The Israeli government is liable for any damage to smokers' health, an Israeli tobacco company said Thursday in response to a $2 billion lawsuit filed against it and five U.S. cigarette makers.
Dubek Ltd. said in a statement submitted to the Tel Aviv Stock Exchange that any claims for smoking-related damage should be covered by revenues from the tobacco tax levied by the Israeli government on all domestic and imported cigarettes.Israel's largest health insurer, Kupat Holim Clalit, on Monday filed a lawsuit at the Jerusalem District Court, in what it said was the first suit of its kind against U.S. tobacco companies to be filed outside the United States.
"A tax has been imposed over the years on the cigarettes it (Dubek) produces which was, among other things, intended to reflect the health damages caused to smokers and their environments," Dubek's statement to the bourse said.
Along with Dubek, the suit names Philip Morris Cos. R.J. Reynolds, a unit of RJR Nabisco Holdings Corp.; Brown & Williamson Tobacco Corp., a unit of B.A.T. Industries Plc.; Lorillard Tobacco Co., a unit of Loews Corp.; and Liggett & Myers, a subsidiary of Liggett Group Inc.
In response to Dubek's statement, Treasury spokesman Eli Yosef told Reuters: "There are no taxes allocated (for special purposes). Let them show us any such agreement and then we'll comment."
But the annual report of the Treasury's State Revenues Administration released last month said in its chapter on tobacco taxes that the levy was in fact collected to offset smoking-related damages.
"The fixed tax reflects the estimated external effect of cigarette consumption (health damages to smokers and their environment). This damage does not vary according to the price of cigarettes and therefore justifies a fixed tax, at a single level, both on local production and imports," the report said.
Dubek also charged Kupat Holim Clalit with being "negligent by omission" for failing to adequately warn the public about the dangers of smoking.
In a statement, Philip Morris said it would "vigorously defend" the lawsuit.
"We are disappointed that Kupat Holim, Israel's largest sick fund, filed this baseless lawsuit," Timothy Lindon, senior assistant general counsel for Philip Morris, was quoted as saying in the statement faxed to Reuters.
"We believe the fund's legal and factual theories are fatally flawed. Courts throughout the United States are rejecting the theories upon which similar lawsuits are based," he said.