Philip Morris Sues - Counterfeit Marlboros

Philip Morris USA will sue over counterfeit cigarettes. The nation's largest tobacco company accuses 10 New York and New Jersey retailers of selling counterfeit Marlboro cigarettes in the federal lawsuit that was filed late last week. They have now filed lawsuits against a total of 27 stores this year in the two states in an effort to defend their brand.ABC News reports, "Philip Morris is asking the court to ban the retailers — small grocery stores and delis — from purchasing, distributing or selling counterfeit Marlboro cigarettes. It also is asking for companies to turn over their profits from the illegal cigarettes, along with punitive damages and attorney's fees."
In a move certain to raise the ire and interest of cash starved governments, Philip Morris "alleges that in addition to selling products with bogus branding, the state and federal taxes were not properly paid on the cigarettes," a report from NJ Biz adds.
The company added that both New York and New Jersey are areas rife for counterfeit tobacco products due to the high taxes levied against each product. An Associated Press story notes, "in New York City, a pack of Marlboro cigarettes can cost more than $10."

Third of minors buying cigarettes from shops and pubs

The Office of Tobacco Control has said there is a long way to go to ensure cigarettes are not getting into the hands of minors.
It's latest research shows around a third of minors are still buying cigarettes in shops and from vending machines in pubs.
A third of pubs and almost a third of shopkeepers are allowing cigarettes to be sold to minors, according to the latest survey from the Office of Tobacco Control.
It also shows the ban on point-of-sale advertising, introduced in July, is working well.
The survey also showed that in almost all cases where ID was asked for cigarettes were not sold.

Smuggled cigarettes bound for NI

A man is being questioned after millions of smuggled cigarettes were seized in the Irish Republic.
Irish customs officials seized between five and six million cigarettes on the M1 near Dundalk, County Louth. It is believed they were destined for NI.
They were hidden in a container which arrived in Dublin Port from Barcelona. The seizure was made on Monday morning.
The Irish authorities said 1.6m euros would have been lost through the sale of the untaxed cigarettes.

Tobacco is the leading cause of death

I'd like to remind your readers that Thursday, Nov. 19 marks the American Cancer Society's Great American Smokeout a day that encourages smokers to quit and non-smokers not to start. Tobacco remains the leading cause of death nationwide, and accounts for one out of every three cancer deaths in California every year.
And to the ex-smokers in our community; congratulations on your success in living a tobacco-free life! You have greatly reduced your risk of diseases such as cancer, heart disease and lung disease not to mention reducing your community's exposure to the hazards of second-hand smoke.
If you know someone who smokes and is interested in quitting, Great American Smokeout is the perfect time to remind them that the American Cancer Society has developed resources such as cancer.org/smokeout and the toll-free number, 1-800-227-2345. Both are accessible 24/7 to help smokers manage a plan to quit. And if you're interested in ensuring that your community is smoke-free, get involved in American Cancer Society Cancer Action Network (ACS CAN) at acscan.org. In addition, the St. Helena Center for Health offers a residential Smoke-Free Life Program in a supportive, smoke-free environment.

Under-aged decoy buys cigarettes

During an undercover compliance check, three businesses sold cigarettes to under-aged shoppers on Friday, Oct. 30, according to Det. Lt. Scott Fischer of the village of Holly Police Department. This was Phase II of the police department’s 2009 Youth Sentinel Program.
Phase II was completed when undercover officers conducted compliance checks of 11 local businesses who sell tobacco products. A 17-year-old decoy was sent into the businesses and attempted to purchase a pack of cigarettes. Eight of the businesses examined the decoy’s identification and refused the sale.
Fischer said three businesses sold the decoy cigarettes and those clerks were issued a state law citation. The citations are a misdemeanor punishable by up to 93 days in jail and a fine of up to $500.
In June, Phase I was completed when a 19-year-old decoy was sent into liquor license holding establishments and attempted to purchase alcoholic beverages. Two of the businesses sold alcohol to the decoy. The employees responsible were issued citations and the businesses were petitioned to the Michigan Liquor Control ommission.
This year’s Youth Sentinel program began in April, when officers visited all liquor license holding establishments and businesses that sell tobacco products within the village of Holly, educating them in the importance of not selling those products to minors.
Fischer said those businesses were told during the visits that police officers would be conducting undercover compliance checks utilizing under-aged decoys in the immediate future.

Addie fancies puffing on cigars after concerts

Some people choose going to see a movie or shopping at the mall as stress-relief therapy. Composer-slash-conductor Addie M.S. opts for something a little different: smoking cigars.
When his days get too tiring, lighting up a cigar does the trick in perking him up a bit.
“I indulge myself in smoking cigars after finishing a concert,” says the 15-year stogie veteran.
“It’s like a carrot dangling in front of my head to remind me that after the hard work, I’ll get to do what I want.”
At first, clove cigarettes were his weapon of choice. But after countless burn holes in his shirts, Addie chose another option.
“I had a friend laugh at me when he saw holes in my conductor’s costume, and then he offered me a cigar,” says the 50-year-old.
“At first it tasted weird. But then I got carried away with the different sensation cigars bring.”

Beckman hopes reform fees go up in smoke

Have healthcare companies sunk as far as controversial tobacco companies in the public eye? One medical equipment maker thinks so.
Makers of medical tests, implants and other devices face anywhere from $2 billion-a-year in industry-wide taxes in the House of Representatives’ health reform bill passed on Saturday to $4 billion-a-year under a Senate version.
The Senate measure’s tax is not deductible and would be applied much like the tobacco settlement from cigarette makers years ago, said Beckman Coulter CEO Scott Garrett.
“That hurts, that stings to be treated like the tobacco industry,” he told the Reuters Health Summit in New York.
It could hurt customers — hospitals, patients and others — too. Companies have said they would have pass along any higher costs from the tax directly onto users.
Garrett, whose company makes clinical diagnostic tests as well as other research instruments, said he was “rooting for the House version,” which is tax deductible and phases in the charges starting in 2013.

Ice cream man in cigarette scam

A man from Cumbria has admitted selling counterfeit cigarettes to a child from his ice cream van.
Anthony Wharton, 61, of Marsden Street, Barrow was caught by trading standards officers who found him selling cigarettes to a 16-year-old.
He pleaded guilty at Furness and District Magistrates Court to three charges of selling counterfeit cigarettes. He also admitted one count of selling cigarettes to a minor.
Wharton admitted he would often sell cigarettes to children whom he thought looked old enough, but he failed to ask for proof of age.
After a raid at his home on 14 October 1,360 counterfeit cigarettes were found.
Wharton must pay court costs of £350 and surrender all counterfeit cigarettes. He was also ordered to complete 60 hours unpaid community work.

Seneca educates lawmakers on treaty rights, tobacco economy

NEW YORK – State lawmakers at a public hearing heard claims of “lost” tax revenues ranging from tens of millions to billions of dollars from untaxed cigarette sales on Indian reservations.
While none of the witnesses backed up their claims with substantive evidence, the Seneca Nation of Indians presented officials with a three-inch thick document on its treaty rights, legal history, and an economic study by a Harvard economist that pinpointed how – and how much – the nation’s tobacco-based economy benefits the state.
The hearing, which was chaired by Sen. Craig Johnson, D-N.Y., was an all day – and sometimes heated – event at Manhattan Community College Oct. 27. The aim was to investigate why the state has failed in its attempts to collect cigarette taxes from reservation cigarette sales to non-Natives.
J.C. Seneca, a Seneca Nation tribal councilor, testifying on behalf of the nation, addressed that question at the beginning of his testimony.
“The answer to that question, put simply, is that your government has no authority to do so, that the United States government has promised the Seneca Nation that your taxes would not apply to our territory, and, perhaps most importantly, you cannot force the Nation and the Seneca people to be the state’s tax collectors,” Seneca said.
The hearing was the latest battle in a cigarette tax war that has ebbed and flowed through two decades, characterized by lawsuits and a “forbearance policy” in which the state claims entitlement to collect taxes from cigarettes sold to non-Indians on Indian land, but declines to do so.
The hearing comes on the heels of a letter Gov. David Paterson wrote to federal prosecutors, asking for a “threat assessment” on the potential for violence if the state tries again to collect the taxes.
More than 100 citizens from Seneca and other Indian nations across the state attended, responding freely to the witnesses’ testimony with cheers, applause or rebukes.
Seneca and Robert Porter, the nation’s general counsel, said the plain language meaning of the nation’s 1842 Treaty of Buffalo – which says, in part, that the U.S. “will protect such lands of the Seneca Indians, within the State of New York, as may from time to time remain in their possession from all taxes, and assessments for roads, highways, or any other purpose.”
Johnson suggested the treaty language could mean the state is only prohibited from assessing real estate taxes. He asked why the nation has never taken the issue to court.
“It seems to me that would put an end once and for all to the question of whether or not New York state can collect sales tax on cigarette sales to non-Native Americans,” he said.
“We wouldn’t trust the court to rule in our favor,” Seneca said, adding that the nation determines the meaning of its treaties, not the courts.
Porter noted that the nation’s gaming compact does not concede jurisdiction to courts, but instead stipulates an arbitration process in the case of unresolved conflicts.
The notion that the nation would trust the state’s courts to resolve a dispute is just as unlikely as the state trusting the nation’s courts to resolve a dispute, Porter said.
“We’re dealing here with international law; we’re dealing with a treaty to which you are not even a party. You are simply obligated under your law to adhere to those treaties. We need to go to the United Nations to achieve the proper degree of involvement in our internal disputes. If that is the direction you’re going in, we’ll gladly invoke that as well as we have with the president of the United States.”
Sen. Martin Golden tried to persuade Seneca that it would only be “fair” to share the nation’s “taxes” with New York tax payers.
“If you agree that most of this (the sale of untaxed cigarettes) is going on across the borders you should have no problem in allowing state regulators to be part of the Seneca Nation and other nations to monitor (your sales). … We want fairness, you want fairness. Let’s get together so those dollars that are part of Indian nations are equally shared with the tax payers, especially when it comes to those non-tribal members that are purchasing 49 cartons of cigarettes,” Golden said.
Seneca replied that a taxation agreement has already been made – the Treaty of 1842.
Golden insisted that the state needs to “collect those taxes “before it falls into greater debt” – a theme reiterated by several senators.
Sen. George Maziarz said he wants to “dissociate” himself from Golden and comments by other lawmakers who said Indians take social services from the state, but give nothing back.
“I’m probably the only one who has grown up and lived and currently lives next to a Native American community. We all went to public schools, they went to the Indian school and they were not equal, I can tell you. The roads on the rez were always the last to be paved. Health care was almost nonexistent.”
Sen. Michael Nozzolio raised the issue of Paterson’s “threat assessment” letter and told Seneca he hoped the nation “would not condone violence.”
“Indian people struggle every day to fight for what we have and we’re going to continue to fight. When violence happened in the past, it was precipitated by the state. Seneca people weren’t armed. We didn’t have guns. We didn’t have clubs. We didn’t invade anybody’s territory,” Seneca said.
Sen. Eric Adams stood up for the nation’s right to defend itself.
There was no consensus on the estimated “lost taxes.”
William Comiskey, the tax and finance department’s deputy commissioner, said losses could be as much as $225 million annually, “assuming full compliance.”
But full compliance can’t be assumed because it’s impossible to calculate the number of untaxed cigarettes distributed through non-state licensed sources, he said.
Stephen Rosenthal described himself as “the largest distributor of tobacco and cigarettes in New York” until untaxed cigarette sales drove him out of business. He claimed with no evidence that the state’s loss is $1.6 billion.
Seneca pointed out that the nation is one of the largest employers in western New York, providing jobs with benefits for more than 6,300 mostly non-Native people.
Harvard economist Jonathan Taylor’s study detailed how every $1 of gross profits accrued to the nation’s tobacco businesses provides the state economy with $1.67. In 2007 alone, the nation’s combined tobacco and gas businesses generated an estimated $313 million and spun off nearly $200 million into the economy. The nation’s economic activities have contributed more than $1.1 billion to the statewide economy over the last decade, he said.
So even if the nation is not subject to taxation, the ripple effect of its economy benefits the state, Seneca said.
The committee will review all the testimonies and additional material that may be submitted and issue a report by the end of the year or early next year.

Tobacco Co. Wins New Trial on $5M Punitives

(CN) - A tobacco company stands to further reduce a $5 million punitive damage award to the family of a man who smoked from age 13 until he died of lung cancer at 57. A New York appellate division ordered a new trial on damages, saying the jury had been given faulty instructions.
Brown & Williamson Tobacco Co. conceded that Harry Frankson smoked a pack of its Lucky Strikes cigarettes each day for 40 years.
The jury ruled that Brown fraudulently concealed the health risks of smoking and awarded $20 million in punitive damages. The trial judge reduced that total to $5 million.
On appeal, the 2nd Appellate Division in Brooklyn said the jury wasn't properly instructed that it could not punish Brown for damages to any smokers other than Frankson, as the plaintiff's attorney mentioned "tens of thousands of deaths" in his summation.
"Absent a proper limiting instruction," Justice Eng wrote, "the jury could have mistakenly understood the plaintiff's argument that the defendants' conduct resulted in the deaths of tens of thousands of people to justify taking those people's deaths into account in calculating the amount of damages warranted to punish the defendants' reprehensible conduct."
Eng remanded the case for a new trial on the issue of punitive damages.