Clearing smoke of tobacco deal Q&A: With congressional action looming and lawsuits abounding, the tobacco industry's $368.5 billion settlement is a many-faceted issue. Here is an overview.

Sun Journal

March 22, 1998|By Scott Shane | Scott Shane,SUN STAFF

Congress is considering a number of bills that would dramatically change the way the tobacco industry operates. Most are variations on the deal struck in June between cigarette makers and attorneys general of some of the 40 states suing them.

In its original form, that agreement would settle the states' lawsuits and pending class action suits as well as banning future class action suits. In return, the industry would pay $368.5 billion over 25 years and would accept limited Food and Drug Administration regulation of nicotine and major restrictions on advertising.

Tobacco companies now are placing advertisements calling for Congress to pass that deal. Anti-smoking organizations are demanding tobacco taxes and strict regulation with no protection from future lawsuits. Which path is most likely to serve public health is hotly debated.

Q: Why is this tobacco settlement before Congress anyway?

A: Many terms of the June 20 deal, negotiated largely by a handful of attorneys general led by Mississippi's Mike Moore, can be implemented only by legislation. And several of the attorneys general suing the tobacco industry, notably Minnesota's Hubert H. "Skip" Humphrey III and Maryland's J. Joseph Curran Jr., have sharply criticized the deal and lobbied Congress to change its terms.

Since June, Mississippi, Florida and Texas have settled their lawsuits for a total of $30 billion over 25 years. Minnesota refused to settle; trial of its case began eight weeks ago. Maryland's case is scheduled for trial next year.

Q: So why not accept the deal as it was negotiated?

A: Most public health advocates believe the terms are too favorable to the industry. Critics of the deal ask why cigarette makers, who have been accused of decades-long fraud and deception, deserve legal protections other businesses do not have.

Q: Would all future tobacco lawsuits be prohibited?

A: No. Under the June settlement, individual suits against tobacco companies would be permitted. But plaintiffs could collect only compensatory damages to cover actual losses, not punitive damages, and the total paid each year would be capped at $5 billion.

Most important, class actions would not be permitted. Because the up-front costs of suing the industry are so great, many lawyers say that only class actions have a large enough potential payoff to justify the risk. So individual smokers might find no lawyer willing to take their cases.

Q: Why does Congress have to make a deal with the tobacco companies in order to regulate them?

A: For many actions, it does not. Research suggests the most reliable way to reduce smoking, especially by young people, is to increase the price of cigarettes.

Congress can do that unilaterally by imposing a new tax of $1.50 or more a pack, as health advocates propose. Also, courts have so far upheld the FDA's power to regulate nicotine as a drug, so that does not require congressional action.

Q: Well, then, why not junk the deal, impose new taxes and regulations, and let the lawsuits proceed?

A: That's what many public health advocates want. But there are problems with this approach, too.

There is no guarantee that the lawsuits will be victorious or that damage awards will come close to the billions in the settlement. A closely watched secondhand-smoke suit was rejected Thursday by an Indiana jury, and courtroom successes against the industry are still rare.

Curran is lobbying the General Assembly now for special legislation to undo an unfavorable court ruling and improve the odds for Maryland's lawsuit.

Even if the states ultimately win, courtroom wrangling will consume huge legal expenses and delay for years actions to reduce smoking.

Another crucial potential loss is the restrictions on advertising the industry would voluntarily accept under the proposed settlement. They include: no human or cartoon figures in ads; no ads in publications with a significant percentage of young readers; no billboards or other outdoor advertising; no Internet ads; no brand-name sponsorship of sporting events; no giveaway items with cigarette logos; no payments for "product placement" of cigarettes in movies.

Q: Why couldn't Congress simply put all those advertising restrictions into law?

A: It could. But the industry would probably challenge the restrictions in court as a violation of the First Amendment.

Baltimore's ban on tobacco and alcohol billboards survived such a challenge after three years in court, but it is only a partial ban.

Legal scholars believe that if the advertising restrictions in the settlement were imposed unilaterally by Congress, many might be struck down, leaving the industry free to advertise aggressively.

Q: How are lawyers likely to fare if there is a settlement and if there isn't?

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.