February 18, 2002

US District Court dismisses two contraband lawsuits against tobacco companies

A Brooklyn federal judge today dismissed two lawsuits that were seeking to hold various Philip Morris entities and other US companies liable for tax revenues allegedly lost by the governments as a result of the smuggling of cigarettes.

The European Community and 10 of its member states filed one lawsuit; the second was brought by 24 departments of the Republic of Colombia and the Capital District of Bogotá.

US District Judge Nicholas G Garaufis based his ruling on a recent binding decision by the US Court of Appeals for the Second Circuit. Last fall that court affirmed the dismissal of a virtually identical lawsuit brought by Canada against RJ Reynolds and related tobacco companies.

"We are pleased that the court applied legal principles followed throughout the world and agreed that these lawsuits should be dismissed," said William S Ohlemeyer, Philip Morris Vice President and Associate General Counsel.

The basis of the Second Circuit's decision in the Canada case, and Judge Garaufis' decision today, is a well-established legal doctrine that US courts will not allow foreign governments to use American courts to collect their own taxes. Throughout this country's history, the courts of this nation have not been required or allowed to interpret or enforce the revenue rules of foreign governments; just as other governments- including those who brought these cases- will not enforce US tax laws and their underlying public policy.

Ohlemeyer said "this ruling does not diminish Philip Morris' interest in continuing to assist governments in the fight against the contraband and counterfeit cigarette trade. We said at the outset of these cases that we believed this is a problem that can and should be addressed through cooperation rather than litigation; and we still believe that.

"We would welcome the opportunity to sit down and discuss with the European Community and the governments that brought these lawsuits the concrete steps that we have taken- to reduce, and hopefully eliminate, the smuggling and counterfeiting of cigarettes," said Ohlemeyer.

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.

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See pmi.com and pmiscience.com

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