RICHMOND, Va.–The Board of Directors of Altria Group, Inc. today announced the election of John T. Casteen III to the Board of Directors. With the addition of Mr. Casteen, the Altria Board increases from nine to ten directors.

“With his broad public and private sector experience, I know he will make significant contributions.”

Mr. Casteen has served as the President of the University of Virginia since 1990. He will step down from that position on August 1, 2010 and become President Emeritus at that time.

“I am delighted to welcome John Casteen to our Board of Directors,” said Michael E. Szymanczyk, Chairman and Chief Executive Officer of Altria. “With his broad public and private sector experience, I know he will make significant contributions.”

Mr. Casteen previously served as the Dean of Admission at the University of Virginia from 1975 to 1982, Virginia Secretary of Education from 1982 to 1985, and president of the University of Connecticut from 1985 to 1990.

Mr. Casteen’s business career has included service as a director of the following companies: Connecticut Bank and Trust Company; New England Education Loan Marketing Corporation (Nellie Mae); Sallie Mae; Blue Cross/Blue Shield of Connecticut, Inc.; College Construction Loan Insurance Association (Connie Lee); Allied Concrete Company; Jefferson Bank Shares, Inc.; Jefferson National Bank; and Wachovia Corporation. He currently serves as director at Sage Publications, Inc.; Jefferson Science Associates, LLC; and the Virginia University Research Partnership, Inc.

Mr. Casteen has been a director of the American Council on Education, a director of the National Collegiate Athletic Association, trustee and chair of the College Entrance Examination Board, commissioner of the Education Commission of the States, member of the Board of Control for the Southern Regional Education Board, commissioner of the New England Board of Higher Education, and chair of the Association of Governing Boards’ council of presidents. From 1991 to 1993, he chaired the National Board on Oceans and Atmosphere. He is a member of the Board of Trustees of the Chesapeake Bay Foundation.

A few words about a giant — Philip Morris USA, for instance — can echo in unexpected corners of Wall Street.

After the company that supplies Philip Morris with its cigarette paper revealed the tobacco giant is buying a small amount of paper from another firm, its stock lost more than a third of its value.

Wall Street decided Thursday and yesterday that Georgia-based Schweitzer-Mauduit International was worth $315 million less than it had thought, as versions of the story hit traders’ screens.

Philip Morris buys a bit more than $80 million a year of Schweitzer’s papers, a patented design that feature tiny bands that extinguish cigarettes when they are left to smolder.

Still, Wall Street’s reaction to Schweitzer’s quiet mention that Philip Morris would buy small amounts of printed paper from an importer underscored the Henrico County-based cigarette-maker’s dominance of the U.S. tobacco market.

“In isolation, lost volume at PM USA would have a modest earnings impact,” Goldman Sachs analyst Richard Skidmore said.

“The greater concern is that PM USA’s actions are followed by other cigarette manufacturers,” Skidmore said, adding that he expects Schweitzer’s “shares will struggle to regain momentum until after concerns around its [banded paper] relationship with PM USA and its patent lawsuit are resolved.”

In addition to disclosing Philip Morris was trying the importer’s paper on one of its discount brands, Schweitzer this week launched a patentinfringement lawsuit against four competitors.

Schweitzer is one of the world’s biggest cigarette-paper manufacturers, and its banded paper put it on the path for an even larger role, now that most states have passed laws requiring fire-safe cigarettes.

Philip Morris plans to finish converting its South Richmond manufacturing plant to use the banded paper by midyear.

Frederic Villoutreix, Schweitzer chairman and chief executive officer, said he believed Philip Morris was buying the imported paper in order to assess it, and because of the tobacco company’s concern that it not be completely reliant on a single manufacturer for its supply.

“The current volume involved is very, very small,” Villoutreix repeatedly told analysts on Thursday during a conference call.

Schweitzer said in a statement that it remains the sole supplier of a variety of paper it developed in cooperation with Philip Morris, though its agreement does allow Philip Morris to explore other alternatives to the patented product.

Schweitzer’s stock, which had started the week at about $70 a share, closed yesterday at $50.99, up $4.34.

By David Ress, Timesdispatch
February 13, 2010

SAN FRANCISCO, – Philip Morris International Inc (PM.N) posted higher-than-expected fourth-quarter profit on Thursday and announced a new $12 billion share repurchase program, sending its shares up more than 4 percent.

The company, which sells Marlboro cigarettes and other brands outside the United States, said selective price increases helped it offset tough economic conditions and high unemployment rates that prompted some smokers to trade down to lower-priced brands.

“The fragility of the economic recovery, particularly with regard to employment levels and currency volatility, naturally warrants a cautious outlook for 2010,” CEO Louis Camilleri said in a statement.

“However, we enjoy solid momentum and remain confident that we will again post strong financial results this year.”

Philip Morris, the world’s largest non-state-owned tobacco company, said it intends to buy back $12 billion in stock over the next three years, starting in May. It expects to repurchase $4 billion worth of shares this year.

Profit for the quarter ended Dec. 31 was $1.52 billion, or 80 cents a share, compared with $1.45 billion, or 71 cents a share, a year earlier.

Excluding some costs, it said earnings were 81 cents a share. Analysts, on average, forecast 79 cents a share, according to Thomson Reuters I/B/E/S.

Fourth-quarter revenue rose 9.7 percent to $6.7 billion, including a favorable currency impact. Excluding currency, it said revenue rose by 7.9 percent.

Cigarette shipment volume rose 0.5 percent to 218.2 billion units in the quarter, as market share gains in Algeria, Egypt and South Korea helped offset declines in the European Union.

Philip Morris has been able to take advantage of growing cigarette demand in emerging markets, even as the slumping economy and higher taxes have taken their toll on demand in parts of western Europe.

Camilleri said on a conference call that, while there was concern in the past year that consumers would abandon higher-priced premium cigarettes for cheaper ones, that phenomenon has been “relatively restricted.”

Premium cigarette sales will remain under pressure in 2010 due to high unemployment, but Camilleri said the pressure should not be “pervasive” or “particularly disruptive.”

For 2010, the tobacco company expects organic shipment volume, or volume excluding acquisitions, to parallel 2009.

It also forecast 2010 earnings of $3.75 a share to $3.85 a share. Analysts, on average, have been expecting $3.82 a share.

The company’s shares were up $2.00, or 4.3 percent, to $48.81 in afternoon trading.

NEW YORK — As expected, Reynolds American Inc. and Lorillard Tobacco Co. on Tuesday followed Philip Morris’ lead in raising their cigarette prices but to varying degrees.

According to a research note from analyst Nik Modi of UBS Investment Research, New York, Reynolds American, Winston-Salem, N.C., announced an increase in its list prices across its cigarette portfolio of 6 to 8 cents, echoing the increases announced Friday by Philip Morris, Richmond, Va. The overall increase is about 3%. The price increase is effective Nov. 2.

Meanwhile, Lorillard, Greensboro, N.C., announced a reduction in promotional incentives by about 25% per carton, which is equivalent to a price increase, according to Modi. However, the per-pack increase amounts to 1 cent per pack, which is a few pennies shy of both Reynolds’ and Phillip Morris’ increases.

“We believe this is due to: 1) Lorillard will likely move around buy-down levels to effectively reach the same increase on a price per pack basis as [Philip Morris] and [Reynolds], 2) the company is waiting for later in the year to take a larger increase (which we expect Altria to lead) and 3) Lorillard sometimes raises prices more than RAI and MO and also tends to already discount less,” Modi wrote.

As previously reported in CSP Daily News, Philip Morris announced Friday it would raise its wholesale prices. The cost of packs of Marlboro, Basic and L&M cigarettes rose by 6 cents a pack and the rest of its brands by 8 cents.

The company did not give a reason for the increase.

By Steve Holtz

This week, the Canadian Medical Association Journal (CMAJ) published a devastating article about the destruction of key documents by British American Tobacco’s (BAT) Canadian subsidiary, Imperial Tobacco Canada (ITC).

In it, the authors claim that BAT instructed ITC to destroy key documents that could expose the company to liability or embarrassment. ITC, rather stupidly in my view, wrote to BAT listing 60 of these documents, confirming their destruction. Using this list, these 60 documents were subsequently found in BAT’s own document archives.

The documents included evidence from internal scientific reviews, as well as 47 original research studies, 35 of which examined the cancer-causing effects of smoking. The documents also describe BAT research on light and mild cigarettes, including the ways in which consumers adapted their smoking behavior in order to get the same levels of nicotine as if they were smoking full-strength cigarettes. The documents also depict a comprehensive research program on the pharmacology of nicotine and its addictiveness, showing the central role of nicotine in smoking behavior.

We should bear in mind that in 1992, when these documents were destroyed, tobacco companies were still denying that nicotine was addictive and that smoking caused cancer.

As we say in our seminars: Sometimes you need to ask yourself who your friends are.

Damian O’Hara is a former chain smoker who after countless miserable attempts to quit, finally did so successfully using Allen Carr’s Easyway method (Sterling/ 2006). The early part of his career was spent working at international advertising agencies but today he is the President of Allen Carr North America where he heads up the US and Canadian arm of a global organization dedicated to helping smokers quit. Over the past 25 years Allen Carr’s Easyway books and seminars have helped an estimated 10 million smokers quit successfully.

3,500 American Kids Begin Smoking Each Day–1K Will Smoke For Life

Nicotine Replacement Therapy: 94% Failure Rate

NYC: Smoking Costs $5,000 Gross Yearly

October 15, 2009 Tradingmarkets

LOS ANGELES — A jury on Monday recommended that cigarette maker Philip Morris USA should pay $13.8 million in punitive damages to the daughter of a longtime smoker who died of lung cancer.

The panel voted 9-3 in favor of Bullock’s daughter Jodie Bullock, who is now the plaintiff in the case. Betty Bullock died of lung cancer in February 2003.

She had sued Philip Morris in April 2001, accusing the company of fraud and product liability. A jury in 2002 recommended Philip Morris pay a record $28 billion in punitive damages to Bullock, but a judge later reduced the award to $28 million.

In 2008, the 2nd U.S. District Court of Appeal reversed the jury’s decision and remanded the case for a new trial over the punitive damages. Philip Morris said the $28 million remained excessive.

However, the original jury recommended the tobacco company pay Bullock $750,000 in damages and $100,000 for pain and suffering, a verdict that still stands.

In a statement, Richmond, Va.-based Altria Group Inc., which owns Philip Morris, said any amount given to Bullock’s daughter is unwarranted.

“After hearing weeks of improper arguments and evidence that violated state and federal law on punitive damages, the jury still managed to reject plaintiff’s patently unreasonable request,” said Murray Garnick, Altria Client Services senior vice president, speaking on behalf of Philip Morris. “Even so, we believe that any punitive damages award is unwarranted based on the facts in this case and that this award is unconstitutionally excessive.”

Defense attorney Frank P. Kelly said outside of court that Philip Morris hasn’t decided yet whether to appeal the decision.

Plaintiff’s attorney Michael Piuze said the jury’s verdict amounted to a “slap on the wrist for Philip Morris.”

“I liked it better when it was $28 billion,” said Piuze, who represented Betty Bullock after she filed the lawsuit. “She wanted me to beat the crap out of Philip Morris, and we did it once.”

Betty Bullock, 64, of Newport Beach, started smoking Marlboros when she was 17 and later turned to Benson & Hedges, both Philip Morris products.

Attorneys for Philip Morris argued Betty Bullock could have stopped smoking at anytime, and the harmful effects of cigarettes were known to smokers.

Jurors said the figure they reached was a compromise, with some arguing that Philip Morris shouldn’t pay anything, while others believed the cigarette maker should pay billions of dollars in damages.

Matt Reed, 37, of Burbank was one of the three dissenting jurors, who believed Philip Morris should pay a higher amount than the verdict.

“Some of us looked at it as an opportunity to deter this behavior,” Reed said. “I don’t find $13.8 million to be much of a deterrent.”

Other jurors felt Betty Bullock should have been more responsible, but using a formula decided on an amount for the years she suffered from lung cancer.

“I saw it as a personal choice,” said Poulet Minasian, 25, of Los Angeles. “There was a big gap in the amount (during deliberations), but the $13.8 million made sense.”

Zimbabwe secured a $60 million loan from the Africa Export Import Bank to boost tobacco production, the Herald reported, citing Finance Minister Tendai Biti.

The southern African nation needs about $120 million to increase annual tobacco output to 75 million kilograms (165 million pounds) from 42 million kilograms now, the Harare-based newspaper said.

Often-violent farm invasions by loyalists of President Robert Mugabe have seen tobacco production plummet from a high of 236 million kilograms in 2000, according to the Web site of Universal Corp., the world’s largest tobacco-leaf merchant.


Copyright © 2009 Bloomberg

Cigarette smoking in 1950s, especially in America, was considered cool and glamour.
Even, Hollywood icons such as James Dean and Humphrey Bogart were seen always with a cigarette in their hand. Screen beauties such as Audrey Hepburn and Marlene Dietrich made smoking look sensual and sophisticated.
Even a future president, Ronald Reagan held in his hand packs of Chesterfield during his B-movie days. By the late 1950s around half of the population of industrialized nations smoked in the UK. The product was cheap, legal and socially acceptable.
Cigarettes were originally sold as expensive handmade luxury goods for the urban elite. In United States in those years, smokers frequently used traditional pipe-smoking and tobacco-chewing habits.
American tobacco firm Philip Morris was particular expert at marketing its cigarettes. This Tobacco Industry gave people the chiseled looking of Marlboro Man who declared: “For man’s flavor come to Marlboro Country.”
Other brands also sought to lessen fears of smoking. For example Camel cigarettes had such an advert saying: “More doctors smoke Camels than any other cigarette.” But, as early as 1951, UK scientists found a link between lung cancer and smoking.
For years, the Tobacco Industry appeared to be unconquerable. Then, in 1994, Diane Castano, whose husband died of lung cancer, pleaded the tobacco industry.
Soon attempts to protect non-smokers from being exposed to secondhand smoking were defended by politicians in California. This led to the 1995 ban on smoking in most enclosed places of employment. And by 2005 less than a quarter of the US population smoked cigarettes, and that is now falling.

Britain’s Imperial Tobacco (IMT.L) plans to issue two benchmark bonds, one for three years in euros and another for 10 years in sterling, IFR reported on Wednesday.

BBVA, Calyon, HSBC, Royal Bank of Scotland and UniCredit have been named to manage the euro deal, while Barclays, Commerzbank, Morgan Stanley and RBS will manage the sterling transaction, said IFR Markets, a Thomson Reuters online news and market analysis service.

The maker of Lambert & Butler, West and Gauloises cigarettes is rated BBB by Standard & Poor’s, Baa3 by Moody’s Investors Service and BBB- by Fitch Ratings.

Copyright © 2009 Reuters

The motion picture and cigarette industries in the United States grew rapidly after the First World War. By the end of the 1920s, studios brokered cigarette endorsement deals for movie stars under contract to them in return for national advertising campaigns paid for by the tobacco companies.
The tobacco industry shifted spending to television in the 1950s, but after the US Government banned broadcast advertising of tobacco products in 1970, systematic film placement of tobacco imagery intensified. In 1989, reports of product placement in Hollywood films spurred the US Congress to demand more detail on advertising expenditures from the tobacco companies. These data were to be used to improve US Federal Trade Commission surveillance of cigarette marketing expenditures. However, the tobacco companies denied they bought product placement in films, and some companies failed to report ongoing payments to Hollywood agents as recently as the mid-1990s. In response, health advocates implemented campaigns designed to educate film industry “creatives” (writers, directors, actors) about tobacco imagery’s harmful effect, but these actions were essentially ineffective.
In 1998, the states’ Attorneys General and the five large US tobacco companies entered into the Master Settlement Agreement (MSA); among other things, this legal agreement prohibited the participating US domestic cigarette companies from tobacco product placement in entertainment media. Because the MSA was an agreement between US domestic tobacco companies and the states’ Attorneys General, it did not cover overseas tobacco subsidiaries .
In 2002, the Smoke Free Movies project, based at the University of California, San Francisco’s Center for Tobacco Control Research and Education (a WHO Collaborating Centre), began a web site (www.smokefreemovies.ucsf.edu) and a series of paid advertisements in entertainment trade publications. These ads suggested that smoking persisted in youth-rated films for one of two reasons (quoted verbatim from the paid ads): “Either people in Hollywood are still on the take, in which case they’re corrupt … or they’re doing Big Tobacco’s dirty work for free – in which case they’re stupid”. Smoke Free Movies and its national NGO allies also developed and promoted a set of four evidence-based policy solutions intended to substantially and permanently reduce teen exposure to onscreen tobacco imagery, without intruding on film content. These have provided the basis for the policy options described in Section 2.2, above.
The major motion picture studios, through the MPAA, at first took none of the steps advocated by US health experts and organizations. However, NGO tracking of individual studios’ records and the steady accumulation of research evidence on exposure of adolescents to smoking in the movies stimulated congressional hearings. In addition, Attorneys General from more than thirty states wrote letters to the companies that owned the major studios, stating that they were knowingly harming children by releasing films with tobacco imagery.
In Los Angeles, where the Hollywood studios themselves are located, the County Department of Health Services was the first public health agency in the United States to endorse the four policy goals, beginning in 2002. Since then, its publicity events and media briefings have been regularly attracting international attention. The Commissioner of Health of the State of New York, where most of these companies are based, published full-page advertisements in The New York Times and other news media calling for action by the studio heads. Other state and local public health officials continue to join this campaign.
On the national level, the Institute of Medicine of the National Academies of Science, the National Cancer Institute and the Centers for Disease Control and Prevention have all noted the need for the film industry to change its practices. Subsequently, the MPAA announced in 2007 that it would “consider” smoking in its ratings. In practice, however, the MPAA has not elevated film ratings for smoking but merely noted smoking in the rating labels attached to “independent” films given limited release, sparing most youth-rated films with smoking released by the MPAA’s own member studios. In 2008, MPAA-member film studios agreed to deploy anti-tobacco spots, but only on youthrated DVDs distributed in the United States.

While Saturday at the Longbranch is the same as it ever was, the club’s country side is smoke-free every other night of the week. On those nights, smoking is confined to the “Red Room” smoking lounge (plus a smoking deck outside). The Longbranch’s smaller “Top 40″ side allows smoking on the nights it is open, Thursday through Saturday.

On a recent weekday night, most of the people at the Longbranch for a two-step dance class expressed support for the policy. Nonsmoker Nancy Van Dyke, who has been coming to the Longbranch’s dance classes for several years, calls the new smoke-free environment “good clean fun.”

“It’s great to come here now and not be choking afterward,” concurs her friend, Terra Fox.

Even the smokers seem down with the program. Says Bob Loeh, a longtime Longbranch regular, “I’ve been smoking three packs a day for 30 years, and if I can go without while I’m in here, anybody can.”

But that’s a Tuesday-night crowd. Saturday is an entirely different beast, even from Friday.

“Fridays are more couples, people coming to dance,” McCollum says. “Saturdays are rowdier crowds — a lot of bachelorette parties, people who just turned 21, things like that. So … we’re just trying to make an atmosphere where everybody’s happy. We’ve been in business 25 years, and it’s hard to change something like that overnight.”

Like the Longbranch, most other bar venues take a middle-ground approach of trying to limit smoking without banning it. You can’t smoke in the front room by the stage at The Cave in Chapel Hill, but you can in the back room. At Raleigh’s Lincoln Theatre, you can’t smoke downstairs, but you can at the back of the newly installed upstairs balcony. And Kings in Raleigh recently instituted a new policy of no smoking before midnight.

As for what smoking regulations do to cash flow, that’s hard to say. Cradle owner Frank Heath says he thinks he’s had “a little bit of an uptick” from going nonsmoking. But Mouse Mock, who owns The Cave, says he has lost business from limiting smoking.

“My first few months, all my regulars ditched me and went elsewhere because they couldn’t sit at the bar and smoke,” Mock says. “I absolutely felt it. A lot have come back, but I still don’t get the same early-evening crowd I used to.”

BEER and cigarettes go together like cows and hay in Wisconsin. North Carolina is the top United States tobacco-growing state.

Yet bars and restaurants in both states are poised to go smoke-free after their state legislatures passed bans on Wednesday. Both North Carolina Governor Beverly Perdue and Wisconsin Governor Jim Doyle have said they support the measures.

Twenty-two US states and the District of Columbia have prohibited smoking in bars and restaurants since New York City passed its landmark ban in 2003. Four more states – Montana, Nebraska, South Dakota and Virginia – will do so by the end of the year. Florida, Idaho and Nevada ban smoking in restaurants.

The North Carolina House’s 62-56 vote marked yet another step away from the legacy of tobacco in a state that is still the nation’s top producer by sales. Last year, North Carolina farmers produced US$686 million worth of tobacco, nearly half the value of the entire US output.

“It is definitely a historic move,” said Betsy Vetter, a spokeswoman for the American Heart Association’s North Carolina chapter. “We think this will protect a large portion of the population from secondhand smoke, and that’s quite an accomplishment for public health.”

Their law would allow fines of up to US$50 for smokers who keep puffing after being asked by an establishment’s managers to stop, but the law can only be enforced by a local health director and not police. Hospitality owners or managers could be fined up to US$200 after being warned twice to enforce the smoking rules.

In Wisconsin, lawmakers voted for a bill marking a truce between the Wisconsin Tavern League and anti-smoking and health groups.

Republican Representative Leah Vukmir branded the ban “anti-smoking zealotry.”

“The only thing that’s compromised are individual rights and individual freedoms,” she said.

Copyright © 2009 Wtop

Mississippi leaders have taken an important step to protect the state’s kids and taxpayers from the devastating toll of tobacco by increasing the state cigarette tax for the first time since 1985. The 50-cent increase, to 68 cents per pack, is a win-win-win solution for Mississippi — a health win that will reduce tobacco use and save lives, a financial win that will raise much-needed revenue and reduce tobacco-caused health care costs, and a political win that is popular with voters. However, at 68 cents per pack, Mississippi’s cigarette tax will still be well below the state average of $1.24 per pack, so Mississippi’s leaders can achieve even greater health and financial benefits by further increasing tobacco taxes.

We applaud the legislators who took a stand to protect the health and pocketbooks of Mississippi families and congratulate the many organizations that advocated for the cigarette tax increase for their tireless efforts to improve Mississippians’ health.

The evidence is clear that increasing the cigarette tax is one of the most effective ways to reduce smoking, especially among kids. Studies show that every 10 percent increase in the price of cigarettes reduces youth smoking by 7 percent and overall cigarette consumption by about 4 percent. Mississippi can expect a 50-cent-per-pack cigarette tax increase to prevent some 16,000 Mississippi kids alive today from becoming smokers, spur 9,700 Mississippi smokers to quit for good, save 7,600 Mississippi residents from smoking-caused deaths, produce $372 million in long-term health care savings, and raise $94 million a year in new revenue.

In addition to further increasing state tobacco taxes, Mississippi leaders should also use some of the tobacco tax revenue to increase funding for the state’s tobacco prevention and cessation program. Mississippi once had one of the nation’s most effective tobacco prevention programs, but has yet to restore funding after 2006 budget cuts. Mississippi currently spends $10.7 million a year on tobacco prevention programs, which is just 27.3 percent of the $39.2 million recommended by the U.S. Centers for Disease Control and Prevention.

Tobacco use is the leading preventable cause of death in Mississippi, claiming 4,700 lives each year and costing the state $719 million annually in health care bills, including $264 million in Medicaid payments alone. Government expenditures related to tobacco amount to a hidden tax of $559 each year on every Mississippi household. In addition, more than 19 percent of Mississippi high school students currently smoke, 14,100 Mississippi kids try smoking for the first time each year, and 4,200 more kids become regular smokers every year.

Counting the Mississippi increase and a cigarette tax increase awaiting the governor’s signature in Florida, the average state cigarette tax would be $1.27 per pack. Rhode Island has the highest state cigarette tax at $3.46 per pack. Twelve states and the District of Columbia have cigarette tax rates of at least $2 per pack, and 27 states and DC would have cigarette tax rates of at least $1 per pack or more.

Copyright © 2009 Tobaccofreekids

Tobacco company Philip Morris (Malaysia) Sdn Bhd has teamed up with non-profit organisation Yayasan Salam Malaysia (Salam) to build three more information and communications technology (ICT) centres.

The centres, costing a total of RM115,000 to set up, are located in Jerlun (Kedah), Pekan (Pahang) and Batu Rakit (Terengganu). Philip Morris has eight other ICT centres around the country.

Each centre is equipped with 11 computers, broadband connection, shared printer and local area network, and are used to teach ICT skills to rural folk.

The centres are part of Philip Morris’ corporate social responsibility programme to address the needs of underserved communities.

“We recognise that technology is not accessible to a large majority of rural communities in our country,” said Marlene Kaur, director of corporate affairs at Philip Morris Malaysia.

It would be the ultimate discovery for e-discovery: a perfect method to turn terabytes of digital data into a collection of case-relevant documents.

Three years ago, a handful of lawyers and scientists started the quest, a project to save litigation from being bur­ied in an avalanche of electronic documents. Since then, the Text Retrieval Confer­ence Legal Track has been using different types of computer searches to wade through huge piles of digital in­formation, hoping to get closer to a complete picture of what is issue-important in a computer’s data stores.

The good news: The TREC Legal Track team believes it is close to finding a protocol that can work. The bad: The project also found disturbing problems with the way lawyers work today.

And the harshest conclusion: Key­word searching—what most law­yers use to find litigation documents—misses the majority of relevant documents. Or as Jason Baron, one of the Legal Track study coordinators, puts it, “Lawyers need to understand that the way they have been searching for electronic documents has some serious flaws.”

So as they search for a solution, the Legal Track team has tossed a ton of online documents, the efforts of academics worldwide and commercial e-discovery advisers, the skills of senior litigators, a lawyer collecting frog sounds and the ghost of Ludwig Wittgenstein into the challenge.

DIGITAL DRAMA

Ever since bill gates turned into a whiny, twitch­ing mess on the stand as his own e-mails were read back to him during the 1998 Microsoft monopoly trial, lawyers have known that digital documents—especially e-mail—are a key to winning cases.

But without improvements in technology, those “gotcha” moments might be hard to come by. Facing the prospect of monumental e-discovery costs, some lawyers may settle important cases, further reducing the number of trials. And mishandling e-discovery demands has cost firms millions in court fines and lost claims. In fact, it was a landmark case that spurred the creation of TREC Legal Track.

It’s something of an accident of history that Baron is now an expert on information retrieval. He’s a law­yer by training with no special background in computer search technology. In addition to seven years as a Social Security litigator for class actions, he has been involved in high-profile cases for the federal government for dec­ades, in­cluding the legal challenge to the Communi­cations Decency Act, which restricted online pornography.

In the closing days of the Reagan administration, a fed­eral court granted a tem­porary order to retain backup tapes containing Iran-Contra records from the National Security Council. At that point, electronic records in litigation were pretty much unheard of. But as the Justice Department’s lead counsel on the case and its 7 million pages of e-mail, documents and calendars from the mid-1980s through 1989, Baron got his first glimpse at the inadequacies of search techniques.

Later, as director of litigation for the U.S. Na­­­tional Archives and Records Admini­stra­tion, Baron was assigned a request to review documents pertaining to tobacco litigation in U.S. v. Philip Morris. (The case itself is a data monster. The final opinion in PDF runs 1,683 pages, including a 30-page table of contents.)

No big deal. Searching for records is what an archivist does, he thought. But for this litigation, archivists were expected to search for paper documents going back 50 years, and also to search millions of e-mails dated as far back as the 1980s.

Even with 25 archivists and lawyers on task, it was impossible to review every page, document and e-mail. So Baron applied the same technology lawyers have been using to tackle document sets for a long time—simple keyword computer searches.

About 1 percent of the 20 million Clinton-era White House e-mails they combed through came up as potentially relevant through simple keyword searches. But even that tiny fraction brought Baron’s team near the break­ing point.

“It was obvious to me that the volume of information was overwhelming us in litigation, and the technology we have to deal with it was just not sufficient,” Baron says.

He figured someone somewhere in the federal government must have done some re­search on the topic of infor­mat­ion retrieval. In fact, he discovered that the U.S. De­partment of Commerce’s Na­tional Institute of Standards and Technology had been conducting a 15-year investigation on retrieval of text from large document collections.

When Baron approached the government scientists involved, they were thrilled to have a real-world problem to tackle as part of what had been a pure research project. TREC Legal Track, begun in 2006, is now co-sponsored by NIST and subagencies of the U.S. Office of the Director of National Intelligence.

Since then, Baron’s career hasn’t been the same. He now gives lectures and seminars on e-discovery, work­s on Legal Track and keeps his day job as a top gov­ernment lawyer. “Ever since I’ve been swept up in this battle with e-mail and electronic records, it’s only grown in importance and scandal,” he says. “It’s been a fascinating career, but nothing I anticipated, that’s for sure.”

THE LANGUAGE CHALLENGE

The basic problems of e-discovery relate directly to language itself. George Paul, a partner at Lewis and Roca in Phoenix, has written extensively on e-discovery, which helped make him a devotee of 20th century philosopher Wittgenstein, who also grappled with the limits of language.

“The big-picture issue is that we are up against a fundamental, philosophical problem,” says Paul. “This is not a computer problem. … Words don’t stand for behavior, but are elastic and change their meaning depending on their context.”

During his time off, Paul sometimes makes amateur field recordings of frogs, which he sends to Legal Track colleagues. It’s a hobby that reflects a deep interest in the fundamental questions of communication.

“I’m not sure what the recordings mean, but I think he may have discovered frog language,” says Ken Withers, director of judicial education and content with the Sedona Conference, a Phoenix-based, law-oriented think tank.

Whether or not croaking is communicating, the problems of human language can be even more engaging.

“Misses and false alarms are facts of life in any system because language use necessarily involves ambiguity,” says TREC Legal Track co-coordinator Doug Oard. “You can reduce errors, but you cannot eliminate them.”

The fundamental ambiguity of language is com­pound­ed by human error. Add in the fact that scanning documents with optical character recognition software intro­duces mistakes and garbled text, and that’s just if you’re talking about one language. You also have the problems of nontextual information like sound, video, images, spreadsheets and other database files.

HERE COMES THE JUDGE

But most lawyers and their clients aren’t interested in philosophical debates, frogspeak or the hassles of proofreading, and they don’t care what search technology reveals about language. They just want an e-discovery technology that will stand up in court. And, while keyword searching is deficient, it is defensible.

“It may be dumb and naive to use keywords, but you can’t defend any of these new, advanced search technologies to a judge,” says Bill Speros, a Cleveland-based e-discovery consultant. “If the judge asks you how you got a result, you can’t just say, ‘I don’t know; that’s just what the computer told me.’ ”

There is no mystery about how keyword searches work: You sit a lawyer or paralegal at a computer and you show the court the search terms you negotiated with your opponents and what those terms found. That looks to many a judge like a good-faith effort.

However, the strange thing about using computers to search massive computer databases is that, even though massive data stores are now the norm, there has been almost no research on the topic. And that leaves the door open for unsubstantiated claims.

“Right now anyone can say anything about search tech­­­nology,” says John Jessen, founder and chairman of Daticon Electronic Evidence Discovery, which is based in Kirkland, Wash. “You can say your search is 8 percent more accurate than the next guy’s, but there’s no common benchmark about what those claims mean. Right now it’s a marketing world; whatever marketers say goes.”

The most commonly cited research on information re­trieval is a 1985 article, “An Evaluation of Re­trieval Ef­fectiveness for a Full-Text Document Retrieval System,” by David C. Blair and M.E. Maron. Published in Commu­­nications of the Association for Computing Machinery, it is also about the only major research project on the problem.

Blair and Maron asked lawyers and paralegals to use keyword searches to find documents on a given topic among 40,000 documents comprising 350,000 pages. Legal researchers estimated they would find 75 percent of relevant documents, but the research showed only 20 percent had been found. In turn, Legal Track tested search technology from more than 20 different institutions and e-discovery vendors, finding that no single technology provided any better results than the standard Boolean keyword searches commonly used.

Baron says those last-century results are stunningly similar to results from the first two years of the TREC Legal Track more than two decades later. Legal Track showed Boolean keyword searches using commands such as and, or and within so many words across a range of different hypothetical topics found only between 22 and 57 percent of all relevant documents cumulatively retrieved through a variety of alternative search methods. But the Boolean search was no better or worse than other more sophisticated search methods tested, and it still represents the current standard.

Keyword searches done thoughtfully can return a viable amount of documents. E-discovery consultant Speros recalled an insurance case in which lawyers needed documents pertaining to young people. Rather than just search for that term and some synonyms, he used words like mother, father, dad and words for activities correlated with children like baseball and football.

“If I can do it in a thoughtful way,” he says, “I can get better results than some fancy new search technology.”

Notes Phoenix litigator Paul, “The top people in the world have been working on this problem; they’ve had years and years and years and thousands of times more computing power since the days of Blair and Maron, and yet there’s been no material advance. How come we have 10,000 times more computing power than we did years ago and see no more advance?”

Still, something very important did come out of those earlier tests: While almost every test found roughly 20 percent of potentially relevant documents, each different type of search basically found different documents. When testers threw different combinations of search technologies at the database, they were able to find roughly 78 percent of the total number of relevant docu­ments.

Baron believes these paradoxical and confounding findings can be reconciled if “lawyers come to realize that to improve the results of searching, one needs to use a variety of available search methods and tools. No one off-the-shelf method will solve all of your e-discovery issues.”

MIX AND MATCH

Baron and the legal track team are trying to create a credible process and protocol to improve digital searches. It won’t exactly be the perfect search; no one expects that. The researchers are using all the computing power and search techniques they can muster to try to crack the problem.

Here’s where the tobacco litigation archive comes in. Legal Track is using the nearly 7 million publicly available documents from the master settlement agreement database, a collection of tobacco documents produced in relation to several state lawsuits against the industry. That database was chosen because it contains a wide spectrum of types of documents.

At that target cache, TREC Legal Track is aiming 13 hypothetical legal complaints (PDF). Written like normal legal documents, they contain all the information included in real-world complaints for fictional tobacco-related lawsuits, such as campaign finance violations, class actions, antitrust investigations, securities litigation, patent infringement and wrongful death suits. The most important part is the search terms these hypotheticals lay out.

Baron says the Legal Track team has had fun dreaming up hypotheticals on subjects ranging from the mu­sic of Bob Dylan and Joan Baez to research on pigeon deaths. “Basically, anything you can think of has been contained in some subset of documents that were gathered together for purposes of the prior tobacco litigation, and we have taken full advantage,” he says.

For example, the request for documents pertaining to folk singers is part of a hypothetical complaint targeting a fictional tobacco company for securities fraud. The company’s fictional marketing campaign features counterculture music and film icons of the 1960s, so the complaint requests a search for all documents making a connection between the music of Peter, Paul, and Mary; Baez; or Dylan and the sale of cigarettes. It even asks for documents discussing the use of psychedelic colors and documents referencing Bonnie and Clyde, James Bond movies or the films of Stanley Kubrick.

Baron says it’s too early to know how these different topics will work out, but he expects graduate students will be poring over the results and writing Ph.D. theses to produce all kinds of further scholarship. The tests will use a number of leading search strategies to see which combination of search strategies gets the best results.

The participating teams of information scientists from around the world are mostly from academic institutions, with computer scientists like Paul Thompson from Dartmouth and Stephen Tomlinson from e-discovery vendor Open Text helping to design and run tests.

E-discovery vendors have been reluctant to help with Legal Track. Last year a half-dozen companies were involved, and some larger ones have offered advice, but only this year did two companies offer full participation.

“What we’ve tried to represent is that this is not going to be some sort of U.S. News & World Report ranking,” says Bruce Hedin, who is with San Francisco-based e-discovery company H5. “Some firms may stay on the sidelines because they’re reluctant to have their search technology measured, but I think they’ll see that we can offer standards and protocol that can actually validate their approach once they subscribe to what we’re doing.”

In Hedin’s critique of the project’s first two years, he said the results were interesting, but the research protocol used didn’t fully reflect the challenges lawyers face in the real world. He argued that a senior litigator usually makes the ultimate decision about relevance as a check on decisions made by a large number of researchers.

Hedin soon found himself enlisted in creating a new task for the project, and the group is trying a new approach called the interactive track, in which those who participate will be expected to concentrate their resources on finding relevant documents modeled on how a senior litigator in a real e-discovery setting operates.

While Hedin’s company is not officially involved, he has volunteered to help coordinate the effort. For year three, Legal Track has enlisted an estimated 110 volunteers and three topic authorities, expert attorneys who have experience similar to that of a senior litigator.

Experienced legal minds are hard to get on a volunteer basis. “As you’d expect, a lot of these people are busy with their day jobs,” Hedin says. “And it’s not like having people on staff where you can call a meeting anytime you need to.”

So far the TREC Legal Track research has identified a couple of practices that improve on the baseline keyword search. To start, lawyers need to work with opposing counsel to identify good search terms and to negoti­ate proposed Boolean search strings.

And it is important to use sampling—testing to see whether the search engines are finding documents known to be relevant. That means deploying what e-discovery experts call iterative feedback loops. These involve a team of lawyers and other in-house experts conducting searches in stages, and conferring with counsel and experts from the opposing party to de­termine whether the process is working.

Experts say that when litigators set up a search, they should identify the data types and then prove that the search tool they’re using works with those data types.

“Judges don’t want to get into a fight about tools, but want to hear a reasonable plan,” says Jessen, the e-discovery firm founder who is a volunteer in Legal Track. “This is not about perfection, but did you set up, enable and audit a process in good faith?”

Legal Track has an example of an imaginary negotiation (PDF) in which lawyers offer counterproposals over whether search strings using the terms asthma, bronch, respire, breath, trach, child, young and juve are better than strings using severe asthma or asthma attack and child.

Unfortunately, only a small minority of lawyers actually sit down with opposing counsel to negotiate document search strings. The iterative process employed in Legal Track is an aspirational model for the profession, which still largely treats discovery as adversarial.

The interactive task used experienced lawyers to review search results in a feedback loop, as happens in actual litigation. In some limited circumstances, advanced search technologies could beat Boolean in a head-to-head comparison. Previously, TREC researchers were able to find more documents than Boolean only by employing multiple search technologies together.

Oard says it’s not clear yet why this is happening, but the results are an improvement. “A lawyer can go to a judge and tell him with a straight face that, if well-implemented, our system is a reasonable alternative to Boolean.”

Baron expects to get more commercial participants and academic teams in the next year of TREC Legal Track, when the tests will target the online collection of documents from the Enron litigation. It is newer than the tobacco litigation database, which was made up primarily of scanned records, and should produce even more useful results.

BOOSTER SHOTS

Legal track has gotten a big boost from two sources. the first is the Sedona Conference, which has been the major forum for lawyers to hash out e-discovery issues. The conference, which backed Baron and Oard’s original TREC research in 2006, was highly influential in the creation of recent amendments to the Federal Rules of Civil Procedure for e-discovery.

The second comes from federal judges. They have become keenly aware of the deficiencies in search technology and are increasingly impatient with lawyers who complain about the limitations without offering solutions.

“For lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread,” wrote Magistrate Judge John Facciola of the U.S. District Court in Washington, D.C., in U.S. v. O’Keefe.

In Victory Stanley Inc. v. Creative Pipe (PDF), Judge Paul Grimm at the U.S. Dis­trict Court in Maryland wrote that experts are likely to be necessary in complex e-discovery cases, which immediately drives up cost and complexity. However, he also cited the Sedona Conference’s “Best Practices Commen­tary on the Use of Search and Information Retrieval Methods in E-Discov­ery” (PDF) and its eight practice pointers on successful keyword searching.

But federal rulings, even with amended federal procedure rules, can’t do the whole job. “The Federal Rules of Civil Procedure carried with them an unspoken optimism that technology will get cheaper and better, and offset the huge costs and complexity involved in e-discovery,” says Paul. “I think now there’s a growing sense of ‘Uh-­oh, where are the efficiencies we thought we’d see?’ ”

Lawyers tend to leave search technology to consultants or technologists, but as judges become increasingly aware of the deficiencies of search, lawyers will need to know what their tech guys are up to.

As for the lawyers currently conducting e-discovery, they are finding themselves in an untenable position. “If we use some fancy search technology that we can’t explain, we’re put in harm’s way in front of the judge,” says Speros. “And if we use dumb and naive keyword searches, we’re in harm’s way. For lawyers like me, we just want to know one simple thing: What will work for me and my client?”

TREC researchers warn that their work has not yet found that ultimate search method, but they have created a viable test environment. The TREC Legal Track is to the point where it may soon offer lawyers a common language and defined processes for search that can account for the inherent deficiencies of the technology.

“What I hope to get out of this is some common language about search,” Jessen says, with a caveat. “Of course, if judges don’t buy into what we’re doing, this is not going anywhere.”

Source: Abajournal

The Supreme Court dealt a blow to Philip Morris yesterday, ending the cigarette maker’s challenge of an award now worth more than $150 million to the widow of a longtime smoker.

The court’s decision not to intervene, announced in a one-sentence order months after the justices heard oral arguments in the dispute, was a surprising and anticlimactic ending to a case that has bounded back and forth through the judicial system for nearly a decade.

An Oregon jury in 1999 agreed with Mayola Williams that Philip Morris, through its marketing, was guilty of misleading her husband, Jesse, into believing that cigarettes were not harmful or addictive, and awarded nearly $80 million in punitive damages. The sum, to be split between the Williams family and the state under Oregon law, has nearly doubled because of interest charged to Philip Morris as it challenged the decision, and it is the largest award of its kind.

Even though the justices have strongly implied that the award was too large and twice sent the case back west for further deliberation, the Oregon Supreme Court found reasons to leave it as it was. After the Oregon justices declined to change their decision a second time, citing state law, lawyers for Philip Morris petitioned the high court to “vindicate” its authority.

Instead, the justices said in the unsigned opinion that they should not have accepted the case for a third time, and in the language of the court, dismissed it as “improvidently granted.”

The justices did not explain why, but the length of time between the argument and yesterday’s announcement indicates they had given it a shot, but in the end had trouble finding a majority that could agree on how to handle the legal issues raised. The non-decision leaves unsettled the court’s jurisprudence on punitive damages.

The question of whether jury awards for punitive damages, which are meant to discourage companies from reprehensible behavior, become so large at some point that they violate the Constitution has been a battle between big business and trial lawyers for years. It has split the Supreme Court in a way that is different from its usual ideological divide.

When it last considered the case, the court in a 5 to 4 ruling strongly suggested that the award to the Williams family was too high, and said state courts should make sure that juries awarding punitive damages base their decisions on harm caused to the plaintiff, not to others outside the lawsuit.

Murray Garnick, a lawyer for Philip Morris USA’s parent company, Altria Group, looked for a silver lining in yesterday’s decision by noting that the justices did not disturb that ruling.

But Robert S. Peck of the Center for Constitutional Litigation, who represented Williams, said that in dismissing the case, the court had done what his side had argued and now had passed up three opportunities to rule that the award was too large. That sent a message to tobacco companies and others, he said.

“Reprehensibility is still the most important factor” in judging the appropriateness of a punitive damages award, Peck said, and the Oregon court “expressed true outrage at Philip Morris’s behavior.”

Under Oregon law, the award is to be split, with 40 percent going to Williams and 60 percent to the state. Altria lawyer Garnick said the company will fight paying the money to Oregon, because an agreement between the states and tobacco companies bars the state from collecting punitive damages.

Source: Washingtonpost

A Pinellas County jury today ruled in favor of Philip Morris USA in one of the first tobacco lawsuits following a 2006 Florida Supreme Court decision that decertified a class action but allowed former class members to file individual lawsuits.
“The jury reached the correct result and determined that the plaintiff failed to meet the criteria established by this particular court to prevail at trial,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of Philip Morris USA.

Garnick said that this case was the third case tried to verdict since the Florida Supreme Court’s decision which allowed former Engle class members to proceed by relying on findings by the former Engle jury. Approximately 4,000 claims, or roughly half of those filed in the wake of the Florida Supreme Court’s decision in the Engle case, are pending in federal court and have been put on hold pending a federal appeals court review of the constitutional issues that arise from allowing the plaintiff to rely on prior Engle jury findings.

“The jury’s verdict in this case shows that Philip Morris USA still has powerful defenses in these cases even when the trial court misinterprets the Florida Supreme Court’s holding in Engle and allows the plaintiff to improperly rely on a prior jury’s findings that have no connection with the plaintiff,” added Garnick. “Philip Morris USA will vigorously defend each individual Engle progeny case that goes to trial. We continue to believe each plaintiff must prove the essential elements of their claims and that we continue to have very strong defenses to these type of cases,” said Garnick.