Category: Litigation

Claim: Tobacco Profiting from Child Labor

Tobacco companies say they go to great lengths to keep their supply chains free of child labor.
(Photo: Timothy Donahue)
British American Tobacco (BAT) and Imperial Brands profited from child labor on tobacco farms in Malawi, according to a legal claim initiated after an investigation by The Guardian.
The claim alleges “widespread use of unlawful child labor, unlawful forced labor and the systematic exposure of vulnerable and impoverished adults and children to extremely hazardous working conditions with minimal protection against industrial accidents, injuries and diseases.”
The Guardian’s 2018 investigation reported that tobacco farmers were exposed to nicotine poisoning, toxic pesticides and harsh weather conditions during labor-intensive shifts in areas where up to 63 percent of children were engaged in child labor.
Due to that investigation, several countries, including the U.S., suspended leaf imports from Malawi over the child labor allegations. U.S. Customs and Border Protection later cleared imports from Malawi by Limbe Leaf Tobacco Co. and Alliance One International after investigations determined that the tobacco imported by those companies was not harvested and produced with child labor.
(Tobacco Reporter recently featured Alliance One’s actions to keep its supply chain free of child labor and forced labor in a feature article, titled, “Up to the Task.”)
BAT and Imperial Brand declined to comment on the specifics of the case.
“BAT takes human rights very seriously and expects all employees and suppliers to respect and uphold them. It would not be appropriate for us to comment on the specifics of this situation, given the possibility of future litigation,” a BAT spokesperson said. “We take the issue of child labor extremely seriously and strongly agree that children must never be exploited, exposed to danger or denied an education.”
“We take the issue of child and forced labor very seriously and do not condone exploitative practices in our supply chains, as made clear in our code of conduct, which is published on our corporate website,” an Imperial Brands spokesperson said.
“We actively seek to prevent exploitation through multi-stakeholder initiatives, including an industry-wide sustainable tobacco program, which is aligned to the U.N. guiding principles. We will defend any claim vigorously, and it would be inappropriate to comment further.”
Leigh Day, the law firm that filed the legal claim, said that more details of the claim will be filed in January 2021 with the monetary value to be set later.
December 18, 2020
South Africa Tobacco Ban Unconstitutional

Photo: David Carillet – Dreamstime.com
South Africa’s ban on tobacco sales during the country’s hard lockdown earlier this year was unconstitutional, the country’s High Court ruled Dec. 11.
From March to August, the government prohibited sales of tobacco products and alcohol to help stem the spread of the coronavirus. Market leader British American Tobacco South Africa (BATSA) and smaller companies united in the Fair-trade Independent Tobacco Association (FITA) challenged the ban, arguing that a short-term ban on a product whose health risks become evident only in the long run makes no sense.
They also questioned the rationale of the argument around cigarette sharing. Tobacco shortages and high prices of black-market cigarettes would only increase the likelihood of smokers sharing their “stompies,” the tobacco companies said.
The government lifted the ban before the matter had been heard in court, but BATSA decided to proceed with the court action to prevent the ban from being reintroduced at a later stage of the pandemic.
In its ruling Friday, the Western Cape High Court judges who presided over the case said Regulation 45, which Minister Nkosazana Dlamini-Zuma relied upon for the ban, “cannot and does not withstand constitutional scrutiny.”
In court, the government had argued that the ban was aimed at reducing the occupation of intensive care unit beds by smokers. If people didn’t smoke, they would likely not get Covid-19 in a more severe form, it argued. But BATSA maintained the government had not justified the ban in law or science.
Tobacco companies expressed satisfaction with Friday’s ruling.
“British American Tobacco South Africa has been vindicated in its view that the disastrous ban on tobacco sales was unjustified and unconstitutional after the Western Cape High Court ruled in its favor,” the company wrote in a press release.
“The five-month ban on tobacco and vapor products sales was ill-considered, unlawful and has worsened the illicit trade in cigarettes and vapor products in the country.”
“We note and welcome the judgment of the full bench of the Western Cape High Court, wrote FITA in a statement.
“The court further found Regulation 45 to be neither necessary nor that it furthered the objectives set out in section 27(2) of the Disaster Management Act. This, of course, was one of the arguments advanced by FITA in its challenging of the ban on the sale of cigarettes and tobacco-related products, which the full bench of the North Gauteng High Court erred in finding same to be necessary.”
In the wake of the court ruling, BATSA also renewed its call for South Africa to urgently ratify the World Health Organization Illicit Trade Protocol to eradicate the illegal sale of cigarettes. The company stated that ratifying the protocol is “the only way for the country to claw back tax losses resulting from the explosion in illicit trade that occurred during the ban on tobacco and vapor products.”
In July, BATSA estimated that the ban on legal cigarette sales had cost South Africa ZAR4 billion ($241.7 million) in lost excise tax revenues and 30,000 lost industry jobs.
December 14, 2020
Regulation of E-cigs as Tobacco Upheld

Photo: jessica45 | Pixabay
A U.S. federal appeals court has upheld the Food and Drug Administration’s (FDA) decision to regulate e-cigarettes as tobacco products, reports Westlaw Today.
Several vape shops and e-liquid manufacturers, represented by the Pacific Legal Foundation, a conservative legal group, had challenged the FDA’s decision claiming it violated the Constitution (Moose Jooce et al v. FDA).
They argued that the FDA’s then-associate commissioner for policy, Leslie Kux, who issued the 2016 rule deeming e-cigarettes to be tobacco products, lacked the authority to do so because she was a career employee, not a principal officer appointed by the president.
The FDA countered that the authority had been delegated to Kux by the agency’s commissioner. Furthermore, it said, her authority did not matter because the rule was ultimately ratified by two different FDA commissioners, most recently FDA Commissioner Scott Gottlieb in April 2019.
A unanimous panel of the D.C. Circuit U.S. Court of Appeals ruled that the regulation did not run afoul of the Constitution’s Appointments Clause.
Jonathan Wood of the Pacific Legal Foundation said he and his clients were disappointed by the ruling and considering next steps.
December 3, 2020
New Infringement Suit Against IQOS

Photo: Tobacco Reporter archive
Healthier Choices Management Corp. (HCMC) has filed a patent infringement lawsuit against Philip Morris USA and Philip Morris Products over the IQOS tobacco heating product.
Among other products, HCMC markets vapor products, including the Q-Cup, a small quartz cup that heats cannabis or CBD concentrate.
“We look forward to proving our allegations of infringement in this matter and intend to continue to move forward against any and all companies that infringe upon our intellectual property in both the tobacco and cannabis categories,” said Jeff Holman, CEO of HCMC, in a statement.
IQOS is already the subject of two other patent infringement proceedings filed by R.J. Reynolds Tobacco Co (RJ). One is proceeding before the International Trade Commission and seeks to stop the importation of IQOS into the United States; the other is a patent infringement action currently pending in the Eastern District of Virginia. R.J. Reynolds’ patents are unrelated to and unaffiliated with the patents asserted in the HCMC case.
Philip Morris USA parent Altria Group rejects RJR’s claims and has countersued the company, alleging that RJR’s own electronic nicotine delivery systems products infringe multiple patents owned by Philip Morris International (PMI) and Altria Group.
In April, British American Tobacco (BAT) sued PMI in the United States and Germany for patent infringement. BAT’s claim focuses on IQOS’ heating blade technology, which the company says is an earlier version of the technology used in BAT’s Glo tobacco heating devices.
December 2, 2020
Discounters Contest Minimum Price

Photo: Tobacco Reporter archive
Liggett Group, Vector Tobacco and Xcaliber International, together with a Colorado citizen and cigarette smoker, have filed a motion for a preliminary injunction against the State of Colorado in a United States Federal Court. The motion seeks to enjoin Colorado from enforcing the recently enacted Colorado minimum cigarette price requirement, which would raise retail cigarette prices for Colorado consumers to premium brand levels.
The motion alleges that the requirement was inserted into a cigarette tax increase bill solely to secure support for the bill from Philip Morris, the largest U.S. seller of premium cigarettes. The motion also alleges that the minimum price requirement violates the Commerce Clause of the U.S. Constitution by favoring Colorado retailers’ in-state economic interests over the interests of out-of-state discount manufacturers.
Further, the complaint alleges that the minimum price requirement was not properly disclosed to Colorado voters who approved the bill on Election Day. “Voters believed that the tax increases would benefit education and other public purposes, when in fact all of the benefit of the minimum price provision will go to retailers, Philip Morris and other premium cigarette manufacturers, and none to the State of Colorado,” the plaintiffs wrote in a statement.
November 23, 2020
Healthcare Cost Recovery Suit Rejected

Photo: jessica45 | Pixabay
The Seoul Central District Court rejected South Korea’s National Health Insurance Service’s (NHIS) request to seek KRW53.7 billion ($48 million) from KT&G and local units of British American Tobacco and Philip Morris International for compensation to offset the NHIS’ treatment costs resulting from smoking-related diseases.
The NHIS announced that it intends to appeal the District Court’s ruling. The NHIS originally filed the lawsuit in 2014, which sought reimbursement for treatment of long-time smokers who suffered diseases such as lung cancer.
The court’s decision noted that the NHIS is not a direct victim and therefore has no right to seek damages from the cigarette makers. The court added that the NHIS failed to prove a direct connection between the patients’ diseases and their smoking and concluded that there was insufficient proof that the cigarette makers produced “flawed” products.
“The outcome is extremely shocking and deplorable,” said NHIS President Kim Yong-ik. “We want to have a legal confirmation about the clear damages caused by smoking, but it was not as easy as we had expected.”
November 20, 2020
Companies Challenge Flavor Ban

Photo: Michal Kalasek | Dreamstime.com
R.J. Reynolds Tobacco Co., American Snuff Co., R.J. Reynolds Vapor Co., Santa Fe Natural Tobacco Co., Philip Morris USA, John Middleton Co., U.S. Smokeless Tobacco Co., Helix Innovations, Neighborhood Market Association. and Morija filed a lawsuit seeking to repeal the California flavor ban law on Oct. 9.
The California law bans the sale of menthol cigarettes as well as all other flavored tobacco and vapor products except premium cigars, shisha and loose-leaf tobacco beginning Jan. 1, 2021.
The lawsuit seeks a ruling that “declare[s] that the Family Smoking Prevention and Tobacco Control Act pre-empts the California ban on the sale of all flavored tobacco products, making the law invalid and unenforceable; declare[s] that the law is invalid and unenforceable under the Commerce Clause of the U.S. Constitution; [and] issue[s] preliminary and permanent injunctions preventing the enforcement and implementation of the California ban on the sale of all flavored tobacco products,” according to CSP.
California Governor Gavin Newsom signed the ban Aug. 28. Opponents filed a petition to put the question to voters in a referendum to overturn it shortly after its passage.
October 26, 2020
Regulator Criticized Over Bloomberg Funds

Photo: Philip Morris Fortune Tobacco Corp.
Consumer advocates have threatened to file graft charges against the Philippine Food and Drug Administration (FDA), reports The Manila Bulletin.
Previously, the FDA admitted to receiving funds from Bloomberg Initiative and the Union, both of which are known anti-tobacco groups. Under Republic Act 6713, this is prohibited.
The admission came out during a discussion on heated-tobacco products and resulted in a call for an investigation of the FDA.
“If the FDA ignores the views of legitimate and impacted stakeholders and proceeds with the adoption of an administrative order lifted from the playbook of their anti-tobacco patrons, we would be constrained to file an anti-graft case with the Ombudsman,” said Anton Israel, president of the Nicotine Consumers Union of the Philippines.
October 21, 2020
Manufacturers Sue Colorado

Photo: jessica45 | Pixabay
The U.S. discount cigarette manufacturers Liggett Group, Vector Tobacco and Xcaliber International have filed a complaint against the State of Colorado and several Colorado officials, including Governor Jared Polis, Attorney General Phil Weiser, and members of the Colorado General Assembly, alleging violations of federal and state law in connection with Proposition EE, a $294 million tax hike on the ballot this November in Colorado.
The complaint, filed in the federal district court in Denver, Colorado, seeks to invalidate a specific anti-competitive and anti-consumer provision of Proposition EE that would fix the minimum price of cigarettes in Colorado at $7 per pack, beginning Jan. 1, 2021.
The complaint alleges that the state made a back-room deal with Philip Morris USA, the largest U.S. seller of premium cigarettes such as Marlboro, to fix cigarette prices at premium levels, effectively eliminating competition from discount cigarettes which have increasingly taken market share from Philip Morris. In return, Philip Morris agreed not to oppose the proposed cigarette excise tax increase of $1.10 per pack. Proposition EE would nearly double the price of cigarette brands sold by discount manufacturers, creating an unfair burden on value conscious Colorado consumers. Furthermore, only about half of the state-imposed price increase would flow through to the State Treasury.
The complaint asserts that the price-fixing component of Proposition EE is not disclosed in the ballot question, but buried within a proposed tax hike, because the governor and other proponents of the new law knew that it would draw widespread criticism. The plaintiffs are asking that the federal court invalidate the price-fixing component, if approved by the voters, as an unconstitutional and illegal exercise of state power and the result of improper legislative due process.
“We are deeply concerned that Colorado politicians have agreed to price-fixing in what has been reported as a ‘back-room deal’ with Philip Morris to secure its support for a tax increase,” said Nicholas Anson, president and chief operating officer of Liggett Group and Liggett Vector Brands, in a statement. “The price-fixing component of Proposition EE would not only benefit Philip Morris and hurt value conscious consumers; it was intentionally omitted from the ballot question, leaving Colorado voters in the dark about this unconstitutional proposal.”
October 16, 2020
Puff Bar Owner Sues Over Fake Products

Photo: DS Technology Licensing
DS Technology Licensing, the owner of registered trademarks associated with the Puff Bar vapor device, and Puff Inc., an authorized U.S. distributor, has filed a lawsuit in Los Angeles County Superior Court against over 20 Chinese and American companies accused of distributing counterfeit vaping devices.
The defendants include international manufacturer and distributor CACUQ, U.S. distributors, e-commerce companies, and brick-and-mortar retail stores. Plaintiffs are represented by the law firm of Gallinger Law.
The lawsuit addresses both counterfeit Puff Bar vapor devices as well as knockoff products identified as Puff Smart, Puff Mini, Puff Stig and Airis Puff and seeks $50 million in restitutionary damages and $25 million in punitive damages.
“Defendants in the lawsuit have infringed on the famous Puff and Puff Bar marks by introducing competing devices which use the stylized “Puff” associated with Puff Bar Vapor Devices as well as by openly selling fake or counterfeit Puff Bar vapor devices,” DS Technology Licensing wrote in a statement.
“Defendants are believed to be only a small number of the violators, as the anti-counterfeit verification system at puffbar.com has identified thousands of retail stores at which consumers bought devices which failed the check.”
DS Technology Licensing promised award to those with information that leads to the seizure of counterfeit goods.
October 2, 2020