Business 8th Edition by Marianne Jennings

Exercise 5

The ABC News program Day One ran two reports, on February 28 and March 7, 1995, which left viewers with the impression that Philip Morris Company was spiking its cigarettes with nicotine to make them more addictive. Philip Morris filed a $10 billion defamation suit against Capital Cities\ABC, Inc. for defamation on March 24, 1995. The suit alleged that the "spiking" report was untrue. An ABC News spokesperson said in response to the suit, "ABC News stands by its reporting on this issue."
Philip Morris is based in New York; the suit was filed in Richmond, Virginia; and a news conference to announce the suit was held in Washington, D.C., on the day hearings were to begin to determine whether the FDA should regulate nicotine as a drug. Philip Morris was not the primary target of the Day One report, but it was mentioned by name in the broadcasts. Philip Morris did not ask ABC for a retraction prior to filing suit.
J. D. Lee, a Knoxville, Tennessee, plaintiff's attorney who has had experience litigating against tobacco companies, noted that the prospect of getting his hands on Philip Morris's internal documents in such a suit made him gleeful: "I would have a field day with Philip Morris."
By September 1995, ABC and Philip Morris had settled the suit. ABC issued the following public apology and agreed to pay attorneys' fees for Philip Morris.
It is the policy of ABC News to make corrections where they are warranted. On February 28 and March 7, 1995, the ABC program, Day One, aired segments dealing with the tobacco industry. Philip Morris filed a defamation lawsuit alleging that the segments wrongly reported that, through the introduction of significant amounts of nicotine from outside sources, Philip Morris "artificially spikes" and "fortifies" its cigarettes with nicotine, and "carefully controls" and "manipulates" nicotine for the purpose of "addicting" smokers. Philip Morris states that it does not add nicotine in any measurable amount from any outside source for any purpose in the course of its manufacturing process, and that its finished cigarettes contain less nicotine than is found in the natural tobacco from which they are made.
ABC does not take issue with those two statements. We now agree that we should not have reported that Philip Morris adds significant amounts of nicotine from outside sources. That was a mistake that was not deliberate on the part of ABC, but for which we accept responsibility and which requires correction. We apologize to our audience and Philip Morris.
ABC and Philip Morris continue to disagree about whether the principal focus of the reports was on the use of nicotine from outside sources. Philip Morris believes that this was the main thrust of the programs. ABC believes that the principal focus of the reports was whether cigarette companies use the reconstituted tobacco process to control the levels of nicotine in cigarettes in order to keep people smoking. Philip Morris categorically denies that it does so. ABC thinks the reports speak for themselves on this issue and is prepared to have the issue resolved elsewhere.
ABC and Philip Morris have agreed to discontinue the defamation action.
What do you think of Philip Morris's decision to litigate? Would you have made the same decision? Was it a public relations tactic as well as an enforcement of rights? What motivation did both sides have for settling the case? Evaluate the ethics of ABC News in running the story. Evaluate the ethics of Philip Morris in filing suit without first approaching ABC for a retraction.