Big Tobacco: We've Kicked Habit

Tobacco industry lawyers say the government won't be able to prove cigarette makers schemed for decades to deceive the public about smoking hazards and that the industry intends to keep up such bad behavior.

Industry lawyers plan to offer opening arguments in the $280 billion civil racketeering case against them Wednesday.

Big tobacco will argue that under a 1998 agreement with state governments to pay back $250 billion for health related costs, it has already learned its lessons, reports CBS News Correspondent Jim Stewart. It now fully discloses research into its products, it says, and bans marketing to children.

"The government has given short shift, and in many instances ignored the profound changes that have occurred in the cigarette business," said Philip Morris USA attorney William Ohlemeyer.

Government lawyers alleged in opening remarks Tuesday the industry knew smoking was linked to disease but set up research and public relations organizations to cast doubt on that.

"What you will see is very substantial evidence of past conduct that is unacceptable in terms of corporate fraud," Associate Attorney General Robert McCallum said.

Justice Department lawyers quoted numerous industry officials issuing public denials, but Ohlemeyer said showing industry executives were out of step with public health officials does not prove fraud occurred.

"They have to prove more than people made mistakes or did things they shouldn't have done," Ohlemeyer said.

He added that even if the government can prove fraud occurred, the law requires Justice attorneys to demonstrate to U.S. District Judge Gladys Kessler that the fraud is likely to occur again in the future.

"Legally they have to prove more than there was fraud in the past," he said. "They have to prove a reasonable likelihood of future violations."

Ohlemeyer said agreements worth $246 billion that the industry reached with all the states in the late 1990s imposed sweeping restrictions on how cigarettes are marketed and make future fraud impossible.

Those restrictions include a ban on billboard, transit or cartoon ads. The agreements also led to the closure of organizations the government alleges disseminated misleading information.

Justice attorneys say showing fraud occurred in the past is enough to infer it will happen again. However, they also say the companies still mislead the public about the harmful nature of second-hand smoke and their efforts to lure teens.

Justice attorney Frank Marine said the companies target teens through in-store promotions and magazine ads, though they deny doing so. Marine said the companies target teens because they need future customers.

"They must market to teenagers to survive," he said.

The defendants are Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A.; and the Tobacco Institute.

The Clinton administration filed the lawsuit in 1999, and the Bush administration pursued it after receiving early criticism for openly discussing the case's perceived weaknesses and attempting unsuccessfully to settle it.

The government has spent $135 million on the case so far.

Scientific studies dating to the 1950s said smoking could lead to cancer and other problems. In 1964, the U.S. surgeon general issued a report linking smoking to lung and larynx cancer and chronic bronchitis.

Marine said the companies tried to cast doubt on such findings to ensure they wouldn't lose customers. "The problem to them was that the public might stop smoking because of health concerns," Marine said.

Justice lawyers pointed to internal memos to try to show cigarette-makers knew they were being deceitful.

In one from the early 1960s, an R.J. Reynolds scientist, Alan Rodgman, said, "The statistical data from the smoking health studies are almost universally accepted."

The government says the $280 billion it is seeking is money the companies earned through fraud. The industry says the government is not entitled to any money. An appeals court is considering that issue even as the lower court trial gets under way.

The trial is expected to last about six months. The first witness is former Food and Drug Administration Commissioner David Kessler, who is not related to Judge Gladys Kessler. He is expected to take the stand Thursday and address allegations the companies manipulated nicotine levels in cigarettes to make them more addictive.