Philip Morris CEO Takes the Stand
MIAMI (AP) - A titan of the tobacco industry took the stand in defense of his business Monday, telling jurors he knew the company needed to change because society was demanding it.
Philip Morris Inc. CEO Michael Szymanczyk was the first of five tobacco executives expected to testify about new company operating procedures. It is part of a bid to dissuade a Florida jury from punishing tobacco companies with a potential multibillion-dollar punitive damage request by 300,000 to 500,000 sick Florida smokers.
Szymanczyk opened by telling jurors he is the ``top decision-maker'' in his company. He said when he was named CEO in 1997, he intended to make changes, because the company was facing ``substantial litigation.''
``It was pretty clear that the company was out of alignment with society's expectations of it,'' Szymanczyk said.
``There was something wrong if all of the states were suing us. ... We wanted to fix that,'' he said, referring to the 1998 Master Settlement Agreement, in which big tobacco paid the states $254 billion.
He testified in a soft-spoken manner, and several times he had to be asked to speak more loudly.
Szymanczyk took the stand after plaintiffs attorney Stanley Rosenblatt argued that the executive shouldn't be allowed to give jurors ``a public relations spiel about how they do business today.'' He said current company conduct is not relevant to the issue of punitive damages.
But Philip Morris lawyer Dan Webb called that reasoning ``ridiculous,'' saying Szymanczyk should be allowed to explain how the company's conduct has changed.
Circuit Judge Robert Kaye decided to allow the testimony, with some limits. He noted that Szymanczyk had been with Philip Morris since 1990.
``I'm certain he knew and understood what was going on in the company, way back in 1990,'' Kaye said. ``To come in and say that now that I'm CEO in 1997, `I just realized what we were doing wrong,' I think, well, it stretches one's credulity.''
The six-member jury previously awarded $12.7 million in compensatory damages to three people in the nation's first smokers' class-action suit to go to trial.
The appearance of the CEOs before the jury demonstrates the importance of the case to the industry. Tobacco executives make infrequent public appearances, primarily at corporate annual meetings, and rarely testify under oath.
Smokers' witnesses estimated the companies could raise $150 billion to $157 billion to pay a punitive verdict. Those figures would dwarf the national punitive damages record of $3 billion, assessed against Texaco in 1987.
The oil company, sued by Pennzoil Co. over their rival attempts to acquire Getty Oil Co., also was ordered to pay $7.53 billion in compensatory damages. After Texaco filed for bankruptcy protection, the companies agreed in 1988 to settle for a total of $3 billion.
The nation's five biggest cigarette makers, who are asking for no award at all, don't want the jury to consider anything beyond their present value because of the potential for borrowing and price increases to inflate the verdict.
One witness representing smokers estimated the industry value at $150 billion.
In a deposition May 10, Szymanczyk denied his company recruits children as customers despite two recent studies indicating more cigarette advertising in magazines with high youth readership.
Philip Morris announced magazine ad cutbacks last week, a move seen by Rosenblatt as a ploy that jurors will see through.
Szymanczyk, who is expected to be on the stand at least a day, ``will submit himself to cross-examination so the jury can hear the truth,'' Webb said.
The other CEOs set to testify are Andrew Schindler of R.J. Reynolds Tobacco Co., Nicholas Brookes of Brown & Williamson Tobacco Corp., Martin Orlowsky of Lorillard Tobacco Co. and Bennett LeBow of Liggett Group Inc.