In Re: Light Cigarettes Marketing and Sales Practices Litigation

REPLY TO ADDITIONAL Statement of Fact

D. Me.April 14, 2010

- 1 - UNITED STATES DISTRICT COURT DISTRICT OF MAINE IN RE: LIGHT CIGARETTES MARKETING MDL Docket No. 1:09-MD-2068 SALES PRACTICES LITIGATION ALL CASES DEFENDANT PHILIP MORRIS USA INC.’S REPLY TO PLAINTIFFS’ STATEMENT OF ADDITIONAL MATERIAL FACTS Pursuant to Rule 56(d) of the Local Rules for the United States District Court for the District of Maine, defendant, Philip Morris USA Inc. (“PM USA”), submits this Reply to Plaintiffs’ Statement of Additional Material Facts (“plaintiffs’ SAF” or “pls. SAF”). PRELIMINARY STATEMENT In response to PM USA’s 47-paragraph statement of material facts, most of which plaintiffs failed to dispute, plaintiffs have submitted 118 additional paragraphs of supposed “additional material undisputed facts” in opposition to PM USA’s motion for summary judgment. The majority of plaintiffs’ additional “facts,” however, are not relevant -- let alone material -- to this Court’s determination of whether, given PM USA’s extensive disclosures after December 1, 2002, PM USA’s use of the descriptors at issue in these cases can be deceptive as a matter of law. Plaintiffs’ SAF consists largely of quotations from past hearsay testimony that are either taken out of context and/or have nothing to do with the issues here, mischaracterized documents, and findings from a decision, United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1 (D.D.C. 2006), that this Court has ruled has no binding effect in this case. In addition, much of plaintiffs’ SAF relates to the issue of causation, which is not at issue Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 1 of 63 - 2 - for purposes of this motion. Rather than create a genuine issue of material fact, plaintiffs’ additional “facts” are immaterial and create unnecessary work for PM USA and the Court. In addition, plaintiffs fail to comply with the basic requirements of Local Rule 56, which requires that their statement of facts be “a . . . short . . . and concise statement” “of material facts” each set forth “in . . . a separately numbered paragraph,” and fail to support many of their alleged “facts” with record citations. Local Rule 56(c) (emphasis added). Instead, many of plaintiffs’ numbered paragraphs contain multiple sentences that are overly- long and convoluted. In addition, rather than state “facts,” plaintiffs frequently offer argument, comment, and improper characterizations of testimony and documents. Indeed, many of plaintiffs’ “facts” are so laced with improper argument and mischaracterization that they in effect are an end run around the page limit on plaintiffs’ brief. E.g., Pls. SAF ¶¶ 57, 105, 106. Plaintiffs’ 118 additional “facts” violate the plain language of this Court’s Rule 56(c), and PM USA respectfully objects to plaintiffs’ improper imposition of the obligation of an unduly burdensome response upon it, and requests that plaintiffs’ SAF be stricken in its entirety. Local Rule 56(c); see, e.g., Stanley v. Hancock County Comm’rs, 2004 ME 157,¶ 29, 864 A.2d 169, 179 (2004) (interpreting the identical requirement under the Maine Civil Rules and indicating in dicta that “[i]f a party submits an unnecessarily long, repetitive, or otherwise convoluted statement of material facts that fails to achieve the Rule’s requirement of a ‘separate, short and concise’ statement, the court has the discretion to disregard the statement . . . .”). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 2 of 63 - 3 - PM USA’S REPLIES TO PLAINTIFFS’ SAF Pursuant to this Court’s Rule 56(d), PM USA replies to plaintiffs’ SAF, interlineating its replies with plaintiffs’ asserted facts:1 48. PM USA’s distribution of “low tar/lights” onserts in November 2002 was done in one week’s volume of selected light brand styles from all “classes” of PM USA cigarettes, as categorized by PM USA based upon their sales volume, which included “Classes A, B, C & D Brands.” McCormick Dep. Ex. 3, 3007287724-3007287727, at 3007287724 (attached hereto as Exhibit A); McCormick Dep. at 39:7-21, Exhibit AA. QUALIFIED: PM USA’s distribution of “low tar/lights” onserts in November 2002 was done based on “1 week’s worth of average weekly sales volume per SKU” and included Classes A, B, C, and D Brands. Pls. Ex. A, 3007287724. In addition, the exhibit that plaintiffs cite makes clear that PM USA adjusted the “quantities for some low volume products . . . to facilitate national distribution.” Id. Based on the exhibit, the onsert distribution included all but 19 low-tar packings, and included those labeled as “light,” “ultra light,” “medium,” and “mild.” Id. 49. This involved 175 “packings” -- that is, low tar/lights onserts were included in the “packing” of “one week’s volume” of packs of cigarettes in each of 175 different “SKUs,” which 1 For ease of reading, PM USA has adopted the following citation conventions for its statements in reply. These are slightly different than those used in plaintiffs’s SAF. Citations to “Pls. Ex. __” refer to the exhibits to plaintiffs’ SAF. Additionally, although plaintiffs included excerpts from the McCormick Deposition as their Exhibit AA, PM USA has included as Exhibit 12 to its reply brief the full McCormick Deposition. Citations to PM USA’s Exhibit 12 will appear in the text of PM USA’s replies as “McCormick Dep. at ___.” Additionally, citations to the “Harris Aff. ¶ __” refer to the affidavit submitted by Dr. Harris on March 31, 2010 as Exhibit A to plaintiffs’ response to the summary judgment motion at issue here. Citations to other affidavits submitted by Dr. Harris in this multidistrict litigation, such as those submitted in support of Plaintiffs’ Motion for Class Certification, will be identified specifically. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 3 of 63 - 4 - are product numbers identifying a unique product offering with a different pack. McCormick Dep. at 40:10-42:13, Exhibit AA. QUALIFIED: PM USA’s distribution of “low tar/lights” onserts in November 2002 was done based on “1 week’s worth of average weekly sales volume per SKU.” Pls. Ex. A, 3007287724. In addition, the exhibit that plaintiffs cite makes clear that PM USA adjusted the “quantities for some low volume products . . . to facilitate national distribution.” Id. 50. Nineteen SKUs were excluded from this distribution of low tar/lights onserts. Exhibit A at 3007287724; McCormick Dep. at 42:14-43. Accordingly, purchasers of those SKUs did not receive any low tar/lights onserts in this distribution. QUALIFIED: PM USA ADMITS the first sentence of paragraph 50. PM USA objects to the second sentence of paragraph 50 as speculative argument unsupported by any citation to the record as required by Local Rule 56, and requests that it be STRICKEN. 51. In an Altria document entitled “Lautenberg Amendment Talking Points,” (AC5000960458-AC5000960459) (attached hereto as Exhibit C), it states, “On an annual basis since 2002, PM USA has placed onserts on one week’s volume of our cigarette brands that contain that [sic] the terms ‘light’, ‘ultralight’, ‘medium’ ‘mild’ to communicate to consumers the purpose and limitations of tar and nicotine yield ratings.” Exhibit C at AC5000960458 (emphasis added). In other words, if 52 million packs of a certain brand of cigarettes are sold in a year, the low tar/lights onserts will be included in one million, or only 1.9%, of the packs sold that year. See also McCormick Dep. at 41:4-23 (“If one week’s average sales volume was 1,000 packs, onserts would be put on 1,000 packs for that particular SKU.”) DENIED: PM USA DENIES the second sentence of paragraph 51 because on its face it is not supported by the record citation immediately following it, or by any other evidence of Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 4 of 63 - 5 - record. See Affidavit of Jeffrey Harris (Mar. 29, 2010) (Ex. I to Pls. Mot. Class Certification) ¶ 17 (reporting a higher percentage); Affidavit of Jeffrey Harris, M.D., Ph.D. (Mar. 31, 2010) (Ex. A. to Pls. Resp. Opp. PM USA. Mot. Summary J. Plaintiffs’ Claims for Purchases After Dec. 1, 2002) (“Harris Aff.”), Table 1 (reporting specific percentages per jurisdiction, the mean of which is higher). Further, it is a hypothetical statement that is not a statement of “material fact” permitted by Local Rule 56. Therefore, PM USA requests that the second sentence be STRICKEN. With respect to the first sentence of paragraph 51, PM USA ADMITS that the quoted language appears in plaintiffs’ Exhibit C. 52. The “One week’s volume” term was also used in an April 15, 2003 internal PM USA email (attached hereto as Exhibit D) regarding the distribution of onserts on “one week’s volume of all non-full flavor PM USA brand styles during November 2003.” ADMITTED. 53. The distribution of low tar/lights onserts in the fourth quarter of 2003 was only done in one week’s volume of the top-selling brands, the “A and B Classes,” due to limitations in the factories’ ability to include onserts in other brands. McCormick Dep. Ex. 6 (5002612333- 5002612335) (attached hereto as Exhibit B), at 5002612333; McCormick Dep. at 57:7-25, Exhibit AA. QUALIFIED: The distribution of low tar/lights onserts in the fourth quarter of 2003 was done in one week’s average weekly sales volume per SKU of the top-selling brands, the “A and B Classes,” due to limitations in the factories’ ability to include onserts in other brands. Pls. Ex. B, 5002612333; McCormick Dep. at 57:7-25 (Ex. 12 to Def. Reply Br.). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 5 of 63 - 6 - 54. Instead of the 175 packings that included low tar/lights onserts in the previous year, only 45 packings included these onserts in 2003. Exhibit B at 5002612333; McCormick Dep. at 56:10-11, Exhibit AA. QUALIFIED: The 45 packings constituted the vast majority of PM USA’s low-tar cigarette sales in 2003, and the inclusion of the onsert with these products resulted in the distribution of 111,700,000 onserts in 2003. See Pls. Ex. B., 5002612333. 55. The distribution of low tar/lights onserts in the fourth quarter of 2003 excluded all brands in PM USA’s “C” and “D” classes. See Exhibit B hereto at 5002612333; McCormick Dep. at 57:7-25, Exhibit AA. Accordingly, only smokers of the top-selling brands of PM USA light cigarettes could have received low tar/lights onserts in the cigarettes they purchased in and shortly after the fourth quarter of 2003. QUALIFIED: The 45 class “A” and “B” products constituted the vast majority of PM USA’s low-tar cigarette sales in 2003, and the inclusion of the onsert with these products resulted in the distribution of 111,700,000 onserts in 2003. See Pls. Ex. B., 5002612333. PM USA objects to the second sentence of paragraph 55 as speculation unsupported by any citation to the record as required by Local Rule 56 and requests that it be STRICKEN. 56. The remaining brands -- those in the “C” and “D” classes -- did not include low tar/lights onserts. Based upon the differences between the number of packings that included low tar/lights onserts in 2002, and the number of packings that included these onserts in 2003, it appears that approximately 130 different SKUs that were included in the low tar/lights onsert distribution in 2002 were excluded from the low tar/lights onsert distribution in 2003. Id. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 6 of 63 - 7 - QUALIFIED: The 45 class “A” and “B” products constituted the vast majority of PM USA’s low-tar cigarette sales in 2003, and the inclusion of the onsert with these products resulted in the distribution of 111,700,000 onserts in 2003. See Pls. Ex. B., 5002612333. 57. While Philip Morris states that it has included [informational] onserts in approximately 130 million cigarette packs distributed nationwide in 2002, 109 million packs in 2003, 118 million packs in 2004, 149 million and then another 135 million packs in 2005, 140 million packs in 2006, 129 million packs in 2007, and 127 million packs in 2008 (McCormick Aff. ¶ 10), these numbers are miniscule compared to the number of packs of cigarettes PM distributes in a single month. In sworn testimony in the DOJ Action before Judge Kessler, Denise Keane, PM USA’s General Counsel, testified that PM USA distributes 780 million packs of cigarettes a month. See Trial Testimony of Denise Keane, Morning of January 19, 2005, in United States v. Philip Morris USA, AC5000920623-AC5000920649 (attached hereto as Exhibit E), at AC5000920634. DENIED: Although PM USA ADMITS that it distributed onserts in the approximate amounts stated in paragraph 57. PM USA DENIES the characterization that “these numbers are miniscule compared to the number of packs of cigarettes PM USA distributes in a single month,” and requests that this language be STRICKEN because it is not supported by citation to the record, is argumentative, and is not a proper statement of material fact under Local Rule 56. PM USA ADMITS that Ms. Keane gave the referenced testimony, but DENIES plaintiffs’ statement to the extent that it purports to represent Ms. Keane’s testimony as referring specifically to any particular month or cigarettes relevant to this motion. See, e.g., Aff. of Jeffrey Harris, M.D., Ph.D (Mar. 29, 2010) (Ex. I to Pls. Mot. Class Certification), Table 1 (reporting data that Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 7 of 63 - 8 - indicates that the total number of low-tar packs distributed in the fourth quarter of 2002 was approximately 489 million.) 58. Based upon data provided by PM USA, in each year PM USA has distributed the low tar/lights onserts at issue in PM USA’s motion for each of the relevant MDL jurisdictions, such onserts have been included in anywhere as low as .88% of the packs of Light cigarettes PM USA sold in a particular state during a particular year (New Mexico 2004), but in no higher than 2.45% of such packs (Arkansas 2008). See Affidavit of Jeffrey E. Harris, M.D. Ph.D. (“Harris Aff.”), at ¶5, Table 1, which is attached as Exhibit A to Plaintiffs’ Response in Opposition to Philip Morris USA Inc’s Motion for Summary Judgment on Plaintiffs’ Claims for Purchases After December 1, 2002. DENIED: PM USA objects to paragraph 58, which purports to be plaintiffs’ characterization of information contained in their expert, Dr. Harris’ Table 1, because it misstates the information provided in Table 1, and therefore is not a proper statement of material undisputed fact, is unsupported by the record citation, and should be STRICKEN. PM USA DENIES paragraph 58. See Harris Aff., Table 1. 59. PM USA’s estimates of the “reach” of their low tar/lights onserts program are unsubstantiated. McCormick testified that PM USA determined in 2002, with respect to its first distribution of low tar/lights onserts, that it could reach 86% of the smokers of its light cigarettes through the use of low tar/lights onserts on a number of packs equal to one weeks’ volume of sales. McCormick Dep. at 125:14-126:20, Exhibit AA. DENIED: PM USA objects to the first sentence of paragraph 59 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by any citation to the record as required by Local Rule 56, and requests that it be STRICKEN. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 8 of 63 - 9 - PM USA DENIES the first sentence of paragraph 59. McCormick Dep. at 127:8-11 (explaining basis for determination); see also Pls. Ex. H, AC5000920604 (testimony of Denise Keane confirming that this figure was based on “analysis” by PM USA’s research department and knowledge of its customers and distribution practices); Pls. Ex. I, AC5001040751 (testimony of Michael Szymancyk similarly explaining process). With respect to the second sentence of paragraph 59, PM USA QUALIFIES that sentence to the extent that McCormick testified that onserts were placed on a number of packs equal to a week’s average sales volume per brand/SKU. 60. This was supposedly confirmed by a document prepared, for some unexplained reason, in September 2005. See McCormick Dep. Ex. 19 (AC5000979757- AC5000979758) (attached hereto as Exhibit F), at AC5000979758. DENIED: Although PM USA ADMITS that the referenced document bears a date of 9/11/2005 in the lower left corner, it DENIES that the referenced document was necessarily prepared on that date, and further objects to the characterizations “supposedly confirmed” and “for some unexplained reason,” and requests that paragraph 60 be STRICKEN because it is argumentative, not a proper statement of material fact under Local Rule 56, and, to the extent it purports to state the date on which the document was prepared, is unsupported by the citation to the record provided, as required by Local Rule 56. 61. However, the basis for that estimate remains unclear. McCormick stated that he was not involved in the analysis that resulted in that estimate. McCormick Dep. at 126:21-127:1, Exhibit AA. DENIED IN PART: PM USA objects to the first sentence of paragraph 61 as argumentative and not supported by a citation to the record as required by Local Rule 56, and Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 9 of 63 - 10 - requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 61. McCormick Dep. at 127:8-11 (explaining basis for determination); see also Pls. Ex. H, AC5000920604 (testimony of Denise Keane confirming that this figure was based on “analysis” by PM USA’s research department and knowledge of its customers and distribution practices); Pls. Ex. I, AC5001040751 (testimony of Michael Szymancyk similarly explaining process); see also Pls. Ex. F, AC5000979757 (referring to 86%). PM USA ADMITS the second sentence of paragraph 61. 62. Nor was he aware of any follow-up analysis to confirm whether the target “reach” percentage of 86 percent was actually achieved. Id. at 127:5-17, Exhibit AA. ADMITTED. 63. Moreover, as McCormick used it, the term “reached” does not mean that the message was actually read and accurately conveyed and understood by 86% of the smokers; instead, it means simply that PM estimated that 86% of the smokers of its light cigarettes would purchase a pack of cigarettes containing a low tar/lights onsert. Id. at 128:11-17, Exhibit AA. DENIED: The statements in paragraph 63 are not supported by Mr. McCormick’s cited testimony, and are argumentative, and PM USA DENIES them on that basis. McCormick Dep. at 128:11-17. 64. PM USA’s estimate of the “reach” of their television advertisements is unsubstantiated. PM USA has estimated that it reached 82% of the adult television watching audience with a “No Safe/Low Tar” television advertisement that was to run from November 17 to December 21, 2003. See McCormick Dep. Ex. 18 (3034014029 and 30072287612) (attached hereto as Exhibit G), at 3034014029; McCormick Dep. at 147:6-11, Exhibit AA. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 10 of 63 - 11 - DENIED IN PART: PM USA objects to the first sentence of paragraph 64 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by any citation to the record as required by Local Rule 56, and requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 64. McCormick Dep. at 145:24-148:22; Pls. Ex. G, 3034014029. PM USA ADMITS the second sentence of paragraph 64. 65. PM USA’s estimate of the number of times consumers would see its television advertisements is unsubstantiated. PM USA expected to have the adult television watching audience see the spot an average of 7.6 times. Exhibit G at 3034014029. DENIED IN PART: PM USA objects to the first sentence of paragraph 65 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by any citation to the record as required by Local Rule 56, and requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 65. McCormick Dep. at 145:24-148:22; Pls. Ex. G, 3034014029. PM USA ADMITS the second sentence of paragraph 65. 66. PM USA’s estimate of the “reach” of their television advertisements is unsubstantiated. When the advertisement ran again from October 25 to November 28, 2004, PM USA estimated it would reach 83% of the adult television watching audience, who would see it an average of nine times. Id. DENIED IN PART: PM USA objects to the first sentence of paragraph 66 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by any citation to the record as required by Local Rule 56, and requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 66. See McCormick Dep. at 145:24-148:22; Pls. Ex. G, 3034014029. PM USA ADMITS the second sentence of paragraph 66. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 11 of 63 - 12 - 67. These efforts were part of PM USA’s “ongoing efforts to communicate broadly about tobacco issues by incorporating TV into the mix specifically. It enabled you to have a very broad reach in terms of the number of people who were exposed to the message . . . .” McCormick Dep. at 144:5-12, Exhibit AA. ADMITTED. 68. However, even taking these “reach” estimates at face value, which McCormick admitted were “at the higher end of what you would typically expect to see for a television campaign,” (McCormick Dep. at 148:20-22, Exhibit AA), PM USA’s documents and McCormick’s testimony confirm that for the entire three and one-half year period between June 2003 and December 3, 2006, PM USA ran “No Safe/Low Tar” television spots only twice -- once from November 17 to December 21, 2003, and again from October 25 to November 28, 2004. Exhibit G at 3034014029; McCormick Dep. at 153:6-154:6, Exhibit AA. QUALIFIED: PM USA ADMITS that it ran a television campaign between November 17 and December 21, 2003 that reached 82 percent of adults an average of 7.6 times, and a television campaign between October 25 and November 28, 2004 that reached 83 percent of adults an average of 9 times. See Pls. Exhibit G, 3034014029. PM USA QUALIFIES paragraph 68 because Mr. McCormick was not characterizing the validity of the reach estimates, as plaintiffs suggest, but was rather noting that a campaign of the scope PM USA was undertaking was more extensive than most television advertising campaigns. McCormick Dep. at 148:5-22. 69. Rather than this being an “ongoing effort[],” PM USA ceased airing the “No Safe/Low Tar” ads back in 2004, after only two brief periods of airing. Id. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 12 of 63 - 13 - DENIED: PM USA DENIES the characterizations in paragraph 69 that PM USA’s television advertisements were not part of an ongoing effort and that the advertisements ran for only two brief periods on the grounds that those characterizations are argumentative and are not supported by the record. See Pls. Ex. G, 3034014029 (demonstrating the extent of the advertising campaigns and their duration). PM USA notes the ongoing efforts it made beginning in 1999, and continuing through the present, to which plaintiffs have already admitted. See Pls. SAF ¶¶ 11-39 (generally admitting PM USA’s efforts). 70. PM USA’s General Counsel, Denise Keane, testified as follows regarding PM USA’s assertion that its low tar/lights onsert program reached 90% of its light cigarettes smokers: THE COURT: What’s the basis for your estimate that you’re reaching 90 percent of the above age legal smokers in the country? THE WITNESS: They have a way. We have a research department, and they have an understanding as to how people buy product, and, you know, an average smoker will, you know, buy a pack of cigarettes -- some of them do it every day, so they have a program that, you know, starts with the premise, some buy every day some buy only once a week, because some people are carton purchasers and a carton purchaser is going to buy less frequently, so they designed the duration of the onsert to both try to maximize the technology that we had available and also to try to get that extensive a reach with regard to the onsert. So we have a, as I said, a program and an analysis that predicts that, in fact, we had a 90 percent reach. See Trial Testimony of Denise Keane, Afternoon of January 19, 2005, in United States v. Philip Morris USA, AC5000920596-AC5000920622 (attached hereto as Exhibit H), at AC5000920604. ADMITTED. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 13 of 63 - 14 - 71. One explanation for how PM USA came up with the 90% figure was provided in the written direct testimony of Michael E. Szymancyk, the Chairman and Chief Executive Officer of PM USA. See AC5001040657-AC5001040756 (attached hereto as Exhibit I). Mr. Szymancyk stated that when PM USA’s low tar/lights onsert was distributed in the first quarter of 2004, PM “would have covered approximately 90 percent of Philip Morris USA’s volume.” Id. at AC5001040751. When asked how he was estimating that number, he explained: Most smokers purchase at least one pack per week. We put the onserts on all of the major brands, which represent 90 percent of Philip Morris USA’s volume. The onserts were run for a week. So if you figure that most smokers of our major brands purchase one pack a week, they would have received the onsert. Id. ADMITTED. 72. However, according to McCormick, this is not an accurate description of how distribution of low tar/lights onserts occurred. While Philip Morris suggests that its periodic distribution of low tar/lights onserts was such that there was a saturation of the market for a week at the time of distribution, and that was therefore likely to reach a high percentage of smokers of PM’s light cigarettes products, the low tar/lights onserts were not actually distributed at the retail level all at once during each distribution. Rather than the low tar/lights onserts being “run for a week,” as Mr. Szymancyk suggests, low tar/lights onserts were placed on a volume of packs of select brands equal to the average one week sales volume of a given brand. In other words, if a given brand sold on average one million packs in a week, that is the number of packs that would contain the low tar/lights onserts. See McCormick Dep. Ex. 5 (AC5000979757) (attached hereto as Exhibit J). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 14 of 63 - 15 - QUALIFIED: PM USA QUALIFIES paragraph 72 because it mischaracterizes both the testimony of Mr. Szymancyk and Mr. McCormick. Mr. Szymancyk’s statement that the onserts were “run for a week” is a correct general summary of the onsert distribution process that is entirely consistent with Mr. McCormick’s more specific explanation. Plaintiffs questioned Mr. McCormick at length on the distribution system. See McCormick Dep. at 13:18-22:9. Although Mr. McCormick stated that he did not have precise knowledge of PM USA’s distribution chain, Mr. McCormick indicated that PM USA distributed to wholesalers who distributed to retailers, and that the process of distribution would not necessarily occur immediately for all products. “Instead, it would depend on the brands,” because for faster- moving brands, the distribution from wholesale to retail would run its course in as early as two weeks, while for slower-moving brands it would take longer. Id. at 16:11-23; Pls. Ex. J, 500979757. Thus, although some slower moving brands containing onserts would have reached retail destinations later than others, McCormick Dep. at 13:18-24, the onsert process was designed, based on PM USA’s knowledge of its consumers and distribution processes, so that the onserts on each brand would be released over approximately a week and reach approximately 86 percent of PM USA’s low-tar consumers. Pls. Ex. A, 3007287724; Pls. Ex. H, AC5000920604; McCormick Dep. at 127:8-11. PM USA also made quantity adjustments, where necessary, for lower volume brands “to facilitate national distribution.” Pls. Ex. A, 3007287724. 73. McCormick admitted that the packs that did contain low tar/lights onserts did not all hit retail stores at once, and probably hit retail outlets over a span of two months or longer. The onserted packs were placed into the normal distribution channels, i.e., sent to warehouses, shipped to wholesalers and finally sold at the retail level, over a period of six to ten weeks. See Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 15 of 63 - 16 - “Low Tar Communication,” McCormick Dep. Ex. 5, attached hereto as Exhibit J, at AC5000979757 (indicating, under “Timing,” “Retail: 11/18/02-Jan. ‘03.”); McCormick Dep. at 52:22-53:20, Exhibit AA (confirming a six to ten week distribution period at the retail level). DENIED: PM USA DENIES paragraph 73 as unsupported by the cited testimony or referenced exhibit and as misleading in the absence of the additional information supplied in PM USA’s reply to paragraph 72, which PM USA incorporates here by reference. See McCormick Dep. at 50:9-53:19 (indicating lack of familiarity with the document and only indicating what document purported to show); Pls. Ex. J (indicating no specific end date and not distinguishing among brands); supra reply ¶ 72. 74. Once packs of cigarettes leave PM USA’s warehouse, PM USA ceases to have any control over the distribution of the product. McCormick Dep. at 23:1-7, Exhibit AA. QUALIFIED. Mr. McCormick testified in the very next sentence after the cited testimony that PM USA has agreements with wholesalers and direct customers that address various aspects of the sale of PM USA products. See McCormick Dep. at 23:8-13. 75. Thus, PM USA has no control over how the product is sold (id. at 23:21-22); how soon the product is sold (id. at 23:25-24:11); or whether packs containing low tar/lights onserts were sold ahead of non-onserted packs (id. at 17:5-13). See Exhibit AA. QUALIFIED. Mr. McCormick testified that PM USA has agreements with wholesalers and direct customers that address various aspects of the sale of PM USA products. See McCormick Dep. at 23:8-13. 76. Accordingly, there is no way for PM USA to know how quickly the low tar/lights onserted packs were sold, or, for that matter, how many were in fact sold before being removed Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 16 of 63 - 17 - from the shelves for purposes of maintaining the freshness of retailers’ stock. See id. at 23:25- 24:11, Exhibit AA. DENIED: PM USA objects to paragraph 76 because it is argumentative and is not supported by the cited testimony or any part of the record, and requests that it be STRICKEN. PM USA otherwise DENIES paragraph 76. See McCormick Dep. 127:8-11; Pls. Ex. H, AC5000920604 (Keane testimony). 77. As Mr. Szymancyk confirmed that the distribution method for the low tar/lights onserts was the same in 2003 and 2004 as it had been in the initial distribution in 2002, see Exhibit I at AC5001040756, the same may be said for each of those distributions of low tar/lights onserts as well. DENIED: PM USA objects to paragraph 77 because it is unsupported by the record citation, and therefore should be STRICKEN. Mr. Szymancyk did not purport to discuss the subject-matter of either this paragraph or paragraph 76 in the cited portion of his testimony, which cannot be characterized as supporting the specific proposition asserted in either paragraph. Therefore, PM USA DENIES paragraph 77. See Pls. Ex. I, AC5001040752- AC500104756. 78. PM USA repeated its description of how the onserts were distributed to the Wall Street Journal, which published the description in an article about the low tar/lights onsert program: “For a limited time, the pamphlet will be put on every pack of ‘light,’ ‘ultra light,’ ‘mild’ or ‘medium cigarettes Philip Morris makes for sale in the U.S., and should reach about 86% of the smokers who buy those styles of its cigarettes, the company says.” See “Philip Morris Tells Smokers ‘Light’ Cigarettes Aren’t Safer,” The Wall Street Journal via Dow Jones, Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 17 of 63 - 18 - attached to an internal PM USA email exchange dated November 20, 2002 (AC5001085778- AC5001085781) (attached hereto as Exhibit K), at AC5001085778. ADMITTED. 79. This was also repeated in an apparent “talking points” memorandum dated November 5, 2002 (AC5001077121-AC5001077125) (attached hereto as Exhibit L), which provides “[r]esponses to anticipated questions” and specifies what to say “[i]f [a] reporter asks about the FTC petition or the FTC has publicly posted the petition.” Id. at AC5001077122. Under “Messages – ‘Information for Smokers’ Onsert,” the memorandum states: “Philip Morris U.S.A. is placing an ‘onsert’ or ‘insert’ on every non-full flavor brand style manufactured or sold by the company.” Id. at AC5001077121. ADMITTED. 80. The memorandum goes on: “The Company is including this information for a limited time on medium, mild, light and ultra light packings for all of its brands, approximately 130 million packs. We estimate that this effort will reach approximately 86 percent of the adult smokers who purchase these styles of Philip Morris U.S.A. cigarettes.” Id. ADMITTED. 81. The memorandum again implies that every pack of PM USA light cigarettes will contain the low tar/lights onserts for a week: “We are communicating the information quite broadly on the total volume of every non-full flavor brand package that we expect be [sic] available at retail for approximately one week’s time.” Id. at AC5001077123. QUALIFIED. The memorandum explicitly indicates that onserts for individual brands are expected to reach retail during approximately one week’s time. See Pls. Ex. L, AC5001077123. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 18 of 63 - 19 - 82. PM USA’s own research has long indicated that the use of “onserts,” even when consumers do receive and read them, is not very effective in communicating complex ideas about the relative advantages and dangers of different types of cigarettes. For example, a document entitled “PMUSA No safe/Low Tar Communication Vehicle Awareness Study” (McCormick Dep. Ex. 11) (PM3002997413-PM3002997418) (attached hereto as Exhibit M) which indicates it was “Conducted by MarketView Research, February 2005” (id. at PM3002997413), states that its objective was “[t]o measure general awareness of PM USA’s ‘no safe/low tar’ communication vehicles (onsert, television, and radio) among adult smokers of PM USA “low tar” brands, as measured by standard FTC testing methodology.” Id. at PM3002997414. It contains a graph entitled “PMUSA No Safe/Low Tar Communication Vehicle Awareness” listing “Onsert,” “Television,” and “Radio” along an axis from 0 to 100. Alongside “Onsert” is a bar with the number 39 at the end. Id. at PM3002997415. DENIED: PM USA DENIES paragraph 82 on grounds that it mischaracterizes PM USA’s research, is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and therefore should be STRICKEN. See McCormick Dep. 127:8-11; See Pls. Ex. M, at PM3002997415; Pls. Ex. O, at PM303033906583. PM USA ADMITS that the referenced document contains the quoted language. 83. When asked whether he thought this graph indicated that only 39 percent of those interviewed in the study were aware of the low tar/lights onserts, McCormick stated, “I would interpret that as being a percent. I don’t know the specific question that was asked, but based on the label, ‘Vehicle Awareness,’ that’s probably pretty close.” McCormick Dep. at 88:5-14, Exhibit AA. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 19 of 63 - 20 - ADMITTED. 84. Other evidence demonstrates that PM USA had market research indicating that onserts were not effective in conveying their intended message. According to McCormick, a document entitled “PMUSA Ad Test (Phase II): Focus Group Results,” (McCormick Dep. Ex. 9) (PM3000181427- PM3000181449) (attached hereto as Exhibit N), which indicates that it was “Prepared By: Lombardo Consulting Group, 2 April 2003,” “appears to be a summary of focus groups that were conducted in . . . some time prior to the date of this document, which is dated April 2nd, 2003.” McCormick Dep. at 71:9-13, Exhibit AA. In this document, a page with the heading “Tar and Nicotine (Onsert)” states: “The ‘Tar and Nicotine’ ad that included information on the onsert fell out of the mix.” See Exhibit N at PM3000181443. DENIED: PM USA objects to the first sentence of paragraph 84 on grounds that it mischaracterizes PM USA’s research, is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and therefore should be STRICKEN. PM USA DENIES the first sentence of paragraph 84. See McCormick Dep. at 127:8-11; Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583. With respect to the remainder of paragraph 84, PM USA ADMITS that the referenced document contains the quoted language. 85. The summary further states, “The onsert does not provide the proof point credibility expected.” Id. DENIED: PM USA DENIES paragraph 85 to the extent it implies that the referenced document is referring to the onsert rather than an “ad that included information on the onsert.” See Pls. Ex. N, PM3000181443; see also McCormick Dep. 73:24-76:16. PM USA ADMITS that the document referenced in paragraph 85 contains the quoted language. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 20 of 63 - 21 - 86. The summary also states, “While people rationally understand the importance of communicating ingredients on packaging, it is not relevant or a stand out statement.” Id. ADMITTED. 87. In his sworn deposition testimony, McCormick was unable to offer any insight into what these statements meant, and indeed, he insisted that, despite the heading “Tar and Nicotine (Onsert)” and the express statement that “The onsert does not provide the proof point credibility expected,” (emphasis added), this page did not deal with onserts at all, as the entire document, including this page, dealt only with television and radio advertising. McCormick Dep. at 76:1-80:8, Exhibit AA. DENIED: PM USA objects to the first two clauses of paragraph 87 because they are argumentative, are not proper statements of material fact under Local Rule 56, and are unsupported by the provided citation to the record as required by Local Rule 56, and requests that they be STRICKEN. PM USA DENIES the first two clauses of paragraph 87. See McCormick Dep. at 76:1-80:8. PM USA ADMITS the remainder of paragraph 87 but DENIES any implication that Mr. McCormick’s testimony is not correct. See Pls. Ex. N, PM3000181443; see also McCormick Dep. 73:24-76:16. 88. On direct examination by his attorney, McCormick once again stated that, despite the “onserts” language, “They were not testing onserts, they’re testing advertising.” Id. at 142:2-3, Exhibit AA. ADMITTED. 89. McCormick suggested that the reference to “onserts” was “a television spot that [we’re] calling ‘onsert.’” Id. at 142:20-21, Exhibit AA. ADMITTED. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 21 of 63 - 22 - 90. Yet another study also indicates the ineffectiveness of the onserts. See McCormick Dep. Ex. 12 (3033906581-3033906586) (attached hereto as Exhibit O), entitled “PM USA No Safe/Low Tar Communication Vehicle Awareness Study,” which indicates it was “Conducted by MarketView Research, January 2006”, the objective was listed as “[t]o measure general awareness of PM USA’s ‘no safe/low tar’ communication vehicles (onsert and television) among adult smokers of PM USA ‘low tar’ brands, as measured by standard FTC testing methodology.” Id. at 3033906582. DENIED: PM USA objects to the first sentence of paragraph 90 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 90 as a mischaracterization of PM USA’s research. See, e.g., McCormick Dep. at 127:8-11; See Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583. PM USA ADMITS that the document referenced in paragraph 90 contains the quoted language. 91. One of the “Stimuli” listed was “Onsert: PM USA’s ‘Information for Smokers’ Low Tar Onsert.” Id. ADMITTED. 92. Again, the document contained a graph labeled “PMUSA No Safe/Low Tar Communication Vehicle Awareness” and listing “Onsert” and “Television” along an axis from 0 to 100. Alongside “Onsert” is a bar with the number 44 at the end. Id. ADMITTED. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 22 of 63 - 23 - 93. McCormick confirmed that this “seemed to state” that 44% of those interviewed in the study were aware of PM USA’s “No Safe/Low Tar” onserts. McCormick Dep. at 92:19- 24. ADMITTED. 94. Yet another study was conducted, this one entitled “PM USE HE/LT Communications Vehicle Awareness Research, January 2006” a draft report of which was identified as Exhibit 13 to the McCormick Dep. (3035122090-3035122095) (attached hereto as Exhibit P). DENIED: PM USA DENIES paragraph 94 to the extent it suggests that the referenced document is “another study” and not merely a summary of the previous studies referenced in plaintiffs’ Exhibits M and O. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). 95. Under “Background/Objectives,” it listed the following: “In February 2005, a study was conducted to measure overall awareness of PM USA’s ‘No Safe/Low Tar’ communications among adult smokers of PM USA Low Tar brands.” Id. at 3035122091. DENIED: PM USA DENIES paragraph 95 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 95 contains the quoted language. 96. A similar study was conducted in January 2006 to gauge awareness of “PM USA’s ‘Health Effects/Low Tar’ communications,” including the “‘PM USA Low Tar (LT)’ Onsert (found on PM USA non-full flavor cigarette packs only).” Id. at 3035122091. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 23 of 63 - 24 - DENIED: PM USA DENIES paragraph 96 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 96 contains the quoted language. 97. This study showed that, as of January 2006 -- that is, more than three years after PM USA first started periodically placing low tar onserts onto its light cigarette products -- 53% of the adult smokers of PM USA Low Tar brands interviewed stated that they had never seen the onsert before. Id. at 3035122093 DENIED: PM USA DENIES paragraph 97 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 97 contains the statistic referenced. 98. Another 3% either did not know if they had seen the onsert before, or gave no answer. Id. DENIED: PM USA DENIES paragraph 98 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 98 contains the statistic referenced. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 24 of 63 - 25 - 99. Additionally, some 70% of the adult smokers of PM USA Low Tar brands interviewed stated that they had never seen PM USA’s “Health Effects” TV commercial before. Id. at 3035122094. DENIED: PM USA DENIES paragraph 99 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 99 contains the statistic referenced. 100. In the same study, 49% of the adult smokers of PM USA Low Tar brands interviewed stated that they were not aware of either the onsert or the TV commercial. Id. at 3035122095. DENIED: PM USA DENIES paragraph 100 to the extent it may be read to suggest that an additional study was performed beyond those referenced in plaintiffs’ Exhibits M and O, which plaintiffs’ Exhibit P summarizes. Compare Pls. Ex. P with Pls. Exs. M and O (containing overlapping data). PM USA ADMITS that the document referenced in paragraph 100 contains the statistic referenced. 101. A memorandum to Jan Angel of Philip Morris USA from Bette Levine of Marketing Perceptions, regarding “MARLBORO ULTRA LIGHTS QUALITATIVE RESEARCH -- ARIZONA,” dated March 15, 2006 (McCormick Dep. Ex. 14) (PM3035950167- PM3035950170) (attached hereto as Exhibit Q), further suggests that onserts have not effectively reached smokers with the intended messages. Under the heading “Onsert Awareness,” the memorandum indicates that when “[a]sked if they had noticed any type of onsert or small pamphlet on their cigarette packs”: “[m]ost respondents commented that they had ‘probably Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 25 of 63 - 26 - read one of these at some point, some time ago.’ Few felt compelled to continue to look at this material, since, as was often said during these interviews, ‘I just assume they’re all pretty much going to say the same thing.’” Id. at PM3035950170 (emphasis in original). DENIED: PM USA objects to the first and third sentences of paragraph 101 because they are argumentative, are not a proper statement of material fact under Local Rule 56, and are unsupported by the provided citation to the record as required by Local Rule 56, and requests that they be STRICKEN. PM USA notes that the referenced document expressly disclaims that it can be used to determine whether the data it provides is “representative of the broader market of adult smokers” because of deficiencies in sample size and methodology. Pls. Ex. Q, 3035950167. PM USA DENIES the first and third sentences of paragraph 101 as a mischaracterization of PM USA’s research and the referenced document. See McCormick Dep. 127:8-11; Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583. PM USA ADMITS that the document referenced in paragraph 101 contains the quoted language. 102. The document continued: “Topics recalled among those who opened and read at least one onsert included: Corporate (mostly); Miles/UPC offers (a few); and also mentioned by a few, ‘some type of advertising or nice pictures.’” Id. (emphasis in original). ADMITTED. 103. In an internal PM USA email exchange, dated May 2, 2006, and marked as Exhibit 15 to the McCormick Deposition (PM3035948392- PM3035948393) (attached hereto as Exhibit R), PM USA’s Doug James listed among the “general feedback” from the study the bulletpoint: “Generally, not much attention is paid to the onserts.” Id. at PM3035948392. DENIED: PM USA DENIES paragraph 103 to the extent it offers a mischaracterization of PM USA’s research and the referenced document. See, e.g., Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 26 of 63 - 27 - McCormick Dep. 127:8-11; Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583; Pls. Ex. Q, 3035950167-3035950170. PM USA notes that the document referenced in plaintiffs’ Exhibit R disclaims that it can be used to determine whether the data it provides is “representative of the broader market of adult smokers” because of deficiencies in sample size and methodology. Pls. Ex. Q, 3035950167. PM USA ADMITS that the document referenced in paragraph 103 contains the quoted language. 104. When Mr. James asked Jan Angel whether she agreed that this was the general feedback, she responded, “Absolutely. . . . Re onserts, I’d rephrase to say that most [Marlboro Ultra Lights] adult smokers associate onserts with the Corporate onsert, which they already know the messaging.” Id. DENIED: PM USA DENIES paragraph 104 to the extent it offers a mischaracterization of PM USA’s research and the referenced document. See, e.g., McCormick Dep. at 127:8-11; Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583; Pls. Ex. Q, 3035950167-3035950170. PM USA notes that the document study referenced in plaintiffs’ Exhibit R disclaims that it can be used to determine whether the data it provides is “representative of the broader market of adult smokers” because of deficiencies in sample size and methodology. Pls. Ex. Q, 3035950167. PM USA ADMITS that the document referenced in paragraph 104 contains the quoted language. 105. As far back as 1995, Philip Morris had evidence suggesting that onserts (or “outserts,” as they were referred to in this study) on cigarette packs were ineffective as a means of communicating with consumers. In a document entitled “Dave’s Focus Groups: Denver Summary Findings, A Qualitative Research Study Conducted for Philip Morris,” 2040130163-2040130178 (attached hereto as Exhibit S), dated June 1995, the reactions to outserts Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 27 of 63 - 28 - on packs of Dave’s cigarettes that were recorded included: “Some said they read the outsert on the first pack purchased, but felt no need to read outserts on other packs purchased, just assuming they were all the same.” Id. at 2040130173. DENIED: PM USA objects to the first sentence of paragraph 105 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and requests that it be STRICKEN. The document referenced in paragraph 105 has nothing to do with, and cannot possibly be used to draw conclusions regarding, the onserts first distributed in 2002. See Pls. Ex. S, 2040130163-2040130178. PM USA DENIES the first sentence of paragraph 105 as a mischaracterization of PM USA’s research and the referenced document. McCormick Dep. at 127:8-11; Pls. Ex. M, PM3002997415; Pls. Ex. O, PM303033906583; Pls. Ex. Q. PM USA ADMITS that the document referenced in paragraph 105 contains the quoted language. 106. This is consistent with what PM USA would later hear in their MARLBORO ULTRA LIGHTS study cited above: “Few felt compelled to continue to look at this material, since, as was often said during these interviews, ‘I just assume they’re all pretty much going to say the same thing.’” Exhibit Q at PM3035950170 (emphasis in original). DENIED: PM USA objects to paragraph 106 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and requests that it be STRICKEN. The document referenced in paragraph 106 has nothing to do with, and cannot possibly be used to draw conclusions regarding, the onserts first distributed in 2002. See Pls. Ex. S, 2040130163- 2040130178. PM USA DENIES paragraph 106 as a mischaracterization of PM USA’s research and the referenced document. See McCormick Dep. at 127:8-11; Pls. Ex. M, Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 28 of 63 - 29 - PM3002997415; Pls. Ex. O, PM303033906583; Pls. Ex. Q. PM USA ADMITS that the document referenced in paragraph 106 contains the quoted language. 107. Other people in the 1995 study “said they saw the outsert but paid no further attention to it, figuring it was ‘just some advertising’ or ‘something like the Camel Cash.’” Exhibit S at 2040130173. ADMITTED. 108. “A few said they did not recall even seeing an outsert on their pack.” Id. ADMITTED. 109. “A few recalled that the outsert ripped when they opened their pack, so they ‘tossed it.’” Id. ADMITTED. 110. The last time PM USA used onserts to convey their “low tar message” was in 2008. McCormick Dep. at 115:14-15, Exhibit AA. ADMITTED. 111. Onserts are used to convey a variety of different messages, only one of which is the low tar message. Id. at 103:18-19, Exhibit AA. ADMITTED. 112. A PM document entitled “Corporate Responsibility Communications 2004 Budget Breakdown” (501262283 8-5012622844) (attached hereto as Exhibit T), indicates that the budget for “onserts” in 2004 was only $75,000 -- $30,000 in the first and second quarters, $15,000 in the third quarter, and none in the fourth quarter. Id. at 5012622838. QUALIFIED: The document purports to indicate only the budget for production of onserts relating to corporate responsibility communications as that term is used in the Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 29 of 63 - 30 - document. Pls. Ex. T., 5012622838. The same document elsewhere indicates a different budget for “low tar program” onserts, of $1.2 million. See Pls. Ex. T, 5012622844. 113. An internal email dated March 19, 2004 (3011394048-3011394051) (attached hereto as Exhibit U) from Zane Gibbs from New Products Marketing at Philip Morris USA (see 3011394050), indicated that onserts were to be used for both “Corporate Responsibility messages,” which includes “highlighting the resources available on our website, information and resources related to our Youth Smoking Prevention efforts, and information about Low Tar cigarettes,” and also “branded Marketing communications.” See id. at 3011394049 (emphasis in original). ADMITTED. 114. The email goes on to state that, for both “Corporate Responsibility and Marketing onsert programs,” PM USA’s goal was “to have onserts appear on about 20% of our forecasted domestic volume throughout the year.” Id. ADMITTED. 115. A “Draft PM USA 2004 Onsert Proposal – Preliminary Proposal for Cross- Functional Consideration” (McCormick Dep. Ex. 16 (PM3010047276- PM3010047361)) (attached hereto as Exhibit V), also prepared by Zane Gibbs, discusses a proposed program for using onserts for a number of different purposes, focusing primarily on brand development and marketing. See, e.g., id. at PM3010047278 (listing “Develop onserts that enhance brand equity directly to adult smokers” as the goal of “Brand Communication Using Pack Onserts.”); PM3010047279 (listing among “Brand Onsert Communication Examples” Brand Equity; Name Generation; Coupon; Sweepstakes; and Contest). ADMITTED. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 30 of 63 - 31 - 116. Certain non-branded/marketing messages were also discussed: listed among “Potential PMUSA Messaging Topics” are Cessation/Addiction; Cigarette Smoking and Disease; Compensation (Lights); ETS; Reduce Youth Smoking; Reduce Environmental Impact; and Banded Paper (NY State), some of which are listed above as “Corporate Responsibility” messages. Id. at PM3010047293. ADMITTED. 117. The “Corporate Responsibility 2005-2006 Onsert Plan” (5012622794- 5012622828) (attached hereto as Exhibit W) expressly states that PM USA did not want the “Total Combined Annual Onsert Production” -- again, including both “Corporate Responsibility” and branded onsert -- to be included in greater than 25% of their packages. Id. at 5012622804. ADMITTED. 118. Moreover, the “Corporate Responsibility 2005-2006 Onsert Plan” indicated that “[e]quipment limitations excluded certain packings from onserting,” and therefore “onserts [were] not being applied to all PM USA SKUs.” Id. at 5012622816. QUALIFIED: The document does not refer to any particular distribution of onserts and indicates that the issue had been resolved. See Pls. Ex. W, 5012622816. 119. The PM USA onserts did not disclose as much as the onserts distributed by competitor Star Tobacco Company in the onserts they distributed in packs of Advance. See “Update: new Competitive Tobacco - Related Technologies” (2067184459-2067184467) (attached hereto as Exhibit X), at 2067184466. DENIED: PM USA objects to paragraph 119 because it is argumentative and a matter of opinion and not a proper statement of material fact under Local Rule 56, and requests that it be Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 31 of 63 - 32 - STRICKEN. PM USA DENIES paragraph 119. McCormick Aff. Ex. B (onsert example); Pls. SAF ¶ 13 (admitting to content of onserts). 120. The Advance onserts stated: “By adding filters and putting tiny ventilation holes in the filters, cigarette makers developed many brands which tested as having reduced tar and nicotine, even though the tobacco itself was relatively unchanged.” Id. ADMITTED. 121. PM USA’s General Counsel Denise Keane admitted, in her trial testimony in the DOJ Action, that Philip Morris’s onserts did not explain this. See Exhibit E at AC5000920633. DENIED: PM USA DENIES Paragraph 121 because it mischaracterizes Ms. Keane’s testimony. Ms. Keane was asked about a specific onsert not at issue here -- not all of PM USA’s onserts. See Pls. Ex. E, AC5000920633. As plaintiffs have admitted, PM USA’s onserts explained in exact or similar language that “[t]he tar and nicotine yield numbers are not meant to communicate the amount of tar and nicotine actually inhaled by any smoker, as individuals do not smoke like the machine used in the government test method. The amount of tar and nicotine you inhale will be higher than the stated tar and nicotine yield numbers if, for example, you block ventilation holes, inhale more deeply, or take more puffs or more cigarettes.” Pls. SAF ¶ 13; McCormick Aff. Ex. B. Plaintiffs have also admitted that PM USA also informed smokers in its onserts that “you may not inhale less tar and nicotine . . . . It depends on how you smoke.” Pls. SAF ¶ 13 (admitting that the onserts contained this precise information); McCormick Aff. Ex. B. 122. Advance’s onserts also stated that ‘“[b]ecause many smokers smoke to get nicotine they tend to . . . smoke more intensely when smoking lights or ultralights.”’ Id. (Ms. Keane quoting Advance’s onserts). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 32 of 63 - 33 - ADMITTED. 123. Again, Ms. Keane admitted that PM USA’s onserts do not include this information. Id. QUALIFIED: Ms. Keane was asked if PM USA’s onsert mentioned “nicotine” as the cause of compensation. See Pls. Ex. E, AC5000920633. Nothing in Ms. Keane’s testimony is inconsistent with plaintiffs’ own admissions as a matter of undisputed fact here, that PM USA’s onserts stated “[t]he amount of tar and nicotine you inhale will be higher than the stated tar and nicotine yield numbers if, for example, you block ventilation holes, inhale more deeply, or take more puffs or more cigarettes” and that “you may not inhale less tar and nicotine.” See Pls. SAF ¶ 13; Pls. Ex. E, AC5000920633. 124. Finally, the Advance onserts provide the information that “[a]ll smoke tobacco products are addictive and pose serious health hazards,” and PM USA’s do not. Id. DENIED: Although PM USA ADMITS that Ms. Keane indicated that the Advance onserts stated that “[a]ll smoke tobacco products are addictive and pose serious health risks,” PM USA DENIES that, contrary to plaintiffs’ own admissions, PM USA’s onserts did not similarly explain that “[t]here is no such thing as a safe cigarette, including this one” and that cigarettes are “harmful” and have “health effects.” See Pls. SAF ¶ 13; McCormick Aff. Ex. B. 125. PM USA was focused primarily on the efficacy of its marketing onserts. For example, in a presentation given at the Massachusetts Department of Public Health Meeting, February 7, 2005 (AC50009 19131- AC50009 19224) (attached hereto as Exhibit Y), examples of both “Low Tar Onserts” (id. at AC5000919165; AC5000919168) and marketing onserts (id. at AC5000919164; AC5000919167) were presented and discussed, but the only analysis of the Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 33 of 63 - 34 - efficacy of the onserts in conveying their intended messages had to do with the marketing onserts. See, e.g., id. at AC5000919171- AC5000919174. DENIED: PM USA objects to the first sentence of paragraph 125 because it is argumentative, is not a proper statement of material fact under Local Rule 56, and is unsupported by the provided citation to the record as required by Local Rule 56, and requests that it be STRICKEN. PM USA DENIES the first sentence of paragraph 125 as a mischaracterization of PM USA’s “focus.” PM USA took careful and extensive steps to ensure the distribution of the onserts at issue in this motion and the message they contained to consumers. See McCormick Aff. ¶¶ 9-12; see also, e.g., Pls. Ex. A. Furthermore, PM USA DENIES plaintiffs’ characterization of the presentation referenced in the remainder of paragraph 125 as unsupported by plaintiffs’ Exhibit Y. See Pls. Ex. Y, AC5000919131-AC5000919168 (providing slides apparently used at or for the presentation, but not a record of the statements or full content of the presentation). 126. Geoffrey Bible, former CEO of Philip Morris Companies until April 2002, who then served as chairman of Philip Morris Companies until September 2002, testified in his deposition in the DOJ Action that he had “no knowledge” of Philip Morris’s inclusion of package onserts to provide additional disclosures beyond those mandated by Congress and the FTC. See Excerpts of Deposition Testimony of Geoffrey Bible (AC5001054811- AC5001054839) (attached hereto as Exhibit Z) at AC5001054839. QUALIFIED: PM USA objects to paragraph 126 and requests that it be STRICKEN because Mr. Bible’s knowledge is not a material fact under Local Rule 56, especially since he was no longer Chairman or CEO of Philip Morris Companies Inc. (now Altria Group, Inc.) at the time Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 34 of 63 - 35 - the onserts were first distributed. PM USA ADMITS that Mr. Bible gave the excerpted testimony. 127. Mr. Bible confirmed Philip Morris’s reticence to go beyond what is strictly required by the FTC in terms of disclosures and warnings: Q. When Philip Morris in October of 2000 changed its position to state its agreement that smoking causes disease and is addictive, did it inform its consumers on the packaging? A. No, because that’s not a mandated health warning. Q. But, sir, Philip Morris is not barred from including additional warning on cigarette packaging; isn’t that correct? A. We wouldn’t preempt Congress, who has determined that they are the body to determine the health warnings that should go on cigarette packs. Q. But, sir, Philip Morris can voluntarily decide to provide its consumers more information about its product, can it not? A. It’s not our policy to place warnings different to those mandated by the legislature. Q. In fact, when Philip Morris purchased cigarette brands from Liggett in 1999, the packaging when the brands were sold to Philip Morris contained an addiction warning; isn’t that correct? A. Yes. Q. And Philip Morris decided to remove the addiction warning; isn’t that correct? A. Consistent with our policy, that the warning labelson our packages will be exactly what the legislature and Congress has determined should go on the pack. Id. at AC500105481 1-AC5001054813; AC5001054838-AC5001054839. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 35 of 63 - 36 - DENIED: PM USA DENIES the first sentence of paragraph 127 as a mischaracterization of Mr. Bible’s testimony and PM USA’s policies, especially no longer Chairman or CEO of Philip Morris Companies Inc. (now Altria Group, Inc.) at the time the onserts were first distributed. Pls. Ex. Z, AC5001054811-AC5001054813; AC5001054838- AC5001054839. PM USA ADMITS that Mr. Bible gave the excerpted testimony. 128. On examination by the Government’s counsel in the DOJ Action, Ms. Keane also made it clear that, with respect to the information it provides to consumers regarding Light cigarettes, PM USA does only what has been mandated by the FTC: BY MR. GOLDFARB: Now, regardless of the FTC regulatory time line, or any actions undertaken by the FTC, at no point has Philip Morris been precluded from providing accurate non- misleading information to consumers; isn’t that correct? A. I know we’ve had this conversation. In terms of are we precluded by law, no. But the decision as to whether or not to do it [i.e., provide accurate non-misleading information to consumers], would be an analysis based on what we thought was going on – what I thought was going on in terms of what was appropriate and what guidance I thought the FTC had clearly communicated they would or would not give. Exhibit H at AC5000920609. DENIED: PM USA DENIES the first sentence of paragraph 128 as a mischaracterization of PM USA’s policies and Ms. Keane’s testimony. Ms. Keane’s testimony, in context, concerned specific policies and activities that preceded the activities that constitute the basis for this motion. Ms. Keane’s testimony refers specifically to why PM USA did not act before 2000 to a particular FTC action. Ms. Keane explained that PM USA was waiting for the FTC, which she thought would “act quickly.” Pls. Ex. H, AC5000920609. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 36 of 63 - 37 - When the FTC did not do so, Ms. Keane indicated, the policy changed. See id. PM USA ADMITS that Ms. Keane gave the excerpted testimony. 129. The DOJ court found as follows: “For several decades, Defendants have marketed and promoted their low tar brands as being less harmful than conventional cigarettes. That claim is false, as these Findings of Fact demonstrate. By making these false claims, Defendants have given smokers an acceptable alternative to quitting smoking, as well as an excuse for not quitting.” DOJ, 449 F. Supp. 2d at 430 (J 2023). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 129 in the absence of an appropriate record citation. PM USA further DENIES paragraph 129 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 130. The DOJ court found as follows: “Defendants used a combination of techniques to market and promote their low tar brands. Defendants’ marketing has emphasized claims of low tar and nicotine delivery accompanied by statements that smoking these brands would reduce exposure to the “controversial” elements of cigarette smoke (i.e., tar). Since the 1970s, Defendants also have used so-called brand descriptors such as ‘light’ and ‘ultra light’ to communicate reassuring messages that these are healthier cigarettes and to suggest that smoking low tar cigarettes is an acceptable alternative to quitting. In addition to appealing advertising and easily-remembered brand descriptors, Defendants have used sophisticated marketing imagery Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 37 of 63 - 38 - such as lighter color cigarette packaging and white tipping paper to reinforce the same message that these brands were low in tar and therefore less harmful.” Id. at 430 (J 2024). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore Plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 130 in the absence of an appropriate record citation. PM USA further DENIES paragraph 130 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 131. The DOJ court found as follows: “Even as they engaged in a campaign to market and promote filtered and low tar cigarettes as less harmful than conventional ones, Defendants either lacked evidence to substantiate their claims or knew them to be false. Indeed, internal industry documents reveal Defendants’ awareness by the late 1960s/early 1970s that, because low tar cigarettes do not actually deliver the low levels of tar and nicotine which are advertised, they are unlikely to provide any clear health benefit to human smokers, as opposed to the FTC smoking machine, when compared to regular, full flavor cigarettes.” Id. at 430 (J 2025). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 131 in the absence of an appropriate record citation. PM USA further Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 38 of 63 - 39 - DENIES paragraph 131 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 132. The DOJ court found as follows: “As Defendants have long been aware, nicotine delivered by cigarettes is addictive. Defendants’ internal documents demonstrate their understanding that, in order to obtain an amount of nicotine sufficient to satisfy their addiction, smokers of low tar cigarettes modify their smoking behavior, or ‘compensate,’ for the reduced nicotine yields by taking more frequent puffs, inhaling smoke more deeply, holding smoke in their lungs longer, covering cigarette ventilation holes with fingers or lips, and/or smoking more cigarettes. As a result of this nicotine-driven smoker behavior, smokers of light cigarettes boost their intake of tar, thus negating what Defendants have long promoted as the primary health- related benefit of light cigarettes: lower tar intake.” Id. at 430 (J 2026). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 132 in the absence of an appropriate record citation. PM USA further DENIES paragraph 132 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 133. Philip Morris never publicly explained its position that cigarette smoking is not addictive, because, according to Denise Keane, General Counsel for Defendant Philip Morris Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 39 of 63 - 40 - USA, the company believes it should properly be characterized as a drug dependence. Keane TT, 1/18/05, 10447:23-10448:7; DOJ, 449 F. Supp. 2d at 288 (J 1259). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 133 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ decision. 134. While Philip Morris told people that it agrees that cigarette smoking is addictive, it has not told the public that it agrees that it is the nicotine delivered in cigarette smoking that is addictive. Ms. Keane admitted this was material information that the public should possess. Keane TT, 1/18/05, 10533:5-10534:4; DOJ, 449 F. Supp. 2d at 288-89 (J 1262). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 134 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ opinion. 135. Ms. Keane also admitted that when Philip Morris purchased three Liggett brands in 1999 -- L & M, Lark, and Chesterfield -- it removed the pre-existing package labels stating that Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 40 of 63 - 41 - smoking is addictive. Keane TT, 1/18/05, 10457:5-10460:16; DOJ, 449 F. Supp. 2d at 288 (J 1260). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 135 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that this finding appears in the DOJ opinion. 136. While Philip Morris replaced the pre-existing package labels with onserts, these onserts did not contain the statement that Philip Morris agrees that smoking is addictive, even though Philip Morris had publicly stated this view in 2000, as already noted. Keane TT, 1/18/05, 10460:17-10462:15; DOJ, 449 F. Supp. 2d at 288 (J 1261). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA therefore DENIES paragraph 136. PM USA ADMITS that this finding appears in the DOJ opinion. 137. The DOJ court found as follows: “In spite of the overwhelming medical and scientific evidence, only one cigarette manufacturer Defendant, Liggett, has placed a warning on its packages flatly and clearly stating that nicotine is addictive. Liggett advertising and Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 41 of 63 - 42 - packaging state, ‘Smoking is Addictive.’” LeBow TT, 2/7/05, 12375:21-12376:1; DOJ, 449 F. Supp. 2d at 289 (¶ 1263). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 137 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 138. The DOJ court found as follows: “The primary means by which Defendants have ensured that their low delivery products will sustain smoking addiction is by incorporation of physical design characteristics and ingredients that enable the human smoker to easily obtain his or her reinforcing level of nicotine, regardless of the cigarette’s nominal FTC machine- measured yield. Internal documents reveal that Defendants designed their cigarettes to increase the flexibility of their nicotine and tar dosing capacity to smokers even as they reduced nicotine and tar yields as determined by the FTC machine method.” DOJ, 449 F. Supp. 2d at 339 (¶ 1516). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 138 in the absence of an appropriate record citation. PM USA further DENIES paragraph 138 on the ground that it does not relate to the public disclosures that are Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 42 of 63 - 43 - the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 139. Defendants’ own internal documents demonstrate that the lights descriptor was placed on their light cigarettes to convey to consumers that they are healthier to smoke than regular cigarettes. DOJ, 449 F. Supp. 2d at 513 (¶ 2401) (“James Morgan, who was Brand Manager of Marlboro from 1969 to 1972, during the time when Philip Morris introduced Marlboro Lights, its first ‘light’ cigarette, explained the intended meaning of the ‘lights’ descriptor. Morgan stated that, from the very beginning, the ‘lights’ descriptor was intended to communicate that the brand was low in tar-as opposed to a brand that was lighter in taste.”) (N.B.: James Morgan was President and CEO of Philip Morris from 1994 until 1997). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 139 in the absence of an appropriate record citation. PM USA further DENIES paragraph 139 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 140. The DOJ court found as follows: “So that Philip Morris could market its Light cigarettes as yielding less tar and nicotine than full-flavored cigarettes, Philip Morris set out to ‘trick’ the Federal Trade Commission (“FTC”) and, thus, the public at large, about the actual levels of nicotine and tar that smokers would receive from these Light cigarettes.” Id. at 500 (J 2346). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 43 of 63 - 44 - DENIED: The quoted language does not appear in the DOJ opinion. PM USA DENIES the assertion in the absence of a record citation. 141. The DOJ court found as follows: “In the early 1970s, the Federal Trade Commission developed a machine to measure tar and nicotine levels. Even though it became the accepted mechanism for taking such measurements, it became widely known in both the public health community and by the cigarette company Defendants that the FTC method did not accurately measure the amounts of nicotine and tar which a smoker actually ingested. Cigarette company Defendants, with the benefit of their much more sophisticated understanding of smoker compensation, as well as their knowledge of nicotine control, then intentionally developed and marketed cigarettes, which, in actuality, delivered higher levels of nicotine than those measured by the FTC method. Those levels of nicotine were sufficient to create and sustain addiction in smokers.” Id. at 309 (J 1370). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 141 in the absence of an appropriate record citation. PM USA further DENIES paragraph 141 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 142. The DOJ court found that Defendant developed and marketed Light cigarettes precisely to lure smokers of regular cigarettes who were contemplating quitting for health reasons away from quitting and towards this purportedly healthier alternative. See id. at 860. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 44 of 63 - 45 - DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 142 in the absence of an appropriate record citation. PM USA further DENIES paragraph 142 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ opinion. 143. The DOJ court further found that the defendants there knew that, “because of nicotine addiction,” former smokers of regular cigarettes, who switched to Light cigarettes based on the belief that they were less harmful to their health, would compensate for the reduced nicotine yield from such cigarettes through a variety of means, including taking more frequent puffs, inhaling smoke more deeply, holding smoke in their lungs longer, covering cigarette ventilation holes with their fingers or lips, and/or smoking more cigarettes. Id. at 860, 461-67 (JJ 2173-200)(emphasis added). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 143 in the absence of an appropriate record citation. PM USA further DENIES paragraph 143 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ opinion. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 45 of 63 - 46 - 144. The DOJ court found that the Defendants opposed any changes in the FTC Method that would more accurately reflect the effects of compensation on the actual tar and nicotine received by smokers (id. at 560-61 (J 2628)), and that by engaging in this deception, Defendants dramatically increased their sales of Light cigarettes, assuaged the fears of smokers about the health risks of smoking, and sustained corporate revenues in the face of mounting evidence about the health dangers of smoking. Id. at 561 (J 2629). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 144 in the absence of an appropriate record citation. PM USA further DENIES paragraph 144 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ opinion. 145. The DOJ court found as follows: “In sum, there is an overwhelming consensus in the public health and scientific community, both here and abroad, that low tar cigarettes offer no clear health benefit to smokers, have not reduced the risk of lung cancer and heart disease for smokers using them, and have not produced any decrease in the incidence of lung cancer. Moreover, because of the misleading nature of the advertising for low tar cigarettes, smokers who might have quit have refrained from doing so in the belief that such cigarettes reduced their health risks.” Id. at 456 (J 2145). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 46 of 63 - 47 - therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 145 in the absence of an appropriate record citation. PM USA further DENIES paragraph 145 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 146. The DOJ court found as follows: “A March 1, 1977 Philip Morris memorandum by industry-funded scientist Stanley Schachter to Thomas Osdene, Director of Research, concluded that low tar/low nicotine cigarettes are not less harmful: [I]t would certainly seem that the campaign for low nicotine cigarettes is misguided and rests on a set of fallacious premises . . . . The question is crucial and particularly so in light of . . .Ross’s evidence that carbon monoxide, hydrogen cyanide, and nitrogen oxide delivery is considerably greater in most of the popular brands of low nicotine filter, [sic] cigarettes than in high nicotine, non-filter cigarettes . . . . It is . . . clear . . . that the major body of data that has been used to justify the campaign for low nicotine cigarettes does nothing of the sort.” Id. at 456 (J 2146). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 146 in the absence of an appropriate record citation. PM USA further DENIES paragraph 146 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 47 of 63 - 48 - 147. The DOJ court found as follows: “Dr. Farone stated that Philip Morris’s Marlboro full-flavor and Marlboro Lights cigarettes are ‘essentially identical except for dilution’-- i.e., that Marlboro Lights have more dilution, dilution referring to ventilation that dilutes the smoke, particularly when machine-smoked by the FTC method, with ambient air. ‘[A]s you increase dilution, the toxicity in [the Ames] test increases, which is more likely than not associated with a toxicity increase in smokers’.” Id. at 456 (¶ 2147). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 147 in the absence of an appropriate record citation. PM USA further DENIES paragraph 147 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 148. The DOJ court found as follows: “In fact, Dr. Farone explained that the very Ames mutagenicity testing that Philip Morris has conducted for the past 25 years, and that “Philip Morris has concluded . . . predicts carcinogenicity” has indicated that Philip Morris’s Marlboro Lights cigarettes are, as designed, more mutagenic than Marlboro full-flavor cigarettes: [I]n the case of Marlboro Lights, the Philip Morris test data that I have reviewed on that level of dilution for equivalent blends indicated that the product design for their Light cigarettes was more mutagenic than the full flavor Marlboro, Marlboro Reds, and therefore predictive of more potential cancer risk. These studies were repeated multiple times over the past 20 years and continue to be repeated to this day. The Philip Morris data, as was used by Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 48 of 63 - 49 - Philip Morris, was a strong warning that their product design change between a Marlboro Red and a Marlboro Light- increased ventilation-resulted in a potentially more dangerous product. Philip Morris has not ‘changed the design of “Light” cigarettes in response to its studies and knowledge concerning mutagenicity’.” Id. at 456 (¶ 2148). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 148 in the absence of an appropriate record citation. PM USA further DENIES paragraph 148 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 149. The DOJ court found as follows: “A 2001 document about Ames mutagenicity testing from Philip Morris’s INBIFO laboratory in Germany demonstrated that, in every case, the mutagenicity of Marlboro Lights is higher than the mutagenicity of Marlboro full-flavor.” Id. at 458 (¶ 2155). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 149 in the absence of an appropriate record citation. PM USA further DENIES paragraph 149 on the ground that it does not relate to the public disclosures that are Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 49 of 63 - 50 - the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 150. The DOJ court found as follows: “James Morgan, former President and CEO of Philip Morris, conceded in 2002 that, in his opinion, lower tar cigarettes are not any safer than higher tar cigarettes.” Id. at 458 (¶ 2156). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 150 in the absence of an appropriate record citation. PM USA further DENIES paragraph 150 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 151. The DOJ court found as follows: “According to Nancy Brennan-Lund, Philip Morris Senior Vice President of Marketing, ‘what we say on our web site we believe to be true.’ Philip Morris’s position is that low tar cigarettes are no less harmful than full-flavor cigarettes, ‘based on what the Monograph 13 came out with.’ Lund later qualified her statement: it has ‘not been proven’ that light cigarettes are less harmful, so one cannot assume they are less harmful.” Id. at 458 (¶ 2157). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 50 of 63 - 51 - DENIES paragraph 151 in the absence of an appropriate record citation. PM USA further DENIES paragraph 151 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 152. The DOJ court found as follows: “Ellen Merlo, then Philip Morris USA Senior Vice President of Corporate Affairs, agreed that in 2002 that Philip Morris’s policy at the time was that lights or low tar cigarettes are not safe or safer than any other cigarettes.” Id. at 458 (¶ 2158). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 152 in the absence of an appropriate record citation. PM USA further DENIES paragraph 152 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 153. The DOJ court found as follows: “Defendants have stated publicly that they produce low tar cigarettes only to accommodate consumer taste preferences for ‘lighter,’ ‘milder’ tasting cigarettes, and that they do not intend their use of brand descriptors or their marketing of low tar cigarettes to imply a less harmful product. See Section V(E)(5), infra (discussing Defendants’ false statements regarding their low tar cigarette marketing). Contrary to their public statements, however, Defendants’ internal marketing documents establish that Defendants have known for decades that even though consumers prefer the taste of regular Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 51 of 63 - 52 - cigarettes to low tar cigarettes, they are willing to forgo them and smoke low tar cigarettes, which are less enjoyable and have a less appealing taste, because they believe low tar cigarettes are better for their health.” Id. at 476 (¶ 2239). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 153 in the absence of an appropriate record citation. PM USA further DENIES paragraph 153 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 154. The DOJ court found as follows: “According to Jeanne Bonhomme, Director of Consumer Insights for Philip Morris, in her experience, ‘there is a general perception among consumers that as you go down in tar, cigarettes have less taste.’ For this reason, Philip Morris planned to produce a low tar Merit cigarette that tasted like a cigarette with higher tar. A June 30, 1993 document from a Philip Morris USA New Products Meeting, titled ‘Marlboro New Product Development,’ stated that the ‘Project’ was to ‘[b]uild the Merit business by introducing a 3 mg product that tastes like a 5 mg.’ Philip Morris also planned to ‘[d]evelop a 6 mg Tar Cigarette with the Sensory Attributes of an 8-9 mg Tar Cigarette.’ (Philip Morris’s 1992 R & D Operational Plans for the Product Development Department issued to Cliff Lilly of Philip Morris USA included the following objectives: ‘Design and develop an 3 mg [Merit] product with the subjective attributes of a 6 mg cigarette . . . . Design and develop a 6 mg [Merit] product with the subjective attributes of a[sic] 8 mg cigarette . . . . Develop 6 mg [Marlboro Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 52 of 63 - 53 - Ultra Lights] line extension . . . providing enhanced subjective quality and Marlboro character . . . LOW TAR HIGH FLAVOR Objective: Develop new technologies which will allow us, within the next two to four years, to produce ‘Ultra Low’ tar, 2 to 4 mg, cigarettes with the sensorial experience of “Lights” or “Full Flavored” cigarettes’).” Id. at 477 (J 2240). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 154 in the absence of an appropriate record citation. PM USA further DENIES paragraph 154 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 155. The DOJ court found as follows: “Bonhomme added that ‘Philip Morris’s own marketing research shows that there are consumers who switch to low tar cigarettes even though they do not prefer the taste or flavor, because they believe it is better for them,’ and that ‘for those people the reason for switching to a low tar brand is not taste or flavor, but perceived health benefits.’ Bonhomme admitted that these smokers are willing to sacrifice taste for perceived health benefits.” Id. at 477 (J 2241). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 155 in the absence of an appropriate record citation. PM USA further Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 53 of 63 - 54 - DENIES paragraph 155 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 156. The DOJ court found as follows: “Bonhomme explained that Philip Morris’s Merit brand of cigarettes utilized a marketing strategy, titled ‘Merit Solutions,’ that was intended to communicate to consumers that ‘Merit was a solution to the problem of finding a low tar brand with good taste.’” Id. at 477 (J 2242). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 156 in the absence of an appropriate record citation. PM USA further DENIES paragraph 156 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 157. The DOJ court found as follows: “An undated Philip Morris document, titled ‘Background Information on Philip Morris Brands,’ included ‘Benefit Statements’ for Philip Morris’s various ‘light’ brands that revealed Philip Morris’s intent was not to market these cigarettes as ‘lighter’ tasting, but rather as cigarettes that taste like full-flavor cigarettes with the extra purported benefit of low tar and nicotine: Marlboro Medium: ‘gives you a flavorful smoke in a low tar cigarette’ and ‘bridges the flavor gap between low tar and full flavor cigarettes.’ Benson & Hedges 100’s Lights: ‘premium tobacco flavor in a satisfying low tar smoke.’ Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 54 of 63 - 55 - Benson & Hedges 100’s Deluxe Ultralights: ‘only 5 mg tar, yet is rich enough to be called Deluxe . . . is an ultra low tar cigarette that gives you satisfying taste . . . delivers cool, rich taste with only 5 mg tar.’ Merit: ‘You’ll enjoy low tar and good flavor . . . . At only 7 mg tar, Merit delivers the rich flavor of leading cigarettes with twice the tar . . . get rich menthol flavor at only 8 mg tar.’ Merit 100’s: ‘flavor that makes low tar and good taste a reality for 100’s smokers.’ Merit Ultra Lights: ‘cool, flavorful smoke with only 5mg tar.’ Merit Ultra Lights 100’s: ‘an ultra light with flavor.’ Virginia Slims Ultra Lights: ‘gives flavor and taste-and is an ultra low tar smoke.’ Parliament Lights: ‘enjoyable taste in a low tar cigarette.’” Id. at 477 (¶ 2244). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 157 in the absence of an appropriate record citation. PM USA further DENIES paragraph 157 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 158. The DOJ court found as follows: “According to James Morgan, former CEO of Philip Morris, Philip Morris did not intend for the name Marlboro Lights to communicate that it had light or lighter taste: Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 55 of 63 - 56 - I have trouble in describing what light taste really means . . . . Light taste, first of all, is not a positive attribute if it does mean anything . . . in my judgment, light taste is really a meaningless and nebulous claim . . . the bigger proposition is the lower tar and nicotine . . . . We are not talking, in my judgment, talking about light . . . as a taste. It’s not a term that means anything in terms of taste, and the name Marlboro Lights as I said before, a word which we feel has appeal in a different sense than suggesting what the cigarette even tastes like.” Id. at 478 (¶ 2246). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 158 in the absence of an appropriate record citation. PM USA further DENIES paragraph 158 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion, although plaintiffs have added the word “James” and the phrase “former CEO of Philip Morris” without bracketing. 159. The DOJ court found as follows: “Nevertheless, Jeanne Bonhomme, Director of Consumer Insights for Philip Morris, stated that to her knowledge: ‘Philip Morris has always denied publicly that it markets low tar cigarettes as safe or safer than full-flavor brands;’ and ‘Philip Morris has always denied publicly that it uses brand descriptors such as “light” and “ultra light” to communicate they are safe or safer than full-flavor brands.’” Id. at 527 (¶ 2471). Id. at 478 (¶ 2246). Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 56 of 63 - 57 - DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 159 in the absence of an appropriate record citation. PM USA further DENIES paragraph 159 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion, although plaintiffs added the word “nevertheless” without bracketing and appear to have added an extra citation at the end of the quotation. 160. The DOJ court found as follows: “A September 10, 1999 Davis Polk & Wardwell memorandum to Mark Berlind of Philip Morris includes ‘a series of questions that might arise, as well as possible answers, relating to low delivery cigarettes and brand descriptors.’ In answer to the question ‘If the brand descriptors do not indicate what smokers actually inhale or serve as a point of comparison among competing brands, what purpose do they serve?,’ the memorandum proposed responding that Philip Morris’s brand descriptors do communicate that Philip Morris’s lower tar brands deliver less tar and nicotine than full-flavor brands: ‘For example, the “Lights” in Marlboro Lights indicates that the smoke yields for Marlboro Lights is lower than that for Marlboro, and Marlboro Ultra Lights delivers less smoke ‘tar’ and nicotine than Marlboro Lights.’” Id. at 527 (¶ 2475). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 57 of 63 - 58 - DENIES paragraph 160 in the absence of an appropriate record citation. PM USA further DENIES paragraph 160 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the finding appears in the DOJ opinion. 161. The DOJ court found as follows: “This document’s proposed response to the question whether ‘Philip Morris ever intend[ed] to or propose[d] to take advantage of’ the ‘perception’ of consumers that ‘lower-yielding brands [are] “safe” or “safer” than full-flavor brands’ was that ‘Philip Morris has never intended [to] or proposed to take advantage of this perception. (although over time various individuals in the Company may have suggested that the Company do so)[.]’” Id. at 528 (¶ 2476). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 161 in the absence of an appropriate record citation. PM USA further DENIES paragraph 161 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that quoted language appears in the DOJ opinion. 162. The DOJ court found as follows: “As recently as 2003 and 2004, the Board of Directors of Altria (formerly known as Philip Morris Companies), publicly made misleading statements to its shareholders and to the U.S. Securities and Exchange Commission (‘SEC’) in documents filed with the SEC. In a March 17, 2003 Proxy Statement, a group of Altria shareholders proposed to the Altria Board of Directors that ‘the Board find appropriate ways of Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 58 of 63 - 59 - informing our customers about the actual health risks of smoking “light and ultra light” cigarettes to disassociate them from any belief that such products are safer and deliver less tar and nicotine.’ The shareholder proposal cited Monograph 13 which found that ‘most smokers believe “Lights” and “Ultra Lights” are less harsh and deliver less tar and nicotine,’ and that, ‘on average, smokers believe that Lights afford a 25% reduction in risk, and Ultra Lights a 33% reduction in risk;’ the Canadian Government’s conclusion that the terms low tar, light and ultra light are deceptive to the consumer; and the World Health Organization’s recommendation that the terms light and ultra light be banned as misleading. The Board of Directors of Altria recommended that shareholders vote against this proposal, stating: ‘for those adults who choose to smoke, PM USA and PMI believe descriptors such as “low-tar,” “mild,” and “light” serve as useful points of comparison for cigarette brands regarding characteristics such as strength of taste and reported tar yield.’” Id. at 528 (J 2480). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 162 in the absence of an appropriate record citation. PM USA further DENIES paragraph 162 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 163. The DOJ court found as follows: “Defendant Philip Morris suppressed and concealed many scientific research documents, even going so far as to send them to a foreign Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 59 of 63 - 60 - affiliate in order to prevent the disclosure of documents in litigation and in federal regulatory proceedings.” Id. at 809 (J 3907). DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 163 in the absence of an appropriate record citation. PM USA further DENIES paragraph 163 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 164. The DOJ court enjoined the Defendants there from the following activities: “further use of deceptive brand descriptors which implicitly or explicitly convey to the smoker and potential smoker that they are less hazardous to health than full flavor cigarettes, including the popular descriptors ‘low tar,’ ‘light,’ ‘ultra light,’ ‘mild,’ and ‘natural.’ The Court is also ordering Defendants to issue corrective statements in major newspapers, on the three leading television networks, on cigarette “onserts,” and in retail displays, regarding (1) the adverse health effects of smoking; (2) the addictiveness of smoking and nicotine; (3) the lack of any significant health benefit from smoking ‘low tar,’ ‘light,’ ‘ultra light,’ ‘mild,’ and ‘natural’ cigarettes; (4) Defendants’ manipulation of cigarette design and composition to ensure optimum nicotine delivery; and (5) the adverse health effects of exposure to secondhand smoke.” Id. at 27. DENIED: Pursuant to this Court’s order dated March 5, 2010, plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 60 of 63 - 61 - therefore plaintiffs cannot rely on findings from DOJ as support for this factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES paragraph 164 in the absence of an appropriate record citation. PM USA further DENIES paragraph 164 on the ground that it does not relate to the public disclosures that are the subject of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the DOJ opinion. 165. The D.C. Circuit Court of Appeals upheld the DOJ court’s findings that the Defendants there engaged in a scheme to defraud smokers and potential smokers by, inter alia: “(1) falsely denying the adverse health effects of smoking; (2) falsely denying that nicotine and smoking are addictive; (3) falsely denying that they manipulated cigarette design and composition so as to assure nicotine delivery levels that create and sustain addiction; (4) falsely representing that light and low tar cigarettes deliver less nicotine and tar and therefore present fewer health risks than full flavor cigarettes; (5) falsely denying that they marketed to youth; (6) falsely denying that secondhand smoking causes disease; and (7) suppressing documents, information, and research to prevent the public from learning the truth about these subjects and to avoid or limit liability in litigation.” U.S. v. Philip Morris USA Inc., 566 F.3d 1095, 1108 (D.C. Cir. 2009) (citations omitted). DENIED: Pursuant to this Court’s order dated March 5, 2010, Plaintiffs’ motion to apply non-mutual issue preclusion to the facts found by the court in DOJ was denied, and therefore Plaintiffs cannot rely on findings from DOJ as support for any factual assertion. See Order on Pls. Motion for Application of Collateral Estoppel Doctrine (Mar. 5, 2010). PM USA DENIES the assertion in the absence of a record citation. PM USA further DENIES paragraph 165 on the ground that it does not relate to the public disclosures that are the subject Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 61 of 63 - 62 - of PM USA’s motion, and therefore is not material. PM USA ADMITS that the quoted language appears in the Court of Appeals opinion. Dated: April 14, 2010 Respectfully submitted, ___/s/H. Peter Del Bianco, Jr.___________ H. Peter Del Bianco, Jr. LAMBERT COFFIN P.O. Box 15215 477 Congress Street Portland, Maine 04112-5215 (207) 874-4000 Philip H. Curtis Nancy G. Milburn ARNOLD & PORTER LLP 399 Park Avenue New York, NY 10022 (212) 715-1000 Judith Bernstein-Gaeta James M. Rosenthal ARNOLD & PORTER LLP 555 12th Street, N.W. Washington, D.C. 20004 (202) 942-5000 John H. Beisner SKADDEN, ARPS, SLATE, MEAGHER & FLOM & AFFILIATES 1440 New York Avenue, N.W. Washington, D.C. 20005 (203) 371-7000 Counsel to Defendant Philip Morris USA Inc. Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 62 of 63 - 63 - CERTIFICATE OF SERVICE I hereby certify that on April 14, 2010, I electronically filed the foregoing Philip Morris USA’s Reply to Plaintiffs’ Statement of Additional Material Facts using the EM/ECF system which will send notification of such filing to all counsel of record registered with the ECF system. /s/ H. Peter Del. Bianco, Jr., Esq. H. Peter Del Bianco, Jr., Esq. LAMBERT COFFIN P.O. Box 15215 477 Congress Street Portland, Maine 04101 Telephone: (207) 874-4000 pdelbianco@lambertcoffin.com Case 1:09-md-02068-JAW Document 195 Filed 04/14/10 Page 63 of 63