IN CIRCUIT COURT
The state of South Dakota and the South Dakota Department of Social Services, by and through Mark Barnett, Attorney General of the state of South Dakota, for its Complaint alleges as follows:
1. The Attorney General of South Dakota, Mark Barnett, brings this action on behalf of the state of South Dakota pursuant to his authority under the common law and SDCL chs. 1-11, 37-1, 37-24, 21-10, and SDCL 28-1-28. The Attorney General brings this action to protect the public health and the citizens of the state of South Dakota by seeking declaratory and equitable relief and damages and penalties for violation of state law.
2. The Plaintiff South Dakota Department of Social Services ("DSS") is the state agency responsible for administering and managing the South Dakota medical assistance statutes.
3. Defendant Philip Morris, Inc. ("Philip Morris") is a Virginia corporation whose principal place of business is 120 Park Avenue, New York, New York 10017. Philip Morris manufactures, advertises, promotes, and sells cigarettes and other tobacco products throughout the United States, including the state of South Dakota.
4. Defendant R.J. Reynolds Tobacco Company ("Reynolds") is a New Jersey corporation whose principal place of business is Fourth and Main Street, Winston-Salem, North Carolina 27102. Reynolds manufactures, advertises, promotes, and sells cigarettes and other tobacco products throughout the United States, including the state of South Dakota.
5. Defendant Brown & Williamson Tobacco Corporation ("Brown & Williamson") is a Delaware corporation whose principal place of business is 1500 Brown & Williamson Tower, Louisville, Kentucky 40202. Brown & Williamson manufactures, advertises, promotes, and sells cigarettes and other tobacco products throughout the United States, including the state of South Dakota.
6. Defendant B.A.T. Industries, P.L.C. ("B.A.T. Industries") is a British corporation whose principal place of business is Windsor House, 50 Victoria Street, Town of London. Through a succession of intermediary corporations and holding companies, B.A.T. Industries is the sole shareholder of Brown & Williamson. Through Brown & Williamson, B.A.T. Industries has placed cigarettes into the stream of commerce with the expectation that substantial sales of cigarettes would be made in the United States and in the state of South Dakota. In addition, B.A.T. Industries conducted, or through its subsidiaries, agents, and/or co-conspirators conducted, significant research for Brown & Williamson on the issue of smoking and health, and, in addition, was responsible through itself and its subsidiaries, agents, and/or co-conspirators, for developing, influencing, leading, and coordinating significant smoking and health issues and decisions by Brown & Williamson. Further, upon information and belief, Brown & Williamson sent research conducted in the United States on the issue of smoking and health to England in an attempt to remove sensitive and inculpatory documents from United States jurisdiction, and these documents were subject to the control of B.A.T. Industries. Upon information and belief, and from approxi--mately 1992 to the present, B.A.T. Industries has intentionally upstreamed substantial sums of money from Brown & Williamson, and maintained Brown & Williamson's substantial long-term debt, with the intent and effect of rendering said subsidiary insolvent and unable to respond to an award of damages arising out of tobacco litigation. As such, B.A.T. Industries aided and conspired with the Defendants in doing the things hereinafter alleged, and acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
7. Defendant British-American Tobacco Company, Limited ("BATCO") is a British corporation, whose principal place of business is Millbank, Knowle Green, Staines, Middlesex TW 18 IDY, England. Currently, the ultimate parent corporation of BATCO is B.A.T. Industries. BATCO is the former parent and current corporate affiliate of Brown & Williamson and, as such, placed cigarettes into the stream of commerce with the expectation that substantial sales of cigarettes would be made in the United States and in the state of South Dakota. In addition, BATCO conducted, or through its agents, subsidiaries, affiliated companies, and/or co-conspirators conducted, significant research for Brown & Williamson on the issue of smoking and health, and, in addition, was responsible through itself, its agents, subsidiaries, affiliated companies, and/or co-conspirators, for developing, influencing, leading, and coordinating critical smoking and health issues and decisions by Brown & Williamson. As such, BATCO aided and conspired with the Defendants in doing the things hereinafter alleged, and, as such, it acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
8. Defendant B.A.T. (U.K. & Export) Limited ("BATUKE") is a British corporation with its principal place of business at Millbank, Knowle Green, Staines, Middlesex TW 18 IDY, England. Currently, the ultimate parent corporation of BATUKE is B.A.T. Industries. BATUKE conducted, or through its agents, subsidiaries, affiliated companies, and/or co-conspirators conducted, significant research for Brown & Williamson on the issue of smoking and health. BATUKE aided and conspired with the Defendants in doing the things hereinafter alleged, and, as such, acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
9. Defendant Lorillard Tobacco Company ("Lorillard") is a Delaware corporation whose principal place of business is One Park Avenue, New York, New York 10016. Lorillard manufactures, advertises, promotes and sells cigarettes and other tobacco products throughout the United States, including the state of South Dakota.
10. Defendant American Tobacco Company, Inc. ("American Tobacco") was a Delaware corporation whose former principal place of business was 281 Tresser Boulevard, Stamford, Connecticut 06904. American Tobacco, for at least a portion of the time relevant to this lawsuit, manufactured, advertised, promoted, and sold cigarettes and other tobacco products throughout the United States, including the state of South Dakota. In 1994, the stock of American Tobacco was sold to B.A.T. Industries or one of its subsidiaries. Since the time of sale, American Tobacco has been merged into Brown & Williamson, a subsidiary corporation of B.A.T. Industries. Upon information and belief, this merger was completed during 1997. Currently, cigarettes and tobacco products formerly sold by American Tobacco are being sold by Brown & Williamson throughout the United States, including the state of South Dakota.
11. Defendant Liggett Group, Inc. ("Liggett") is a Delaware corporation whose principal place of business is 700 Main Street, Durham, North Carolina 27702. Liggett manufactures, advertises, promotes, and sells cigarettes and other tobacco products throughout the United States, including the state of South Dakota.
12. Defendant United States Tobacco Company ("U.S. Tobacco") is a Delaware corporation with its principal place of business at 100 West Putnam Avenue, Greenwich, Connecticut. U.S. Tobacco, for at least a portion of the time relevant to this lawsuit, advertised, promoted, and sold cigarettes throughout the United States, including the state of South Dakota. U.S. Tobacco, for all times relevant to this lawsuit, manufactures, advertises, and sells smokeless tobacco (snuff and chewing tobacco) throughout the United States, including the state of South Dakota.
13. All the Defendants described in paragraphs 2 through 12 (Philip Morris, Brown & Williamson, Reynolds, B.A.T. Industries, BATCO, BATUKE, Lorillard, Liggett, American Tobacco, and U.S. Tobacco) shall collectively be referred to as "Tobacco Companies" in this Complaint.
14. Defendant Hill & Knowlton, Inc. ("Hill") is a New Jersey corporation whose principal place of business is 420 Lexington Avenue, New York, New York. Hill is a public relations firm and was the primary advertising agency for one or more of the Tobacco Companies, the Tobacco Industry Research Committee ("TIRC"), and The Council for Tobacco Research-U.S.A. ("CTR"). As such, Hill aided and conspired with Defendants in doing the things hereinafter alleged, and, as such, it acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
15. Defendant Tobacco Institute, Inc. ("Tobacco Institute") is a New York nonprofit corporation with its principal place of business at 1875 I Street Northwest, Suite 800, Washington, D.C. 20006. Tobacco Institute is operated as the Tobacco Companies' public relations and lobbying arm and as their agent and employee. As such, the Tobacco Institute aided and conspired with Defendants in doing the things hereinafter alleged, and acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
16. Defendant Council for Tobacco Research-U.S.A., Inc. ("CTR"), the successor to the Tobacco Industry Research Committee ("TIRC"), is a New York nonprofit corporation with its principal place of business at 900 Third Avenue, New York, New York 10022. CTR is operated as the Tobacco Companies' public relations and lobbying arm and as their agent and employee. As such, CTR aided and conspired with Defendants in doing the things hereinafter alleged, and acted to facilitate and further the tortious and unlawful acts in or affecting the state of South Dakota set forth in this Complaint.
17. Whenever reference is made in this Complaint to any act of Defendants, such allegation shall mean that each Defendant acted individually and jointly with the other Defendants named in that cause of action.
18. Whenever reference is made in this Complaint to any act of Defendants, such allegation shall mean that the corporation did the acts alleged in the Complaint through its officers, directors, employees, agents, and/or representatives while they were acting within the actual or ostensible scope of their authority.
19. This Court has jurisdiction over the subject matter of this case pursuant to SDCL §§ 16-6-9, 37-1-14.2, 37-1-14.3, 37-24-23, 37-24-31, and 21-10-5.
20. Venue is proper in Hughes County pursuant to SDCL §§ 15-5-6, 15-5-8, 37-1-14.1, and 37-24-25.
21. For purposes of this action, cigarettes constitute a relevant product market. The Tobacco Companies, directly or through their subsidiaries or affiliated corporations, manufacture, ship, and sell cigarettes and other tobacco products throughout the United States and throughout the state of South Dakota. The relevant geographic markets are the United States and the state of South Dakota.
22. The cigarette industry is an oligopoly. Five tobacco companies, Philip Morris, Reynolds, Brown & Williamson/American Tobacco, Lorillard, and Liggett control virtually 100 percent of the market for cigarettes in the United States and the state of South Dakota. Two companies, Philip Morris and Reynolds, are dominant in the industry, with national market shares in 1995 at approximately 46.1 percent and 25.7 percent, respectively.
23. In part because of its concentration, the cigarette industry has long been one of America's most profitable businesses. The industry earns billions of dollars in profits each year from domestic sales alone.
24. From a period of time at least after December of 1953 to the present, the Defendants transacted a continuous and substantial business within the state of South Dakota and/or have aided, abetted, and conspired with other Defendants such that Plaintiffs were affected and damaged in the state of South Dakota, as a result of the injuries that are alleged herein. Defendants have committed wrongful, unlawful, tortious acts under the laws and regulations of the state of South Dakota.
25. In committing the wrongful, unlawful, and tortious acts alleged, the Defendants have pursued a common and continuing course of conduct, and have acted in concert with, aided and abetted and conspired with one another, in furtherance of their common plan and scheme outlined herein, which damaged and caused an effect on Plaintiffs within the state of South Dakota.
26. The concentration of the cigarette industry has allowed the Tobacco Companies and their trade associations to engage in a decades-long unlawful conspiracy relating to the issue of smoking and health, and to direct their considerable profits in furtherance thereof.
27. In the 1940s and early 1950s, scientists and doctors began finding a link between cigarette smoking and health. The Tobacco Companies were, at that time, aware of this research.
28. Until the mid-1950s, in public statements and advertisements, the Tobacco Companies disseminated explicit and implied health related claims about their products and smoking. These claims included, but were not limited to, deceptive representations of safety and medical endorsements.
29. Through at least the 1950s, the Tobacco Companies introduced products that were claimed to be safer for consumers. The Tobacco Companies introduced and promoted filtered cigarettes as being better for consumers' health. Filtered cigarettes were very popular with consumers.
30. As demonstrated by the health-related advertising claims and the introduction and promotion of filtered cigarettes, the Tobacco Companies understood that consumers were concerned about their health and wanted safer products. During this period, the Tobacco Companies competed vigorously on the basis of health and safety in their advertising and promotional material, and in the products they marketed.
31. In the early 1950s, cigarette manufacturers were confronted with the publication of several scientific studies which sounded grave warnings on the health hazards of cigarettes. One of the first of these studies was published in 1952 by Dr. Richard Doll, a British researcher. Dr. Doll, in a statistical analysis, found that lung cancer was more common among people who smoked and that the risk of lung cancer was directly proportional to the number of cigarettes smoked. A second study was published in December 1953 by Dr. Ernest Wynder of the Sloan-Kettering Institute. Dr. Wynder painted the shaved backs of laboratory mice with a residue of cigarette smoke. Malignant tumors grew in 44 percent of the mice, providing biological confirmation of the cancer-causing properties of cigarettes.
32. These studies generated widespread public concern about the health hazards of cigarettes. Tobacco company officials referred to this as the "Big Scare," which by late 1953 had caused a decrease in consumption of cigarettes and in the stock prices of many of the Tobacco Companies.
33. On December 14, 1953, in the direct aftermath of the "Big Scare," Brown & Williamson President Timothy V. Hartnett circulated a memorandum to his counterparts at other Tobacco Companies and set out his proposals on how the industry should collectively deal with the "health issue." Presidents of most of the Tobacco Companies met the next day, December 15, 1953, at an extraordinary gathering in the Plaza Hotel in New York City. Present were the presidents of American Tobacco, Benson & Hedges, Brown & Williamson, Lorillard, Philip Morris, Reynolds, and U.S. Tobacco. Also in attendance was the public relations firm of Hill & Knowlton, which coordinated the meeting and was to play a major role in formulating and executing the industry response.
34. At this meeting, the attendees discussed forming an association specifically charged with a public relations function and chose Hill to hire the staff, disburse the funds, and play a central role in this function. Shortly thereafter, Hill presented a detailed recommendation which included the creation of the Tobacco Industry Research Committee ("TIRC"). Hill prepared a memorandum of the December 1953 meeting summarizing the discussions in part as follows:
a. The companies had not met together since two previous antitrust decrees had prohibited "many group activities." However, the companies viewed the current problem "as being extremely serious and worthy of drastic action."
b. Another indication of the seriousness of the problem was "that salesmen in the industry are frantically alarmed and that the decline in tobacco stocks on the stock exchange market has caused grave concern . . . ."
c. The problem was viewed entirely in terms of a public relations problem, as opposed to a public health concern. The industry leaders "fe[lt] that the problem [was] one of promoting cigarettes and protecting them from [those] and other attacks that may be expected in the future" and that the industry "should sponsor a public relations campaign which is positive in nature and is entirely 'pro-cigarettes.'"
d. All of the leading manufacturers, except Liggett, agreed to "go along" with the public relations strategy. Liggett decided not to participate at that time "because that company feels that the proper procedure is to ignore the whole controversy."
e. The group discussed forming an association "specifically charged with the public relations function."
f. Hill was to play a central role in the industry association. "The current plans are for Hill and Knowlton to serve as the operating agency of the companies, hiring all the staff and disbursing all funds."
35. Beginning with the meeting in December 1953, and continuing to the present, the Defendants, and each of them, and their co-conspirators, agreed, formed, and maintained an illegal contract, combination, or conspiracy to restrain and manipulate health information about tobacco and cigarettes and to restrain and limit the development of new products in order to stabilize and/or increase the market for cigarettes and other tobacco products.
36. The tools used by the conspirators to achieve their goals include: a public relations campaign involving misrepresen-ta-tions of the health effects of smoking and suppression of research relating to the dangers of cigarettes, while purporting to provide honest, unbiased information regarding the safety of tobacco and cigarettes; misleading the public about the addictive qualities of nicotine; agreeing among themselves not to conduct individual research on the issue of health and tobacco and not to make comparative health claims; and suppression of research, development, and marketing of safer cigarettes.
37. As a result of this meeting, TIRC was formed. TIRC's membership included all domestic Tobacco Companies except Liggett. Hill controlled the operation of TIRC and of TIRC's successor, the Council for Tobacco Research ("CTR"). There was substantial staff overlap between Hill and TIRC and CTR.
38. In 1964, TIRC changed its name to Council for Tobacco Research (CTR).
39. Also in 1964, Liggett joined the TIRC/CTR.
40. Another organization, the Tobacco Institute, was formed by the Tobacco Companies in 1958. It performed a variety of functions for the Tobacco Companies in relation to their joint activities, including exchange of information, policing their agreement, and coordinating activities. By way of example, the Tobacco Institute placed false advertisements on behalf of the Tobacco Companies stating that, in the interest of absolute objectivity, they were supporting totally independent research efforts with completely nonrestrictive funding and that the tobacco industry recognized and accepted the responsibility to promote the progress of independent scientific research in the field of tobacco and health. The Tobacco Institute knew at the time it placed those advertisements that the statements were deceptive.
41. On January 4, 1954, TIRC placed an advertisement in the Sioux Falls Argus Leader, a newspaper in Sioux Falls, South Dakota, and in other newspapers across the country in virtually every city with a population of 50,000 or more. This advertise-ment, captioned "A Frank Statement to Cigarette Smokers," was run under the auspices of TIRC with five Tobacco Companies listed by name. The advertisement stated, in part:
a. "Recent reports on experiments with mice have given wide publicity to a theory that cigarette smoking is in some way linked with lung cancer in human beings."
b. "Although conducted by doctors of professional standing, these experiments are not regarded as conclusive in the field of cancer research."
c. "[T]here is no proof that cigarette smoking is one of the causes" of lung cancer.
d. "We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business."
e. "We believe the products we make are not injurious to health."
f. "We always have and always will cooperate closely with those whose task it is to safeguard the public health."
g. "We are pledging aid and assistance to the research effort into all phases of tobacco use and health."
h. "For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE."
i. "In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry."
j. "This statement is being issued because we believe the people are entitled to know where we stand on this matter and what we intend to do about it."
42. The issuance of this Frank Statement and a summary of its contents was reported in other newspapers in South Dakota.
43. The issuance of this advertisement was an integral step in the conspiracy to suppress and conceal information that might reduce the sale of tobacco products.
44. The Defendants renewed and repeated the duty they assumed through the Frank Statement by subsequent acts over the years. This included, for example:
a. The Tobacco Institute ran an advertisement captioned, "A Statement About Tobacco and Health," which stated in part:
i. "We recognize that we have a special responsibility to the public--to help scientists determine the facts about tobacco and health, and about certain diseases that have been associated with tobacco use."
ii. "We accepted this responsibility in 1954 by establishing the Tobacco Industry Research Committee, which provided research grants to independent scientists. We pledge continued support of this program of research until the facts are known."
iii. "Scientific advisors inform us that until much more is known about such diseases as lung cancer, medical science probably will not be able to determine whether tobacco or any other single factor plays a causative role--or whether such a role might be direct or indirect, incidental or important."
iv. "We shall continue all possible efforts to bring the facts to light."
b. In 1970, the Tobacco Institute ran an advertise-ment captioned, "The question about smoking and health is still a question." In this advertisement, the Tobacco Institute stated:
i. "[A] major portion of this scientific inquiry has been financed by the people who know the most about cigarettes and have a great desire to learn the truth . . . the tobacco industry."
ii. "[T]he industry has committed itself to this task in the most objective and scientific way possible."
iii. "In the interest of absolute objectivity, the tobacco industry has supported totally independent research efforts with completely non-restrictive funding."
iv. "Completely autonomous, CTR's research is directed by a board of ten scientists and physicians. . . . This board has full authority and responsibility for policy, development and direction of the research effort."
v. "The findings are not secret."
vi. "From the beginning, the tobacco industry has believed that the American people deserve objective, scientific answers."
c. Again in 1970, the Tobacco Institute stated, "The Tobacco Institute believes that the American public is entitled to complete, authenticated information about cigarette smoking and health." The Tobacco Institute further stated that, "The tobacco industry recognizes and accepts a responsibility to promote the progress of independent scientific research in the field of tobacco and health."
45. By and through issuing the Frank Statement and the other publications that followed, the Defendants undertook a special and continuing duty to protect the public health by representing that it would conduct and disclose unbiased and authenticated research on the health risks of cigarette smoking. When they made this representation, Defendants intended that the public and governmental regulators would believe and rely upon it, and knew or should have known that consumers would consider the representations material to their decisions to purchase and smoke cigarettes and that government regulators would consider the representations material to their decisions to regulate cigarettes. At that time, and continuing to the present, Defendants intended and/or knew or should have known that their failure to fulfill the duty they undertook would directly increase the health care costs to the state of South Dakota. The issuance of this statement and others that have followed was also intended by Defendants to assure public health officials that they would respond to health issues in an honest manner so that no government regulation was necessary.
46. Notwithstanding these publications and other statements, Defendants did not live up to their promise and assumed duty. Defendants, in part through the TIRC and later through the CTR and Tobacco Institute, developed and implemented a coordinated, industry-wide strategy, on behalf of the Tobacco Companies, to mislead and confuse the public about the dangers of smoking by suppressing information about tobacco and cigarettes and by challenging or diluting any negative information that became public. This strategy included the dissemination of articles, publications, and advertisements that misrepresented scientific knowledge about the health effects of smoking and the addictive nature of nicotine, the suppression of research by tobacco industry scientists relating to the dangers of smoking and the addictive qualities of nicotine, and wrongful claims of privilege in order to keep documents and information from the public. The issuance of these publications and statements was an integral step in the conspiracy to suppress and conceal information that might reduce the cartel's sale of tobacco products.
47. The promises of full disclosure and objective scientific research were never fulfilled. Instead, the trade associations--dominated by the Tobacco Companies' public relations officials and attorneys--have served as fronts in a campaign of deceit and misinformation concerning the health risks of smoking. Research was undertaken not in pursuit of the scientific truth on smoking and health, but to aid Defendants in their sales, marketing, public relations, and litigation battles. Research that might confirm the health risks of smoking was suppressed or concealed.
48. In contrast to the representations made by Defendants in the 1954 Frank Statement and subsequent thereto, the TIRC/CTR has since its inception functioned to perpetuate the deception that the health risks of smoking and nicotine addiction have never been proven. A 1962 memo stated that Defendants had handled the "Big Scare" effectively by treating the public health threat as a public relations problem that was solved for the self-preservation of the industry's image and profit. One Defendant's executive called the CTR the best, cheapest insurance the tobacco industry could buy, noting that without it, Defendants would have to invent CTR or would be dead.
49. Contrary to Defendants' publications and statements and in furtherance of the conspiracy, CTR formed a "Special Projects Division" to assist Defendants in concealing unfavorable information. Research that might indict smoking as a cause of illness was diverted and shielded from the public by a fraudulent claim of attorney-client privilege. A series of research grants designated as CTR "Special Projects" were developed by Defendants in a manner so as to artificially cloak this work with the protection of the attorney-client or attorney work product privilege. Defendants have used the CTR Special Projects Division to conceal accurate information that was harmful to the object of the Tobacco Companies' conspiracy. To this day the Tobacco Companies have kept research from the Special Projects Division shielded from public scrutiny.
50. In addition to the activities conducted through the TIRC/CTR and Tobacco Institute, Defendants have also suppressed or concealed smoking and health research conducted by or on behalf of the Tobacco Companies. This research provided Defendants with information not available to the public at large or to public health officials regarding the adverse health consequences of smoking. Defendants have shielded company research documents with artificial claims of attorney-client privilege and attorney work product and, on information and belief, made documents unavailable by sending them out of the United States so that they would not be discovered in legal proceedings in the United States.
51. The joint efforts of the Defendants on the issue of smoking and health also included the general counsel of some of the Tobacco Companies meeting to review proposals for scientific research, and the scientific directors of some of the Tobacco Companies meeting and acknowledging a general feeling that an industry approach as opposed to an individual company approach was highly desirable.
52. Despite independent scientific evidence which was confirmed by their own internal research, the Defendants, in a unified stance, continue to this day (with the exception of Defendant Liggett following settlement agreements entered into with other states in similar litigation) to make public declarations that there is no causal connection between cigarette smoking and adverse health effects and that cigarette smoking is not addictive. These fraudulent, misleading, deceptive, and untrue representations are overt acts in furtherance of the Defendants' ongoing conspiracy and combination to market and profit from a product it knows is deadly and addictive.
53. In furtherance of their conspiracy, the Tobacco Companies agreed among themselves to limit individual research by a "gentlemen's agreement" to suppress independent research on the issue of smoking and health. All such research was to be conducted and funded through the TIRC/CTR. This agreement was referenced in a 1968 internal Philip Morris draft memorandum, which stated, "We have reason to believe that in spite of the gentleman's agreement from the tobacco industry in previous years that at least some of the major companies have been increasing biological studies within their own facilities." This memorandum also acknowledged that cigarettes are inextricably intertwined with the health field, stating, "Most Philip Morris products both tobacco and non-tobacco are directly related to the health field."
54. In furtherance of their conspiracy, the Tobacco Companies also agreed not to compete on product innovation and thus not develop and market safer cigarettes. All Defendants knew such products would have significant effects on the Tobacco Companies' joint defense efforts, because they had taken the position in litigation that there was no alternative design for cigarettes. In addition, Defendants knew that the introduction of safer cigarettes would imply other cigarettes were not safe. Defendants stopped and/or suppressed laboratory research on safer cigarettes. While some Defendants, in violation of the agreement, did work to develop safer cigarettes, none of these products were marketed, except in limited test markets and then without reference to their biological superiority.
55. An additional part of the conspiracy was an agreement not to advertise or market comparative health claims. At the time of the December 1953 meeting, it was recognized that competing advertising claims about the comparative health advantages of their tobacco products were not in their joint interests. As such, there was an agreement not to make such comparative claims.
56. As evidence of this agreement, such claims which were common in advertising prior to the December 1953 meeting virtually stopped by June of 1954.
57. The Tobacco Companies policed their agreements internally and externally. For example, one member of the conspiracy, U.S. Tobacco, went so far as to terminate an employee and apologize to the other Tobacco Companies when its employee in 1977 was quoted in a New York Post article referring to smokeless tobacco as less dangerous than smoking. In addition, in 1957 when U.S. Tobacco circulated a letter regarding the comparative health advantages of its King Sano brand, Defendants "diplomatically" persuaded U.S. Tobacco from circulating the letter further and repeating its content.
58. The Cigarette Advertising Code, adopted by the Tobacco Companies in 1964, was another mechanism used to enforce the illegal agreement not to compete on the basis of comparative safety or health characteristics of tobacco products. Among other provisions, it prohibits health claims in industry advertisements unless the "Code Administrator," to whom all cigarette advertisements are required to be submitted, approves of the advertisement. The Code provided a mechanism to monitor and police the Tobacco Companies' illegal agreement.
59. The Federal Trade Commission Cigarette Advertising Guides, adopted September 22, 1955, and modified March 25, 1966, did not allow claims to be made in advertising based on unsubstantiated health effects. However, it was clear to the Tobacco Industry that the Guides could be modified if justification was shown. These Guides do not justify the abandonment of legitimate and truthful competition on the basis of "safety."
60. Through the Frank Statement and following publications and statements, Defendants assured the consuming public that they would disclose information concerning the addictive nature of nicotine.
61. The Defendants have been in possession of information demonstrating the addictive nature of nicotine. Contrary to the special duty Defendants assumed, Defendants intentionally suppressed, concealed, and failed to disclose information concerning the addictive nature of nicotine. By way of example, researchers working for Philip Morris confirmed the addictive nature of nicotine and attempted to develop a synthetic form of nicotine that would avoid its cardiovascular complications. Philip Morris fired the researchers, closed their laboratory, and threatened them with legal action if they published their work.
62. Defendants have claimed and asserted that nicotine is not addictive, in direct conflict to their own knowledge and information.
63. The industry was aware that consumer demand would support "safer" products. Prior to adoption of its Cigarette Advertising Code, companies made claims of reduced tar and nicotine content for their filtered products, which the public perceived as offering reduced health risks. However, the smoker who switched to a filtered cigarette (claiming reduced tar) received as much or more nicotine and tar as he would have gotten from a regular cigarette. The industry recognized a difference between "health-oriented" cigarettes, which were never marketed on a wide basis, and "health-image" cigarettes, such as low-tar, low-nicotine products. The latter were a marketing tool, intended to give the illusion of a safer product.
64. In furtherance of selling their "lite" or "light" cigarettes, the Defendants have represented that these products have less tar and nicotine than regular cigarettes. In fact, the amount of nicotine and tar a smoker was getting from these cigarettes is higher than the amount set forth on the cigarette package; the amount of nicotine obtained from these cigarettes is equivalent to the amount of nicotine in standard cigarettes; and such cigarettes are not healthier for consumers than are "regular" cigarettes.
65. The primary control of nicotine delivery (the amount received by the smoker) is in the design and careful, sophisticated manufacture of the cigarette, to ensure that the smoker obtains the precise amount of nicotine intended by the manufacturer. According to a United States Food and Drug Administration ("FDA") investigation, despite reductions in the amount of tar delivered by cigarettes over the past several decades, nicotine delivery in low-yield cigarettes has not fallen proportionately with the reductions in tar. Instead, nicotine delivery has apparently risen over the last decade, a result which suggests that nicotine delivery is being independently and carefully manipulated by tobacco manufacturers. The FDA specifically found that this information, together with the other evidence of the industry's breeding, purchasing, blending, and manufacturing practices, reveals that the tobacco manufacturers control the amount of nicotine that is delivered to the consumer from cigarettes.
66. Defendants have manipulated the amount of nicotine in cigarettes and other tobacco products, in order to maintain and increase their market for tobacco products. The Defendants manipulate levels of nicotine by breeding technologies, creating genetically altered tobacco leafs, adding ammonia and other chemical compounds during manufacturing, manipulating the quantity of free nicotine, and reconstituting tobacco, among other methods.
67. The Defendants, rather than disclosing material information about nicotine addiction, have suppressed, concealed, and misinformed the public and the governmental regulators about the true properties of nicotine and the addictiveness of smoking.
68. In 1994, the Defendants, in apparent response to FDA and others' assertions of nicotine manipulation, placed advertisements across the country denying that they "spike" cigarettes with nicotine, denying that they believe cigarette smoking is addictive, and misleading the public about whether the Tobacco Companies deliberately control nicotine levels in their products. For example, an advertisement placed by Philip Morris in newspapers across the country in April 1994 denied that Philip Morris manipulates nicotine levels, stating that nicotine levels in finished cigarettes are lower than the nicotine level of the original, natural tobacco leaf.
69. Defendants' advertisements deliberately create the false impression that the issue involving "spiking" is about whether reconstituted and reduced-tar tobacco has less nicotine than the original tobacco leaf. The inaccuracy of Defendants' statements lies in the careful and deliberate omission that the Tobacco Companies have added nicotine in the form of an extract to the reconstituted tobacco to keep it at addictive levels.
70. Contrary to their public statements, the Tobacco Companies have specifically targeted minors through their advertisement and marketing campaigns in order to induce minors to start smoking cigarettes and in order to increase cigarette sales to minors. The Tobacco Companies need to induce minors to start smoking in order to maintain their customer base. The Tobacco Companies have known for years that most people who are addicted to smoking cigarettes begin smoking cigarettes as minors. According to a 1994 U.S. Surgeon General's report, 3,000 children become regular smokers each day; nearly all first-time use of tobacco occurs before high school graduation; most adolescent smokers are addicted to nicotine and report that they want to quit but are unable to do so; and cigarette advertising appears to increase young people's risk of smoking by affecting their perceptions of the persuasiveness, image, and function of smoking.
71. The Tobacco Companies have specifically targeted youthful consumers, including children, in their advertising with sophisticated promotional schemes. By way of example, Reynolds, in a memorandum, stated that evidence is available that the 14 to 18-year-old market is an increasing segment of the smoking population and that Reynolds must soon establish a successful new brand in that market in order to maintain its industry position. It wrote to public school principals asking that the principals inform students that scientists do not know the causes of chronic diseases reported to be associated with smoking.
72. The Tobacco Companies have developed advertising imagery intended to appeal to children. The Tobacco Companies have employed various techniques to induce children to smoke or to increase their consumption of cigarettes, including the give-away of T-shirts, caps, and other items with decals or graphics associated with tobacco products, promoting sporting events and other activities associated with successful and/or healthy athletes, associating cigarette smoking with independence and freedom from authority, with success, with risk taking, with sexual attractiveness, and with a healthful, athletic, youthful and glamorous lifestyle, and by emphasizing girls' and young women's interests in slim and feminine products. Several brands were repositioned in the market to appeal to young consumers. Marlboro was transformed by Philip Morris from a red-tipped cigarette for women to the cigarette for manly cowboys.
73. A notorious example of the industry targeting of minors is the Joe Camel advertising campaign conducted by Reynolds. When Reynolds began this cartoon campaign in 1988, Camel's share of the children's market was negligible. In just a few years, Camel's share of this illegal market was dramatically increased.
74. The Tobacco Companies further target children as consumers by the placement of their advertising. For example, Reynolds ordered its employees to identify stores near high schools so as to increase its marketing efforts in those locations.
75. The Tobacco Institute and several Tobacco Companies have begun public relations campaigns which purportedly aim to discourage children from smoking. In reality, they are a pro-smoking subterfuge. The only reason stated by these campaigns for not smoking is that smoking, like marriage and driving, is for "grown-ups." By describing smoking as an "adult" decision or as something "adults" can do safely, Tobacco Companies make smoking more attractive to children. None of the materials developed by these public relations campaigns discloses to children the real risks of smoking.
76. The Defendants knew that their tortious and unlawful conduct, as outlined above, would cause millions of persons to begin to smoke, primarily in their youth and adolescence; would cause millions of persons to continue to smoke; would cause adverse health effects in millions of smokers; and would cause the cost of medical care to increase dramatically in the United States as well as in South Dakota.
77. As a direct result of Defendants' tortious and unlawful conduct, cigarette smoking has become the most pervasive public health issue of our time and the single most preventable cause of death in our society. There is no known level of safe consumption of cigarettes and tobacco products.
78. The number of deaths caused by smoking--more than 400,000 each year in the United States, or one out of every six deaths--surpasses the combined totals for alcohol, suicide, homicide, AIDs, cocaine, heroine, and motor vehicles. At least one out of every three regular cigarette smokers dies of smoking-attributable illnesses.
79. The Center for Disease Control ("CDC") has estimated that in South Dakota, smoking-attributable illnesses cause approximately 1175 deaths a year, which include cardiovascular (heart disease and stroke), cancer, emphysema, asthma, and bronchitis.
80. In addition to the human toll, the economic costs of cigarette smoking, and, in particular, health care expenditures from smoking-attributable illnesses, amount to an unacceptable burden on society and on the state of South Dakota.
81. The CDC has distributed a statistical model which shows that more than $82 million a year is spent in South Dakota each year to pay the health care expenses for cigarette-attributable deaths and illnesses. This does not include the indirect costs of smoking to the state of South Dakota, such as loss of income from smokers whose illnesses render them unable to work. Nationwide, the CDC data shows that the estimated health care costs for smoking-attributable illnesses are $50 billion. These costs have been increasing at a precipitous rate, more than doubling in the period from 1987 to 1993.
82. South Dakota's Medical Assistance Program is jointly funded by the federal government and the State. The state of South Dakota program pays for necessary medical treatment for thousands of beneficiaries or those who otherwise meet the eligibility requirements for receipt of benefits. In fiscal year 1997 (July 1, 1996-June 30, 1997), the service expenditures of the South Dakota Medical Assistance Program to these beneficiaries were approximately $327 million. Some of these beneficiaries are receiving treatment for smoking-attributable illnesses as a result of using cigarettes.
83. In addition, the state of South Dakota also expends money for the payment of medical expenses in conjunction with its operation of public institutions and providing indigent care, a portion of which is attributable to smoking-attributable illnesses as a result of using cigarettes.
84. Since 1991, the state of South Dakota has acted as a self-insurer for the provision of a state employee medical benefits plan. During this period of time, South Dakota has expended millions of dollars for payment of employee and dependent medical expenditures, a portion of which are attributable to smoking-attributable illnesses as a result of using cigarettes.
85. The tortious and unlawful actions of the Defendants threaten and interfere with the statutory and contractual duties of the state of South Dakota, as described above, and with the public health of the citizens of the state of South Dakota.
86. Defendants, through their tortious and unlawful actions, have been guilty of fraud or malice, actual or presumed; further, Defendants have been guilty of willful and wanton misconduct, in disregard of humanity.
87. Despite the egregiousness of their conduct, the Defendants have enjoyed virtual immunity from regulation and successful litigation. This is attributable to their success in fraudulently suppressing harmful information, misrepresentations to Congress and federal agencies, and unreasonably aggressive litigation tactics which render it virtually impossible for injured smokers to be able to afford to sue.
88. Any applicable statutes of limitation have been tolled by Defendants' ongoing affirmative and intentional acts of fraudulent concealment, suppression of the truth, misrepresentation and denial of the facts, as alleged above. Defendants' acts of fraudulent concealment include intentionally covering up and refusing to disclose internal documents, suppressing and subverting medical and scientific research, and falsely designating documents as protected from disclosure by the attorney-client privilege, all with the intent and effect of suppressing information concerning the health consequences of tobacco use, the addictive properties of nicotine, the development of a safer cigarette, the manipulation of nicotine levels in their products, and the promoting and marketing of their products to minors. Through such acts of fraudulent concealment, Defendants have successfully concealed the truth from Plaintiffs and the public. Indeed, Defendants' denial, misrepresentations, concealment, and suppression of the truth continue to this day.
89. Plaintiffs were without knowledge of Defendants' combination or conspiracy, or of any facts from which it might reasonably be concluded that Defendants were illegally conspiring, or which would have led to the discovery thereof until recently. Plaintiffs could not have reasonably discovered such facts or the alleged violations at an earlier time, because the Defendants fraudulently concealed, and continue to conceal, their course of conduct.
90. Plaintiffs are not fully aware of the methods used by the Defendants to conceal its activities, but believes that the methods used in furtherance of its combination and conspiracy were inherently self-concealing, and could not have reasonably been apparent to Plaintiffs.
91. The Defendants' conspiracy and concealment of its fraudulent conduct is ongoing and continues to this day. The Defendants continue to deny that (a) smoking causes cancer and other health problems; (b) nicotine is addictive; (c) they manipulate the level of nicotine in tobacco products; and (d) they are targeting marketing to minors.
92. In the alternative, Defendants are estopped from relying on any statutes of limitations because of the acts of denial, misrepresentation, fraud, concealment, and suppression of the truth set forth above.
93. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
94. SDCL 37-1-3.1 provides:
95. The Attorney General of the state of South Dakota has the authority under SDCL 37-1-14.2 to bring an action on behalf of the State for violations of SDCL 37-1-3.1, for injunctive, other equitable relief, and civil penalties in the amount of not more than $50,000 for each violation. In addition, under SDCL 37-1-14.3, the Attorney General has the authority to bring an action for injunctive and other equitable relief and damages, for violation of SDCL 37-1-3.1 where the State is injured in its business or property.
96. Beginning at least as early as the 1950s and continuing until the present date, Defendants entered into a contract, combination, or conspiracy in unreasonable restraint of trade and commerce in the market for cigarettes in South Dakota, in violation of SDCL 37-1-3.1 and its predecessor. The market for cigarettes in South Dakota is directly related to and inextricably intertwined with health care.
97. Defendants' contract, combination, or conspiracy, among other things, consisted of agreements to:
a. Restrain and suppress research on the health effects of tobacco products use and the addictive nature of nicotine;
b. Restrain and suppress the dissemination of information on the harmful effects of tobacco products use and the addictive nature of nicotine;
c. Discredit and create doubt concerning the research of others relating to the health effects of tobacco products and the addictive nature of nicotine; and
d. Restrain the research, development, marketing, and sale of product innovations relating to the health effects of tobacco products use; and
e. Restrain the marketing of cigarettes based upon comparative health claims.
98. This contract, combination, or conspiracy had the purpose and effect of:
a. Restraining competition in the market for cigarettes in South Dakota;
b. Preventing the loss of sales revenues that would have resulted if information on the harmful effects of cigarette use and the addictive effects of nicotine had been made public;
c. Preventing competition for the sale and marketing of cigarettes and product innovations relating to the health effects of smoking cigarettes;
d. Preventing the assumption by the Tobacco Companies of the health care costs associated with the use of cigarettes that would have resulted if the information on the harmful effects of smoking and the addictive effects of nicotine had been made public; and
e. Shifting the cost of health care associated with smoking cigarettes to the health care providers, recipients, and insurers, which costs would otherwise have had to be borne as a cost by the Tobacco Companies.
99. In furtherance of their contract, combination, or conspiracy, Defendants did, without limitation, the following acts:
a. Defendant Tobacco Companies created the TIRC/CTR and the Tobacco Institute, charged with the task of disseminating false and misleading information regarding the health risks associated with smoking cigarettes;
b. Defendants agreed to withhold information and restrain and suppress research regarding the health risks of smoking and the addictive nature of nicotine;
c. Defendants agreed to destroy or conceal documents and information relating to the health effects of smoking and the addictive nature of nicotine;
d. Defendants Tobacco Companies destroyed and concealed research and information revealing the health risks of smoking and the addictive nature of nicotine or evidence thereof;
e. Defendants jointly sponsored deceptive mass media articles and advertisements intended to discredit, create doubts, and deceive the public and public entities about the health risks of smoking and the addictive nature of nicotine;
f. Defendants made false representations concerning their commitment to sponsor and make public "objective" scientific information regarding the relationship between health and smoking cigarettes;
g. Defendants Tobacco Companies agreed to halt, limit, stifle, and arrest research, development, marketing, and sales of product innovations related to the health risks associated with smoking; and
h. Defendants suppressed the sales and marketing of product innovations related to discrediting the health risks of smoking.
100. As a result of the foregoing, the public has been misinformed and misled concerning the nature and health consequences of smoking cigarettes, and has been deprived of the availability of safer cigarettes, all of which has restrained competition and has had an effect on the volume of cigarettes purchased by the public and the prices charged by the Defendants and has affected the allocation of resources in the economy within South Dakota.
101. South Dakota and its residents have suffered injury as a result of the aforesaid unlawful activities.
102. The effect of these unlawful activities has been to limit the ability of South Dakota residents to obtain information material to their decision about the purchase of cigarettes and to obtain safer cigarettes at the lowest possible competitive price. As a result, South Dakota residents have used and continue to use more dangerous cigarettes than they otherwise would have and have paid higher prices for them.
103. Defendants' conduct has damaged the general economy of the state of South Dakota by:
a. Diverting money that would otherwise be employed in other more competitive sectors of the economy;
b. Causing higher rates of illness and death among the residents of the State which historically have been paid for by other sectors of the economy;
c. Reducing the productivity of a large segment of the workforce of the state of South Dakota; and
d. Requiring the state of South Dakota to expend monies for health care costs for smoking-attributable illnesses.
104. As a result of Defendants' unlawful activity, Plain-tiffs have suffered and will continue to suffer substantial injuries and damages to their business and property.
105. The aforesaid unlawful activities and the effects thereof are continuing and will continue unless the injunctive relief sought by the Plaintiffs are granted.
106. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
107. Defendants, by engaging in the conduct described above, violated and continue to violate SDCL 37-24-6(1) and its predecessor, SDCL 37-24-6(5). Defendants' wrongful conduct includes, by way of example:
a. Defendants' fraudulent, misleading, and deceptive statements and practices relating to the issue of smoking and health, including intentional misrepresentations that there is no causal connection between cigarette smoking and adverse health effects and that cigarette smoking is not addictive;
b. Defendants' fraudulent, misleading, and deceptive statements and practices relating to the industry's false promises to conduct and disclose objective research on the issue of smoking and health;
c. Defendants' fraudulent concealment of information relating to the issue of smoking and health and failure to disclose material facts, including intentional concealment and failure to disclose.
108. As a direct and proximate result of Defendants' wrongful activity, Plaintiffs have suffered and will continue to suffer substantial injuries and damages.
109. Unless enjoined from doing so, Defendants will continue to violate this statute.
110. Plaintiffs reallege paragraphs 1 through 109 and paragraphs 115 through 142 of this Complaint.
111. Defendants entered into a conspiracy to violate the statutes set forth in the first two causes of action; and the common law causes of action as set forth in the balance of this Complaint.
112. Defendants' conspiracy contributed to Plaintiffs' increased expenditures for health care costs because the conspiracy caused South Dakota citizens for whom the State is responsible for health care costs, to take up or continue smoking.
113. By combining to use tortious and unlawful means, including without limitation misrepresentation, deception, and fraud to maintain their markets and profits, Defendants engaged in a conspiracy in violation of the common law of South Dakota.
114. As a direct result of Defendants' conspiracy, Plaintiffs suffered and will continue to suffer substantial injuries and damages.
115. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
116. Defendants assumed and undertook a special responsibility and duty to render services for the protection of the public health and a duty to those who advance and protect the public health, including the state of South Dakota, by their representation and undertaking to accept an interest in the public's health as a basic and paramount responsibility; to cooperate closely with those who safeguard the public health; to aid and assist the research effort into all phases of tobacco use and health; to continue research and all possible efforts until all the facts were known; and to provide complete and authenticated information about cigarette smoking and health.
117. Defendants recognized that their undertaking was necessary for the protection of the public health and that their conduct would affect the smoking habits and health of millions of Americans, the cost of medical care, and the operations of the insurance market.
118. Defendants have breached and continue to breach their special responsibility and duty through their failure to exercise reasonable care in performance of their undertaking. Defendants' failure to exercise such reasonable care increased the risk of harm and the cost of health care provided by the state of South Dakota.
119. As a direct and proximate result of Defendants' conduct, Plaintiffs have suffered and will continue to suffer substantial injuries and damages.
120. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
121. Defendants breached duties, including but not limited to the duty not to place in the stream of commerce unreasonably dangerous tobacco products, the duty not to fraudulently conceal or suppress information and research on the safety of tobacco and the addictiveness of nicotine, the duty undertaken by them to conduct research into the health effects of tobacco use and to disclose the results of that research, the duty to make their products safe and nonaddictive, and the duty not to market tobacco products to children.
122. As a result of their breach of those duties, Defendants became obligated to pay for the harm caused by their wrongful conduct, yet they have not done so. Instead, the Defendants embarked on a campaign of denial, subterfuge, and deceit to deny responsibility, to maintain their profits, and to avoid paying for the consequences of the harm they have caused.
123. Plaintiffs have expended large sums of money to pay for the costs of the harm caused by Defendants' wrongful conduct, including the costs of medical assistance payments to patients in South Dakota with smoking-related health problems, diseases and addiction, and including the costs of providing medical coverage and benefits to the State's employees and their dependents to the extent attributable to smoking. Plaintiffs' expenditures were and continue to be immediately necessary to protect the health and safety of the public and of the State's employees and their dependents.
124. Plaintiffs had and continue to have the intent to charge and recoup from Defendants these sums of money.
125. As a result of Defendants' wrongful activities and the necessity of Plaintiffs' expenditures, Plaintiffs have paid costs resulting from Defendants' breach of duty. Defendants are the actual wrongdoers and had and have the duty to pay the costs resulting from their breach of duty; therefore, Defendants must make restitution to the Plaintiffs for having paid those costs.
126. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
127. Defendants have promoted the sale of cigarettes to South Dakota residents by continuing to conceal factual and/or material information and misinforming governmental authorities about the true carcinogenic, pathologic, and addictive qualities of cigarettes.
128. Defendants have spent billions of dollars on targeted marketing programs designed to encourage children to purchase and smoke cigarettes, which is prohibited by the laws of South Dakota.
129. Many of South Dakota's citizens who are afflicted with smoking-attributable illnesses are state employees and their dependents, those institutionalized, or those who are poor and unable to provide for their own medical care, and must rely upon the State to provide for their care. This reliance results in an extreme burden on the taxpayers and the financial resources of this State. Yet, these citizens, along with our youth, are targeted by the aforementioned tobacco promotional techniques. South Dakota taxpayers have expended millions of dollars in caring for their fellow citizens who have suffered from smoking-attributable illnesses.
130. Defendants undertook the wrongful conduct alleged herein for the purpose of increasing their sales, and profits from their sales of cigarettes, while at the same time avoiding liability for the health care costs caused by such sale and use of these products and shifting those costs to the state of South Dakota and others.
131. Without justification, Defendants have refused and failed to pay for the consequences of their tortious and unlawful conduct, and, as a result, the state of South Dakota has been required to pay such medical costs.
132. South Dakota's expenditure of substantial sums to pay for the costs of medical care for health problems resulting from the use of cigarettes sold, for enormous profit, by Defendants has unjustly enriched the Defendants at the expense of the state of South Dakota.
133. While the State and its various agencies and institutions are struggling to pay for the health care costs attributable to smoking, Defendants continue to reap billions of dollars in profits from the sale of cigarettes.
134. By virtue of the foregoing, South Dakota has borne and continues to bear a duty that, in law, equity, and fairness ought to have been borne by Defendants.
135. As a result of Defendants' conduct, South Dakota has suffered and will continue to suffer substantial injuries and damages for which South Dakota is entitled to recovery.
136. In equity and good conscience, it would be unjust and unconscionable to permit Defendants to enrich themselves at the expense of Plaintiffs and to retain the benefit of Plaintiffs' expenditures without fair compensation to Plaintiffs.
137. Plaintiffs reallege paragraphs 1 through 92 of this Complaint.
138. Defendants have intentionally interfered with the public's right to be free from unwarranted injury, disease, and sickness and have caused damage to the public health, the public safety, and the general welfare of the residents of South Dakota, and have thereby annoyed, injured, or endangered the comfort, repose, health, or safety of others, and have thereby wrongfully caused the State to expend millions of dollars in support of the public health and welfare.
139. By the wrongful conduct alleged above, including Defendants' distribution and marketing of cigarettes to the public without disclosure of information in their possession relating to the harmful health effects and addictive properties of their products, their deliberate and intentional campaign to confuse and deceive the public concerning those addictive and harmful health effects, their distribution and marketing of harmful and addictive products when they knew that safer cigarettes were available, their manipulation of addictive nicotine levels in their products, and their marketing of cigarettes with the intent to induce minors to use them, Defendants have unreasonably annoyed, endangered, and injured the public health and safety.
140. The sale of cigarettes to persons under 18 years of age is prohibited by SDCL 34-46-2 and its predecessors, and Defendants' conduct in intentionally marketing cigarettes to persons under the applicable age also constitutes unreasonable annoyance, endangerment, and injury to the public health and safety.
141. As a result of the foregoing, Plaintiffs have special damages for which Defendants are liable.
142. Unless Defendants are enjoined and restrained from continuing their harmful activities and ordered to take affirmative steps to undo and abate the harm and confusion caused by their harmful activities, the unreasonable annoyance, injury, and endangerment of the public health as described above will continue, for which Plaintiffs have no adequate remedy at law.
WHEREFORE, Plaintiffs pray that this Court issue an order and judgment:
A. Declaring that Defendants have engaged in unlawful and deceptive trade practices, unreasonable restraints of trade, and a public nuisance, in violation of the laws of the state of South Dakota, and are jointly and severally liable for all damages, penalties, and restitution;
B. Enjoining Defendants and their respective agents, servants, officers, directors, employees, and all persons acting in concert with them, directly or indirectly, from engaging in unlawful and deceptive trade practices, unreasonable restraints of trade, and in maintaining a public nuisance, in violation of the laws of the state of South Dakota;
C. Ordering Defendants to disclose, disseminate, and publish all research previously conducted directly or indirectly by themselves and their respective agents, affiliates, servants, officers, directors, employees, and all persons acting in concert with them, that relates to the issue of smoking and health;
D. Ordering Defendants to fund a corrective public education campaign relating to the issue of smoking and health, administered and controlled by an independent, third party;
E. Ordering Defendants to take reasonable and necessary affirmative steps to prevent the distribution and sale of cigarettes to minors under the age of 18;
F. Ordering Defendants to fund clinical smoking cessation programs in the state of South Dakota;
G. Ordering the Defendants to dissolve the Council for Tobacco Research and the Tobacco Institute, or, in the alternative, to divest their ownership, sponsorship, and/or membership in the Council for Tobacco Research and the Tobacco Institute;
H. Ordering Defendants to disgorge all profits from sales of cigarettes in South Dakota;
I. Ordering Defendants jointly and severally to pay restitution for all smoking-attributable health care expenditures;
J. Awarding damages against Defendants jointly and severally in an amount presently undetermined for past and future damages caused by the Defendants' actions in violation of the laws of the state of South Dakota;
K. Trebling damages awarded to Plaintiffs for violations of the South Dakota Antitrust Law, pursuant to SDCL 34-1-14.3;
L. Awarding punitive damages against each Defendant in accordance with SDCL 21-3-2 in an amount presently undetermined for their tortious and unlawful conduct;
M. Awarding civil penalties against each Defendant in the amount of $50,000 for each violation of the South Dakota Antitrust statutes pursuant to SDCL 34-1-14.2;
N. Pursuant to SDCL 34-24-27, awarding civil penalties against each Defendant in an amount of $2,000 for each violation of SDCL 37-24-6;
O. Awarding reasonable attorneys' fees pursuant to SDCL 37-1-14.3;
P. Awarding costs and disbursements; and
Q. Granting such other legal or equitable relief as the Court deems just and equitable.
Dated this 23rd day of February, 1998.
Lawrence E. Long
Chief Deputy Attorney General
Jeffrey P. Hallem
Assistant Attorney General
Assistant Attorney General
Office of Attorney General
500 E. Capitol Ave.
Pierre, South Dakota 57501-5070
Telephone: (605) 773-3215
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