The government presented evidence regarding the aspects of Defendants’ scheme, such as addiction and nicotine. A few examples cannot adequately present the volumes of evidence underlying the district court’s findings of fact, but the following provide a fair sample: A 1991 Reynolds Research and Development report acknowledged that “[w]e are basically in the nicotine business.”
Dr. Farone testified that during his time at Philip Morris there was “widespread acceptance internally throughout the 35 company—among executives, scientists, and marketing people” that nicotine was primarily responsible for addiction to smoking. Id. at 858. Indeed, the district court found that “internal documents and testimony from former company employees affirmed that within their corporate walls, Defendants openly recognized the addictiveness of cigarettes.” Id. Regarding light cigarettes, internal research reports and memoranda at the Defendant companies revealed that they understood the phenomena of smoker compensation and studied how to manipulate it in order to make their light brands appealing to addicted smokers while continuing to be able to advertise the brands as low tar. For example, a 1978 BATCo memorandum about that company’s internal research acknowledged that “a majority of habitual smokers compensate for changed delivery” and explained that if smokers “choose [a] lower delivery brand . . . than their usual brand” they “will in fact increase the amounts of tar and gas phase that they take in, in order to take in the same amount of nicotine.”
As these examples and hundreds more findings in the district court’s opinion demonstrate, the court had before it sufficient evidence from which to conclude that Defendants’ executives, who directed the activities of the Defendant corporations and their joint entities, knew about the negative health consequences of smoking, the addictiveness and manipulation of nicotine, the harmfulness of secondhand smoke, and the concept of smoker compensation, which makes light cigarettes no less harmful than regular cigarettes and possibly 36 more. The government presented evidence indicating that specific high-ranking corporate officials were directly informed about these matters, as well as evidence of pervasive knowledge and acceptance of these propositions throughout the Defendant organizations. The overwhelming indirect and circumstantial evidence was sufficient to allow the district court to reasonably infer that the high level executives, including “CEOs, Vice Presidents, [and] Heads of Research & Development” for Defendants knew about their respective companies’ “internal research, public positions, and long term strategies,” id. at 897, that is, the “internal knowledge and practice” of the company, id. at 853. These executives then made, caused to be made, and approved public statements contrary to this knowledge.