EXCERPTS from The Associated Press, July 21, 2004,

A federal judge fined tobacco giant Philip Morris USA and its parent company, Altria Group Inc., $2.7 million Wednesday for deleting e-mails that may be relevant in the government's lawsuit against the cigarette industry.

"A monetary sanction is appropriate," U.S. District Judge Gladys Kessler said in her ruling. "It is particularly appropriate here because we have no way of knowing what, if any, value those destroyed e-mails had to plaintiff's case."

In a statement, Philip Morris called the loss of e-mails "inadvertent" and said it was "studying its legal options."

Shortly after the government filed its civil racketeering case against the tobacco industry in 1999, the court ordered the parties to preserve all documents and records containing information that might be relevant to the case.

However, Philip Morris officials deleted e-mails that were over 60 days old on a monthly basis for at least two years after that order was issued. Court records show Philip Morris notified the court it was out of compliance with the court order in June 2002, a few months after becoming aware of the problem.

Kessler said it was "astounding that employees at the highest corporate level in Philip Morris, with significant responsibilities pertaining to issues in this lawsuit, failed to follow" the order.

Philip Morris attorney William Ohlemeyer called the punishment harsh.

The Justice Department alleges in the lawsuit that tobacco companies deceived the public about the dangers of tobacco and the addictive nature of nicotine. The government also contends the companies targeted children through advertising and lied about it.

The Justice Department is seeking $280 billion that it contends tobacco companies earned fraudulently, and the government wants the judge to impose new restrictions on the industry such as banning vending machines and limiting in-store promotions.

The defendants in the lawsuit are Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A.; and The Tobacco Institute.
 

    Added 25 July 2004