Tobacco firms seeking a deal $300 billion settlement could close all lawsuits

Skepticism in Congress

Talks among states, activists, executives are first of their kind

April 17, 1997|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON SUN STAFF WRITERS CARL M. CANNON, KAREN HOSLER AND SCOTT SHANE CONTRIBUTED TO THIS ARTICLE. — WASHINGTON -- The tobacco industry and its opponents are trying to negotiate a $300 billion settlement that could close courthouses across the nation to lawsuits from smokers and place severe restrictions on cigarette advertising.

Reports of the deal, a major element of which would require the consent of Congress, drew skeptical reactions yesterday from Capitol Hill and anti-smoking activists.

Face-to-face talks between anti-smoking forces and several states on one side and top-level cigarette company executives on the other -- the first bargaining the industry has ever been willing to do on its legal risks -- have reached an "intense" level in the past three weeks, said Mississippi Attorney General Mike Moore, a leader in the negotiations.

The core of the deal, sources confirmed, would be a broad grant by Congress of legal immunity for the industry. In return, the industry would promise to pay off injured smokers or survivors of those who died, and to live under close federal supervision and tight curbs on advertising -- especially promotions aimed at children.

The images of Joe Camel and the Marlboro Man would vanish from billboards and ad displays. No real people could be depicted.

Unless the terms of the deal are made considerably more onerous on the industry than those being discussed, however, any settlement could face trouble.

"If you think this is a tough deal from the point of view of the tobacco industry, look at the stocks," suggested John Banzhaf, a law professor in Washington and longtime adversary of the industry, who heads the Action on Smoking and Health organization.

Tobacco company shares shot up on Wall Street after the negotiations were disclosed in yesterday's Wall Street Journal. Investor interest in a deal appeared to be sending tobacco executives to the bargaining table, sources said.

The payoff figure that seems to be a target -- $300 billion or more, paid out over 25 years -- represents "five cents on the dollar, nowhere near where we want it to be," Banzhaf said. "Smoking costs the American economy $100 billion a year," he added. "We're thinking about something in that ballpark."

There appears to be skepticism in Congress about granting the industry immunity to smokers' lawsuits.

"You would definitely need to pass legislation" to do that, said Senate Judiciary Committee Chairman Orrin G. Hatch, a Utah Republican. "But I think it would be a very difficult thing to do. We're talking about product liability. I don't think we can exempt one industry from product liability laws."

He said he would "look at anything they come up with, but I think it's going to be very tough."

A group of Democratic senators urged President Clinton in a letter to "resist efforts to bail out the tobacco industry." Referring to a recent settlement between 22 states and the smallest cigarette company, Liggett Group, that will help challengers build their legal cases against the other manufacturers, the Democrats said: "We are on the cusp of a victory and should not allow the tobacco industry to use a global settlement to turn the tide."

At the White House, officials confirmed that lawyer Bruce Lindsey, the aide personally closest to Clinton, was monitoring the talks.

He has made clear that Clinton endorses the concept of a settlement, but that any deal had to include the president's anti-teen-age smoking initiatives, which seek to put tobacco out of reach of minors and to discourage promotions that appeal to the young.

White House press secretary Mike McCurry, asked whether the industry had indicated a willingness to accept the youth-protection measures, replied: "I don't think they would be proceeding with the conversations they're having unless they understood at the end of the day they would have to meet our requirements."

Last year, after announcing those requirements, the president invited the industry to negotiate a legislative solution as an alternative -- a suggestion the industry rebuffed, choosing instead to challenge the president in court.

McCurry said that all sides would have to agree to immunize the industry from smokers' lawsuits -- including the smokers with cases pending.

The bargainers, who have been keeping congressional leaders informed, are drafting a bill to shut off tens of thousands of lawsuits making large claims for damages from the tobacco companies.

Among the lawsuits that would be wiped out are those by 22 state governments, including Maryland, seeking billions of dollars in reimbursement for state Medicaid costs in treating smokers, and a variety of smokers' high-dollar "class action" cases, including one pending in Maryland courts.

Maryland Attorney General J. Joseph Curran Jr. suggested that the industry's new interest in negotiating reflects a fear of what may come out in lawsuits. "I suspect the tobacco companies are reluctant to have a jury hear the evidence we have on them."

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