First Round of Tobacco Settlement Talks Focuses on Money

Justice Department officials and lawyers for the tobacco industry held their first round of settlement talks yesterday regarding the government's multi-billion dollar lawsuit against the nation's leading tobacco companies, and the two sides remain divided over whether a monetary payment should be part of any agreement, the Wall Street Journal reports. In the lawsuit, the federal government alleges that the tobacco companies engaged in racketeering by misleading consumers about the health risks of cigarettes. Last month, Attorney General John Ashcroft appointed a team of lawyers to begin settlement talks. One industry official said of yesterday's 40-minute meeting, "They said, 'If we're going to settle, we need money.' We said we're not going to pay any." Besides a monetary payment, department lawyers said that any settlement "must include" some additional restrictions on tobacco products. The Journal reports that department attorneys "warned" that the racketeering charges "could carry large monetary penalties and stressed that [the department] was preparing for trial, set for 2003." But industry lawyer Herbert Wachtel "rais[ed] doubts" about the government's chance of success on the claim, pointing out that two of the government's three claims have been dismissed (Wall Street Journal, 7/19). Martin Feldman, a tobacco analyst at Salomon Smith Barney, added, "We doubt that the industry will embrace these settlement talks with any degree of enthusiasm" (Winston-Salem Journal, 7/19). No further meetings have been scheduled (Wall Street Journal, 7/19).