DOJ to Explore Settlement of Tobacco Lawsuit

Attorney General John Ashcroft has appointed three Justice Department civil attorneys to begin discussions with the tobacco industry about a possible pretrial settlement in the federal government's multibillion dollar racketeering lawsuit against the nation's major tobacco companies, the Houston Chronicle reports. Anti-tobacco activists responded that the Bush administration was "backing off the case as a favor" to the industry, and tobacco companies reiterated their belief that the lawsuit is meritless (Hedges, Houston Chronicle, 6/19). According to unnamed Bush administration officials, the new settlement team met yesterday for the first time with the department's tobacco litigation teams. Officials "stressed that the department was not giving up on the lawsuit" and that the litigation team would work on a separate track to continue to prepare for a trial (Gullo, AP/Philadelphia Inquirer, 6/20).

The New York Times reports that the impetus for settlement negotiations came "in part" from the Justice Department's growing belief that the "government might lose the lawsuit if the case [goes] to trial." Department officials said that Ashcroft, who opposed the lawsuit as a senator, "might not be serious about aggressively pursuing the lawsuit" (Johnston, New York Times, 6/20). Last fall, U.S. District Judge Gladys Kessler dismissed part of the lawsuit -- the government's claim that the industry should be forced to pay billions of dollars to cover the costs of treating people with smoking-related illnesses. However, Kessler did allow the government to proceed with its claim that the industry engaged in racketeering by misleading consumers about the health risks of tobacco products. Last week, the Justice Department asked Kessler to reconsider her decision to dismiss the health care costs claim. An Ashcroft aide said the department "believes it's in its strongest possible position right now to negotiate a settlement" because if Kessler decides against reinstating the department's health care costs claim, the government would have less "leverage" to reach a settlement (Lichtblau/Levin, Los Angeles Times, 6/20). Department officials added that a "strong factor" behind pursuing a settlement was a ruling by a federal appeals court last month which "threw out similar racketeering claims by labor unions and three foreign nations," reversing Kessler's decision "to allow the racketeering charge to go forward" in those cases (Houston Chronicle, 6/19). Martin Feldman, an industry analyst at Salomon Smith Barney, said the government's racketeering claims are on "shaky legal ground," adding, "The tobacco industry always had a very good chance of winning this case" (Johnson/Kiely, USA Today, 6/20).

Anti-tobacco advocates and several lawmakers "attacked" the Justice Department's decision yesterday, saying it was a "capitulation" to the tobacco industry and would serve to undermine the government's bargaining position (Kaufman/Eggen, Washington Post, 6/20). Rep. Lloyd Doggett (D-Texas) said that "settling this case highlights what Big Tobacco can buy with millions of dollars in campaign contributions. The tobacco industry has addicted this administration to contributions just as it has addicted people worldwide to its deadly product." In the 2000 elections, the industry donated $8.4 million to political candidates, most of whom were Republicans. With a donation of $90,125, President Bush was the "single biggest recipient" (Los Angeles Times, 6/20). Matthew Myers, president of the Campaign for Tobacco-Free Kids, also questioned the government's strategy in seeking a settlement: "It is especially worrisome that administration officials are weakening the hand of their negotiating team by stating ahead of time that they believe they would lose in court. No attorney representing a client in good faith prepares for trial by saying they expect to lose, and this statement is a tremendous disservice to the government's client -- the American people" (Seper, Washington Times, 6/20). William Schultz, a member of the Clinton administration who helped oversee the lawsuit, said the Justice Department has underestimated the "strength of the racketeering case," adding that Kessler "upheld the (racketeering) theory. That means if the government proves the facts, the government wins the case, and the facts have never been an issue here" (Washington Post, 6/20).

For their part, cigarette makers "expressed surprise at the talks of a settlement" and added that the case should be "thrown out," the Chronicle reports. "Philip Morris has not been approached about any settlement ... nor have we approached anyone about settlement of this lawsuit," the company said in a statement, adding, "We continue to believe the case is without merit." An R.J. Reynolds official added, "We are not settling this case for any amount of money" (Houston Chronicle, 6/19). The Wall Street Journal reports that for a settlement to have "any practical effect," it would "have to go further" than the restrictions the 1998 national tobacco settlement placed on tobacco companies (Cloud/Fairclough, Wall Street Journal, 6/20). The Los Angeles Times adds that some analysts say a settlement "could conceivably involve legislation granting limited authority to the FDA to regulate tobacco products" (Los Angeles Times, 6/20). The Justice Department, however, has made "no decisions" about what it "would accept" to settle the suit ( Wall Street Journal, 6/20).