Tobacco CEO Issues Price Warning
MIAMI (AP) - The head of the nation's No. 1 tobacco company told a jury Tuesday he will have to raise cigarette prices if ordered to pay a damage award.
``There's no bank in the world that will loan us money, pending resolution of cases like this,'' Philip Morris President and CEO Michael Szymanczyk said during his second day of testimony. ``To pay the money, you have to collect it from somewhere.''
Szymanczyk began testifying Monday as the first of five tobacco executives lined up to tell the jury about how their companies have reformed amid lawsuits and public criticism.
Tuesday, he described Philip Morris' Web site, saying it was meant to educate people about smoking, not as a tool to recruit new smokers.
His testimony is part of a bid to dissuade the jury from punishing tobacco companies with a potential multibillion-dollar punitive damages request on behalf of 300,000 to 500,000 sick Florida smokers.
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.
Szymanczyk, 51, told jurors that when he was named president and 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 a 1998 agreement in which cigarette makers paid $254 billion to settle state lawsuits.
The appearance of Szymanczyk (pronounced sih-MAN-sihk), and the planned testimony of the other tobacco CEOs, underscored the trial's importance. Tobacco executives make infrequent public appearances, primarily at corporate annual meetings, and rarely testify under oath.
Witnesses for the sick smokers have estimated the five tobacco companies being sued could raise $150 billion to $157 billion to pay a punitive damages verdict. Those figures would dwarf the national punitive damages record of $3 billion, assessed against Texaco in 1987.
The tobacco companies have argued no punitive damages should be awarded.
Philip Morris lawyer Dan Webb played several TV ads developed and paid for by the tobacco company in hopes of curbing underage smoking. He said the company, under the settlement with the states, has stopped promotional campaigns that appeal to youths, such as free samples and ads with cartoon characters.
The other CEOs expected 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.