Settlement More Likely in DOJ Lawsuit Against Tobacco Companies After Announcement
The announcement by Department of Justice lawyers on Tuesday that they are seeking $10 billion for smoking-cessation programs in their civil racketeering case against several tobacco companies -- rather than the anticipated request for $130 billion -- "could bring the sides a step closer to settlement or at least give the government's case a better chance to survive an appeal," the Wall Street Journal reports (O'Connell/Wilke, Wall Street Journal, 6/13).
The revised program no longer would include services for all 45 million U.S. smokers. Instead, the program would cover an unspecified number of smokers equal to the number who might become addicted to cigarettes within the first year of the trial's conclusion. HHS estimates that about 1.3 million people per year become daily smokers. The revised program would require the companies to spend $10 billion over five years and then $10 million for any additional year a court-appointed monitor determines the companies are breaking the law (California Healthline, 6/10).
U.S. District Judge Gladys Kessler "privately had urged both sides to forge a settlement" after an appeals court in February ruled that DOJ could not request that the companies be forced to give up $280 billion in past profit, the Journal reports. Kessler "repeatedly warned government lawyers not to overreach, reminding them the racketeering laws allow them to seek only to prevent current or future misconduct," according to the Journal.
While anti-tobacco advocates and many Democrats "blasted the government's downsized ambitions," some observers said the revised program "reflects a more realistic view of what tobacco companies might settle for," the Journal reports. DOJ and tobacco company representatives met with a mediator at least once since February and were unable to agree upon the size of the smoking-cessation program, according to a person familiar with the discussions (Wall Street Journal, 6/13).