ATTORNEYS GENERAL: Could Release Deal Within Days
In potentially the "largest civil settlement in United States history," representatives from eights states and the tobacco industry have reportedly finished work on a massive deal to settle up to 46 state lawsuits, details of which could be released on Friday (Meier, New York Times, 11/11). Attorneys general from Washington, New York, California, Colorado, Pennsylvania, North Carolina, North Dakota and Oklahoma plan "to brief attorneys general from 35 other states and Puerto Rico Friday on the proposal" (Goldreich, Washington Times, 11/11). As final details are not yet worked out, most parties to the deal would not admit that a settlement is as good as done. Industry spokesperson Steve Duschesne said, "I can tell you that there is no deal. The deal is not done, and suggestions otherwise are untrue." Brian Smith, spokesperson for Washington AG Christine Gregoire (D), acknowledged that "[n]othing's concrete now" (Gibson, Lexington Herald-Leader. North Carolina AG Mike Easley (D) said, "We don't have a deal yet, but I'm optimistic." Upon being briefed by the eight lead AGs, the other states will have until Nov. 20 "to decide whether to accept the settlement."
Points Of Order
As the deal now stands, Philip Morris Cos., RJR Nabisco Holdings Corp., Lowes Corp. (parent of Lorillard Inc.) and British American Tobacco (parent of Brown & Williamson Tobacco Corp.) will pay as much as $200 billion over 25 years to reimburse states for Medicaid expenses incurred from treating sick smokers over the years. But the size of the settlement, to be disclosed Nov. 23, "would depend on how many states join" (Ly/Stancill, Charlotte Observer, 11/11). The Los Angeles Times reports that "[i]f some states decline to settle, the total pot would be reduced by those states' proposed shares." The industry will likely cover the costs of the settlement through a 35-cent price hike on cigarette packs (Weinstein/Levin, 11/11). In addition, the industry will pay $250 million over 10 years to establish a foundation to reduce youth smoking and $1.45 billion over five years to fund antismoking campaigns. The deal "would eliminate ads on billboards, buses and taxis, ban promotional merchandise featuring cigarette brands, cease paying to place cigarettes in movies and ban marketing that targets children." To solve one of the most contentious issues for the large companies, states could "reduce the amount of money a company owes each year to compensate for" market share lost to smaller tobacco firms not partaking in the settlement; or, the states "could pass laws imposing licensing fees on nonparticipating companies" (Geyelin, Wall Street Journal, 11/11). The Herald-Leader reports that the language will likely include a provision to assist tobacco farmers that may be hurt by the deal (11/11). The agreement will not give the industry immunity from future class-action lawsuits or a limit on punitive damages (Washington Times, 11/11).
Snake Oil Salesmen?
The Wall Street Journal notes that the agreement does not go far enough to placate some of the "more militant attorneys general." Connecticut AG Richard Blumenthal (D) said, "We're scrutinizing very closely the public health provisions related to advertising and countermarketing because there's a real question as to whether we can and should do better" (11/11). Maryland AG J. Joseph Curran Jr. (D) said, "The devil is in the details, and we've got to make sure we understand all the ramifications." The proposed terms have public health representatives up in arms as well. Dr. Albert Blumberg, president of Smoke-Free Maryland, said, "The tobacco industry is famous for giving concessions that turn out to be empty presents. We have reservations about the entire process and the settlement because we haven't had a chance to see it." He said Maryland should strive for the terms of the Minnesota settlement reached in May as the "gold standard" for all such deals (Shane, Baltimore Sun, 11/11). Richard Daynard of the Tobacco Control Liability Project said, "It's going to be riddled with holes. If they had nothing to hide from the American public, they wouldn't be doing it in this way" (Charlotte Observer, 11/11). He added that "[a] lot of states with good hands are being asked to throw in their cards" (Baltimore Sun, 11/11).
Will Some Bail?
Sanford E. Bernstein tobacco analyst Gary Black said four or five states will likely drop out and take their chances in court, possibly Maryland, Massachusetts, Michigan and Wisconsin. "What's important is that California and New York are part of the deal," he said. Overall, Black "characterized the deal as a 'consolation prize,'" after the states and federal government were unable to pass the comprehensive McCain bill in the Senate this summer (Los Angeles Times, 11/11).