February 27, 2002

US District Court dismisses three contraband lawsuits against tobacco companies

A Miami federal judge has dismissed with prejudice lawsuits brought by Ecuador, Belize and Honduras that sought to hold various Philip Morris entities and other US tobacco companies liable for tax revenues allegedly lost by the governments as a result of the smuggling of cigarettes.

"We are pleased that the Court dismissed these lawsuits in accordance with longstanding principles followed in this country and throughout the world," said William S Ohlemeyer, Philip Morris Vice President and Associate General Counsel.

US District Judge Federico Moreno, basing his ruling on a well-established legal doctrine known as the Revenue Rule, said, "though the complaint is pled under federal and state law causes, the substance of the claim is to enforce Ecuadorian tax laws. This is precisely the type of meddling in foreign affairs the Revenue Rule prohibits."

Moreno said, "This age-old common law doctrine provides that courts of one sovereign will not enforce un-adjudicated tax claims of other sovereigns. The issue here is whether this rule precludes this Court from adjudicating Ecuador's (and the other plaintiffs') civil RICO and common law claims. It does."

Judge Moreno's decision is the third time a US federal district court has rejected lawsuits brought against the companies. Earlier this month, a Brooklyn federal judge dismissed two suits, one by the European Community and 10 of its member states and the second by 24 Colombian departments and the Capitol District of Bogota. And, last fall, the US Court of Appeals for the Second Circuit, which sits in New York, upheld the dismissal of a virtually identical lawsuit brought by the Attorney General of Canada against RJ Reynolds and related tobacco companies.

In his ruling, Moreno said, "by applying the Revenue Rule, this Court maintains the integrity of that Constitutional doctrine (regarding separation of powers) and allows the political branches to set the parameters of the United States' dealings with Ecuador".

Ohlemeyer said, "this ruling does not diminish Philip Morris' interest in continuing to assist governments worldwide in the fight against all forms of illegal trade in cigarettes.

"We have said from the outset of this and similar suits brought by a number of European states and Colombian Departments that we would like to work with governments to address the problem of contraband and counterfeit cigarettes through cooperation rather than litigation.

"We remain willing and ready to discuss the concrete steps that we have taken - and additional ones that can be taken with the collaboration of serious governments - to reduce, and hopefully eliminate, the problem," Ohlemeyer added.

About philip morris international inc.

PMI is the world’s leading international tobacco company, with six ot the world’s top 15 international brands and products sold in more than 180 markets. In addition to the manufacture and sale of cigarettes, including Marlboro, the number one global cigarette brand, and other tobacco products, PMI is engaged in the developement and commercialization of Reduced-Risk Products (RRPs). RRPs is the term PMI uses to refer to products with the potential to reduce individual risk and population harm in comparison to smoking cigarettes. Through multidisciplinary capabalities in product development, state-of-the-art facilities, and indusrty-leading scientific substantiation, PMI aims to provide an RRP portfolio that meets a broad spectrum of adult smoker preferences and rigorous regulatory requirements.

For more information

See pmi.com and pmiscience.com

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