Plot
Nick Naylor (Aaron Eckhart) is a handsome, smooth-talking tobacco lobbyist and the Vice President of a tobacco lobby called The Academy of Tobacco Studies, which for fifteen years has been researching the link between nicotine and lung cancer. They claim that their research—funded primarily by tobacco companies—has found no definitive evidence of the linkage. Naylor's job consists mainly of reporting the Academy's questionable research to the public and defending Big Tobacco on television programs by questioning opposing health claims and advocating personal choice. Naylor and his friends, firearm lobbyist Bobby Jay Bliss (David Koechner) and alcohol lobbyist Polly Bailey (Maria Bello), meet every week and jokingly call themselves the "Merchants of Death" or "The MOD Squad".
As anti-tobacco campaigns mount and numbers of young smokers decline, Naylor suggests that product placement of cigarettes could once again boost cigarette sales. Naylor's boss, BR (J.K. Simmons), sends Naylor to Los Angeles to bargain for cigarette placement in upcoming movies. Naylor takes along his young son Joey (Cameron Bright) in hopes of bonding with him. Throughout their trip, Naylor teaches Joey about the beauty of argument. Naylor is also sent to bribe Lorne Lutch (Sam Elliot), the cancer stricken man who once played the Marlboro Man in cigarette ads and is now campaigning against cigarettes. Naylor offers Lutch a suitcase of money for his silence and, though disgruntled, Lutch agrees.
Vermont Senator Finisterre (William H. Macy), one of Naylor's most vehement critics, is the promoter of a bill to add a skull and crossbones warning to cigarette packaging. During a televised debate with Finisterre, Naylor receives a death threat from a caller. Despite the threat, Naylor still plans to appear before the U.S. Senate to fight Finisteere's bill. Naylor is then kidnapped and covered in nicotine patches, causing him to nearly die of nicotine poisoning. Naylor awakes in a hospital where he is told that his smoking habits have resulted in a high nicotine tolerance level and have saved him, but that he is now hypersensitive to nicotine and can never smoke again.
Meanwhile, Naylor has begun a steamy fling with a young reporter named Heather Holloway (Katie Holmes). Believing he can trust her, Naylor tells Holloway all about his life and career as they make love. However, after Naylor’s kidnapping, Holloway publishes an article that relentlessly bashes Naylor and his work at the Academy. It exposes Lutch’s bribe, the secret plans for product placement, and the MOD squad as well and accuses Naylor of training Joey to follow his amoral example. Following the article, all public sympathy for Naylor’s kidnapping evaporates, and BR fires Naylor in an attempt to distance the Academy from negative press.
Unemployed and publicly hated, Naylor falls into depression until his son Joey helps him recall the integrity in his job of defending corporations that almost no one feels deserve a defense. Rejuvenated, Naylor tells the press about his affair with Holloway and promises to clear the names of everyone mentioned in her article. He also declares that he will still appear before the U.S. Senate on the packaging bill, even without the backing from the Academy. At the Senate hearing, Naylor admits to the dangers of smoking but argues that public awareness is already high enough without extra warnings. He emphasizes consumer choice and responsibility and, to the dismay of Senator Finisterre, claims that if tobacco companies are guilty of all tobacco related deaths then perhaps the state of Vermont is also guilty in their high production of cheese caused cholesterol related deaths.
Impressed by Naylor’s speech, BR offers Naylor his job back, but Naylor publicly refuses to work for his backstabbing boss. Heather Holloway, ruined by the public humiliation of Naylor’s confession of their affair, is reduced to working as a local weather girl. The Academy is dismantled soon after the trial, and Senator Finisterre begins working to digitally remove cigarettes from classic films. The MOD Squad still meets weekly, now with the addition of lobbyists for fast food, hazardous waste and oil drilling. In the footsteps of his father, Joey wins a school debate using lessons his father taught him. Naylor opens a firm to train lobbyists to improve the public image of other scrutinized institutions.
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