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NEW YORK -- Convenience store owners looking to circumvent escalating state taxes in an effort to sell cheaper cigarettes should beware. Philip Morris U.S.A. has filed lawsuits in federal courts against 55 retailers engaged in the illegal sale of counterfeit versions of the company's cigarette brands.
Philip Morris declined to name the retailers in the suits, but said they were filed in the United States District Courts in California, New York, Washington and Louisiana.
The lawsuits are aimed at stopping the defendants' sale of counterfeit cigarettes and their illegal use of Philip Morris U.S.A.'s trademarks, including category leader Marlboro, and identifying suppliers of counterfeit cigarettes.
"Counterfeit cigarettes are a small problem that Philip Morris U.S.A. is committed to working with law enforcement, legislators and tobacco retailers and wholesalers to address," said Jack Holleran, vice president of brand integrity for the New York-based tobacco company. "We believe that aggressive action by a number of concerned parties is the best way to effectively combat illegal activity related to cigarettes."
Holleran said counterfeit product was discovered during periodic auditing conducted by Philip Morris U.S.A. During these audits, cigarettes were purchased at various retail locations and then evaluated by Philip Morris U.S.A. to determine whether they were genuine or counterfeit.
The retailers who sold counterfeit product are defendants in the lawsuits Philip Morris U.S.A. has filed. In addition, Philip Morris U.S.A. has shared the results of its audits with federal and state law enforcement agencies.
As cigarette prices have increased in recent years, driven in part by higher state excise taxes, there has been an increase in illegal activity related to the sale of contraband cigarettes. These activities include counterfeit, illegally imported, untaxed, undertaxed and stolen cigarettes. Philip Morris U.S.A. said it would take aggressive action to address these issues, including the formation of a brand-integrity department dedicated to disrupting, reducing and eliminating illegal contraband products and related activities. The company has business policies in place to take action against retailers and wholesalers who sell contraband and believes that these policies provide a strong financial disincentive against dealing in contraband.
"We believe that the vast majority of retailers and wholesalers are committed to selling cigarettes legally and responsibly," said Ross Webster, vice president of trade marketing for Philip Morris. "We hope that these lawsuits send a message that encourages those business owners who are not complying with the law to do so."