Gesser (formerly Cummis), et al. v. Philip Morris Companies Inc. and Philip
Morris Incorporated, Superior Court, Middlesex County, New Jersey, filed July 9,
1998. In May 2002, plaintiffs informed the court that they are withdrawing their
class action claims.
Aspinall, et al. v. Philip Morris Companies Inc. and Philip Morris Incorporated,
Superior Court, Suffolk County, Massachusetts, filed November 24, 1998. In
October 2001, the court granted plaintiffs' motion for class certification.
McClure, et al. v. Philip Morris Companies Inc. and Philip Morris Incorporated,
Circuit Court, Davidson County, Tennessee, filed January 19, 1999.
Marrone, et al. v. Philip Morris Companies Inc. and Philip Morris Incorporated,
Court of Common Pleas, Medina County, Ohio, filed November 8, 1999.
Miles, et al. v. Philip Morris Companies Inc., et al., Circuit Court, Madison
County, Illinois, filed February 10, 2000. Plaintiffs' motion for class
certification was granted in February 2001. Trial is scheduled for January 2003.
Craft (formerly Ratliff), et al. v. Philip Morris Companies Inc., Circuit Court,
City of St. Louis, Missouri, filed February 15, 2000.
Hines, et al. v. Philip Morris Companies Inc., et al., Circuit Court, Fifteenth
Judicial Circuit, Palm Beach County, Florida, filed February 23, 2001. In
February 2002, the court granted plaintiffs' motion for class certification.
Philipps, et al. v. Philip Morris Incorporated, et al., United States District
Court, Eastern District, , Ohio, filed May 1, 2001.
Moore, et al. v. Philip Morris Incorporated, et al., United States District
Court, Northern District, West Virginia, filed August 10, 2001.
Fischer, et al. v. Philip Morris Companies Inc., et al., Superior Court, Alameda
County, Oakland, California, filed October 31, 2001.
Curtis, et al. v. Philip Morris Companies Inc., et al., Fourth Judicial District
Court, Hennepin County, Minnesota, filed November 28, 2001.
Tremblay, et al. v. Philip Morris Incorporated, United States District Court,
New Hampshire, filed March 29, 2002. The case has been consolidated with Peters
v. Philip Morris Incorporated.
Peters v. Philip Morris Incorporated, United States District Court, New
Hampshire, filed April 22, 2002. This
10
Exhibit 99.1
case has been consolidated with Tremblay, et al. v. Philip Morris Incorporated.
Pearson v. Philip Morris Incorporated, et al., Circuit Court, Multomah County,
Oregon, filed July 2, 2002.
Cigarette Contraband Cases
Department of Amazonas, et al. v. Philip Morris Companies Inc., et al., United
States District Court, Eastern District, New York, filed May 19, 2000. In
February 2002, the court granted defendants' motion to dismiss the complaint for
failure to state a claim, and plaintiff has appealed.
The Republic of Ecuador v. Philip Morris Incorporated, et al., United States
District Court, Southern District, Florida, filed June 5, 2000. In February
2002, the court granted defendants' motion to dismiss the complaint for failure
to state a claim, and plaintiff has appealed.
The Republic of Belize v. Philip Morris Companies Inc., et al., United States
District Court, Southern District, Florida, filed May 8, 2001. In February 2002,
the court granted defendants' motion to dismiss the complaint for failure to
state a claim, and plaintiff has appealed.
The Republic of Honduras v. Philip Morris Companies Inc., et al., United States
District Court, Southern District, Florida, filed May 8, 2001. In February 2002,
the court granted defendants' motion to dismiss the complaint for failure to
state a claim, and plaintiff has appealed.
The European Community, et al. v. RJR Nabisco, Inc., et al., United States
District Court, Eastern District, New York, filed August 6, 2001. In February
2002, the court granted defendants' motion to dismiss the complaint for failure
to state a claim, and plaintiff has appealed.
Asbestos Contribution Cases
Fibreboard Corporation, et al. v. The American Tobacco Company, et al., Superior
Court, Alameda County, California, filed December 11, 1997.
Keene Creditors Trust v. Brown & Williamson Tobacco Corporation, et al., Supreme
Court, New York County, New York, filed December 19, 1997.
Raymark Industries, Inc. v. The American Tobacco Company, et al., United States
District Court, Eastern District, New York, filed January 30, 1998. In September
2000, a putative class action was filed in the United States District Court for
the Eastern District of New York which purports to consolidate punitive damages
claims in this case with certain other cases then pending in federal courts in
New York and Pennsylvania. (See Simon, et al. v. Philip Morris Incorporated, et
al. (Simon II), discussed below.) In May 2002, the parties filed a stipulation
of dismissal with prejudice of entire suit, thereby concluding the case.
Owens Corning v. R.J. Reynolds Tobacco Company, et al., Circuit Court, Fayette
County, Mississippi, filed August 30, 1998. In July 2001, the court granted
defendants' motion for summary judgment dismissing the claims of the asbestos
company plaintiff, and plaintiff has appealed.
UNR Asbestos-Disease Claims Trust v. Brown & Williamson Tobacco Corporation, et
al., Supreme Court, New York County, New York, filed March 15, 1999.
Combustion Engineering, Inc., et al. v. RJR Nabisco, Inc., et al., Circuit
Court, Jefferson County, Mississippi, filed December 18, 2000 (not yet served).
Gasket Holdings, et al. v. RJR Nabisco, Inc., et al., Circuit Court, Jefferson
County, Mississippi, filed December 18, 2000 (not yet served).
Kaiser Aluminum & Chemical Corporation, et al. v. RJR Nabisco, Inc., et al.,
Circuit Court, Jefferson County, Mississippi, filed December 18, 2000.
T&N, Ltd., et al. v. RJR Nabisco, Inc., et al., Circuit Court, Jefferson County,
Mississippi, filed December 18, 2000 (not yet served).
W.R. Grace & Co. Conn., et al. v. RJR Nabisco, Inc., et al., Circuit Court,
Jefferson County, Mississippi, filed
11
Exhibit 99.1
April 24, 2001 (not yet served).
Retail Leaders Case
R.J. Reynolds Tobacco Company, et al. v. Philip Morris Incorporated, United
States District Court, Middle District, North Carolina, filed March 12, 1999. In
May 2002, the court granted PM Inc.'s motion for summary judgment and dismissed
all of the claims with prejudice, and plaintiffs have appealed.
Vending Machine Case
Lewis d/b/a B&H Vendors v. Philip Morris Incorporated, United States District
Court, Middle District, Tennessee, filed February 3, 1999.
Tobacco Price Cases
The following are putative class actions filed by tobacco
wholesalers/distributors and by smokers, alleging that defendants conspired to
fix cigarette prices in violation of antitrust laws.
Buffalo Tobacco Products, et al. v. Philip Morris Companies Inc., et al., United
States District Court, Northern District, Georgia, filed February 8, 2000. In
June 2000, the United States Judicial Panel on Multidistrict Litigation
transferred this case to the United States District Court, Northern District,
Georgia. (See In Re: Cigarette Antitrust Litigation, MDL No. 1342, discussed
below.)
DelSeronne, et al. v. Philip Morris Companies Inc., et al., Circuit Court, Wayne
County, Michigan, filed February 8, 2000. In June 2002, plaintiffs' motion for
class certification was denied. Plaintiffs' motion for reconsideration and
defendants' motion for summary judgment are pending.
Greer, et al. v. R. J. Reynolds, et al., Superior Court, San Francisco,
California, filed February 9, 2000.
Lennon v. Philip Morris Companies Inc., et al., Supreme Court, New York County,
New York, filed February 9, 2000. In October 2001, the court granted defendants'
motion to dismiss, and plaintiff has appealed.
Munoz, et al. v. R. J. Reynolds, et al., Superior Court, San Francisco County,
California, filed February 9, 2000.
Smith, et al. v. Philip Morris Companies Inc., et al., District Court, Seward
County, Kansas, filed February 9, 2000. In November 2001, the court granted
plaintiffs' motion for class certification. Trial is scheduled for September
2003.
Gray, M.D., et al. v. Philip Morris Companies Inc., et al., Superior Court, Pima
County, Arizona, filed February 11, 2000. In March 2001, the trial court
dismissed the case, and plaintiffs have appealed. In May 2002, the Arizona Court
of Appeals overturned the trial court's ruling, and defendants appealed.
Brownstein, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Broward County, Florida, filed February 14, 2000. Defendants' motion to dismiss
is pending.
Morse v. R. J. Reynolds, et al., Superior Court, Alameda County, California,
filed February 14, 2000.
Ulan v. R. J. Reynolds, et al., Superior Court, Alameda County, California,
filed February 17, 2000.
Williamson Oil Company, Inc. v. Philip Morris Companies, et al., United States
District Court, Northern District, Georgia, filed February 18, 2000. In June
2000, the United States Judicial Panel on Multidistrict Litigation transferred
this case from United States District Court, District of Columbia. (See In Re:
Cigarette
12
Exhibit 99.1
Antitrust Litigation, MDL No. 1342, discussed below.)
Shafer v. Philip Morris Companies Inc., et al., District Court, Morton County,
North Dakota, filed February 16, 2000.
Sullivan v. R. J. Reynolds, et al., Superior Court, Alameda County, California,
filed February 22, 2000.
Teitler v. R. J. Reynolds, et al., Superior Court, Alameda County, California,
filed February 22, 2000.
Peirona v. Philip Morris Companies Inc., et al., Superior Court, San Francisco
County, California, filed February 28, 2000.
Cusatis v. Philip Morris Companies Inc., et al., Circuit Court, Milwaukee
County, Wisconsin, filed February 28, 2000.
Sand v. Philip Morris Companies Inc., et al., Superior Court, Los Angeles
County, California, filed February 28, 2000.
Amsterdam Tobacco Corp., et al. v. Philip Morris Companies Inc., et al., United
States District Court, Northern District, Georgia, filed March 6, 2000. In
June 2000, the United States Judicial Panel on Multidistrict Litigation
transferred this case from United States District Court, District of Columbia.
(See In Re: Cigarette Antitrust Litigation, MDL No. 1342, discussed below.)
Nierman v. Philip Morris Companies Inc., et al., Supreme Court, New York County,
New York, filed March 6, 2000. In October 2001, the court granted defendants'
motion to dismiss, and plaintiffs have appealed.
Sylvester v. Philip Morris Companies Inc., et al., Supreme Court, New York
County, New York, filed March 8, 2000. In October 2001, the court granted
defendants' motion to dismiss, and plaintiffs have appealed.
I. Goldschlack v. Philip Morris Companies Inc., et al., United States District
Court, Northern District, Georgia, filed March 9, 2000. In June 2000, the United
States Panel on Multidistrict Litigation transferred this case to the United
States District Court, Northern District of Georgia. (See In Re: Cigarette
Antitrust Litigation, MDL No. 1342, discussed below.)
Suwanee Swifty Stores, Inc., D.I.P. v. Philip Morris Companies Inc., United
States District Court, Northern District, Georgia, filed March 14, 2000. In June
2000, the United States Panel on Multidistrict Litigation transferred this case
to the United States District Court, Northern District of Georgia. (See In Re:
Cigarette Antitrust Litigation, MDL No. 1342, discussed below.)
Holiday Markets, Inc., et al. v. Philip Morris Companies Inc., United States
District Court, Northern District, Georgia, filed March 17, 2000. In June 2000,
the United States Panel on Multidistrict Litigation transferred this case to the
United States District Court, Northern District of Georgia. (See In Re:
Cigarette Antitrust Litigation, MDL No. 1342, discussed below.)
Taylor, et al. v. Philip Morris Companies Inc., et al., Superior Court,
Cumberland County, Maine, filed March 24, 2000.
Romero, et al. v. Philip Morris Companies Inc., et al., First Judicial District
Court, Rio Arriba County, New Mexico, filed April 10, 2000. Plaintiffs' motion
for class certification is pending.
Belch, et al. v. Philip Morris Companies Inc., et al., Superior Court, Alameda
County, California, filed April 11, 2000.
13
Exhibit 99.1
Belmonte, et al. v. R. J. Reynolds, et al., Superior Court, Alameda County,
California, filed April 11, 2000.
Aguayo, et al. v. R.J. Reynolds, et al., Superior Court, Alameda County,
California, filed April 11, 2000.
Swanson, et al. (formerly Vetter, et al.) v. Philip Morris Companies Inc., et
al., District Court, Hughes County, South Dakota, filed April 18, 2000.
Ludke, et al. v. Philip Morris Companies Inc., et al., District Court, Hennepin
County, Minnesota, filed April 20, 2000. In November 2001, the court denied
plaintiffs' motion for class certification.
Kissel, et al. (formerly Quickle, et al.) v. Philip Morris Companies Inc., et
al., First Judicial Circuit Court, Ohio County, West Virginia, filed May 2,
2000.
Hartz Foods, et al. v. Philip Morris Companies Inc., et al., United States
District Court, Northern District, Georgia, filed May 10, 2000. In June 2000,
the United States Panel on Multidistrict Litigation transferred this case to the
United States District Court, Northern District of Georgia. (See In Re:
Cigarette Antitrust Litigation MDL No. 1342, discussed below.)
Baker, et al. v. R.J. Reynolds, et al., Superior Court, Alameda County,
California, filed May 15, 2000.
Campe, et al. v. R.J. Reynolds, et al., Superior Court, Alameda County,
California, filed May 15, 2000.
Barnes v. Philip Morris Companies Inc., et al., Superior Court, District of
Columbia, filed May 18, 2000. Defendants' motion to dismiss is pending.
Lau, et al. v. R.J. Reynolds, et al., Superior Court, Alameda County,
California, filed May 25, 2000.
In Re: Cigarette Antitrust Litigation MDL No. 1342, Federal Multidistrict
Litigation Panel, United States District Court, Northern District, Georgia,
Atlanta Division, filed June 7, 2000. (Coordinated litigation of all federal
cases.) In July 2002, the court granted defendants' motion for summary judgment
dismissing the case in its entirety, and plaintiffs have appealed.
Philips, et al. v. R.J. Reynolds, et al., Superior Court, Alameda County,
California, filed June 9, 2000.
Pooler/Unruh, et al. v. R.J. Reynolds, et al., Second Judicial District, Washoe
County, Nevada, filed June 9, 2000.
Saylor, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Washington County, Tennessee, filed August 15, 2001. Defendants' motion to
dismiss the case and plaintiffs' motion for class certification are pending.
Cases Under the California Business and Professions Code
Brown, et al. v. The American Tobacco Company, Inc., et al., Superior Court, San
Diego County, California, filed June 10, 1997. In April 2001, the court granted
in part plaintiffs' motion for class certification and certified a class
comprised of residents of California who smoked at least one of defendants'
cigarettes between June 1993 and April 2001 and who were exposed to defendants'
marketing and advertising activities in California. Certification was granted as
to plaintiffs' claims that defendants violated California Business and
Professions Code Sections 17200 and 17500 pursuant to which plaintiffs allege
that class members are entitled to reimbursement of the costs of cigarettes
purchased during the class period and injunctive relief barring activities
allegedly in violation of the Business and Professions Code. Trial is scheduled
for April 2003.
Daniels, et al. v. Philip Morris Companies Inc., et al., Superior Court, San
Diego County, California, filed April
14
Exhibit 99.1
2, 1998. In November 2000, the court granted the plaintiffs' motion for class
certification on behalf of minor California residents who smoked at least one
cigarette between April 1994 and December 1999. Certification was granted as to
plaintiffs' claims that defendants violated California Business and Professions
Code Section 17200 pursuant to which plaintiffs allege that class members are
entitled to reimbursements of the costs of cigarettes purchased during the class
period and injunctive relief barring activities allegedly in violation of the
Business and Professions Code. Trial is scheduled for October 2002.
Tobacco Growers' Case
DeLoach, et al. v. Philip Morris Incorporated, et al., United States District
Court, Middle District, North Carolina, filed February 16, 2000. In April 2002,
the court granted plaintiffs' motion for class certification. Defendants'
petition for interlocutory review of the class certification order was denied in
June 2002.
MSA-Related Cases
The following are cases in which plaintiffs have challenged the validity of the
Master Settlement Agreement described in Note 8. Contingencies.
Forces Action Project, LLC, et al. v. The State of California, et al., United
States District Court, Northern District, California, filed January 23, 1999. In
August 2001, the United States Court of Appeals for the Ninth Circuit affirmed
the district court's dismissal of plaintiffs' claims based on lack of standing,
and reversed the district court's denial of plaintiffs' motion for leave to file
an amended complaint. In January 2002, the district court denied plaintiffs' new
motion to amend the complaint, and plaintiffs have appealed.
A.D. Bedell Company, Inc. v. Philip Morris Incorporated, et al., Supreme Court,
Cattaraugus County, New York, filed October 18, 1999. In November 1999, the
court denied a motion to dismiss the complaint and denied a motion to vacate the
temporary restraining order enjoining Philip Morris from refusing to sell
products to plaintiff. Defendants filed an appeal from the court's denial of
their motion to dismiss and motion to vacate. In May 2000, the appellate court
granted in part and denied in part defendants' motion to dismiss the case. The
stay which was previously pending resolution of A.D. Bedell Wholesale Co. v.
Philip Morris Incorporated, et al., expired upon the denial of certiorari in
that case.
PTI, Inc., et al. v. Philip Morris Incorporated, et al., United States District
Court, Central District, California, filed August 13, 1999. In May 2000, the
court dismissed plaintiffs' claims.
Star Scientific Inc. v. Mark E. Earley, United States District Court, Eastern
District, Virginia, filed December 15, 2000. Plaintiff, a cigarette
manufacturer, filed a suit against the Commonwealth of Virginia challenging the
constitutionality of the MSA and the legislation enacted to enforce it. The
Company was not named as a defendant in the suit. In March 2001, the district
court entered a final order dismissing the case on the grounds that plaintiff
lacked standing to assert the constitutional challenges to the MSA and that the
challenge of the qualifying statute failed to state a claim upon which relief
can be granted, and plaintiff has appealed. In January 2002, the United States
Court of Appeals for the Fourth Circuit affirmed the district court's decision
rejecting plaintiff's claims.
Mariana, et al. v. William, et al., United States District Court, Middle
District, Pennsylvania, filed October 31, 2001. Plaintiffs, seeking to enjoin
the Commonwealth of Pennsylvania's receipt of funds pursuant to the MSA, allege
that enforcement of the MSA is unconstitutional and violates antitrust laws.
Neel, et al. v. Strong, et al., Circuit Court, St. Louis County, Missouri, filed
January 8, 2002. Plaintiffs, two Missouri residents and taxpayers, seek to
enjoin the payment by PM Inc. and other tobacco companies of attorneys' fees to
counsel who represented the State of Missouri in its health care cost recovery
suit against the tobacco industry, and allege that the Missouri fee payment
agreement violates certain provisions of the Missouri Constitution.
In June 2002, a judge in a New York State trial court, on his own motion, issued
an order to show cause regarding the attorneys' fees arbitration award to
private counsel in connection with the New York Attorney General's health care
cost recovery action. While the order to show cause principally focuses on the
propriety of the amount of fees awarded, it also raises the questions of whether
the court can and should revisit its prior approval of the MSA.
15
Exhibit 99.1
Consolidated Putative Punitive Damages Cases
Simon, et al. v. Philip Morris Incorporated, et al. (Simon II), United States
District Court, Eastern District, New York, filed September 6, 2000. In November
2000, the court indicated that it intends to certify a class in this action
which purports to consolidate punitive damages claims in the following ten
actions then pending in the federal courts in New York and Pennsylvania. In July
2002, plaintiffs filed an amended consolidated class action complaint and a
motion for class certification. The complaint seeks certification of punitive
damages class of persons residing in the United States who smoke or smoked
defendants' cigarettes, and who have been diagnosed by a physician with an
enumerated disease from April 1993 through the date notice of the certification
of this class is disseminated.
CERTAIN OTHER ACTIONS
The following lists certain other actions pending against subsidiaries of the
Company and others as of August 1, 2002.
National Cheese Exchange Cases
Consolidated Action: (Servais, et al. v. Kraft Foods, Inc. and the National
Cheese Exchange, Inc., Circuit Court, Dane County, Wisconsin, filed May 5, 1997;
Dodson, et al. v. Kraft Foods, Inc., et al., Circuit Court, Dane County,
Wisconsin, filed July 1, 1997; Noll, et al. v. Kraft Foods, Inc., et al.,
Circuit Court, Dane County, Wisconsin, filed July 11, 1997).
Knevelboard Dairies, et al. v. Kraft Foods, Inc., et al., United States District
Court, Central District, California, filed April 14, 1998. In April 2002,
Kraft's motion for summary judgment dismissing the case was granted. Plaintiffs
have not pursued an appeal and the case has been dismissed.
Environmental Matters
In May 2001, the Attorney General for the State of Ohio notified Kraft Foods
North America that it may be subject to an enforcement action for alleged
violations of the state's water pollution control law at its production facility
in Farmdale, Ohio. The Ohio Attorney General has alleged that this facility has
exceeded its water permit effluent limits and violated its reporting
requirements. The State has offered to attempt to negotiate a settlement of this
matter, and Kraft Foods North America has accepted the offer to do so. The State
has not yet identified the relief it may seek in this matter.
16