[Intl-tobacco] Israel: Court issues landmark ruling against UK tobacco company

[robert weissman]

Court issues landmark ruling against UK tobacco company
Judy Siegel-Itzkovich, THE JERUSALEM POST 	Nov. 3, 2005

A Jerusalem District Court ruling against giant holding company British
American Tobacco PLC (BAT) on Thursday will reportedly have far-reaching
implications on lawsuits brought by health maintenance organizations
elsewhere against conglomerates that own tobacco companies.

The ruling was the first time outside the US in which a non-American
cigarette holding company was legally declared to have responsibility
for its subsidiaries.

Jerusalem District Court Judge Yosef Shapira set a legal precedent when
he decided to allow the inclusion of the British holding company - the
world's second-largest tobacco concern - as an additional defendant in
Clalit Health Services' NIS 7.6 billion lawsuit against several tobacco
manufacturers.

Clalit, Israel's largest health fund, has been in court since 1998 to
demand compensation for the treatment of members whose health problems
were caused cigarettes manufactured by the defendants.

The precedent lies in ruling that a holding company that does not itself
deal directly with tobacco production, marketing or advertising can be
sued for fraud and misleading the public about the real dangers of its
subsidiaries' products. The court decision was partly based on the fact
that a strategic committee in the holding company set policy for the
companies it owned.

The British company is now subject to the penalties requested by the
health fund.

The court said the lawsuit against this British defendant has
"substantial merit."

Clalit is suing seven groups of cigarette manufacturers from Israel, the
US and Britain for a total of NIS 7.6 billion, plus linkage and interest
since 1998 (in current values, NIS 11.5b.).
The health fund's demand that companies be prohibited from using the
deceptive term "lite" - as if cigarettes with a reduced amount of tar
were less harmful - led to Israeli legislation prohibiting the use of
this term in advertising and labeling of cigarette packets.

Clalit contended that the holding company set down the advertising
policies of its subsidiaries and told them how to refute arguments that
smoking was harmful. Thus, it was not just a holding company with only
loose control of the subsidiaries.

The court said that contrary to BAT's commitment, it did not provide
Clalit with access to its documents in Minneapolis, Minnesota, and in
Guilford, England, for a full year. A precedent-setting decision in the
US established that such documents must be open to public scrutiny.

The same Israeli court and judge ruled last year against Philip Morris
(the maker of Marlboro), British American Tobacco (the maker of Kent),
and Dubek (the maker of Time), which had claimed the health fund cannot
directly sue them for the diseases caused by smoking. The companies
maintained that Clalit would have to sue the tobacco companies in the
name of each smoker separately.
The companies also insisted that Clalit was a "distant, third side" and
"too far away" from the damage caused by smoking to sue the companies.
Since then, the judge ruled that Zerah Gehl, the former managing
director of Israeli tobacco monopoly Dubek - who has for 17 years been
living in England and has not returned - can be personally sued for his
responsibility for the tobacco company's actions when he headed it.

One of BAT's heads, Kenneth Clark, was a leading candidate to head
Britain's Conservative Party, triggering severe criticism due to his
involvement in the tobacco business.