Brazilian Superior Court of Justice Rejects Indemnification Claim for Consumption of Cigarettes

BRASILIA, Brazil, April 28, 2010 - By unanimous vote (3×0), the 4th Panel of the Superior Justice Court
(STJ), the highest Brazilian court for uniformization of precedents on
non-constitutional matters, yesterday denied the claim for indemnification
for moral damages brought against the cigarette manufacturer Souza Cruz S/A
(the Brazilian branch of British American Tobacco Group - BAT, Amex: BTI)
(Bovespa: CRUZ3), by family members of ex-smoker Vitorino Mattiazzi, in the
estimated amount of R$ 490,000.

This was the first time the Brazilian Superior Court of Justice reviewed
the merits of a lawsuit for indemnification for damages attributed to the
consumption of cigarettes, and their decision confirmed the majority of the
rulings adopted by Brazilian courts in first and second instances in
decisions already handed down in similar cases. In all 290 lawsuits with
final rulings in Brazil, such indemnification claims were denied.

The case that was reviewed yesterday by the Superior Court of Justice
began in 2005 in the city of Cerro Largo (state of Rio Grande do Sul, 490 km
from Porto Alegre), when the widow of Vitorino Mattiazzi filed a lawsuit
alleging that her husband was unaware of the risks associated with smoking,
had been induced by misleading advertising and had died from respiratory
illnesses which the widow attributed, exclusively, to the consumption of
cigarettes manufactured by Souza Cruz. As redress, she claimed
indemnification for moral damages in an amount greater than 2,000 minimum
salaries.

At first instance, Judge Guilherme Eugenio Mafassioli Correa did not
accept the argument of "lack of awareness" of the risks associated with
smoking, pointing out, further, that the sale of cigarettes is legal and that
it is not possible to prove that the person exclusively smoked products
manufactured by Souza Cruz, since these are not the only cigarettes available
on the market. Further, he emphasized that "there is no way to hold third
parties liable for a decision that is eminently one's own, individual, as is
the case here. Even if it were questions of status when Vitorino began
smoking, he could have opted not to smoke. Certainly there are people who did
so".

The plaintiff appealed to the Court of Appeals of Rio Grande do Sul
(TJRS), where the justices shifted the burden of proof during the judgment
session and accepted the claim of indemnification, ruling that Souza Cruz
should have proven that it did not manufactured the cigarettes smoked by Mr.
Mattiazzi. Further, the reporting justice assumed, based on generic data
extracted from the Internet, that Mr. Mattiazzi's disease had been caused by
smoking cigarettes, although such causation link had not been evidenced in
the evidentiary phase.

Souza Cruz then filed a special appeal to the Brazilian Superior Court of
Justice, which was granted in yesterday's session. The justices of the 4th
panel confirmed, by unanimous decision (3×0), the understanding that
cigarettes are a product with known inherent risks, the consumption of which
is a decision made exclusively by the consumer, and that, in the sphere of
civil liability, the causation link should not be established based on
presumption, i.e. grounded on statistical data.

Moreover, the Reporting Justice mentioned that the cigarette advertising
does not interfere in the free will of the consumers, who may choose to smoke
or not. These, among other factors, according to the Justices, exclude the
manufacturers from liability for alleged damages associated with smoking.

This was the first ruling on merits on the matter rendered by the
Brazilian Superior Court of Justice which, till now, had only reviewed the
issue of the statute of limitations being applicable to claims of this
nature, confirming the understanding that the period to be applied is five
(5) years, as expressly provided in the Brazilian Consumer Protection Code.

Cia da Informacao, Rafael Machado, +55-11-3071-3494, Ext. 21, rafael at ciadainformacao.com.br, or Cassia Rodrigues, +55-11-3071-3494, Ext. 30, cassia at ciadainformacao.com.br