TOBACCO SETTLEMENT: AGs, Industry Back At Table
The country's "largest tobacco companies have been trying to negotiate a multibillion-dollar settlement of the dozens of state lawsuits pending against the industry," the Washington Post reports. Lawyers representing both the tobacco industry and several states -- including Washington, New York, California and Colorado -- have been meeting for days to hammer out a deal that could be used to settle all 37 outstanding state lawsuits (Torry/Schwartz, 7/10). The New York Times reports that the genesis of the talks came "about three weeks ago when a court ordered the state of Washington and tobacco producers to try to come up with an agreement in the state's lawsuit." Those talks included industry attorneys Arthur Golden and Meyer Koplow, Joe Rice, a lawyer representing 25 states with pending litigation, and Washington Attorney General Christine Gregiore (D). The team began outlining a potential settlement, and other states were notified. One lawyer at the meetings said the goal was to have a plan outlined and several states on board before a national attorneys general meeting Monday in Durango, CO. "The attorneys general have always said that if Plan A didn't work then we would always go with Plan B," said Indiana Attorney General Jeffrey Modisett (D).
Coming To Terms
Most lawyers involved said any settlement would likely mirror, on a larger scale, "the $6.5 billion settlement reached in May between the industry and Minnesota" (Meier, 7/10). The Los Angeles Times reports that the "talks bring negotiators full circle, back to early 1997, before the announcement last summer of a $368.5 billion tobacco peace accord that ultimately failed to gain congressional approval" (Levin/Weinstein, 7/10). The Wall Street Journal notes, however, that any new deal would be "less costly and less comprehensive. And perhaps most important, it won't require congressional approval." The new settlement would not allow Food and Drug Administration regulation of tobacco, nor would it apply any look-back penalties to the industry should teen smoking rates remain at current levels. While it would place restrictions on cigarette advertising, the restrictions would be permissive enough to allow Joe Camel and the Marlboro Man. The deal would not, however, give the industry any of the immunity from class-action lawsuits that it covets (Hwang, 7/10). Sanford C. Bernstein & Co. tobacco analyst Gary Black said the new settlement would cost the industry "between $180 billion and $200 billion over the next 25 years."
Quid Pro Quo?
The Los Angeles Times reports: "Considering that the industry reached separate settlements in the first four state cases (Mississippi, Florida, Texas and Minnesota) totaling about $36 billion," a deal of $200 billion "would appear to give the states a little more than they would have received under the $386.5 billion proposal," since the larger deal would have been shared with the federal government. In addition, the deal would allow Big Tobacco to avoid costly trials with individual states, many of which are slated to begin within a few months. The Los Angeles Times notes, however, that some attorneys general may not be so willing to settle. Rob Stutzman, spokesperson for California Attorney General Dan Lungren (R), said the state will "settle for nothing that does not rightfully compensate California taxpayers, as well as hold the industry accountable for the way they market to children" (7/10). Connecticut Attorney General Richard Blumenthal (D) added, "The terms certainly wouldn't be acceptable to Connecticut" (Wall Street Journal, 7/10).
Wrench In The Works
The Washington Post reports that the latest talks have temporarily broken down, over the "states' demands for an upfront payment of about $20 billion, twice the amount the companies offered in the June 20  deal" (7/10). Analyst Black, however, said everything appeared to still be on track. "The industry is moving full speed ahead. We expect an announcement to come sometime late this summer." Bill Novelli, president of the National Campaign for Tobacco- Free Kids, said that if a state-driven settlement happens, it "could put pressure on Congress to enact companion public-health measures and could make such a bill more palatable because the cost would be much lower" (Bloomberg News/Winston-Salem Journal, 7/10). Former FDA Commissioner David Kessler voiced a similar view. "When there is a void in national leadership, the states step in. It would be an enormous failure of national leadership if the U.S. Congress left the job to the state attorneys general," he said (Wall Street Journal, 7/10).