Exhibit 99.1
CERTAIN PENDING LITIGATION MATTERS AND RECENT DEVELOPMENTS
As described in Note 10. of this Quarterly Report on Form 10-Q, there are legal
proceedings covering a wide range of matters pending in various U.S. and foreign
jurisdictions against ALG, its subsidiaries and affiliates, including PM USA 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
March 27, 2003 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 USA and, in some cases,
ALG and/or its other subsidiaries and affiliates, including PMI, as of May 1,
2003, and describes certain developments in these cases since March 27, 2003.
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 1,100 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.
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 May 1, 2003, approximately
2,800 of these suits were pending in the Circuit Court of Dade County, Florida
against PM USA 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
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injuries 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 12 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 10.
Contingencies for a discussion of this 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 current and former 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 class
members with smoking cessation programs. Jury selection began in June 2001, and
is now completed. In September 2002, the trial court entered an order precluding
defendants from introducing evidence or making arguments to the jury concerning
the affirmative defense of comparative fault. Also, in September 2002, the trial
court issued an amended trial plan requiring the adjudication of defendants'
liability to the entire class, including defendants' affirmative defenses, based
on a trial of the two class representatives' claims. Defendants filed writs
challenging each of these rulings with the intermediate appellate court, and the
Louisiana Supreme Court. Defendants' appeals were denied by the Louisiana
Supreme Court. Trial is currently underway.
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, and plaintiffs appealed. In February 2003, the West
Virginia Supreme Court agreed to hear plaintiffs' appeal.
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.
Parsons, et al. v. A C & S, Inc., et al., Circuit Court, Kanawha County, West
Virginia, filed February 27, 1998.
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.
Julian, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Montgomery County, Alabama, filed April 14, 1999.
Simms, et al. v. Philip Morris Incorporated, et al., United States District
Court, District of Columbia, filed May 23, 2001. In February 2003, the court
denied plaintiffs' motion for class certification.
Lowe, et al. v. Philip Morris Incorporated, et al., Circuit Court, Multomah,
Oregon, filed November 19, 2001.
Birchall, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed July 10, 2002.
Goldfarb, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed July 25, 2002.
Cahn, et al. v. United States of America, et al., United States District Court,
New Jersey, filed July 29, 2002.
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Ellington, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed July 31, 2002.
Vandina, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed July 31, 2002.
Vavrek, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed July 31, 2002.
Martinez, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 4, 2002.
Ginsburg, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 6, 2002.
Hamil, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 6, 2002.
Ramsden, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 6, 2002.
Deller, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 9, 2002.
Hudson, et al. v. Philip Morris Incorporated, et al., United States District
Court, Nevada, filed September 9, 2002.
Buffman v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Eben v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Gagne v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Garnier v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Goodman v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Griffin v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Huckeby v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Lee v. Philip Morris Incorporated, et al., United States District Court, Nevada,
filed October 29, 2002.
Lee v. Philip Morris Incorporated, et al., United States District Court, Nevada,
filed October 29, 2002.
Raimo v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Ramstetter v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 29, 2002.
Baker v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 31, 2002.
Page v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 31, 2002.
Sampson v. Philip Morris Incorporated, et al., United States District Court,
Nevada, filed October 31, 2002.
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Brown v. Philip Morris Incorporated, et al., Circuit Court, Campbell County,
Kentucky, filed January 2, 2003.
Martinez, et al., v. Philip Morris Incorporated, et al., United States District
Court, Utah, filed January 7, 2003.
Brown, et al. v. Philip Morris Incorporated, et al., United States District
Court, Massachusetts, filed January 10, 2003.
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., Nineteenth Lower Civil Court of the Central Courts of
the Judiciary District of Sao Paulo, Brazil, filed July 25, 1995.
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.
Ragoonanan, et al. v. Imperial Tobacco Limited, et al., Superior Court of
Justice, Ontario, Canada, filed January 11, 2000.
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. In September 2002, the case was
dismissed, and plaintiff has appealed.
Asociacion de Laringectomizados de Leon v. Altadis S.A., et al., Court of First
Instance, Leon, Spain, filed January 3, 2001. In 2003, the case was dismissed,
and plaintiff has appealed.
HEALTH CARE COST RECOVERY LITIGATION
The following lists the health care cost recovery actions pending against PM USA
and, in some cases, ALG and/or its other subsidiaries and affiliates as of May
1, 2003 and describes certain developments in these cases since March 27, 2003.
As discussed in Note 10. Contingencies, in 1998 PM USA 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. ALG 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. Defendants' motion to dismiss the case
was granted by the trial court and plaintiffs' appeal is pending.
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City of St. Louis, et al. v. American Tobacco, et al., Circuit Court, City of
St. Louis, Missouri, filed November 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. Trial is scheduled for September 2004.
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
10. 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 appealed. In September 2002,
the appellate court affirmed the trial court's ruling, and Venezuela has
petitioned the state supreme court for further review.
The Caisse Primaire d'Assurance Maladie of Saint-Nazaire v. SEITA, et al., Civil
Court of Saint-Nazaire, France, filed June 1999. A final hearing on the case is
scheduled for June 2003.
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
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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
November 2001, the Venezuela and Espirito Santo actions were dismissed, and
Venezuela appealed. In September 2002, the appellate court affirmed the trial
court's ruling that dismissed the case brought by Venezuela, and Venezuela has
petitioned the state supreme court for further review.
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. In December 2002, the court granted defendants' motion to dismiss the
case, and plaintiff has appealed.
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.
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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 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, et al. v. Philip Morris Spain, et al., Court of First
Instance, Madrid, Spain, filed February 21, 2002. In September 2002, the court
granted defendants' motion for dismissal for lack of jurisdiction, and plaintiff
appealed. The appellate court has reversed the trial court's ruling.
Union Cases
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 granted review, but ruled in November 2002 that review should not
have been granted and remanded the case to the intermediate appellate court,
which issued an order that its 2001 ruling dismissing the case is final.
Native American Cases
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.
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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, and the motion for
certification has been denied.
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 USA, 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 USA has appealed.
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 and who have allegedly suffered from smoking-related injuries.
Plaintiffs claim that the putative class is entitled to a portion of the MSA
funds under Tennessee's "made whole" doctrine. 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. In July 2002, the court granted the State's motion to
dismiss on the grounds of sovereign immunity. In December 2002, the trial court
granted the remaining defendants' motion to dismiss for failure to state a
claim, and plaintiffs have appealed. This case has been consolidated with
Anderson, et al., v. The American Tobacco Company, Inc., et al., discussed below
for appeal. PM USA and several other appellees have filed a motion to dismiss
the appeal based on appellants' failure to file a timely notice of appeal. The
appellate briefing schedule has been stayed pending resolution of the motion to
dismiss.
Anderson, et al. v. The American Tobacco Company, Inc., et al., United States
District Court, Middle District, Tennessee, filed May 23, 1997. In October 2002,
an order was entered that consolidated this case with Temple, et al. v. The
State of Tennessee, et al. ("Temple") discussed above and granted plaintiffs'
motion to amend the complaint to make the allegations in this case similar to
those in Temple. In November 2002, the trial court granted defendants' motion to
dismiss for failure to state a claim, and plaintiffs have appealed. See Temple,
et al., v. The State of Tennessee, et al., discussed above.
Other Cases
Perry, et al. v. The American Tobacco Company, et al., United States District
Court, Eastern District, Tennessee, filed September 30, 1996. Defendants' motion
to dismiss the case was granted by the trial court and plaintiffs' appeal is
pending. In April 2003, the United States Court of Appeals for the Sixth Circuit
affirmed the trial court's dismissal of the case.
Mason, et al. v. The American Tobacco Company, et al., United States District
Court, Eastern District, New York, filed December 23, 1997. In July 2002, the
court denied plaintiffs' motion for class certification, and granted defendants'
motion to dismiss the case, and plaintiffs have appealed.
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A.O. Fox Memorial Hospital, et al. v. The American Tobacco Company, et al.,
Supreme Court, Nassau County, New York, filed March 30, 2000. Defendants' motion
to dismiss was granted by the trial court and plaintiffs appealed. In February
2003, the appellate court affirmed the trial court's ruling. Plaintiffs have
petitioned the New York Court of Appeals for further review.
Jefferson County d/b/a Cooper Green Hospital, et al. v. Philip Morris
Incorporated, et al., United States District Court, Northern District, Alabama,
filed October 10, 2002. In April 2003, the court granted defendants' motion to
dismiss the case with prejudice.
CERTAIN OTHER TOBACCO-RELATED ACTIONS
The following lists certain other tobacco-related litigation pending against ALG
and/or its various subsidiaries and others as of May 1, 2003, and describes
certain developments since March 27, 2003.
Lights/Ultra Lights Cases
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 and
defendants have appealed.
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. Trial is
scheduled for August 2003.
Price, et al. v. Philip Morris Incorporated, Circuit Court, Madison County,
Illinois, filed February 10, 2000. See Note 10. Contingencies. for a discussion
of this case.
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, and
defendants have appealed.
Philipps, et al. v. Philip Morris Incorporated, et al., Court of the Common
Pleas, Medina County, Ohio, filed May 1, 2001.
Moore, et al. v. Philip Morris Incorporated, et al., Circuit Court, Marshall
County, West Virginia, filed August 10, 2001.
In re Tobacco Cases II (Daniel Fischer, Jr., individually and on behalf of those
similarly situated and the general public) v. Philip Morris Incorporated, et
al., Superior Court, San Diego County, California, filed October 31, 2001. In
August 2002, plaintiff stipulated to the dismissal of ALG as a defendant. In
October 2002, plaintiffs amended their complaint to add PMI as a defendant.
Also, in October 2002, defendants' motion to coordinate the case with a case
pending in state court in San Diego, California was granted.
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, Superior Court, Rockingham
County, New Hampshire, filed March 29, 2002. The case has been consolidated with
Peters v. Philip Morris Incorporated.
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Peters v. Philip Morris Incorporated, Superior Court, Rockingham County, New
Hampshire, filed April 22, 2002. This case has been consolidated with Tremblay,
et al. v. Philip Morris Incorporated.
Pearson v. Philip Morris Incorporated, et al., United States District Court,
Oregon, filed November 20, 2002.
Sullivan v. Philip Morris USA, Inc., et al., District Court, Calcasieu Parish,
Louisiana, filed March 28, 2003.
Virden v. Altria Group, Inc., et al., Circuit Court, Hancock County, West
Virginia, filed March 28, 2003.
Stern, et al. v. Philip Morris USA, Inc. et al., Superior Court, Middlesex
County, New Jersey, filed April 4, 2003.
Piscetta, et al. v. Philip Morris Incorporated, Superior Court, Fulton County,
Georgia, filed April 10, 2003.
Arnold, et al. v. Philip Morris USA Inc., Circuit Court, Madison County,
Illinois, filed May 2, 2003.
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.
Defendants' motion to dismiss the complaint for failure to state a claim was
granted by the trial court and plaintiffs' appeal is pending.
The Republic of Ecuador v. Philip Morris Incorporated, et al., United States
District Court, Southern District, Florida, filed June 5, 2000. Defendants'
motion to dismiss the complaint for failure to state a claim was granted by the
trial court and plaintiff's appeal is pending.
The Republic of Belize v. Philip Morris Companies Inc., et al., United States
District Court, Southern District, Florida, filed May 8, 2001. Defendants'
motion to dismiss the complaint for failure to state a claim was granted by the
trial court and plaintiff's appeal is pending.
The Republic of Honduras v. Philip Morris Companies Inc., et al., United States
District Court, Southern District, Florida, filed May 8, 2001. Defendants'
motion to dismiss the complaint for failure to state a claim was granted by the
trial court and plaintiff's appeal is pending.
The European Community, et al. v. RJR Nabisco, Inc., et al., United States
District Court, Eastern District, New York, filed August 6, 2001. Defendants'
motion to dismiss the complaint for failure to state a claim was granted by the
trial court and plaintiffs' appeal is pending.
Asbestos Contribution Cases
Fibreboard Corporation, et al. v. The American Tobacco Company, et al., Superior
Court, Alameda County, California, filed December 11, 1997.
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.
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).
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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 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.
Defendants' motion for summary judgment dismissing all claims with prejudice was
granted by the trial court and plaintiffs' appeal is pending.
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 the cases 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 has been
denied. Defendants' motions 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. Defendants' motion to dismiss was granted by
the trial court, and plaintiffs appealed. In March 2003, plaintiffs withdrew
their appeal.
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 appealed. In May 2002, the Arizona Court of
Appeals reversed the trial court's ruling, and defendants appealed to the
Arizona Supreme Court, which has accepted defendants' appeal.
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Brownstein, et al. v. Philip Morris Companies Inc., et al., Circuit Court,
Broward County, Florida, filed February 14, 2000. In February 2003, the court
granted defendants' motion to dismiss the case, and plaintiffs have appealed.
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 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. Defendants' motion to dismiss was granted by the
trial court, and plaintiffs appealed. In March 2003, plaintiffs withdrew their
appeal.
Sylvester v. Philip Morris Companies Inc., et al., Supreme Court, New York
County, New York, filed March 8, 2000. Defendants' motion to dismiss was granted
by the trial court, and plaintiff appealed. In March 2003, plaintiff withdrew
his appeal.
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.)
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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 was granted in April 2003.
Belch, et al. v. Philip Morris Companies Inc., et al., Superior Court, Alameda
County, California, filed April 11, 2000.
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. In November 2002, the court granted defendants'
motion for partial dismissal of the case.
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.) Defendants' motion for summary judgment was granted by the trial court
and plaintiffs' appeal is pending.
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., United States District
Court, Eastern District, Tennessee, filed August 15, 2001. Plaintiffs' motion to
amend the complaint was granted in February 2003 after they
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withdrew their motion for class certification and defendants withdrew their
motion to dismiss. In March 2003, defendants filed a motion to dismiss the case.
Wholesale Supply Co., Inc. v. Philip Morris Inc., et al., District Court, Ward
County, North Dakota, filed October 11, 2002.
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 September 2003.
Daniels, et al. v. Philip Morris Companies Inc., et al., Superior Court, San
Diego County, California, filed April 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. In September 2002, the court granted defendants' motions for
summary judgment as to all claims in the case. Plaintiffs have appealed.
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. Trial is scheduled for April 2004.
MSA-Related Cases
The following are cases in which plaintiffs have challenged the validity of the
Master Settlement Agreement described in Note 10. 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 appealed. In February 2003, the
Ninth Circuit affirmed the district court's January 2002 ruling, and in April
2003, the Ninth Circuit denied plaintiffs' petition for rehearing.
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 PM USA 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.
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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 USA 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 September
2002, the court granted defendants' motion to dismiss the case, and plaintiffs
have appealed. In April 2003, the Missouri Court of Appeals affirmed the trial
court's dismissal of the case.
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 July
2002, plaintiffs filed an amended complaint and a motion seeking certification
of a 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 was disseminated. The following persons are excluded
from the class: (1) those who have obtained judgments or settlements against any
defendants; (2) those against whom any defendant has obtained judgment; (3)
persons who are part of the certified Engle case; (4) persons who should have
reasonably realized that they had an enumerated disease prior to April 9, 1993;
and (5) those whose diagnosis or reasonable basis for knowledge predates their
use of tobacco. In September 2002, the trial court granted plaintiffs' motion
for class certification, and defendants have petitioned the United States Court
of Appeals for the Second Circuit for review of the trial court's ruling. The
Second Circuit has agreed to hear defendants' appeal. Trial of the case has been
stayed pending resolution of defendants' petition to the Second Circuit.
CERTAIN OTHER ACTIONS
The following lists certain other actions pending against subsidiaries of the
Company and others as of May 1, 2003.
Environmental Matters
In May 2001, the Attorney General for the State of Ohio notified KFNA 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 KFNA has
accepted the offer to do so. The State has not yet identified the relief it may
seek in this matter.
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