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Chapter 11: The Role of the Attorney General in Tobacco
For over a decade, attorneys general engaged in litigation against the tobacco industry. This class will explore the major issues raised in these cases.Predatory Lending and Negotiation Exercise
  • 1 A Tobacco Bill's Unlikely Demise

    ABC

    How Unexpected Opposition Killed a Landmark Tobacco Control Bill Sept. 8, 2004 Sep. 9, 2004 - Retired Surgeon General C. Everett Koop and former FDA Commissioner David Kessler are two icons of the public health community, recognized for their fight against the tobacco industry.


    But when lawmakers created the most comprehensive tobacco control legislation in American history — a landmark deal that would have regulated the manufacturing and sale of cigarettes and put billions of dollars into anti-smoking campaigns — the two men turned their backs on it.


    "They squandered a historic opportunity, and now we have a situation where none of their goals are being met," said Sen. John McCain, R-Ariz., who drafted the groundbreaking legislation.


    For the first time, a senior executive of the country's largest cigarette maker has told ABC News about big tobacco's secret negotiations with public officials. And the major players in the case also speak about why the deal never happened.


    ‘Sea Change’


    The path to the deal began a decade ago, when Kessler was the commissioner of the Food and Drug Administration. He asserted that cigarettes were drugs, and it was time for the federal government to regulate how they were made and marketed.


    Never before had a government official taken on the Big Tobacco companies, which had been extremely profitable for decades and appeared invincible. Tobacco had been blamed in the deaths of almost 450,000 people a year, but the industry had never had to pay a penny in lawsuits against it.


    When the chief executive officers of seven tobacco companies testified before Congress for the first time ever, in 1994, they said they believed nicotine was not addictive. But then thousands of secret tobacco-industry documents revealed massive evidence that cigarettes were deadly and addictive, evidence the tobacco companies had long suppressed.


    An avalanche of lawsuits against the companies began. Smokers sued, and then the government sued. "There was a sea change in attitudes about the tobacco industry in the United States," said Steve Parrish, a senior executive for Philip Morris in the 1990s.


    Encouraged by the President


    By 1996, the attorney general of Mississippi, Mike Moore, had managed to convince 19 other attorneys general to join him in colossal lawsuits against Big Tobacco.


    Publicly, the industry was defiant. Privately, it was terrified. "We were looking for peace," said Parrish. "We were trying to convince the other side to let us surrender."


    The Clinton administration thought that a settlement was in the public interest, and encouraged Moore to meet with the industry.


    In their first meeting, the industry offered to make dramatic changes. They said they were open to regulation by the FDA. They said they were ready to pay hundreds of billions of dollars in health-care costs for which they had been sued.


    And as a symbolic gesture, they even offered to give up two of their advertising icons, Joe Camel and the Marlboro man. All they wanted in return was some immunity from lawsuits — otherwise, they said, they would not survive.


    The secret negotiations moved along quickly, until the public health community learned about them. Most of its big players were outraged by the offer of legal protection to the industry. "If negotiators … stand up and say there is an agreement, they do that at their peril," Kessler warned at the time.


    Still, negotiations continued, with White House support. And on June 20, 1997, the attorneys general and the tobacco companies announced they had reached a settlement with more concessions from Big Tobacco than anyone had ever imagined possible.


    The companies would ban advertising billboards and vending machines. There would be stronger warning labels on cigarette packages and full disclosure of what was in a cigarette. The companies would stop marketing to children. The companies would pay $368 billion to settle the states' lawsuits. They would fund anti-smoking campaigns on a permanent basis. And the companies agreed to be regulated by the government.


    Consulting Kessler and Koop


    There was just one more thing to do. The agreement had to be turned into a federal law, passed by Congress and signed by Clinton. Moore believed Clinton would embrace it, as he had encouraged the negotiations. But that support never came.


    Instead, as 1998 began, Moore's effort was still under attack from the public health community. Then after nine months of lobbying to turn the settlement into a law, Moore found an ally in McCain.


    In only three weeks, using Moore's settlement as raw material, McCain drafted a comprehensive tobacco control bill that was much tougher on the industry. He also consulted Kessler and Koop to make sure they would have no objections.


    Kessler said McCain "cleaned up in that legislation much of the problems we had with the public health measures."


    Moore says they added some provisions, tightened up some regulations and increased the advertising and marketing restrictions, inflating price of the bill from $368 billion to $515 billion.


    But by then, the tobacco companies had gotten uneasy. They thought the legislation was getting too punitive and continued to insist on some legal protection from lawsuits in return for the public health benefits.


    McCain's bill struck a compromise: Big Tobacco could be held liable for unlimited sums of money if they lost in court. But they would not have to pay more than $6.5 billion in a single year.


    On April 1, 1998, McCain's bill was approved by the Senate Commerce Committee in a 19-1 vote.


    Things Fall Apart


    Everyone believed the bill was now on its way to becoming law. But that is not what happened.


    Koop and Kessler were still critical. "If you told me that this segment had been written by a representative of the tobacco industry, I would fully believe you," Koop said at the time. Kessler said, "No bill is better than a watered-down bill."


    The tobacco companies were alarmed. They thought this bad situation could only get worse. So they too turned against the bill, unleashing a huge ad campaign that cast the legislation as a tax increase.


    Pro-tobacco senators added to the opposition, using Koop and Kessler's objections as ammunition. The legislation died in the full Senate.


    McCain is convinced to this day that Kessler and Koop are responsible for the bill's defeat.


    "I was deeply, deeply disappointed at the behavior of both of them," McCain told ABC News' Peter Jennings. "They both personally assured me that they would [support the bill]." The McCain bill was "everything you ever worked for, everything you ever wanted, you could have," Kessler said in a recent interview with Jennings. "But there's only one little catch" — the provisions that Kessler says would allow Big Tobacco to survive.


    "It's not about the dollars," Kessler said. "It's about assuring the industry its future."


    Parrish says the tobacco industry was surprised by the bill's failure. He says he remembers someone telling him, "These guys don't know how to say yes."


    In the six years since the McCain bill failed, Congress has not passed a single piece of tobacco control legislation. And 2.5 million more Americans have died from smoking.


    This summer, the Senate overwhelmingly approved a bill that would give the FDA the authority to regulate the sale, marketing and advertising of tobacco in return for buying out tobacco farmers.


    The House has yet to vote on the bill and is considering a rival buy out bill.


    Copyright © 2004 ABC News Internet Ventures


  • 2 Tobacco Negotiations

    We stand here today, we hope, planting the flag, the beginning . . . to victory against the tobacco industry . . .. It’s been a long, hard struggle . . .. I won’t tell you that this is the end. This is really the beginning of the end for the way the tobacco industry has treated the American public.
      —Mike Moore, Attorney General of Mississippi

    The Marlboro man will be riding into the sunset on Joe Camel.
      —Bob Butterworth, Attorney General of Florida [1]

    It was late on a Friday afternoon and the press corps was restless. For three months it had followed a series of negotiations between state attorneys general (AG)2, public health advocates, and the five largest tobacco companies in the United States.3 Hundreds of billions of dollars were potentially at stake, as well as important public policy issues, including the future rights of private citizens to sue the industry for wrongful death and illness.


    A ground-breaking deal had been rumored earlier in the month, but it had fallen through. Some observers concluded that there were too many parties and too many contentious issues to ever expect settlement. Just this morning, however, reporters had been alerted that agreement was imminent; as the day dragged on, it became increasingly apparent that there still were major roadblocks.


    At long last, representatives of more than three dozen state attorneys general filed into the crowded room. Television lights went up as Mike Moore, the AG from Mississippi and a leader in the assault against the tobacco industry, stepped up to the podium. He looked both tired and exhilarated as he announced what he called “the most historic public health achievement” of all time. Sharing credit with his counterparts from across the country, Moore noted that “we have been in a grueling negotiation that has sometimes been humorous, sometimes been rocky, sometimes been hard. The last week has been the most contentious thing I’ve ever seen in my life, down to the last couple of minutes.”


    The whole settlement process had been triggered by an unusual lawsuit that Moore filed just three years earlier. At that time, many people had written off his efforts as quixotic or perhaps politically motivated. After all, the tobacco companies had been sued hundreds of times for smoking related illnesses and death, but had never paid a penny in settlement or court order. At the press conference, Moore himself recalled what many skeptics had once said about his strategy: “Never amount to a hill of beans, as they say in Mississippi.”[4]


    By the time he was done, however, Moore had built powerful alliances with other states, as well as with lawyers representing private claimants and various public interest groups. This collective “army,” as he called it, made up of “men and women with the most courage I’ve ever seen in this country” ultimately won what most people would regard as a very large mountain of beans, indeed.


    Specifically, on June 20, 1997, Moore announced that the five major United States tobacco companies had formally committed themselves to a remarkable settlement in which:


      • They would pay $368.5 billion in product liability, over 25 years, with an additional $15 billion per year thereafter, in perpetuity, to states as compensation for the Medicaid costs of tobacco-related illnesses.
      • A portion of the funds would be ear-marked for federal and state enforcement of the agreement. Other funds would be directed towards massive antismoking campaigns, aimed particularly at teens ($500 million annually).[5] The companies would also have to pay penalties if annual targets for reduction in underage smoking were not met.
      • The Food and Drug Administration (FDA) would regulate the manufacture, marketing, and distribution of tobacco and would oversee the industry payments to the states.6 The tobacco companies would also follow strict limits on their advertising and product promotion activities, including recently proposed FDA regulations and other restrictions prohibiting billboard advertising of cigarettes, as well as store displays of tobacco products, sponsorship of sporting events, vending machine sales, and give-aways of merchandise bearing cigarette brand logos.
      • The companies would be required to disclose all new and all previously nonpublic internal laboratory research relating to the health effects and safety of their products.

    In return for these unprecedented concessions, the five tobacco companies henceforth would be immune from paying awards for punitive damages to individual plaintiffs, and from any class action suits against the industry. Suits by individual smokers and their families would continue to be allowed, with no limit on the recovery of compensatory damages by individual plaintiffs.


    In trumpeting the agreement, Moore stated, “We had to punish this industry in such a way that everybody in this country and in the world would recognize that they had paid a higher price than any other corporation in history.” Such punishment was fitting, he explained, because the industry had “done more harm than any other in history.”


    Moore could not claim full and final victory, however. The signatories to the agreement ultimately had to rely on the federal government to implement some of its key provisions. Under the United States Constitution, only Congress could regulate interstate commerce, not individual states; likewise various federal agencies would oversee important aspects of the deal. Only Congress could provide the liability limitations sought by the industry.
    It was well understood that the conclusion of the negotiations between the tobacco industry and most of the states thus signaled the start of an equally complex negotiation at the federal level. Yet in spite of the uncertainty ahead, it was also clear that what Mike Moore and his colleagues had accomplished at the bargaining table had fundamentally changed the rules and the stakes of the game.
    Incriminating information that had long been hidden by the tobacco companies now was a matter of record. Moreover, the head of one of the companies had already admitted to the “three lies,” long suspected, but denied under oath by his counterparts. Specifically, in an earlier settlement with the states, he had publicly acknowledged that:
      •tobacco causes cancer and other serious illness;
      • smoking is addictive;
          • and the companies were targeting youth in their marketing campaigns.

        Also, Moore and his colleagues had made sure that the tobacco industry could not use the agreement as a stalling device. The state attorneys general had retained the right—over the industry’s strenuous objections—to go forward with their multiple lawsuits unless and until Congress and the White House could resolve the remaining regulatory issues and enact the proposed national settlement into federal law.


        No matter how the next stage of the process unfolded, the history of the provisional settlement between the states and the major American tobacco companies was itself a remarkable illustration of a complex, multiparty negotiation. The process took place in a highly politicized context, in the glare of the media, and in the shadow of numerous (and sometimes conflicting) lawsuits and regulations.


        That Moore and his colleagues succeeded where so many before had failed testified to significant changes in the political and regulatory landscape. It also reflected shrewd coalition-building and clever strategy, plus a good measure of luck. Finally, the agreement raised important questions about negotiating the life and death rights and interests of parties who are not themselves at the bargaining table. Though few would second-guess Moore’s strategy, many critics challenged the agreement that he and his fellow attorneys general endorsed, some calling it a “massive bailout” of the tobacco industry.


        This is the story of that deal and how it was reached.


        Smoking, Public Health, and Politics

        The central claims of Moore’s Mississippi lawsuit—and of the dozens of others like it that would follow—was that the state taxpayers were unfairly shouldering the costs of tobacco-related illnesses through the Medicaid program. The notion of invoking the interests of taxpayers was new, but the idea that smoking is expensive, and that the tobacco industry was breaking the law by selling an otherwise legal product to children under 18 (the legal age of sale), certainly was not.


        A precise account of illness and death caused by tobacco can never be made. Yet the total number of American deaths in the twentieth century attributed to smoking is commonly measured in the many millions. In the 1950s, nearly half of the American adult population smoked. If there is any good news in recent public health statistics, it is that the frequency of smoking has dropped significantly since mid-century. By 1997 only a quarter of the population smoked, down from 42% in 1965.7 This drop in the percentage of smokers was somewhat offset by general population growth, however, so that even in the 1990s there still were nearly fifty million American smokers, each consuming on average 27 cigarettes a day.


        Of those who still smoked, an estimated 80-90% became addicted to cigarettes as teenagers. Public health advocates had long accused cigarette companies of marketing directly to teenagers and even younger children for just this reason, using campaigns with cartoon characters like Joe Camel.8 For years the industry denied this charge, lest it appear to condone illegal behavior (cigarette sales to children under 18 were prohibited in the United States). Nevertheless, it was estimated that 3,000 young people became regular smokers each day.[9]


        The resulting health toll has been staggering. In 1997 tobacco was the number one leading preventable cause of death in the United States, claiming the lives of nearly half a million Americans annually; more than alcohol, drunk driving, car accidents, cocaine, crack, heroin, suicide, fire, and AIDS combined. Thirty-three years had passed since the first report by the Surgeon General linking smoking to cancer, yet cigarette use was still believed to play a role in the deaths of one in every seven Americans. The dollar costs are staggering as well. Richard Daynard, director of the Tobacco Products Liability Project at the Northeastern University Law School, estimates the health care costs of smoking at $50 billion a year, and indirect costs, such as lost productivity, at an additional $50 to $100 billion annually.[10]

        Despite the mounting evidence of the individual and social costs of smoking, the federal government’s attempts to regulate tobacco have come slowly. In 1964, in a landmark announcement, the U.S. Surgeon General declared that cigarette smoking was a serious health hazard; specifically, that it caused lung cancer. In 1969, a federal law was passed requiring cigarette manufacturers to put warning labels on each package of cigarettes. Two years later cigarette advertising was banned from television. Growing concern about second hand smoke also helped antitobacco activists achieve “smoke free” zones—on airplanes, in restaurants, and often in the workplace. Yet for each of these steps, there were dozens of more stringent measures that were successfully defeated by the tobacco lobby. Relatively few ever came up for direct votes in Congress. Much more often stricter regulations were bogged down by endless agency studies and subcommittee debates.


        “There’s no magic in it,” explained an aide to Congressman Henry Waxman, one of the first representatives to challenge Big Tobacco. “It’s a very basic issue—their power and influence starts and ends with their money.”11 In 1996, operating profits of the five major U.S. cigarette manufacturers and UST, Inc. (a manufacturer of smokeless tobacco) were almost $10 billion on domestic tobacco sales alone. For the entire industry, profits were $15.781 billion (see Exhibits 1, 2, 3 and 4). Also in 1996, tobacco companies were the largest corporate contributors to both the Democratic and Republican parties, giving nearly $11 million dollars to political parties and individual candidates during the election cycle.12 Between 1986 and 1996, three of four members of Congress—314 Representatives and 78 Senators—accepted industry political action committee (PAC) contributions13 (see Exhibits 5 and 6).


        In addition to direct contributions, tobacco companies also maintained federal lobbyists in Washington who attempted to directly influence tobacco policy. In 1996, Philip Morris alone spent $19.6 million on its Washington lobbying operation, which included 13 house lobbyists and 15 side consultants, law and lobbying firms. The Tobacco Institute, an industry clearinghouse for intelligence reports on antismoking efforts around the country and a coordinator of defensive efforts, had a Washington headquarters which cost the industry an estimated $5-10 million annually.[14]


        Tobacco companies also made political investments at the state level, when antismoking activists started to make more local inroads. In New York, for example, during the 1993 session of the state legislature, the $600,000 reportedly spent by tobacco companies amounted to more than any other industry or special interest group devoted to political persuasion in the state. Likewise, when an antismoking campaign seemed to be gaining momentum in California, cigarette companies spent a reported $4 million on campaign gifts and fees to more than two dozen lobbyists working during the 1989-90 legislative term.[15] Similar efforts were made by the industry in states with strong antitobacco activity, such as Massachusetts and Minnesota.?p>

        The political influence and power wielded by the industry was exerted in both overt and subtle ways. In 1994, for example, when Republican Tom Bliley, the largest single recipient of Congressional tobacco money, took over the House Commerce Committee, he immediately canceled an investigation of the tobacco industry. Special treatment of tobacco interests was not new. Since the 1940s, Congress had awarded the annual farming subsidies to tobacco farmers in the southern states. By restricting cultivation, these subsidies (valued at an estimated $80 million dollars in 1996) helped to prop up the price of tobacco and expand the network of allies.

        Prior Litigation

        In addition to their regulatory activity, tobacco companies were also fighting aggressively on another front: the courtroom. Until the time of the settlement, they were even more successful in this venue than in federal and state legislatures. The first suit brought against the industry was filed in 1954 by a widow, Eva Cooper, who contended that the Camel cigarettes her husband smoked caused him to develop cancer and killed him. She sued R.J. Reynolds and lost, unable to prove that her husband’s death was a result of smoking.


        Other individual suits were filed against various companies in the late 1950s and early 1960s. Relatively few cases actually got to a jury, and not one resulted in a verdict that cigarette companies were responsible for the death or illness of smokers. Some plaintiffs simply dropped their claims after being dragged through extensive and expensive pretrial proceedings. In the words of a lawyer for R.J. Reynolds, “The way we won the cases, to paraphrase General Patton, is not by spending all of Reynold’s money, but by making the other son-of-a-bitch spend his.”[16]


        Despite increasing awareness of the hazards of smoking, cigarette lawsuits in the 1980s and early 1990s shared the fate of the earlier litigation. In the courts, tobacco companies continued to successfully employ a dual strategy defense: they either denied that cigarettes were health hazards, or maintained that even if cigarettes were harmful, smokers were responsible for their own actions. “The plaintiffs have lost every case because of a single flaw in their approach,” explained a former tobacco counsel. “For a product to be defective, it must be bad beyond the average public knowledge. Yet, if you walk into a room of 1,000 people and ask who believes that cigarettes are dangerous and cause cancer, every person in that room—smoker or not—will raise a hand.”17 After 40 years and over 300 lawsuits, no tobacco company had paid a plaintiff a single penny.


        One of the formidable barriers to success in the courtroom was the fact that for many years, the tobacco industry knew more about the health effects of smoking than did consumers and their lawyers (and for a time, perhaps, even more than the government.) As public health research increased, many critics suspected that the industry covered up incriminating evidence, though this was not fully confirmed until the landmark Cipollone decision in 1992.[18] In an unprecedented legal move, Cipollone attorneys subpoenaed 100,000 pages of documents from the tobacco industry, which they claimed proved that the industry suppressed, ignored, and even lied about data on the harmful effects of smoking. In short, they argued, the industry engaged in massive fraud.


        Scientific studies by independent researchers began linking cigarettes to lung cancer in 1950. Around that time tobacco companies themselves became interested in developing their own research laboratories. In January of 1964, when the Surgeon General decried smoking as a major health hazard for the first time, R.J. Reynolds Chairman Bowman Gray told Congress that the industry was prepared to do whatever it took to make smoking safe: “If it is proven that cigarettes are harmful, we want to do something about it regardless of what somebody else tells us to do. And we would do our level best. It’s only human.”[19]


        Reynolds soon built an animal testing laboratory in Winston-Salem dubbed the “Mouse House,” where scientists focused on the links between smoke and lung disease. The operation (and precipitous closing) of this facility were not well known, however, until the release of the documents obtained in the Cipollone case. One scientist who joined the Mouse House in 1967, said that the lungs of his “smoking bunnies” confirmed the causal links between smoking and disease. According to the Washington Monthly, Reynolds executives were not pleased with their in-house scientists’ findings, and in March 1970 closed the Mouse House, fired the scientists, and confiscated dozens of research notebooks. “I strongly suspect we were fired,” reported one scientist, “because anything we were doing was subject to subpoena.”[20]


        Similar incriminating information surfaced in the years following Cipollone from other sources. In 1988 Merrell Williams, a legal temp at Brown & Williamson,21 discovered a cache of documents showing that the company’s lawyers had long known that cigarettes were deadly and nicotine was addictive. Williams secretly photocopied many of the documents and left the company in 1992.


        By this late date, the medical issues had long been resolved—industry research was not needed to confirm the link between smoking and illness—but such evidence was very important to the legal issue of fraudulent concealment, particularly in light of the Supreme Court’s decision in Cipollone on June 3, 1992. Specifically the Court ruled that the health labels on cigarettes (required since 1969) effectively shielded tobacco companies from consumer claims that the industry failed to warn of the dangers of smoking. On the other hand, the Court held that plaintiffs nonetheless could sue cigarette makers on a somewhat different theory. Plaintiffs could hold the tobacco companies responsible for concealing facts about smoking or actually lying about damaging information they possessed, thereby engaging in fraud.


        The Third Wave

        Having been thwarted in the courts, antismoking advocates carried the fight to other venues where they found some allies. In February 1994, Dr. David Kessler, the U.S. Food and Drug Administration (FDA) Commissioner, proclaimed that his agency was considering classifying nicotine as a drug and cigarettes as “drug delivery devices.” This announcement marked a radical change for the FDA. For the first time it would be able to regulate the production, chemical content, advertising and distribution of cigarettes.


        Up to this point, the role of the government in regulating tobacco per se was limited. Tobacco had been specifically excluded from the Consumer Product Safety Act and the Toxic Substance Control Act. Even Kessler’s predecessors as FDA Commissioner had assumed tobacco products also were not encompassed by the Food, Drug, and Cosmetics Act.22 If classified as “drugs,” however, cigarettes would require FDA testing and approval before they could be sold to the American public. Kessler could force cigarette makers to submit detailed information and then demand that the ingredients of cigarettes be listed on packages. The FDA could potentially require tobacco companies to remove certain ingredients from cigarettes, and ultimately produce cigarettes that were less toxic and less addictive. Furthermore, in theory, the FDA could prohibit entirely the sale of cigarettes and other tobacco products in the United States. Kessler’s reasoning was bolstered by industry documents discovered in the Cipollone case as well as those produced by Williams, indicating that the industry itself thought of cigarettes in just these terms (nicotine as a drug and cigarettes as “nicotine delivery systems.”)


        Within a few months Representative Henry Waxman, who chaired the House Subcommittee on Health and Environment, convened Congressional hearings to examine the tobacco issue. Waxman produced internal tobacco company documents that showed that companies had long manipulated nicotine levels in cigarettes. Kessler himself testified that the companies knew nicotine was addictive and manipulated nicotine levels. Notwithstanding overwhelming medical evidence to the contrary, however, the CEOs of the seven major tobacco companies testified under oath that they did not think smoking was addictive.


        The State Medicaid Claims

        Far from Waxman’s hearings and the stirrings of the FDA in Washington, another assault on big tobacco was being mounted. It received much less media attention at the time, but in the end proved to be much more significant. This attack started with an informal discussion between three former law school classmates. One was Mike Moore, a Democrat who in 1988 had been elected as the youngest attorney general in Mississippi in over seventy-five years. Moore was an activist and aggressive reformer. Therefore when his friend Mike Lewis called with a question about tobacco litigation, Lewis had Moore’s attention. Was it possible, Lewis asked, that Moore could sue the tobacco companies on behalf of Mississippi taxpayers to recoup Medicaid spending on tobacco-related illness? Moore listened carefully. This certainly was a novel approach. Moore immediately contacted another Ole Miss Law School classmate, Dickie Scruggs.


        Scruggs was a 51-year-old plaintiff lawyer operating out of the Mississippi gulf coast town of Pascagoula. A former navy pilot, Scruggs had made his millions in the 1980s in asbestos litigation. Until 1991—seven years and millions of dollars into his asbestos practice—Scruggs never actually tried an asbestos case in a courtroom. “I like to get the stakes so high,” he said, “that neither side can afford to lose.” As a judge who watched Scruggs settle one case on the morning it went to trial explained, “He’s the best I’ve ever seen at getting people to agree. He is a master.”[23]


        Scruggs could not simply launch the novel suit on his own. He was a private citizen. Only the state attorney general, as a representative of the people of Mississippi, could try to reclaim their Medicaid payments. Doing so, however, would not be easy. Until that point states had not even considered mounting an attack on the tobacco industry. Attorneys general like Moore, working in resource-strapped state agencies, were well aware of the court room record of the tobacco companies, their deep pockets, and knew the industry was nearly indefatigable.


        In addition to the financial obstacles, there were also major legal hurdles facing the states. Courts’ interpretations of the pre-emption provisions of the Food, Drug and Cosmetic Act, as well as the Federal Cigarette Labeling and Advertising Act, had often shielded cigarette companies from state and local laws on youth access to cigarettes, advertising, and other state efforts to control tobacco. In spite of these very real impediments, Moore and Scruggs were intrigued by Lewis’ theory. It had not been tried before, and the time and political climate might be right.


        To build a case against the tobacco companies, Moore and Scruggs approached people like Merrell Williams, the legal temp who photocopied incriminating documents from Brown & Williamson. By the time Williams met Moore and Scruggs in 1994, he was so terrified of recriminations from the tobacco industry, and so poor from defending himself against their lawsuits, that he was sleeping and hiding out in his boat. Over time, Moore and Scruggs managed to reassure Williams that he would be protected from Brown & Williamson. (Scruggs also helped to secure for Williams a loan on a house and gave him a $3,000 a month job as a “consultant.”) In return Williams would give Moore and Scruggs the evidence.


        Moore and Scruggs anticipated that the tobacco companies would contend that Williams’ documents were stolen or protected by lawyer-client privilege, hence inadmissible in court. In the spring of 1994, they therefore began to disseminate the documents to newspapers, academics, and to the larger antitobacco community. Scruggs also helped another Brown & Williamson whistle blower, Jeffrey Wigand, a former vice president of research. Wigand claimed that Brown & Williamson fired him in 1993, after he objected to company executives that the company was lacing a pipe tobacco product with a cancer-causing additive. Wigand also claimed that the Brown & Williamson CEO had repeatedly said in private conversations that nicotine was addictive and that the company was in the “nicotine delivery business.”[24] Wigand said the CEO had therefore perjured himself in telling Congress that he did not believe that tobacco was addictive.


        Armed with such evidence, on May 23 1994, Moore filed the first lawsuit by a state against the nation’s cigarette manufacturers, seeking to recover $940 million in Medicaid expenditures. “This lawsuit is premised on a simple notion: you caused the health crisis; you pay for it,” Moore said. “The free ride is over. It’s time these billionaire tobacco companies start paying what they rightfully owe to Mississippi taxpayers. It’s time they quit hooking our young people on nicotine delivered through the dirty needle of cigarettes and other tobacco products. . . . I fully intend to make the tobacco companies pay for their sins.”[25]


        “You know,” he continued, “Mississippi is the little guy. We get beat up on all the time; we get the negative press. And so this has made the people of Mississippi very proud that Mississippi is leading the rest of the country in this very important public health fight. That’s driven the thing.”[26] Much of the litigation would be handled by Scruggs, who agreed to a contingency fee arrangement with the state.


        As they began joint preparations for the Mississippi suit, Moore and Scruggs recognized that the credibility of the Medicaid theory would be strengthened if other state attorneys general were pursuing similar cases in their own jurisdictions. Having allies would also facilitate the discovery process. The more attorneys general and private lawyers unearthing condemning industry documents or timid whistle blowers, the better. Moore and Scruggs also believed that exchanging theories, strategies, materials, and even attorneys, might help to reduce the costs and improve the efficiency of what promised to be a long, difficult, and expensive process. Finally, a broad array of legal theories would only complicate matters for the tobacco industry. As states took on the industry with different laws, defenses would be harder to mount. And as more states filed suits, the odds that the industry would lose at least once increased. In addition, even for the powerful tobacco industry, facing off against the top law enforcement offices of several states would be a new and difficult fight than prior “litigation wars” against private plaintiffs. Using Scruggs’ Learjet as their transport, Scruggs and Moore began their cross-country crusade to rally other states to the cause.


        Working to Moore’s advantage, the attorneys general had almost a 20-year tradition of cooperation on a variety of issues. The National Association of Attorneys General (NAAG) often helped to coordinate multistate cases, particularly in the area of antitrust and consumer protection. NAAG’s efforts were regularly nonpartisan and geographically diverse. The states had already worked together on some antitobacco activity. Several states, including Massachusetts and Minnesota, had done youth access stings where the states sent juveniles into stores to buy cigarettes, and then sued large chains for noncompliance with the law. In 1993 27 attorneys general urged the Federal Trade Commission to ban R.J. Reynolds’s “Joe Camel” advertising campaign, arguing that it unfairly encouraged children to smoke. Also in 1993, 16 attorneys general issued a report recommending that fast food restaurants ban smoking. Scott Harshbarger, the AG of Massachusetts, a state with a proven record on antitobacco, was the president of NAAG and would support Moore. Moore also knew that NAAG met three times a year, and these conventions would provide a useful forum for sharing his Medicaid theory.


        Support from other states would also be important for Moore in the face of the opposition he faced at home. When Moore first filed, Mississippi’s Republican Governor Kirk Fordice asserted, “I have nothing to do with the tobacco lawsuit. Philosophically, I want to throw up when I think of all the lawsuits going on in this country.”[27] Fordice went on to try to block the case.


        The Governor was not Moore’s only critic. Others in Mississippi argued that Moore’s driving force was his political ambition. After nine years as AG it was rumored that he might run against Fordice for Governor in 1999, or for Senator if either Trent Lott (Scruggs’ brother-in-law, as it happened) or Thad Cochran’s seats opened up. The defendants in the Mississippi case, 13 tobacco companies, tobacco research organizations and a public relations firm, charged that Moore’s twin goals were to generate publicity for himself and to enrich a clique of trial lawyers (namely Scruggs) who had contributed to his campaigns. “What you’ve got here is a wildly ambitious politician who will stop at nothing to further his career,” said a cigarette distributor named as a defendant in Moore’s suit. “And if we’re road kill along the way, then so be it as far as Mike Moore is concerned.”[28]


        Early Allies

        In June 1994, following Moore’s announcement of the Mississippi suit, the FDA discovered that Brown & Williamson had secretly developed a tobacco plant with twice the nicotine content that occurred naturally. Simultaneously, the Department of Justice began investigating whether the tobacco CEOs had obstructed justice by lying to Congress during the Waxman hearings. Moore found that the states, buoyed by these events, were more confident about taking on the industry. In July he met individually with attorneys general of more than fifteen states during the NAAG summer conference in Texas. Mississippi was not alone for long. Minnesota, under the leadership of AG Hubert “Skip” Humphrey, was the second state to file. West Virginia was third, and Florida, a very large and important state for Moore, was fourth in February 1995.[29] Florida’s $1.4 billion lawsuit against the industry was the largest thus far, and was considered one of the strongest because of the state’s new Medicaid Third Party Liability Law, which stripped cigarette manufacturers of many traditional defenses.[30]


        Soon thereafter Moore and Scruggs boarded the Learjet for Florida, where they met with the attorneys general from Florida, Minnesota, and West Virginia to share information and develop legal strategies. Moore believed that a united front of attorneys general and pooled financial resources would help to attract additional states to the suit. “I predict six to seven more states will join very soon,” he said at the Florida meeting.[31]


        Moore was right. Attorneys general from Maryland, Massachusetts, and Utah were strongly considering suits. Massachusetts had already passed legislation in the summer of 1994 which would allow its AG, Scott Harshbarger, to sue the industry. With a long history of antitobacco activity, Massachusetts would be a critical state to have on board. When the industry filed a pre-emptive lawsuit against Massachusetts, Moore knew this would galvanize Harshbarger to join the coalition. “Suing Scott Harshbarger is like kicking a bulldog,” Moore said.


        Harshbarger also recognized the value of alliances both with other states and with public health and consumer protection groups. “I think a coalition is an important piece of this litigation,” he said.[32]


        On December 19, 1995 Massachusetts became the fifth state to bring a lawsuit against the industry, seeking more than $1 billion in damages. During the press conference at a Boston hospital where Harshbarger announced the suit, Cardinal Bernard Law happened to be in the next room wrapping children’s Christmas gifts. Law heard Harshbarger speak, and then approached the podium himself. The Cardinal described to the assembled crowd how his mother had died of lung cancer. “If this effort can save others from such a devastating disease,” he said of the Massachusetts suit, “then God will have indeed have blessed a very good effort.”[33]


        Beyond this blessing, Massachusetts was the first state to dedicate massive in-house legal resources to the fight, instead of largely subcontracting the litigation to private firms. Harshbarger put supervision of the case in the hands of Tom Green, his First Assistant Attorney General. Harshbarger’s staff drafted model complaints and legal documents that were followed closely by states that filed subsequently. Harshbarger joined Moore—the “pied piper”—and Butterworth as the leaders in the tobacco fight.


        Big Tobacco Fights Back

        The mounting activity of the antitobacco forces caused great consternation within the $45 billion tobacco industry, which was not optimally structured to respond. Though often faced with a common enemy in public health and consumer advocates, the industry—a handful of tightly knit companies—was rarely unified. They jointly sponsored organizations like the Tobacco Institute to mount a mutual defense, but such collaboration did not temper the fierce competition between the tobacco companies.34 In their struggle for market share, Philip Morris and RJR were competing for a declining number of American smokers. Their Marlboro and Camel brands were pitted against each other, as well as against the large number of other brands available to consumers.[35]


        Competition was also intensified by the growing fight for overseas markets. In 1996, Eastern Europeans consumed 660 billion cigarettes a year. There was also a growing demand for American tobacco in Latin America, Asia, Africa, and the Middle East.[36] The key for the tobacco companies, under the mounting attack from the states, would be to manage cooperation in the face of this competition.

        As the state antitobacco movement gained momentum, the industry responded aggressively. Tobacco lobbyists launched a campaign to convince politicians that the AG suits were ill conceived. They tried to argue that similar suits could eventually be brought against other industries, hence litigation would only cause the states grave economic harm over the long term. Mother Jones magazine reported that the tobacco company lawyers were heavy-handed in their dealings with the attorneys general, in one instance allegedly threatening to depose every Medicaid recipient in the state. Connecticut AG Richard Blumenthal described a visit by tobacco lawyers. “In effect they said a lawsuit won’t be successful, and that it would be opposed vigorously and would be very strongly held against me by the tobacco companies and anyone they could persuade to their view,” he said.


        Washington AG Christine Gregoire said that tobacco lawyers emphasized the cost-savings of smoking. “They told me how much money the state was saving because people who smoke die younger,” she said.[37] Carried to its logical extreme, this argument turned Moore’s theory upside down; perhaps the states should pay the cigarette companies! Whatever the economic merits of this position[38], however, the tobacco industry retreated from it publicly.


        When behind the scenes lobbying failed, tobacco companies often went to court. In addition to the pre-emptive suit against Massachusetts, the industry filed a variety of suits against other states, including challenges to their right to hire attorneys on a contingency basis, their right to sue tobacco, and other objections to specific state statutes. But Moore did not falter. “What it really boils down to,” he said, “is the politics are not right, the powers [that] be are against it, but the issue is right. This is a very important thing to do.”[39]


        During the same period, the tobacco companies were attacked on another legal front by a coalition of 65 law firms formed to finance the case of Peter Castano, a lawyer who died of lung cancer. Their coalition sought to fashion a nation wide class action lawsuit against the cigarette industry on the emerging issue of nicotine manipulation and addiction. In Castano, the tobacco manufacturers were accused for the first time of intentionally addicting smokers by manipulating nicotine in cigarettes. In 1995, a U.S. District Judge sided with the plaintiffs by certifying a loosely defined class covering every “nicotine-dependent person” who smoked any cigarette brand in the last 50 years. The scope of the Castano case was unique, with potentially 50 million plaintiffs.


        The Wild Card

        Between the lawsuits brought by Moore and his colleagues, Castano, and the literally hundreds of private suits, the industry was spending $600 million annually on legal bills by the mid-1990s. Unlike some of its more prosperous rivals, Liggett was buckling under the pressure of these legal expenses. Back in the 1950s, Liggett had been a major player in the cigarette business, but its sales had declined over several decades. In 1986, the company came under control of Wall Street rogue Bennett LeBow, a takeover maverick who was an outsider to the Big Tobacco club.[40]


        Despite LeBow’s efforts to turn the company around, Liggett continued to operate in the red. By 1994, Liggett’s market share had plunged to 2%, the company earned only $11 million in pretax profit, and its legal bills amounted to $10 million. LeBow sought to retain Marc Kasowitz, an attorney experienced as a product defense lawyer, but relatively new to tobacco litigation. “I decided I didn’t like the old approach of ‘Let’s fight this to the death,’” LeBow said. “It’s expensive. There was big litigation coming up. What happens when you lose?”[41]

        “When Philip Morris got wind of this, they went ballistic with the idea that Liggett would be represented by someone not part of the regular crowd,” said a lawyer familiar with Liggett’s dealings.42 In fact, Philip Morris was so unhappy with the prospect of Liggett’s changing counsel that it agreed to pay the bills if Liggett would keep its old lawyer to defend the cigarette suits. Even with this subsidy, LeBow still went ahead and hired Kasowitz in 1995. LeBow had an ambitious master strategy. As a major RJR Nabisco shareholder, LeBow wanted to raise Nabisco’s stock value by spinning it off and releasing it from “the albatross of the tobacco litigation” belonging to R.J. Reynolds.[43] Specifically, Kasowitz suggested to LeBow that Liggett try to settle the state Medicaid and Castano suits, and win a provision that any company that later merged with Liggett would be covered by the same agreement. As LeBow imagined it, having the terms in place would make it easier for R.J. Reynolds to break away from Nabisco and join Liggett under the settlement’s umbrella. If he could pull off a Liggett settlement, LeBow hoped he could use the tobacco issue to gain control of the RJR Nabisco Board.


        At the end of January 1996, Mike Moore learned of Kasowitz’s overtures to the lawyers in the Castano group about the possibility of a settlement. Moore immediately contacted Harshbarger (Massachusetts) and Butterworth (Florida), who flew to meet him. The three discussed strategy, and the significance of this opportunity. “They immediately saw the strategic value—as in any other drug case—of getting the little guy to turn state’s evidence,” Green said. “And there was concern, frankly, about LeBow being sort of a Wall Street raider. In most other contexts, there might have been distaste for dealing with him, but compared to the tobacco executives, he was a model citizen.”


        Liggett I: A Break in the Dike?

        In February 1996, the negotiations between Kasowitz and plaintiffs’ lawyers in the Castano case began in earnest. After a few weeks, Harshbarger and the other attorneys general realized a deal was imminent. Harshbarger dispatched Green to go immediately to New York. It was snowing hard, and the airports were closed. Green hopped on a train, buying a change of underwear along the way. For the next few weeks he camped out in Kasowitz’s office with Moore, Butterworth, several of the Castano lawyers, and a handful public health advocates. On March 12 Liggett reached a settlement in the Castano case. “Liggett just can’t afford a scorched-earth litigation policy,” LeBow said. “One major judgment against Liggett would put us out of business.”[44]


        The Liggett settlement was in two parts: Liggett broke rank with its fellow tobacco companies and agreed to settle its portion of the Castano class action suit. The settlement called for Liggett to pay:


          • $1 million immediately;
          • $440,000 a year over the next nine years;
          • and 5% of its pretax income for 25 years, up to $1.25 billion.

        In addition to the Castano case, Liggett struck a deal on March 15 with Moore and representatives of four other states—West Virginia, Florida, Massachusetts, and Louisiana—that had brought suits against the tobacco industry. In the agreement with the attorneys general, Liggett agreed to:

          • Withdraw its opposition to proposed FDA rules (that the FDA would restrict tobacco industry marketing to children and regulate cigarettes);
          • Limit tobacco marketing to children (Liggett would comply with certain provisions of the proposed FDA rules even before they became final); 45 and
          • Pay the initial settling states $5 million ($1 million up front and $4 million in annual installments), 2.5% of Liggett’s pretax income each year over 25 years for initial settling states, and up to an additional 5% of Liggett’s pre-tax income for subsequent settling states. (Liggett would make these payments to an AG Settlement Trust).

        The settlement marked the first time a tobacco company had agreed to pay damages. According to the agreement, any state that filed subsequently could share in the settlement, which provided two pools of money—one for the five original states and a second for subsequent filers. The settlement also included the provision that any company that merged with Liggett would also take part in the settlement. Specifically, it would be absolved of further liability, though it would be obligated to Liggett’s payments and additional payments to the AG Settlement Trust, and would be bound by Liggett’s FDA obligations.


        Originally, Liggett had viewed the state claims as a kind of sub-class of the Castano class action suit. The attorneys general, however, had been very clear that they wanted a separate settlement. First, they knew that there was always the possibility that the Castano class action could be decertified in federal court. More important, they insisted on a significant distinction from Castano; the state cases were not about money (the primary issue in the class action), but rather about law enforcement. According to one of the negotiators for the states, “We wanted to be very clear that as attorneys general, we’re not members of some class. These cases are law enforcement cases; they’re run by the chief law enforcement officers in each state. They’re brought to address the leading preventable cause of death in America, and they’re brought to protect kids who by and large are hooked before they turn legal age. That’s what we’re about.”


        After the settlement other tobacco companies immediately distanced themselves from Liggett. “Our clients intend to defend the litigation, continue to litigate, have no intention of settling, and didn’t know what Mr. LeBow was doing,” said a lawyer for Philip Morris.46 According to another company spokesman, “The word settlement is not even in Philip Morris’ lexicon.”[47]


        The major tobacco companies were not alone in their aversion to the settlement. Some states were wary of an agreement that would give RJR the opportunity to escape liability by getting in on Liggett’s deal. Even one of Moore’s original partners, Minnesota, rejected the deal. According to a lawyer for Minnesota, “As long as there is the thread of possibility that RJR could get out that cheap [by acquiring Liggett], it’s not a good deal.” Minnesota elected to break with the other attorneys general and pursue its own case through the discovery process.48 In the meantime, LeBow’s takeover strategy had failed. The settlement did not assist his proxy fight to spin off Nabisco. An article in the Wall Street Journal reported that the “maverick strategy of pushing to settle cigarette lawsuits backfired badly among tobacco investors.”[49] Some observers concluded that the take over attempt had been flawed, particularly because LeBow had failed to realize that many RJR Nabisco shareholders also held stock in competing tobacco companies that would have been threatened by such a deal.


        The soundness of LeBow’s strategy was called into further question in May, when the Castano class action was decertified by the federal court in New Orleans.[50] In some respects, it appeared as if LeBow had paid to settle a case that he would have won with only a little more patience. In any event, the separate deal that Liggett had made with the state attorneys general was still in force.


        Although the Liggett settlement provided little money for the five states involved (Liggett was in dire financial shape), the deal helped to bring other states into the fold. “We knew it could be a tremendous momentum booster,” Moore said. “Whether you get a small check or a large check, the money gets people’s interest.”51 Although only two state suits were pending when Liggett was settled, others soon followed. “Once there was a break in the dike,” Butterworth said, “it made it much easier to come aboard.”[52]


        In May of 1996, less than two months after the Liggett settlement, Moore helped to organize a one- day conference in Chicago to discuss strategy and information sharing. Although the Chicago meeting was similar in design to the Florida meeting of five attorneys general a year before, this time representatives from 30 states attended. At the conference, officials from each state that had already filed emphasized the importance of their coalition, and the gains that could be made by pooling experience and strategy. Some attorneys general offered advice about assembling a legal team, others pointed to the advantages of the shared discovery process (ongoing debriefings of whistle blowers, recruitment of free experts from the medical community and discovery and analysis of core tobacco industry documents). Medical experts made presentations on the industry’s targeting of children and on the pharmacology of tobacco addiction. Presentations were also made on developing a damages model to quantify costs and representatives from Massachusetts even handed out a “how to file a case” primer.[53]


        Soon the states began to file in increasing numbers, and their particular claims varied widely, reflecting underlying differences in state laws. The state cases included common-law theories, such as Mississippi’s charge that the tobacco companies had unjustly enriched themselves at state expense. States also pursued statutory claims, such as Minnesota’s antitrust charge, where the industry was accused of conspiring to suppress research into a safer cigarette. In every case, the attorneys general followed the Moore and Scruggs model and hired outside counsel, usually on a contingency-fee basis (10%-25%), to go after the tens of billions of Medicaid dollars the states claimed to have spent on tobacco-related illnesses.


        End Game?

        As the state coalition expanded, Moore, Butterworth, and Harshbarger realized that some kind of “larger picture,” beyond the individual state cases, could potentially take shape. Green described the Chicago meeting, The fact that 30 states showed is very significant. . . . Of the 30, there was a broad cross section by party and geographic region. I think if another 5 to 10 actually file, it will place great pressure on the industry to reconsider an “end game” solution apart from the litigation. At the same time, the leaders of the issue must do their cases in state courts wherever possible, and with sufficient independence, so as not to hand the industry an opportunity to consolidate all the litigation in a single federal court in one consolidated case that they can then bottle it up in the fashion of Cipollone. There truly is strength in numbers, but only if we both coordinate and maintain our independence.


        In June, during the NAAG meeting in St. Louis, Moore, Scruggs, Harshbarger and Butterworth met away from the group at a small restaurant. Moore and Scruggs had news: operatives for the tobacco industry—men by the names of Tommy Anderson and John Sears—indicated that the industry was interested in some kind of national settlement.


        Harshbarger and Butterworth were intrigued. They agreed to discuss the matter further, and within a few weeks they again convened secretly to discuss appropriate responses to the industry’s overtures. The attorneys general considered what a global settlement might include: both up-front and long term payments to the states for Medicaid reimbursement and public health programs, some federal tobacco regulation, state and local enforcement authority, action against youth access. Of course in exchange, they knew that the industry would want some kind of protection against further lawsuits.


        In the weeks that followed, Scruggs drafted a proposed agreement with Anderson and Sears (the two operatives). Harshbarger, Moore, and Butterworth then reviewed the draft over a series of conference calls in early August. Yet the privacy of these tentative and fragile discussions would not last. Only a few weeks later, at the Democratic National Convention in Chicago, the story of a supposed deal was leaked to the Wall Street Journal. The tobacco companies denied any knowledge or involvement. And the attorneys general who had been excluded from the discussions (and who had never even considered a national settlement) were furious with Moore. It seemed that their coalition was in jeopardy.


        As Moore tried to regain the confidence of his AG allies, other events were taking shape in the antitobacco crusade. In October, Scruggs and Moore attended a meeting in the office of Grant Woods, the Republican AG from Arizona who had filed his Medicaid suit that summer. LeBow and his attorneys were also present. Having heard talk of a proposed global settlement, they were anxious. LeBow feared that such a deal, in which he would be a minor player at the table, might drive his teetering cigarette company over the edge.[54] Kasowitz and LeBow wanted to work out an arrangement with the additional states that had now filed before any global settlement could be reached. “Settling would be our way to get protection for Liggett,” said Kasowitz. “The terms of a [global] settlement would have put Liggett out of business.” LeBow also thought “it would be very serious if one of the other tobacco companies [settled first].”[55] He urged the attorneys general present to consider the possibility of a second, more comprehensive settlement.

        In the meantime, despite their public denials, the tobacco companies had resumed their own private activity regarding a settlement. In November 1996, through a series of intermediaries, RJR’s CEO Steven Goldstone retained Phil Carlton, a former North Carolina State Supreme Court Justice, to meet with Bruce Lindsey, an advisor to President Clinton. Carlton conveyed the wishes of the industry to work with the attorneys general—and even the antitobacco White House—towards some kind of global settlement. Goldstone later recalled, We could not continue to be seen as a renegade industry. We had to come into the process for our long-term well-being. . . . Why [couldn’t we] just stay in the courts? It’s a judgment that I made. The opportunity was so unique—I was able to go to the board, to the shareholders, and to the employees who own stock and say, “What is the point of producing earnings if nobody puts a value on them?” We’re getting Pyrrhic victories in these cases, because nobody is putting a value on our earnings. . . . The likelihood of a long-term healthy future for this industry, or even for a manageable decline, became more and more unlikely.[56]


        Geoffrey Bible, the head of Philip Morris, agreed. “We had forty years of confrontation,” he said. “We were looking for a new route.”[57]


        Clinton, who had supported Kessler in his 1994 attack on the industry and in his fight for FDA oversight of tobacco, now endorsed Lindsey’s efforts to facilitate a deal between the states and the tobacco companies. Lindsey called Moore and told him that Carlton was representing the industry, and wanted to talk.


        Moore considered what a truly global settlement might entail. Would the states have to put their own individual cases on hold while negotiations took place? Presumably, any national settlement would have to be reviewed by Congress. That process could take years. For a state like Mississippi, that was possibly looking at billions of dollars from the industry in just a few months time, waiting first to negotiate a national settlement, and then on Congress, was unacceptable. Moreover, could Congress be trusted? In both Houses, Republicans and Democrats received enormous sums of money from the industry. Would it be possible to bring companies like Philip Morris and RJR, that spent $600 million a year on legal fees to avoid settlements, to the table in earnest? Skeptical, Moore stalled. He was in no hurry to meet with tobacco representatives while the state suits were still taking shape.


        Liggett II


        In March 1997, a year after its original settlement, Liggett announced a more comprehensive deal, this time with 22 states. In exchange for protection from all further smoking related claims, LeBow made the following admission (regarding the “three lies”):

          • We at Liggett know and acknowledge that . . . cigarette smoking causes health problems, including lung cancer, heart and vascular disease, and emphysema.
          • We at Liggett also acknowledge that nicotine is addictive.
          • Liggett acknowledges that the tobacco industry markets to “youth," which means those under eighteen years of age.[58]

        In addition to these statements, Liggett agreed to:


          • pay 25% of pretax income over 25 years to the states;
          • finance public service advertisements warning about the health dangers of smoking;
          • turn over to the courts company documents chronicling sensitive legal discussion Liggett had with the other major U.S. tobacco companies, including Philip Morris and R.J. Reynolds;
          • place a warning label on its cigarettes stating that smoking was addictive. LeBow defended his actions: We have protected the shareholder and our interest. Liggett could not afford to lose any of these trials. . . . We are pleased to have reached these historic settlements that will protect Liggett from virtually all smoking related claims. We believe that peaceful coexistence on reasonable terms makes far more sense for the tobacco industry than continuing denial of the legal and political reality of today’s situation.[59]

        As in Liggett I, Moore and others believed that the monetary benefit of the settlement was only part of its value.60 Moore noted that the volumes of documents Liggett would turn over might help convince judges that the industry carried out a lengthy conspiracy of deceit. Among the documents were Liggett’s attorneys’ notes from meetings of the Committee of Counsel, a group of tobacco lawyers who met regularly over the years to discuss litigation and other issues, such as health research and public relations.[61] Liggett’s statement on addiction and on tobacco’s health effects were also useful to Moore and other attorneys general. Plaintiffs’ attorneys who had argued that nicotine’s addictive powers robbed consumers of free will would be bolstered by Liggett’s admission. “This was just a home run in terms of obtaining ‘a crack in the dam’,” Green said. In addition, “we got every state that had filed, including Minnesota, which was a feat.”


        “We got the least important culprit to turn state’s evidence and give testimony against the really bad guys,” agreed the Michigan AG.62 “I’ve been a prosecutor all of my life,” Moore beamed. “I know what happens when one of the five turns states evidence. We’ve got the goods on 98% of the industry by turning the little guy.”[63]


        Global Settlement Talks


        By the end of March 1997, the Liggett settlement was concluded and Moore was coming under increasing pressure from the White House to meet with Carlton and tobacco representatives. At the National Center for Tobacco Free Kids (TFK) in Washington, Moore, Scruggs, Matt Myers (TFK’s General Counsel), and the Castano lawyers meet with Carlton.[64] Although the CEOs of the two major tobacco companies (Philip Morris and RJR) were not present, this meeting laid the groundwork for a series of clandestine talks towards a comprehensive settlement.


        The first of these took place on April 3. Two tobacco leaders, Steven Goldstone of RJR Nabisco and Geoffrey Bible of Philip Morris, came to the Marriott Hotel in Crystal City, Virginia, to begin discussions about a possible global settlement. Goldstone and Bible had been told by the heads of the other major tobacco companies that they could represent the industry at this first round of talks.[65] Their presence signaled to the other side that perhaps, for the first time, the industry had in fact “come to the table to sue for peace.”[66]


        To many, Goldstone and Bible represented “a new type of tobacco executive.” The heads of the industry who, only three years before, had testified before Congress that tobacco was not addictive, had moved on. “It would have been inconceivable for the prior executives to agree to concessions,” said Myers.[67] Goldstone, a former smoker, did not share RJR’s “always fight” philosophy. Also a former litigator (not a cigarette salesman), Goldstone had been a longtime counsel to RJR before taking over in 1995. “This is a guy who always tried to settle cases before going to court,” said one RJR executive.[68]


        Bible was more flamboyant. He was a smoker, and built his career selling cigarettes for Philip Morris. A tough Australian who brandished Marlboro menthols at press conferences and in the Philip Morris annual reports, Bible was often called the “Crocodile Dundee of the tobacco industry.”69 In 1994, when Bible replaced Michael Miles (a nonsmoking food marketer) as head of Philip Morris, he adopted the belligerent tobacco mantra. “It is our intention to defend our industry and consumers briskly,” Bible said at one of his first news conferences. But Bible was also a pragmatist. By 1996, he no longer posed with a cigarette in company reports. Bible also recognized that he was facing potential lawsuits from forty states, the possibility that the FDA might prohibit nicotine, and class action suits buttressed by documents and whistle blowers. “Crocodile Dundee ran up against a politically ferocious crocodile and he put down his knife,” said a tobacco analyst. “Geoff Bible is buying peace.”[70]


        In addition to the two tobacco company CEOs, their lawyers, Carlton, Sears and Anderson, the industry was also represented at the talks by former Senate Majority Leader George Mitchell. On the other side of the table, the states had Moore and Scruggs, Woods (Arizona), Butterworth (Florida), Gregoire (Washington), a handful of Castano lawyers, and Myers (TFK). Mitchell helped to get the meeting started. He was certainly an unusual choice for the tobacco industry. A northern liberal Democrat, Mitchell could not be more different from the typical tobacco representatives. His presence also suggested to the attorneys general that perhaps the industry meant business.


        During the talks, Bible and Goldstone announced that they had come in good faith, and were eager to reach some kind of agreement. They said that they were ready to consider the states’ claims for reimbursement for Medicaid expenses in exchange for some kind of limit to the liability from smoker suits. It was agreed that any “global” settlement reached would supersede state settlements and all states would receive a share of the proceeds, based on their population and estimates of state Medicaid costs. According to Harshbarger, “Our position is that if Big Tobacco is willing to accept terms and conditions that include financial relief, protections for kids, and changes in their business practices, it would be a major public health breakthrough. We have an opportunity to get more through a settlement now than we could through years of protracted litigation.”[71]


        The first meeting was brief, but a starting point. For the next three weeks, clandestine talks followed in Northern Virginia, Washington, and Chicago. In this first round of negotiations, the companies expressed a willingness to accept regulation by the FDA, which could be given broad powers to regulate tobacco advertising and to force disclosure of cigarette ingredients. Advertising restrictions under consideration included the elimination of billboard and all other outdoor advertising, an end to cigarette company sponsorship of sporting events, and a ban on the use of human characters in cigarette ads. The companies might also be required to create a fund of as much as $500 million to educate consumers, particularly young people, about the risks of smoking, and pay hundreds of billions of dollars to reimburse the states for Medicaid costs of tobacco-related illness.


        In exchange, the industry was seeking near-total protection from the states’ tobacco attack. According to one Philip Morris lawyer, the companies were seeking “total peace, now and forever.” By bringing an end to the state claims (as well as individual and class action suits filed by smokers and their families), the companies hoped to change the pariah status of the industry. They were also eager to ensure that the FDA would not ban the sale of tobacco products to adults. Most important, however, the companies pressed for a degree of immunity from future suits, which would allow them some quantification of their potential liability. The specter of these lawsuits had harmed the companies financially, and the price of the company stocks were significantly undervalued. This affected many of their nontobacco and nondomestic business assets. The companies believed that some degree of financial predictability, even if that meant a large and expensive settlement, would still pay off if it allowed them to regain investor confidence.


        Although Moore recognized that the companies had only come to the table because they expected some kind of protection from the lawsuits, he and the other attorneys general were committed to preserving individual rights to sue. Scruggs suggested limited immunity: smokers perhaps could file suits if there were limits on damage awards or a bar on punitive damages.


        By mid-April the industry had made significant advertising and marketing concessions. The states’ first demand for Medicaid compensation was $500 billion, to be paid out over twenty-five years. The industry responded that this figure was too large, and counter offered $1 billion up front, increasing eventually to $10 billion a year, over twenty five-years. The states were not satisfied.


        Some progress was made regarding the form—if not the amount—of the payments. One proposal would create an expedited administrative fund against which smokers could file claims for injury and receive payment. Those dissatisfied with that system could choose to file lawsuits. Another possibility would be to forego the fund and allow those who wished to sue to do so with restrictions. Despite the exchange of proposals, no final agreement was reached. Differences remained about the mechanism under which individuals would be compensated. The two sides were also deeply divided over nicotine regulation, and the degree of immunity for the tobacco industry.


        By the third week of talks, the negotiations were no longer secret. A leak to the Wall Street Journal produced an article on April 16th, which announced the talks to the world. Moore was furious. He believed that someone had leaked the talks to kill the deal.


        After this first round of talks, the attorneys general assembled in Chicago to discuss strategy. They thought carefully about the motives of the other side. Why, exactly, had the tobacco companies come to the table? How much was a settlement worth to them? Green, who had spent seven years on Wall Street before joining the Massachusetts attorney general’s office, presented a disturbing scenario: there was a chance that settlement would actually be economically profitable for the tobacco industry. Green had hired a team of analysts to examine exactly what, in financial terms, a settlement would mean to the tobacco companies. They looked at the tobacco companies’ gross operating profits, both in the U.S. and internationally. They examined all the companies’ revenues, not just their tobacco businesses, attempting to gauge ability to pay. The main focus of the presentation, however, was on the marketplace. Specifically, Green noted, the unquantifiability of the costs of litigation made tobacco stocks risky for investors. Consequently, tobacco stocks were enormously discounted in the market. Any public announcement of an agreed settlement, and an assignment of a dollar value to these legal liabilities, might cause an enormous increase in the stock price, and accordingly, in the market capitalization of the tobacco companies (see Exhibit 7).


        The attorneys general discussed the political risks of a settlement, particularly if it was seen as a bailout of the tobacco companies for what was egregious—and often criminal—behavior. This posed a serious dilemma to the attorneys general. They considered two alternative solutions. The first would be to have the industry’s payment be large enough to offset any increase in market capitalization. This would be virtually impossible to win at the bargaining table. The second would be to have more of the industry’s payment up-front rather than over time. “Otherwise you’re financing this off of future business,” Green said. The advantage of a large, up-front payment would be twofold. “An up-front payment underscores that it is for past wrongful conduct . . . making the payment high enough means that the companies will have to go off and finance it, or at least have Philip Morris pay for it. Either way it’ll be painful, and will dampen the run-up.”


        Round II: Dallas, TX


        On May 5, Moore, Scruggs, the other attorneys general, Carlton, and the rest of the tobacco representatives met for yet another round of negotiations in Dallas, Texas. Still unresolved were the issues of how much the industry would pay, and the extent of FDA regulation of nicotine. On the biggest sticking point, however, the question of future immunity, there seemed to be some advances. The cigarette producers had dropped their demand for complete legal protection as a condition in the settlement. According to the New York Times, “The change in the industry’s posture comes amid a swirl of activity involving the most contentious and complicated issue in the talks: how much legal protection, if any, should cigarette manufacturers receive in exchange for concessions on public health issues?”[72]


        Nevertheless, the industry representatives were not satisfied with an AG version of a proposal for limited liability. Instead, the tobacco team offered its own lawsuit package that would, among other things, limit individual compensatory damage awards to $250,000, eliminate punitive damages, and bar traditional liability claims. Moore and the other attorneys general rejected this proposal as did the other plaintiffs’ lawyers.

        Within the states’ camp, internal dissension arose over several key points, most notably liability. While Moore pressed for company liability, he also recognized that without a certain degree of immunity, the industry would not settle. Some states, like Minnesota, Wisconsin, and Maryland, took a hard line on whether to protect cigarette makers from punitive damages. Scruggs had proposed a ban on class actions, or a punitive damage cap. Blumenthal and Humphrey wanted no immunity. “I regret to say so, but I fear that this deal could be a tobacco bailout,” Humphrey said.[73]


        Other complications emerged. State regulators and lawyers representing smokers differed over who should be speaking for the legal rights of individuals in the negotiations. “Right now, things are chaotic,” said one attorney.[74] State attorneys general referred to their presumptive allies, the lawyers representing smokers in private lawsuits as “girths,” a sarcastic reference to their waistlines. Reportedly in a telephone conference call among state officials, tensions flared when one private lawyer representing another state used an obscenity in referring to Moore. This comment was picked up and broadcast on the speakerphone to all on the line (including Moore).


        To make matters more complicated, the incentives of the different private lawyers were not always aligned. Nearly two hundred private law firms were retained by the 28 states to help try their cases. Many lawyers had little personal financial interest in settling. If Texas were to go to trial, for example, and the state won its sought after $14 billion judgment, the state lawyers would be paid about $2.5 billion, based on an 18% contingency fee. If the cases settled, the lawyers from all the states suing would likely split $500-600 million, paid by the tobacco companies. Yet the most influential lawyers in this process were the minority (like Scruggs) who had been retained by more than one state. For them, settling made more sense than trying several cases. Scruggs, who represented many of the states at the talks, could reap a potentially huge windfall with a settlement. In addition, pressure for a settlement may have come from law firms representing multiple class action plaintiffs (such as the Castano Group lawyers) whose fates were tied to the settlement talks. These lawyers might have been willing to go for smaller individual damage awards in exchange for a big, quick settlement fee. Scruggs remarked that with the stakes so high the tension between the lawyers was thick. “We have a whole lot of roosters trying to take credit for the sunrise and only a few of them ha[ve] anything to do with it . . . I figure if anyone is going to be paid well, I am,” he said.[75]


        In an attempt to provide some direction to the talks, the attorneys general who regularly attended all the meetings had split up into four sub-groups on the four areas under discussion in smaller “breakout sessions.” Mike Moore remained the overall quarterback of the AG team. Gregoire, Myers and Green took on teen access, tobacco regulation and the role of the FDA, and the other public health issues. Blumenthal focused on civil liability and immunity, and Butterworth was in charge of the financial issues. Grant Woods of Arizona was tapped to concentrate on state enforcement. Typically, these attorneys general would work intensively on the negotiations, and then report back to the larger group via conference call.


        Keeping the process democratic, while also protecting the internal secrecy of information and strategy was therefore a difficult task. “You know that if you have conference calls with 40 AGs, that’s going to be in the papers the next morning,” said one of the key negotiators. So there’s always a balance between telling the colleagues and trying to advance the ball. . . . It was not odd for a few states to move the ball very far and then bring others in.” By the time of the Texas talks many attorneys general felt excluded from the process and joined their colleagues in Texas. The presence of many new negotiators on the states’ side—both attorneys general and Castano class action lawyers—exacerbated the tensions that were already making the negotiations difficult. According to knowledgeable observers of the talks,

          It quickly became clear that there were too many people at the table. The talks became a victim of their own perceived success; with everybody beginning to believe the negotiations would succeed, they all wanted a piece of the settlement. Moreover, they didn’t trust the other attorneys enough to believe that they’d get their share if they didn’t show up. So they all came.[76]

        Similar tensions, though less visible publicly, were felt across the bargaining table within the tobacco team. The issue of payment structure, for example, proved to be a difficult sticking point. Under a formula agreed to by the five tobacco companies taking part in the proposal, the first $10 billion payment would be divided based on their stock market value. Philip Morris, which would have to pay more than $6 billion of the initial payment (possibly more), was not satisfied with this arrangement. The subsequent annual payments under the settlement, which would start at $8.5 billion and grow to $15 billion, would be divided based on each company’s share of the cigarette market in the United States. Brown & Williamson, and BAT, its British parent, whose tobacco operations were larger overseas than in the United States, were more combative than the other companies on issues relating to FDA regulation of nicotine and of other cigarette ingredients, perhaps out of fear that the company lacked the research and new product capabilities of its rivals. Mirroring the states’ side, the tobacco team also had members who were more willing to settle without a comprehensive bar to future industry liability, and other hard-liners who insisted on blanket immunity for the industry.


        By the afternoon of Wednesday, May 7, the Dallas talks had officially broken down. Meanwhile, the clock was ticking on the pending state lawsuits. Moore’s own Mississippi trial was set to begin in July, and he was nervous. Early on, the attorneys general had insisted that, until an agreement was reached and approved by Congress, they would proceed with their own state suits. This meant that both sides had representatives pursuing parallel tracks in the national settlement talks and the local state cases. “We fight by day and talk by night,” Moore said.


        Round III: Washington, DC

        In the first week of June, both sides convened again, by mutual agreement, in the basement of the Park Hyatt Hotel in Washington for a third round of talks. Still unresolved were the issues of federal nicotine regulation and punitive damages. Moore again held frequent conference calls with the attorneys general who were not present. Many of these attorneys general reiterated their concerns about limiting individual litigants’ rights and punitive damages.


        Also under discussion was the issue of youth access. The tobacco companies had proposed paying some penalty per pack sold to underage kids. To the attorneys general, this type of fine did not seem to fully reflect the lucrative opportunities for the companies in hooking youth smokers. In other words, they believed the tobacco companies’ incentives were still not aligned with the reduction of teen smoking. Even if there were penalties for selling cigarettes to minors, as soon as the minor was a smoking adult, the companies had secured a lifetime customer.


        To try to solve this problem, Gregoire, Myers, Green and others calculated the average lifetime profits the companies earned from teen smokers, by estimating the number of packs per year smoked, the number of years, and the companies’ operating profits on these packs.[77] In order to reconcile the economic incentives of the industry with a reduction in teen/replacement smoking (or to at least eliminate the profit motive for selling to teens), the attorneys general devised a “look back” clause, which would require the companies to pay a fine each year that teen smoking reduction targets were not met. “This [would be] the first time anybody even imposed a penalty on the manufacturer, who does not sell directly to end users, for illegal youth sales, which are made at the retail level,” Green said. “There are penalties in each state, usually very mild, on retailers and illegal retail sales to a minor. There’s never been a manufacturer penalty. So, with the ‘lookback’ penalty, we’re trying to hit the manufacturer for every dime.”


        In addition to the liability and youth access issues, in April both sides had been surprised by a federal court ruling against tobacco that confirmed the right of the FDA to regulate nicotine as a drug. Representatives of B.A.T. (the parent company of Brown & Williamson), who weeks before had expressed qualms about yielding power to the FDA, broke rank with the other tobacco companies. B.A.T. argued that the industry should fight to overturn the recent federal court decision. This became a major stumbling block of the talks, and one which threatened to halt the negotiations. The Clinton administration reportedly sent a clear message to all negotiators that it would not retreat from this legal victory for the FDA. Lindsey insisted that FDA regulation could not be bargained for punitive damages. However, he indicated that protection from punitive damages might be covered by a large financial settlement offer. Talks broke off as top executives of Philip Morris, RJR Nabisco and B.A.T. gathered for nine hours of meetings to discuss B.A.T.’s concerns about the settlement’s nicotine regulation provisions.


        On Monday June 16th, negotiators gathered once again in Washington. This time industry negotiators, including representatives from B.A.T., said that they would accept some kind of FDA regulation. Apparently Bible had worked his Crocodile Dundee charm on Martin Broughton, the head of B.A.T. Bible reportedly convinced Broughton that this was the best deal tobacco could hope for. In exchange, the companies demanded a ban on punitive damages for past misdeeds. By Thursday, Moore and the majority of the states tentatively accepted the draft deal. Moore brought the plan to Lindsey to gauge the Administration’s support. Carlton indicated to Lindsey that the industry was prepared to pay $308.5 billion over 25 years. Moore, who, in a recent conference call had promised the other attorneys general that he could secure $358.5, was pleased by Lindsey’s response. $368.5 billion, Lindsey told Carlton.


        By midday Friday, June 20th, the attorneys general were prepared to announce the agreement. Yet again, all was not ready to go. B.A.T. refused to drop its lawsuit against Jeffrey Wigand, the researcher turned whistle blower. Moore and Scruggs threatened to break off talks. They had vowed to protect Wigand in exchange for his testimony in the Mississippi case. With the press waiting for the announcement of the settlement, Scruggs and Moore pressed their final point: immunity for Wigand and the other whistle blowers. Phone calls were immediately placed to Broughton. Finally, the B.A.T. CEO was reached and he discussed the issue with Bible and Goldstone for half an hour, until he backed down. Immunity for whistle blowers was part of the final deal. Late in the day on Friday, an agreement was announced.

        That evening, several of the key state negotiators gathered for a celebratory drink. They knew that that they had not yet won the war. The proposed deal faced an uncertain future in Congress, where some Senators and Congressman were already grumbling that they had been left out of the process.78 Yet the architects of the proposal had no doubt that they had fundamentally and favorably altered the terrain on which the campaign would be waged. The admissions of culpability that they had won from Liggett and the other big tobacco companies could never be retracted. Public perceptions had been radically changed as well. Florida’s AG, Bob Butterworth, boasted, “the Marlboro Man will be riding into the sunset on Joe Camel.”[79]


        One cloud of doubt lingered over the group, however. There was still the possibility, as Tom Green had suggested, that Wall Street might reward the tobacco companies for reducing the uncertainty of adverse judgments in the future. With some trepidation, Butterworth pulled out a pocket wizard that posted the evening news. The machine booted up and soon a welcome Reuters headline flashed: “Tobacco Stocks Fall as Deal Tougher than Expected.”


        Footnotes

        1. June 20, 1997 press conference of state attorneys general at the ANA Hotel, Washington, D.C. 1997 Federal Information Systems Corporation, Federal News Service.

        2. An attorney general (AG) is a public official who heads a state's legal department. Unlike their counterpart in the United States government, state attorneys general are almost always popularly elected (and as a result, may not belong to the same party as the Governor). Depending on the size of the state, the office of an attorney general may employ hundreds of lawyers who represent the government in a wide variety of civil, criminal, and regulatory matters.

        3. The five largest tobacco companies in the United States included Philip Morris, R.J. Reynolds (owned by RJR Nabisco), Brown & Williamson (owned by B.A.T. Industries), U.S. Tobacco (a Smokeless Tobacco company), and Lorillard (owned by Loews corporation).

        4. June 20, 1997 press conference.

        5. Additional funds would also be earmarked for health care for millions of uninsured children.

        6. The FDA is the federal agency which, in effect, regulates the goods sold in every supermarket and pharmacy in the United States; one fourth of all consumer spending, and some $1 trillion of goods including food, drugs, cosmetics, medical devices, and the nation’s blood supply.

        7. Federal Centers for Disease Control and Prevention. Some of this decline is attributed to increased health consciousness generally, as many Americans adopted more nutritious diets and regular exercise regimes in the same time period. Some of the reduction may have been due to public health campaigns explicitly directed at tobacco.

        8. In the early 1990s, Joe Camel was one of the most familiar corporate advertising symbols in the United States, recognized by 86% of children ages 10 to 17. John M. Broder, “F.T.C. Staff Seeks Action Against Joe Camel,” New York Times 27 March 1997.

        9. Until the settlement, the tobacco industry steadfastly denied that it targeted young people in its marketing. The companies were, however, spending up to five billion dollars a year on advertising. With United States retail sales of $45 billion annually, heavy investment in advertising made cigarette smoking an integral part of American social life—Joe Camel, the Marlboro Man, and other readily identifiable images of youthful, healthy smokers were ubiquitous in magazines and billboards. Certain cigarette brands—such as Marlboro and Virginia Slims—became an integral part of the sporting events they sponsored. Other areas of pop culture—concerts and clothing, for example—also bore the cigarette labels.

        10. These estimates vary. According to the Congressional Office of Technology Assessment, cigarettes cost the nation more than $68 billion annually in tobacco-related health care cost and lost productivity. The cost incurred directly by the federal government is estimated at over $22 billion annually. For context, in 1997, $50 billion was about 7% of the nation’s total health care costs.

        11. Richard Kluger, Ashes to Ashes (New York: Alfred Knopf, 1996), 683.

        12. In fact, the top three corporate contributors to the Republican party were Philip Morris, R.J. Reynolds, and Brown & Williamson. General political contributions to Congress escalated tenfold between 1980 and 1997, with the tobacco industry leading the way. It contributed $8.8 million to the Republican party between 1995 and 1997 when the GOP controlled Congress. According to Common Cause, a campaign finance watchdog group, tobacco interests gave a total $25,285,189 in political interests between 1987 and 1996, including $12,393,315 in PAC contributions and $12,891,874 in soft money contributions to national parties. (Republicans received $10,421,422, while democrats received $2,470,452.)

        13. In 1996, the leading recipient of tobacco industry PAC contributions was Representative Thomas Bliley, a Republican from Virginia and the Chairman of the Congressional Commerce Committee who received $133,815. Speaker of the House Newt Gingrich and Senate Majority Leader Trent Lott received $72,750 and $50,250, respectively. In the first six months of 1997, while settlement talks were taking place, the industry gave $1.9 million to political party committees ($1.6 million to GOP, $334,461 to Democrats) and another $575,000 to individual candidates. Common Cause, “Tobacco Political Giving Hits record $9 Million for ‘96 Elections,” 13 May 1997.

        14. The Tobacco Institute in Washington had a staff of 75, with an additional 125 contract lobbyists in the states. Kluger, 683.

        15. According to the Institute of Health Policy Studies at the University of California at San Francisco, total political expenditures in California increased in 1994 to $24.6 million, compared to $7.6 million in 1992.

        16. Richard Daynard, “Litigation by States Against the Tobacco Industry,” Presentation to the 10th World Conference on Tobacco and Health, Beijing, 26 August 1997.

        17. Mark Curriden, “The Heat is On,” ABA Journal September 1994.

        18. After Rose Cipollone died of lung cancer in 1984, her estate’s attorneys sued three tobacco companies for causing her death.

        19. Justin Catanoso, “Butt Out: Finally a Way to Beat the Cigarette Companies in Court,” Washington Monthly January 1993.

        20. Ibid.

        21. Brown & Williamson, a subsidiary of B.A.T. Industries, is the third largest cigarette maker in the United States.

        22. The Federal Trade Commission, not the FDA, oversaw advertising, promotion practices, and the enforcement of labeling requirements.

        23. Tim Carvell, “Counsel for the Plaintiff,” Fortune 29 September 1997.

        24. Barnaby Feder, “Details of Tobacco Executive’s Assertions are Disclosed,” New York Times 27 January 1996.

        25. Michael Janofsky, “Mississippi Seeks Damages From Tobacco Companies,” New York Tines 24 May 1994.

        26. Kevin Sack, “Tobacco Industry’s Dogged Nemesis,” New York Times 6 April 1997.

        27. “Mississippi Tobacco Suit Sparks Political Clash,” Reuters 25 May 1994.

        28. Sack, “Tobacco Industry’s Dogged Nemesis. . . .”

        29. In addition to a large population, Florida also had its own RICO law and punitive damages. RICO—the Racketeering Influenced Corrupt Organizations Act—often used to crack down on organized crime, was used by the Florida attorney general to accuse tobacco executives of conspiring to hide the dangers of tobacco from smokers.

        30. Under this law, the industry could not argue that the plaintiffs knew cigarette smoking was a hazard.

        31. Gail Appleson, “Massachusetts, Maryland may Join Tobacco Battle,” Reuters Business Report 27 March 1997.

        32. Ibid.

        33. Robert Connolly, “Attorney General Sues Tobacco Company for $1 Billion,” Boston Herald 20 December 1995.

        34. Philip Morris, the “granddaddy” of the industry, in 1996 claimed roughly 50% market share in the United States and had almost $5 billion in profit on domestic tobacco. R.J. Reynolds controlled 25% of the U.S. market. Other major players included Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, and U.S. Tobacco Inc., a producer of smokeless tobacco. The Liggett Group, maker of Chesterfield, Eve and L&M cigarettes, accounted for 2% of industry sales (see Exhibits 1,2,3 and 4).

        35. By the early 1990s, Marlboro cigarettes were available in seventeen varieties, including regular, lights, Medium, 100s, and Menthols. The six major cigarette companies produced 500 different brands and product packaging varieties, up from 165 in 1980. Bruce Isaacsin and Alvin Silk, “Philip Morris: Marlboro Friday (A),” Harvard Business School Case. No. 9-596-001.

        36. At Philip Morris in 1996, international profits accounted for 49% of the companies total tobacco products, up from 28% in 1992. At RJR, international tobacco sales in 1996 represented 44% if the firm’s overall tobacco profits, up from 21% in 1992.

        37. Emphasis added. Claudia Maclachlan, “Now Spotlight is on States in Tobacco War,” National Law Journal 3 June 1996.

        38. According to Thomas Schelling’s work on the economics of tobacco, “The idea that people who smoke and die 15 years early are net financial benefactors to the rest of society, by living most of a normal productive tax-paying life and dying before they can claim their retirement benefits, is momentarily surprising and somewhat paradoxical. But we must not reverse the conclusion. If we begin by thinking that smokers in the aggregate inflict costs on the rest of us...then discovering that those who die leave behind more than they take from us might seem to suggest that we should happily let them smoke and relieve us of supporting them in their old age. But that would be a perverse and unnatural conclusion.” Thomas C. Schelling, “Economics and Cigarettes,” Preventative Medicine vol 15 1986, 560.

        39. Gail Appleson, “State Tobacco Suits Face Legislative Opposition,” Reuters 28 March 1996.

        40. Since the 1960s, LeBow had purchased a variety of companies, including ones which made jewelry, computers, planes, and trading cards.

        41. Paul Jaskunas, “Right Time, Right Place, Right Lawyer,” The American Lawyer March 1997

        42. Ann Shoket, “Guess Who Was Paying Liggett’s Bills from Latham?” The American Lawyer May 1996.

        43. Jaskunas.

        44. Barnaby Feder, “Liggett’s Tobacco Settlement in Danger of Coming Undone,” New York Times 7 September 1996. 45. Specifically, Liggett agreed not to advertise or promote its products using cartoon characters such as Joe Camel, advertise on billboards within 1,000 feet of schools, advertise in magazines or other publications with more than 15% youth readership, advertise on clothing or outerwear, advertise at athletic or other events where children typically constituted more than 15% of attendees, sell cigarette singles or other pack sizes under 20, distribute gifts or other promotional items more likely to appeal to children than to adults, or use on tobacco products any nontobacco trade or brand names.

        46. David Greising, “A Breach in the Walls of Fortress Tobacco,” Business Week 25 March 1996.

        47. Chip Jones, “Tobacco Struggles to Fight Off its Enemies,” Newsday 7 April 1997.

        48. Jaskunas.

        49. Wall Street Journal 17 April 1996.

        50. At this point, lawyers scrambled to file “baby Castano” class action suits in different states.

        51. Maclachlan.

        52. Jaskunas.

        53. While the states were working on establishing their own coalitions, attorneys general also continued to build alliances within their states. In May, 1996, for example, Tom Green attended an American Cancer Society Conference where he talked about the importance of the state efforts, and he encouraged the audience to contact their respective attorneys general and show their support for antitobacco efforts.

        54. There were now 17 states involved in suits against the industry.

        55. David Rovella, “Fear at an October Meeting Spears Liggett Settlement,” National Law Journal 7 April 1997.

        56. Jeffrey Goldberg, “Big Tobacco’s Endgame,” New York Times 21 June 1998.

        57. Ibid.

        58. Timothy Noah and Linda Robinson, “OK, OK, Cigarettes do Kill,” U.S. News and World Report 31 March 1997.

        59. Glenn Collins, “Breaking Ranks, Profile: An Entrepreneurs High Stakes Move,” New York Times 21 March 1997; John M. Broder, “Cigarette Maker Admits that Smoking Can Cause Cancer,” New York Times 21 March

        1997.

        60. Based on Liggett’s 1995 income, its payment that year would have been an estimated $575,000, for potentially tens of thousands of claimants to split. Barry Meier, “Liggett Pact Would Limit Compensation for Plaintiffs,” New York Times 24 March 1997.

        61. For more on the coordinated legal and public relations efforts of the tobacco industry and the ‘Committee of Counsel,’ see Mike France, “Inside Big Tobacco’s Secret War Room,” Business Week 15 June 1998. 62. Broder, “Cigarette Maker Admits that Smoking Can Cause Cancer. . . .”

        63. Sack, “Tobacco Industry’s Dogged Nemesis.” For further discussion of this strategy, see George Higgins’ 1974 examination of the Watergate case. In “The Judge Who tried Harder,” Higgins discusses the federal prosecutor’s attempt to ferret out the participants in the Watergate break-in. According to Higgins, “in cases involving multiple defendants, standard prosecuting procedure calls for private negotiation between the Assistant U.S. Attorney and each defense lawyer, until one of the defendants caves in and pleads guilty in exchange for a recommendation of leniency in sentencing, conditioned upon testifying for the prosecution against his co-defendants. The practice is that the first to crack gets the only deal.” George Higgins, “The Judge Who tried Harder,” Atlantic Monthly April 1974, 90-91.

        64. Matt Myers of Tobacco Free Kids was selected as a representative of public health interests to the talks, since TFK was an umbrella organization of over one hundred public health organizations. The attorneys general believed that, at least in theory, Myers might represent as much of the public health community as possible in the discussions with the tobacco companies.

        65. B.A.T. Industries Plc (British parent of Brown & Williamson Tobacco Corporation), Loews Corporation (parent of Lorillard Tobacco Company), and U.S. Tobacco Inc., a producer of smokeless tobacco.

        66. John Broder, “Two Top Cigarette Makers Seek Settlement,” New York Times 17 April 1997. 67 Matthew Cooper, “The New Dealmakers,” Newsweek 7 July 1997. 68 Ibid. 69 Patricia Sellers, “Geoff Bible Wont Quit,” Fortune 21 July 1997.

        70 Ibid.

        71. Broder, “Two Top Cigarette Makers Seek Settlement...”

        72. Barry Meier, “Tobacco Firms Appear Ready to Back Down on Immunity,” New York Times 4 May 1997.

        73. John Broder and Barry Meier, “The Negotiators Raced to Reach a Tobacco Pact,” New York Times 22 June 1997.

        74. Ibid.

        75. Barry Meier, “Record Legal Fees Loom as Major Issue in Tobacco Deal,” New York Times 23 June 1997.

        76. Carrick Mollenkamp, Adam Levy, Joseph Menn, and Jeffrey Rothfinder, The People vs. Big Tobacco (Princeton, N.J.: Bloomberg, 1997), 172.

        77. They then looked at the net present value of this figure.

        78. According to Senator Paul Wellstone (Minnesota), going to Congress is “a little like going to a football game knowing that the ref has been paid off by one of the teams.” Tom Hamburger, “Tobacco Deal Wont Get an Easy Ride Through Congress,” Star Tribune 1 July 1997.

        79. June 20, 1997 press conference.

  • 3 Tobacco Status- Spring 2011


    Deep Cut to New York’s Acclaimed Tobacco Prevention Program Benefits Tobacco Industry at Kids’ Expense


    Statement by Matthew L. Myers, President, Campaign for Tobacco-Free Kids


    Mar. 29 2011

    Washington, D.C. — The New York Assembly has protected the tobacco industry at the expense of New York's kids and taxpayers by pushing for a budget agreement that decimates funding for the state's highly successful Tobacco Control Program. This is a truly penny-wise, pound-foolish decision that will cost New York a high price in health, lives and tobacco-related health care costs, which total more than $8 billion a year in New York.


    While these are tough budget times, it makes no sense to destroy a program that is saving lives and saving money and that has already been severely cut. If the new cuts are adopted, New York will have cut funding by more than half for programs proven to prevent kids from smoking and help smokers quit.
    Instead of taking out the hatchet, New York should be spending more of the $2 billion the state it collects each year in tobacco settlement payments and tobacco taxes to fund this vital program. With these cuts, New York will be spending less than two percent of its tobacco money to fight the tobacco problem.
    Even with the success of New York State's tobacco prevention efforts, there is still a great deal of work to do. The sad reality is that 25,400 New Yorkers die annually from smoking- related disease, and more than 24,100 New York kids become regular smokers each year. New Yorkers will pay a high price because the Assembly has abdicated its responsibility to fight the state's number one cause of preventable death.

    Menthol Report: Overview


    Tobacco Products Scientific Advisory Committee’s Report and Recommendations on the Impact of the Use of Menthol in Cigarettes on the Public Health


    Section 907 (e) of the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) requires the FDA’s Tobacco Products Scientific Advisory Committee (TPSAC) to submit a report and recommendation to the Secretary of Health and Human Services (HHS) on the impact of the use of menthol in cigarettes on the public health – including use among children, African Americans, Hispanics, and other racial/ethnic minorities – by March 23, 2011. The report has been received by the U.S. Food and Drug Administration (FDA), and is thus considered submitted to the Secretary of HHS.


    In addition, FDA has received an industry perspective document on the public health impact of menthol cigarettes from industry representatives who serve on the TPSAC.


    FDA Action – The report submitted by TPSAC will undergo a thorough review by experts within the FDA Center for Tobacco Products. The FDA will consider the report and recommendations of the Committee, the industry perspective document, and continue to review all of the available science concerning menthol cigarettes. The FDA will then make a determination about what future regulatory action(s), if any, are warranted.


    The Tobacco Control Act does not set a required deadline or timeline for the FDA to act on the recommendations provided by the Committee in the report.


    The Committee’s recommendation of “removal of menthol cigarettes from the marketplace would benefit public health in the United States” is simply that – a recommendation of the Committee based on their review of the current, prevailing science on the topic of menthol as an ingredient in cigarettes. Any future action(s) taken by the FDA to regulate the sale or distribution of menthol cigarettes or establish a tobacco product standard for menthol cigarettes will require rule making that includes public notice and the opportunity for public comment. Therefore, FDA’s receipt of the final report and recommendations does not have a direct and immediate effect on the availability of menthol products in the marketplace.


    Expected Update – The FDA recognizes the strong interest in this issue among all stakeholders and will continue to communicate the steps the FDA is taking as it determines what future regulatory actions, if any, are warranted. FDA intends to provide its first progress report on the review of the science in approximately 90 days from the TPSAC report due date.



    Lorillard, Reynolds sue FDA over menthol cigarettes


    Sat, Feb 26 2011

    By Susan Heavey


    WASHINGTON (Reuters) - Two tobacco companies went to court against U.S. health regulators on Friday, seeking to block consideration of an imminent advisory panel report that could recommend a ban on menthol-flavored cigarettes.


    Lorillard Inc and Reynolds American Inc's R.J. Reynolds Tobacco Co unit filed a lawsuit against the Food and Drug Administration charging there were "conflicts of interest and bias among members" of the FDA advisory panel.


    The advisers have been weighing the health impact of mint-flavored cigarettes and are expected to deliver their final report on March 23.


    Mentholated cigarettes make up roughly 30 percent of U.S. annual cigarette sales of more than $83 billion, according to Euromonitor International.


    The top-selling menthol cigarette is Lorillard's Newport brand. R.J. Reynolds sells the Kool brand and a menthol version of its Camel product.


    A 2009 law gave the FDA regulatory power over tobacco products and specifically banned chocolate, fruit and other flavorings that lawmakers said enticed children to start smoking.


    The legislation called on the FDA to seek advice from a panel of outside experts before determining whether menthol cigarettes should also be taken off the U.S. market.


    The lawsuit filed in U.S. District Court for the District of Columbia accuses three tobacco advisory panel members of having "severe financial and appearance conflicts of interest and associated biases."


    The suit says these advisers have received funding for research or consultation work from drugmakers that make smoking-cessation products.


    Two others on a panel subcommittee also have biases, according to the suit, because they have served as paid expert witnesses in lawsuits against tobacco companies.


    Health advocates denounced the lawsuit as a frivolous attempt to keep the FDA panel's recommendation from coming to light.


    "They fear that the committee, having examined the evidence, will recommend effective actions that reduce or eliminate the lucrative market for menthol cigarettes, said Matthew Myers president of the Campaign for Tobacco-Free Kids. "Once again, they are putting profits ahead of lives and health."


    Altria Group Inc's Philip Morris unit, which is not part of the lawsuit, also sells a menthol version of its Marlboro cigarette.


    All three companies have spoken out against any menthol ban since the FDA's panel began holding meetings last year. The advisers are scheduled to meet on March 2 and March 17 ahead of issuing its report.


    As with other advisory panels, the FDA is not bound to follow its recommendations. The law did not set a deadline for any action on menthol.


    FDA spokesman Jeff Ventura said: "As a matter of general policy, the FDA does not comment on possible, pending or ongoing litigation."


    (Reporting by Susan Heavey; Editing by Carol Bishopric and Tim Dobbyn)



    New Survey Shows Youth Smoking Has Stopped Declining, Smokeless Tobacco Use Up; Elected Leaders Must Step up Fight to Protect Kids from Tobacco


    Statement of Matthew L. Myers, President, Campaign for Tobacco-Free Kids


    Dec. 14 2010

    Washington, D.C. - It is troubling news for the nation's health that the 2010 Monitoring the Future Survey released today shows that smoking rates have stopped declining and may have ticked up slightly among 8th and 10th graders, while youth smokeless tobacco use has increased significantly in recent years. These results come as states have slashed funding for tobacco prevention programs while the tobacco industry continues to aggressively market its deadly and addictive products. The industry's recent tactics have included the introduction of an array of new smokeless tobacco products, many in kid-friendly candy and fruit flavors, and heavy discounting that makes cigarettes and other tobacco products more affordable and appealing to price-sensitive kids.


    The Monitoring the Future results, released by the National Institute of Drug Abuse, are consistent with those of other recent surveys. They sound a clear warning to elected officials at all levels that we cannot take continued progress against tobacco for granted and must redouble efforts to implement proven strategies, including higher tobacco taxes, increased funding for tobacco prevention programs including mass media campaigns, strong smoke-free laws and effective regulation of tobacco products and marketing.


    It is especially critical that the states quickly increase funding for tobacco prevention programs that have been decimated by budget cuts in recent years. In the past three years, states have slashed funding for tobacco prevention programs by 28 percent to the lowest level since 1999, when they first received funds from settlement of their lawsuits against the tobacco industry. This year (Fiscal Year 2011), the states will collect $25.3 billion in revenue from the tobacco settlement and tobacco taxes, but will spend only two percent of it $517.9 million on programs to prevent kids from smoking and help smokers quit. Altogether, the states are providing just 14 percent of the tobacco prevention funding recommended by the U.S. Centers for Disease Control and Prevention.


    The evidence is clear that the more the states spend on tobacco prevention programs, and the longer they do so, the greater the declines in tobacco use. It is no coincidence that the largest youth smoking declines occurred between about 1997 and 2003 when funding for tobacco prevention programs increased, as did cigarette prices, in the wake of the 1998 state tobacco settlement. Since then, states have repeatedly cut funding for such programs, and Legacy has also had to reduce funding for its highly successful truth® youth smoking prevention campaign because most of its settlement funding ended in 2003.


    There is some reason for optimism. Last month, Health and Human Services Secretary Kathleen Sebelius announced the first ever national Tobacco Control Strategic Action Plan. It is critical that the federal government fund and implement this plan, including a national media campaign to prevent kids from smoking and encourage smokers to quit. The Food and Drug Administration must also continue to vigorously exercise its new authority to regulate the manufacture, marketing and sale of tobacco products. The FDA imposed new restrictions on tobacco marketing and sales to kids in June, but the tobacco industry is challenging even stricter marketing restrictions in court.


    The Monitoring the Future survey is another reminder that the United States truly is at a crossroads in the fight against tobacco, the nation's number cause of preventable death and disease. If elected leaders step up their efforts to implement proven solutions, we can accelerate smoking declines and win one of the greatest public health victories in our nation's history. If they fail to do so, progress will stop and even reverse, at great cost in health, lives and health care dollars. Especially in light of the new Surgeon General's report showing how thoroughly destructive smoking is to both individual and public health, there simply is no excuse for failing to fight tobacco use with the political leadership and resources that match the scope of the problem.


    There is no question that we know how to win the fight against tobacco. As the Monitoring the Future Survey shows, smoking rates (the percentage who smoked in the past month) have declined by 66 percent among 8th graders, by 55 percent among 10th graders and by 48 percent among 12th graders since peaking in 1996-1997. For the first time, the 12th grade smoking rate has fallen to under 20 percent (to 19.2 percent). However, youth smoking declines have slowed or stalled in recent years. In fact, the new survey finds a small, although not statistically significant, increase in smoking among 8th and 10th graders, a trend that could grow as these younger students age unless prevention efforts are strengthened.


    Also troubling is the survey's finding that there have been significant increases in smokeless tobacco use for all three grades over the past several years. Among 12th graders, 8.5 percent used smokeless tobacco in 2010, a 39 percent increase since 2006. Even more alarming, 15.7 percent of 12th grade boys currently use smokeless tobacco.



    New Report: States Slash Funding for Tobacco Prevention Programs To Lowest Level Since Tobacco


    Nov. 17 2010


    Washington, D.C. - The states have slashed funding for programs to reduce tobacco use to the lowest level since 1999, when they first received tobacco settlement funds, according to a report released today by a coalition of public health organizations.


    The states this year (Fiscal Year 2011) will collect $25.3 billion in revenue from the tobacco settlement and tobacco taxes, but will spend only two percent of it — $517.9 million — on programs to prevent kids from smoking and help smokers quit. The states have cut funding for such programs by nine percent ($51.4 million) in the past year and by 28 percent ($199.3 million) in the past three years.


    With the U.S. adult smoking rate stalled at 20.6 percent after decades of decline, the report warns that continued progress against tobacco use — the nation's number one cause of preventable death – is at risk unless states increase funding for tobacco prevention and cessation programs. The report also calls on states to increase tobacco taxes and, for states that have yet to do so, to enact strong smoke-free laws that apply to all workplaces, restaurants and bars.


    The report further calls on the federal government to robustly fund and implement the national tobacco prevention strategy unveiled last week by the U.S. Department of Health and Human Services, including launching a national media campaign to discourage kids from smoking and encourage smokers to quit.


    The report, titled "A Broken Promise to Our Children: The 1998 State Tobacco Settlement 12 Years Later," was released by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society Cancer Action Network, American Lung Association and Robert Wood Johnson Foundation. These organizations have issued annual reports assessing whether the states have kept their promise to use funds from the state tobacco settlements — estimated to total $246 billion over the first 25 years — to fight tobacco use.


    "We know how to win the fight against tobacco, but we will not win it unless elected officials at all levels step up efforts to implement proven solutions," said Matthew L. Myers, President of the Campaign for Tobacco-Free Kids. "Despite their budgetary challenges, the states are collecting huge sums from the tobacco industry and should be spending more of it to prevent kids from smoking and help smokers quit. Tobacco prevention is a smart investment for the states that saves lives and saves money by reducing tobacco-related health care costs."


    Other findings of this year's report include:


      • Most states are falling far short of meeting recommended funding levels for tobacco prevention programs set by the U.S. Centers for Disease Control and Prevention (CDC). The $517.9 million the states have budgeted amounts to just 14 percent of the $3.7 billion the CDC recommends for all the states combined.
      • Counting both state funds and federal grants, only two states — Alaska and North Dakota — currently fund tobacco prevention programs at CDC-recommended levels. Only five other states provide even half the recommended funding, while 33 states and DC provide less than a quarter. Three states — Nevada, New Hampshire and Ohio – provide zero state funds for tobacco prevention this year.
      • Tobacco companies spend nearly $25 to market tobacco products for every $1 the states spend to fight tobacco use. According to the latest data from the Federal Trade Commission, tobacco companies spend $12.8 billion a year on marketing.
      • Federal grants, most of them temporary, have helped to cushion the impact of funding cuts in some states. In the past year, the federal government has provided $261.6 million in state and community grants specifically dedicated to reducing tobacco use (the grants are spread over three fiscal years, so not all the money will be spent in fiscal 2011).

    The report comes as recent surveys have found that smoking declines in the United States have slowed and even stalled. The CDC recently reported that the adult smoking rate in 2009 was 20.6 percent — essentially unchanged since 2004 when 20.9 percent smoked. While smoking among high school students has declined by 46 percent from a high of 36.4 percent in 1997, 19.5 percent still smoke.


    "For every step forward in curbing tobacco use among Americans, many states have taken two steps backwards," said American Heart Association CEO Nancy Brown. "The public health community is appalled at the lack of commitment among a vast majority of states to adequately fund comprehensive tobacco prevention and cessation programs with the settlement dollars. As tobacco companies devise new tactics to increase smoking rates among children and adults, it's more important than ever to protect Americans from the dangers of tobacco use and give smokers the necessary tools to reduce their risk for heart disease, stroke and other smoking-related illnesses."


    "Fully funded tobacco prevention and cessation programs stop addiction before it starts and improve the health of our nation's communities," said John R. Seffrin, PhD, chief executive officer of the American Cancer Society Cancer Action Network (ACS CAN), the advocacy affiliate of the American Cancer Society. "Given the record low amount that states are allocating to these important programs, they simply must do a better job at properly allocating funding that helps reduce tobacco use and protects the health of children, 4,100 of whom try their first cigarette every day."


    Tobacco use and exposure to secondhand smoke kill more than 400,000 people in the United States each year and cost the nation more than $96 billion in health care bills. Every day, another 1,000 kids become regular smokers — one-third of them will die prematurely as a result.


    Additional contacts:


    Christina Saull, American Cancer Society Cancer Action Network, (202) 271-9489

    Suzanne Ffolkes, American Heart Association,(202) 785-7929

    Mary Havell, American Lung Association,(202) 715-3459




    Cigarette Tax Gold Rush, March 30, 2010


    Another half dozen states looking at smokes to plug budget shortfalls

    SANTA FE, N.M. -- Cash-strapped states are hitting smokers hard in the pocketbook, raising cigarette taxes to help plug budget shortfalls.


    So far this year, legislators have voted to raise cigarette taxes by $1 per pack in Utah and 75 cents a pack in New Mexico, according to a report in USA Today. At least a half dozen other states are considering increases, including tobacco-growing South Carolina and Georgia. In 2009, 14 states and the District of Columbia raised cigarette taxes.


    So much action is unusual: This is only the 10th time since 1950 that so many states have raised cigarette taxes at once, according to the Centers for Disease Control and Prevention.


    "The main motivation at the moment for most legislators is revenue," Pete Fisher of the Campaign for Tobacco-Free Kids, an anti-smoking group, told the newspaper. "The budget situation has certainly increased the number of states considering them."


    The average state cigarette tax is $1.34 per pack. That's on top of the federal tax, raised last year to $1.01 per pack. Rhode Island has the highest state tax at $3.46 per pack; South Carolina's is lowest at 7 cents. About 46 million Americans smoke, the report stated.


    Increased taxes will push smokers to buy in states where cigarettes are cheaper or turn to smuggled products, Frank Lester, spokesman for cigarette-maker Reynolds American, told the newspaper. Most smokers have low to moderate incomes and one-quarter of them fall below the poverty line, he said, adding, "People are struggling." Budget woes trumped cigarette-maker influence this month in New Mexico, said state Rep. Gail Chasey, a Democrat, whose previous tax increase proposals fizzled. Democratic Gov. Bill Richardson on Wednesday signed the new 75-cent tax.


    Among other states considering tax increases:


      • Washington: State lawmakers in special session are poised to raise the state's tax by $1, bringing it to more than $3 a pack.
      • South Carolina: House lawmakers this month voted to raise the tax by 30 cents per pack; the Senate is considering an increase.
      • Georgia: A bill to raise by $1 the state's current 37-cent tax has the 91 votes it needs to pass if it gets to the House floor, said Rep. Ron Stephens, the Savannah Republican sponsoring the bill. But it's stuck in committee and could die. "Bringing up any new tax in an election year is death—especially for a Republican," he said. If it doesn't pass this year, Stephens says he's sure it will next year.
      • Kansas: Gov. Mark Parkinson, a Democrat, has proposed raising the state's 79-cent-per-pack cigarette tax by 55 cents. A Senate taxation committee last week voted down a 30-cent increase, but the state's budget deficit makes some increase likely before the session is over, said Sen. Les Donovan, the committee's Republican chair.

    For every 10% price increase, cigarette consumption drops by 3% to 4% among adults, and double that among youth, said Terry Pechacek, associate director for science at CDC's Office on Smoking and Health. "It is one of the most reliable and effective strategies," he told the newspaper.


    Per Capita Cigarette Consumption


    http://www.infoplease.com/ipa/A0908700.html




    Obama taps William Corr as deputy health secretaryTue Jan 13, 2009 6:44am EST


    WASHINGTON (Reuters) - U.S. President-elect Barack Obama intends to nominate the Campaign for Tobacco-Free Kids head William Corr as deputy secretary for the Department of Health and Human Services, the transition office said on Tuesday.


    "Corr has extensive management and healthcare policy experience both in Congress and at the Department of Health and Human Services," Obama's office said.


    Before joining the privately funded Campaign for Tobacco-Free Kids organization in 2000, Corr was Tom Daschle's chief counsel and policy director when the former South Dakota senator was Senate minority leader.


    http://www.cspnet.com/Media/Sites-AdministratorsSiteInformation/csp_logo_0.jpg

    President Obama Signs Legislation to allow the FDA to Regulate Tobacco

    http://www.msnbc.msn.com/id/31481823/ns/politics-white_house/

    January 6, 2010

    Judge Lifts Some Tobacco Ad Limits

    By DUFF WILSON


    A federal judge in Kentucky issued a mixed ruling Tuesday in the first significant legal challenge to the new federal law regulating tobacco products.


    Judge Joseph H. McKinley Jr., ruled that companies could be forced to put new, graphic warning labels covering the top half of cigarette packages by 2013. But he ruled they could not be forced to limit their marketing materials to only black text on a white background, saying that was too broad an intrusion on commercial free speech. In a 47-page ruling in Federal District Court in Bowling Green, Ky., the judge upheld the broad authority of the Food and Drug Administration to restrict tobacco marketing and affirmed federal, state, local and tribal authority to impose additional restrictions.

    The case is likely to be appealed to the Sixth Circuit Court of Appeals and the Supreme Court, lawyers on both sides say.


    The Campaign for Tobacco-Free Kids, a Washington advocacy group that promoted the landmark regulatory legislation that passed last year, praised the judge’s action as a victory to protect children and public health.


    “This clears the path for the F.D.A. to move forward on a broad range of marketing restrictions,” Matthew L. Myers, president of the group, said in an interview.


    The ruling also upheld a ban on forms of tobacco marketing that might appeal to youth, including brand-name sponsorships of events like car racing or rodeos, merchandise like caps, T-shirts and sporting goods.


    But David P. Howard, spokesman for R. J. Reynolds Tobacco in Winston-Salem, N.C., emphasized the part of the decision favoring tobacco makers.


    “Certainly we’re pleased with the judge’s decision in finding that certain provisions of the law are unconstitutional, including what we think was one of the biggest issues of the case, that being the use of color and imagery in our advertising,” Mr. Howard said.….


    Copyright 2010 The New York Times Company


    Did You Know? Almost 90 percent of U.S. smokers begin at or before age 18.
    November 8, 2007 Contact: Joel Spivak, (202) 296-5469
    CDC Reports Adult Smoking Declines Have Stalled; Elected Officials Should Step Up Fight Against Tobacco


    Statement of William V. Corr, Executive Director, Campaign for Tobacco-Free Kids


    Washington, D.C. - Sounding an alarm that should be heard in Congress and statehouses across the country, the Centers for Disease Control and Prevention (CDC) reported today that the adult smoking rate in the United States was at a standstill for the second year in a row in 2006 after several years of steady declines. The CDC reported that 20.8 percent of U.S. adults smoked in 2006, about the same as the 20.9 percent who smoked in 2004 and 2005. This stall follows a 15.4 percent decline in adult smoking between 1997 and 2004 (from 24.7 percent to 20.9 percent).


    Youth smoking declines have similarly stalled in recent years after declining significantly since the mid-1990s, and 23 percent of high school students still smoke, according to the most recent CDC data.


    It is troubling news for America’s health that progress has stalled in reducing tobacco use, the nation’s number one preventable cause of death. It is also inexcusable that elected leaders have not done more given the overwhelming scientific evidence of what works to reduce tobacco use among both children and adults. Just this year, landmark reports by the Institute of Medicine (IOM) of the National Academies of Sciences and the President’s Cancer Panel have agreed on the steps that Congress and the states must take to significantly reduce and eventually eliminate the tobacco epidemic:


      • Congress should enact legislation granting the U.S. Food and Drug
      • State officials must redouble efforts to increase tobacco taxes, enact comprehensive smoke-free workplace laws and adequately fund programs to prevent kids from smoking and help smokers quit.

      According to the CDC report, several factors appear to have contributed to the recent stalling of progress:


        • Between 2002 and 2005, states cut funding for tobacco prevention and cessation programs by 28 percent. While funding has increased slightly since, only three states (Maine, Delaware and Colorado) funded tobacco prevention programs at CDC-recommended levels in Fiscal Year 2007. Most states fall far short of the CDC’s recommendations, and altogether, states’ funding of tobacco prevention amounts to less than three percent of the $22 billion they collect in annual revenue from the 1998 tobacco settlement and tobacco taxes.
        • While states cut funding for tobacco prevention, tobacco companies increased their marketing to record levels. Between 1998 (the year of the tobacco settlement) and 2005, annual cigarette marketing expenditures nearly doubled from $6.7 billion to $13.1 billion, according to the Federal Trade Commission.
        • Tobacco prices have also played a critical role. From 1997 to 2002, when youth and adult smoking rates declined significantly, the average retail price of a pack of cigarettes increased by 91 percent as a result of the tobacco settlement and cigarette tax increases. Since 2002, cigarette prices have barely increased, and smoking declines have subsequently stalled. Cigarette prices have been stable because the tobacco companies currently spend more than 80 percent of their marketing dollars on price discounts that counteract the effects of state cigarette tax increases. The tobacco companies have done this because they know that higher cigarette prices are one of the most effective ways to reduce smoking, especially among kids. That’s why it is imperative that Congress and the states counter this price discounting with significant cigarette tax increases.

      Today’s CDC report is a warning that our nation cannot become complacent in the fight against tobacco. Tobacco use kills more than 400,000 Americans and costs the nation nearly $100 billion in health care bills each year. It is time at last for our nation’s leaders to combat the tobacco epidemic with a level of commitment and resources that matches the scope of the problem.


      The results of the CDC’s annual adult smoking survey were published in this week’s issue of the CDC journal, Morbidity and Mortality Weekly Report.


      Released: October 30, 2007


      Zogby Poll: 65% Oppose FDA Regulation of Tobacco


      Survey shows 75% are concerned a proposed change could reduce FDA's effectiveness in regulating pharmaceutical drugs and the U.S. food supply


      Nearly two in three (65%) are opposed to a current proposal in Congress to have the Food and Drug Administration regulate tobacco products, with nearly (47%) who say they are strongly against to the proposed change, a new Zogby International telephone poll shows.


      Nearly two-thirds (74%) of Republicans oppose the change, compared to 64% of independents and more than half (57%) of Democrats. Those living in Southern states (72%) are most likely to be against the proposal, although majorities in all regions of the U.S. were more likely to oppose than support the proposal. The significant opposition to the proposal was found after respondents were asked a series of questions regarding their feelings on the FDA as well provided with factual information regarding how tobacco products are currently regulated in the U.S. and additional duties of the FDA. Before respondents were given this additional information, nearly half (49%) said they were opposed to the proposal to give the FDA regulatory authority over tobacco products. Another 44% said they favored it, while 6% were undecided on the question.


      The telephone survey of 1,006 likely voters nationwide was conducted from August 23-27, 2007, and carries a margin of error of +/- 3.1 percentage points. The survey was sponsored by Lorillard Tobacco.


      “These poll results show Americans want the Food and Drug Administration to concentrate not on tobacco, but rather on policing our food supply and our medicines,” said Pollster John Zogby. “This is even more evident given that these poll results came before FDA Chairman Andrew von Eschenbach reiterated his opposition to FDA regulation of tobacco.


      At a time when a significant majority of American adults say they are unhappy about the direction of the nation and are questioning the competence of the federal government to carry out its current responsibilities, the poll shows little appetite among informed adults to make big changes to the tobacco regulatory scheme.”


      MISSISSIPPI


      Miss.: Former AG Leads Anti-Tobacco


      Monday October 15, 10:36 am ET


      By Shelia Byrd, Associated Press Writer


      Former Mississippi Attorney General at Head of New State-Funded Fight Against Tobacco


      As the Partnership for a Healthy Mississippi limps along without its $20 million in annual funding, the chairman of the nonprofit group is now at the forefront of another anti-tobacco campaign.


      Former Mississippi Attorney General Mike Moore was recently named chairman of the state's Tobacco Advisory Council, created by the 2007 Legislature to recommend anti-smoking programs to the Mississippi Department of Health.


      The irony isn't lost on Moore, a Democrat. He's leading a program approved by Republican Gov. Haley Barbour, who tirelessly fought to terminate the Partnership's funding.


      "As hard as Haley Barbour fought to get me out of the tobacco prevention business, I'm now the chairman of the effort again," Moore said.


      Still, at $8 million a year, the budget for the new state Tobacco Advisory Council is less than half of what the Partnership spent annually.


      Moore holds out hope that the new program can be effective in keeping Mississippians from taking up the habit. But the Partnership is a tough act to follow.


      ………

      Moore said tobacco use among high school students was reduced by 35 percent and 40 percent among middle school students as a result of the Partnership's work.

      ….

      During the 2007 session, Barbour resisted legislators' attempts to steer the money back to the Partnership, said House Public Health Committee Chairman Steve Holland, D-Plantersville.


      The money ended up in the general fund and much of it is going toward programs not related to tobacco cessation, Holland said.


      Matthew Myers, president of Campaign for Tobacco Free Kids in Washington, laments the demise of the Partnership, which currently operates with about five employees who participate in community and school activities across the state.


      "The challenge is going to be how much (the council) can do with the dramatically reduced funding," Myers said.


      Myers also said research suggests the state may already be losing ground on the tobacco fight, referring to the recent Centers for Disease Control and Prevention survey that showed 25.1 percent of Mississippi adults ages 18-35 were smokers. That's the third highest smoking rate in the nation.


      July 11, 2007


      Surgeon General Sees 4-Year Term as Compromised

      By GARDINER HARRIS


      WASHINGTON, July 10 — Former Surgeon General Richard H. Carmona told a Congressional panel Tuesday that top Bush administration officials repeatedly tried to weaken or suppress important public health reports because of political considerations.

      The administration, Dr. Carmona said, would not allow him to speak or issue reports about stem cells, emergency contraception, sex education, or prison, mental and global health issues. Top officials delayed for years and tried to “water down” a landmark report on secondhand smoke, he said. Released last year, the report concluded that even brief exposure to cigarette smoke could cause immediate harm.


      Dr. Carmona said he was ordered to mention President Bush three times on every page of his speeches. He also said he was asked to make speeches to support Republican political candidates and to attend political briefings. And administration officials even discouraged him from attending the Special Olympics because, he said, of that charitable organization’s longtime ties to a “prominent family” that he refused to name.


      “I was specifically told by a senior person, ‘Why would you want to help those people?’ ” Dr. Carmona said. The Special Olympics is one of the nation’s premier charitable organizations to benefit disabled people, and the Kennedys have long been deeply involved in it.


      When asked after the hearing if that “prominent family” was the Kennedys, Dr. Carmona responded, “You said it. I didn’t.”

      Dr. Carmona did offer to provide the names to the committee in a private meeting.


      Bill Hall, a spokesman for the Department of Health and Human Services, said that the administration disagreed with Dr. Carmona’s statements. “It has always been this administration’s position that public health policy should be rooted in sound science,” Mr. Hall said.


      Emily Lawrimore, a White House spokeswoman, said the surgeon general “is the leading voice for the health of all Americans.”


      “It’s disappointing to us,” Ms. Lawrimore said, “if he failed to use this position to the fullest extent in advocating for policies he thought were in the best interests of the nation.”


      Dr. Carmona is one of a growing list of present and former administration officials to charge that politics often trumped science within what had previously been largely nonpartisan government health and scientific agencies.


      ...

      AFRO AMERICAN BUSINESS REACTION TO FDA REGULATION
      National Black Chamber Opposes New FDA Tobacco Regulations


      Bad for business, bad for consumers; NBCC President submits testimony


      WASHINGTON, March 7 /PRNewswire-USNewswire/ -- The National Black Chamber of Commerce (NBCC) announced today that it has submitted testimony to the Senate Health, Education, Labor, and Pensions Committee regarding legislation to increase federal regulation of tobacco products. The bill in question is S. 625, introduced earlier this month by Senator Ted Kennedy (D-MA).


      This legislation, giving the Food and Drug Administration broad new powers to regulate tobacco, would affect millions of business owners around the nation. The NBCC, representing a wide variety of African American business owners, is expressing its concern about this bill's impact on small businesses nationwide.


      In his testimony, NBCC President and CEO Harry C. Alford said, "As written, the bill would represent a threat to every small retailer and distributor of tobacco and related products in the country. As you well know, thousands of such small businesses across the country are Black-owned businesses, and like most small businesses, they are struggling every day to survive in an extremely competitive marketplace. One of the greatest threats posed to the success of small businesses is government overregulation, and overregulation is exactly what S.625 seems to have in mind."


      Mr. Alford went on to say, "At every turn, S.625 undercuts the honest work being done by small businesses -- user fees that depress wages and encourage job loss, lost revenues, unfair enforcement and application of the rules and regulations. S.625 is a well-meaning bill, but one that will have disastrous effects on thousands of minority-owned retailers around the country, killing jobs and closing businesses in those communities that can least afford to take the hit."


      The NBCC is a nonprofit, nonpartisan, nonsectarian organization dedicated to the economic empowerment of African American communities. 190 affiliated chapters are locally based throughout the nation as well as international affiliate chapters based in Bahamas, Brazil, Colombia, Ghana and Jamaica and businesses as well as individuals who may have chosen to be direct members with the national office.


      SOURCE National Black Chamber of Commerce


      FDA REGULATION

      “This will be seen as one of the greatest lost opportunities to improve public health in history. Here we are, a decade later, and there’s no regulation of tobacco products. The product is no safer or less addictive. The two largest manufacturers [R.J. Reynolds and Brown & Williamson in 2005] ... launched candy-flavored cigarettes, for God’s sake. This industry continues to behave in the way it has always behaved.”


      Matt Myers, general counsel for the Campaign for Tobacco-Free Kids, on the tobacco settlement.


      The Associated Press March 6, 2007, 12:11PM EST


      FDA chief: Don't regulate tobacco

      By ANDREW BRIDGES


      WASHINGTON


      Government regulation of tobacco could backfire by inadvertently forcing smokers to light up more and inhale more deeply, the head of the Food and Drug Administration said Tuesday.


      In an interview with The Associated Press, Dr. Andrew von Eschenbach said that if the FDA reduced nicotine levels in cigarettes, people would tailor their smoking habits to maintain current levels of the addictive drug.


      "We could find ourselves in the conundrum of having made a decision about nicotine only to have made the public health radically worse. And that is not the position FDA is in; we approve products that enhance health, not destroy it," said von Eschenbach, a cancer surgeon.


      A bipartisan group of lawmakers introduced legislation last month that would give the FDA the authority to regulate tobacco, in part by reducing its nicotine content.


      Smoking kills more than 400,000 Americans a year.


      Von Eschenbach said repeatedly that the issue of regulating tobacco is a complex one.


      "What I don't want to see happen is that we are in a position where we are determining that a cigarette is safe," von Eschenbach said.


      In 1996, the FDA moved to regulate tobacco. The Supreme Court ruled in 2000 that Congress had not authorized the agency to do so.


      IRAN


      U.S. Cigarette Profits Fill Iran Coffers If sanctions don't work, maybe we can just smoke the Iranians to death. That seems to be a key strategy in the U.S. embargo on Iran these days.


      To punish Tehran for backing terrorism and going nuclear, Washington has slapped on trade sanctions and gone after its banking industry. But in one area, at least, business between the two nations is booming: cigarettes. Allowed into Iran as agricultural products, U.S. tobacco exports to Iran have grown to $142 million since 2002 and now dwarf those of other American goods shipped there.


      The shipments stem from a 2000 U.S. law that eased up on embargoes against Iran, Libya, and Sudan, allowing exports of medicine and agricultural goods. Ironically, the law – the Trade Sanctions Reform and Export Enhancement Act – was pushed by interests from food-farming states, not the tobacco industry, but cigarette-makers appear the big winner. While shipments of U.S. smokes to Libya and Sudan never amounted to much, exports to Iran – considered a prize market by tobacco exporters – have ballooned.


      From 2002 to 2005, tobacco made up nearly half of the value of all U.S. exports to Iran, according to U.S. Census data. The $50 million worth of tobacco products shipped there in 2005 – the last year for which data are available – is nearly three times that of the next largest category, pharmaceuticals, and over six times the amount of all other farm products.


      "It's obviously not what was intended," says Rep. Brad Sherman, a California Democrat who chairs the House Terrorism, Nonproliferation, and Trade Subcommittee. Sherman, who has pushed for tougher sanctions on Iran, says the embargo was eased because of concern over deprivation. "That's why it was about food and medicine. It would have been ironic to put in medicine and cigarettes."


      Iran is not short of cash – as a top oil producer, the regime makes billions of dollars off its petroleum sales, enough to amply fund the nuclear and missile programs that have Washington on edge. But its leaders are nonetheless making a killing off the tobacco trade, as sales are run by a government monopoly (although many cigarettes are smuggled in). According to Iran's IRNA news service, 50 billion cigarettes are consumed there annually, resulting in some 50,000 deaths each year.

      "Maybe we're trying to stop the Iranians by giving them lung cancer," quips one terrorism expert.


      Top U.S. Exports to Iran, 2005 (in thousands of dollars)


      Tobacco, manufactured 50,317


      Pharmaceutical preparations 18,463


      Agricultural farming–unmanufactured 8,131


      Pulpwood and wood pulp 7,389


      Medical equipment 5,444

      Progress in the Smoking War

      Washington Post, Lead Editorial


      Monday, March 13, 2006; A14


      THE NUMBERS ARE dramatic -- and encouraging. Americans smoked fewer cigarettes last year than any time since 1951, when the population was half what it is today. Cigarette sales dropped 4.2 percent in 2005 alone and 20 percent since 1998, according to data based on cigarette sales tax figures and compiled by the National Association of Attorneys General.


      The state attorneys general have an interest in proclaiming progress in the war on smoking -- they attribute much of the decline to the effects of the $246 billion settlement the states reached with the tobacco industry in 1998 -- and it's possible that the study didn't capture some cigarette sales, such as those conducted over the Internet or through the black market. But the group's optimistic findings are reinforced by other studies concluding that fewer Americans are smoking and that the ones who do are smoking less. The Centers for Disease Control and Prevention reported in November that the smoking rate among adults has been falling steadily, from 25 percent in 1993 to 20.9 percent in 2004. Equally cheering, the proportion of heavy smokers (those smoking 25 or more cigarettes a day) dropped from 19.1 percent of smokers in 1993 to 12.1 percent in 2004. After rising during the 1990s, smoking among high school students dropped from 36.4 percent in 1997 to 21.9 percent in 2003.


      © 2006 The Washington Post Company


      Wednesday, March 3, 2004


      Smokers help to balance state budgets

      By Pamela M. Prah, Staff Writer, Stateline.org


      Some states punish smokers for their vice, shooing them out of workplaces and public buildings to puff. But states increasingly are relying on smokers to help balance state budgets.


      As budget-writing season heats up in state legislatures, cash-strapped states once again are turning to tobacco to fill budget gaps either by tapping their tobacco settlement funds or hiking cigarette taxes. New cigarette taxes are proposed in states like New Jersey and Rhode Island, which already charge the highest tax rates of $2.05 and $1.71 a pack, and even in Southern states like Kentucky and Virginia that grow tobacco.


      Relying on tobacco to help fix budget ills has been a welcome remedy, but unfortunately for states, it won't last. Kicking the smoking habit may be good for people's health and states' long-term health care costs, but it' s bad for state revenues in the short run.


      The 1998 tobacco settlement involving four major tobacco companies was a windfall for states. In exchange for agreeing not to sue cigarette manufacturers, states so far have reaped $37.5 billion in payments since 2000, according to the National Governors Association. Many expected states to use the money for anti-smoking and health care programs.


      But last year 31 states dipped into their tobacco settlement funds-not to address smoking-- but to help balance the books for fiscal 2004, said Lee Dixon, vice president of Health Policy Tracking Service, a web-based organization that is affiliated with the National Conference of State Legislatures.


      That's more than double the 15 states that spent tobacco settlement money to fill budget gaps in the previous year. It's too early to tell how many states will turn to their tobacco fund to bail them out for fiscal 2005.


      The settlement, which led 46 states to drop a massive lawsuit against cigarette companies in exchange for sharing $206 billion over 25 years, did not require that the money be spent on anti-smoking or health care programs. (Florida, Minnesota, Mississippi and Texas aren't part of the tobacco settlement and negotiated their own deals with cigarette manufacturers worth $40 billion.)


      Contrary to expectations, only a handful of states spent all of their tobacco money for health purposes last year, including Arizona, Mississippi, South Carolina and Wyoming, according to Dixon's Health Policy Tracking Service.


      Only six states earned "A" grades from the American Lung Association in its 2004 report card for their anti-smoking programs: Arizona, Arkansas, Delaware, Hawaii, Maine and Mississippi.


      © Copyright 2004 Stateline.org


      Monday, October 04, 2004, 12:00 A.M. Pacific


      Tobacco settlement Gregoire negotiated not popular with all

      By Andrew Garber


      Seattle Times staff reporter


      Attorney General Christine Gregoire is called tiger lady, the tobacco slayer, the woman who brought the cigarette industry "to its knees" for her role in negotiating a $206 billion settlement between tobacco companies and 46 states in 1998.


      More than any other event in her career, the deal made Gregoire a heavyweight in Washington politics.


      It's expected to deliver $4.5 billion to Washington over 25 years, with most of the money going toward health insurance for the poor. It also banned cigarette billboards and forbid cartoon ads aimed at children.


      Yet six years after the paperwork was signed, a contentious debate over whether the settlement was a victory or a failure shows no sign of subsiding.


      Critics, including some prominent public-health experts, say the agreement insulated tobacco companies from potentially crippling lawsuits and made the states dependent on money from cigarettes.


      "The settlement agreement has been the absolute worst thing that has ever happened in tobacco control," says Michael Siegel, a physician and associate professor at the Boston University School of Public Health. "Essentially what [Gregoire] did was sign a tobacco-interest bailout."


      But Gregoire also has admirers.


      "Politicians often take credit for things they don't do," said Matthew Myers, head of the Washington, D.C.-based Campaign for Tobacco-free Kids. "This is a case where Chris Gregoire in fact was the most influential attorney general in the country in promoting the public-health provisions in the 1998 settlement."


      Stanton Glantz, head of a tobacco-control research center at the University of California, says the nation would have been better off without a settlement. "Many people, including me, felt it was a bad idea," he says.


      ……..

      Gregoire has ridden a wave of glowing publicity for her role in forging the agreement and mentions it frequently in her campaign speeches.


      It "achieved the largest settlement, it achieved holding [tobacco companies] accountable, it achieved a change in their conduct and it did achieve historic reductions in youth smoking," Gregoire said in a recent interview.


      Her campaign has received more than $100,000 from attorneys on both sides of the tobacco war, including law firms that earned millions of dollars from the settlement. The lead negotiator for tobacco companies, Meyer Koplow, held a fund-raiser in New York that Gregoire attended.

      January 29, 2008

      Philip Morris Readies Aggressive Global Push Division Spinoff Enables Blitz of New Products; High-Tar Smokes in Asia


      By VANESSA O'CONNELL


      January 29, 2008; Page A1


      LAUSANNE, Switzerland -- Sitting in his office overlooking Lake Geneva, Philip Morris International Chief Executive André Calantzopoulos takes a long drag from an unusually short cigarette. Called Marlboro Intense, the product has been shrunk down by about a half inch, and offers smokers seven potent puffs apiece, versus the average of eight or so milder draws.


      The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don't always finish a full-size cigarette. Pointing to his lit Intense, the CEO says there are "possibly 50 markets that are interested in deploying it."


      WSJ's Vanessa O'Connell and David Pybas do a show and tell with new products for smokers that Philip Morris has created ahead of an aggressive international push for new business


      Marlboro Intense is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe once the company -- now a unit of New York-based Altria Group Inc. -- becomes a standalone entity. That change will be set into motion tomorrow, when the Altria board is expected to approve a long-awaited decision to split PMI from Philip Morris USA. The move would free the tobacco giant's international operations of legal and public-relations headaches in the U.S. that have hindered its growth.


      The separate entity, for example, would be exempt from U.S. tobacco regulations and out of reach of American litigators. Importantly, its practices would no longer be constrained by American public opinion, paving the way for broad product experimentation.


  • 4 Tobacco Buyout Lacks FDA Voice

    ABC

    For many public health advocates, the $10.1 billion tobacco buyout awaiting President Bush's signature was the one that got away. Until a few days ago, activists had a bill that included some regulation of the tobacco industry by the federal Food and Drug Administration. Instead, FDA oversight was stripped last week during closed-door negotiations between the Senate and House of Representatives.


    Gone were provisions to restrict tobacco marketing, ban candy-flavored cigarettes and give the FDA authority to strengthen warnings on packages. Gone, too, were requirements for companies to list ingredients and disclose scientific information on their products to the FDA.


    The FDA has no authority to require changes in the chemical makeup of cigarettes. The scuttled oversight provision would have provided that ability, advocates said.


    "It's a sad day for public health," said Paul G. Billings, vice president for national policy and advocacy for the American Lung Association in Washington. "We had an opportunity to make change. It was squandered by the U.S. Congress."


    Tobacco-related illnesses kill 440,000 people a year in the United States, according to anti-smoking advocacy groups.


    In North Carolina, tobacco-related health costs run $1.9 billion a year, said Sally Herndon Malek, head of the Tobacco Prevention and Control Branch in the state's Division of Public Health.


    Last year, nearly 25 percent of adults and 27 percent of high school students in North Carolina smoked, according to the state.


    "That's just a huge drain on our wonderful population," Malek said.


    The buyout that passed Congress on Monday was a historic moment for tobacco farmers. It will wipe out the depression-era quota program that regulated how much tobacco can be grown in the United States and artificially propped up tobacco prices.


    Growers and quota owners will get cash from tobacco companies in return for the quota they owned or the leaf they grew in 2002. Farmers hope to sell more of their newly inexpensive leaf to tobacco companies, which now buy largely from overseas growers.


    The buyout wasn't considered possible until it was attached to a massive corporate tax bill moving through Congress. But few supporters thought the buyout could get past the Senate without the FDA oversight provision.


    That changed last week when House and Senate leaders went into a conference committee, hashing out final details of the corporate tax bill. When they emerged, the FDA provision was gone. The bill passed the House last week and the Senate on Monday.


    The issue of FDA oversight is especially touchy in North Carolina, where anti-smoking activists are careful to say their public health battle is not with tobacco farmers, but rather the manufacturers of cigarettes.


    "Tobacco farmers in North Carolina are good, hard-working people trying to make a living," Malek said. "Most of them have lost loved ones [to tobacco-related illnesses]."


    On Tuesday, she and advocates from across the state gathered at a state conference in Durham to teach local anti-smoking organizations how to change tobacco policy in their communities.


    "We're about changing social norms, and it's about having to work with the culture and history of tobacco in North Carolina," Malek said. "I think, in many ways, North Carolina is at a crossroads."


    The state is home to farmers and tobacco companies, including R.J. Reynolds of Winston-Salem.


    R.J. Reynolds opposed the most recent FDA provision because it sealed Philip Morris' dominance, said spokesman David Howard. The company would agree to regulations that would still allow it to market its products to adult smokers, he said, but would oppose anything that forces the company to release proprietary information about its cigarette blends.


    $6 billion industry


    Together, the industry and farmers have an economic effect on the state of nearly $6 billion, said Blake Brown, an agricultural economics professor at N.C. State University.


    Still, advocates in North Carolina were working in recent months to influence the state's congressional delegation on the buyout's details. They sent hundreds of e-mails and phone calls to the state's congressional delegation about the FDA regulations, said Lynette Tolson, North Carolina director of advocacy with the American Heart Association.


    Democrats generally supported FDA oversight; Republicans didn't unless it was required to get the buyout through, she said.


    The impact of the FDA regulations would have been significant, Tolson said. The oversight focused largely on marketing and informing the public, but that's a critical front, she said, when advocates are trying to get vulnerable teenagers from taking up smoking.


    The oversight provision drew controversy in recent weeks when it was reported that anti-tobacco advocates in Washington, D.C., had quietly negotiated with Richmond, Va.-based Philip Morris to support the regulations.


    Critics said the oversight would have ensured Philip Morris' market dominance by restricting smaller companies' advertising.


    "I was thrilled it wasn't included," said Adam Goldstein, an associate professor of family health at UNC-Chapel Hill and director of its Tobacco Prevention and Evaluation programs.


    "The proposed benefits wouldn't do enough for public health," he said. "The public health gains were all theoretical."


    Goldstein said the regulations also would have benefited Philip Morris by giving the company a stamp of legitimacy from the FDA.


    Now, he said, Philip Morris has less leverage and public advocates can renew their fight for better FDA regulations.


    And the buyout might result in fewer tobacco farmers in the state, giving them less leverage in public policy, he said. "It allows us to dream," he said.


    That's already begun. Sens. Edward Kennedy of Massachusetts and Mike DeWine of Ohio managed to get a unanimous voice vote from the Senate on Sunday night on a separate bill that would let the FDA regulate tobacco. The bill was sent on to the House, but it isn't expected to find much of a foothold there.


    In North Carolina, health advocate Adam Searing sees the buyout as an opportunity during next year's General Assembly session.


    Now that tobacco farmers have their buyout money, perhaps legislators will be more welcoming of an increase in the cigarette tax, said Searing, project director of the N.C. Health Access Coalition.


    "I wonder how that will play out," he said.


    Staff writer Barbara Barrett can be reached at 829-4870 or


    © Copyright 2004, The News & Observer Publishing Company, a subsidiary of The McClatchy Company


  • 5 Fighting Smoke with Fire

    (Tierney Tobacco Profile)

    Fighting Smoke With Fire
    In the Legal Fight Against Tobacco, James Tierney Has a Burning Passion

    By John Schwartz


    Washington Post Staff Writer


    Tuesday, November 17, 1998


    LISBON FALLS, MAINE - For James E. Tierney, self-appointed field general in America's tobacco wars, yesterday was a moment of victory. Attorneys general for 12 states announced that they had agreed to settle their cases against the industry with a deal that could serve as a model for the 34 additional states that have not already settled such suits. If all 46 states sign on, the total value of the pact could reach $206 billion -- the largest legal settlement in history.


    Tierney, 51, a former Maine attorney general, gets an evangelical tone as he proclaims that whatever happens in Congress or in state litigation, "one thing that does not change from place to place is what the tobacco industry did": the industry's attempts to conceal the health consequences of smoking, and the alleged efforts to recruit new generations of smokers to replace dying customers.


    "The public will rise up again," Tierney predicts.


    If that happens, no small amount of the credit will go to Tierney, a Zeliglike figure who now neither holds office nor files his own lawsuits.


    While tobacco industry lobbyists swarm on Capitol Hill, he works from a 200-year-old farmhouse where he and h is wife have raised their five kids,a few miles outside this tiny Maine town.


    In the ongoing tobacco wars, Tierney, these days a consultant hired by state attorneys general, is part strategist, traffic cop, lawyer and spin doctor. His 10 years of experience as attorney general in Maine during the 1980s and his knack for a sound bite have gotten him quoted more often in the national press than many incumbent AGs. He's a new breed of activist and outsider who, with a little help from digital technology, can influence Washington policy debates from far beyond the Beltway -- and become something of an insider in the process. President and Hillary Rodham Clinton, for example, took note of Tierney's thoughtful brand of liberalism and invited him to one of those intimate Big Ideas dinners at the White House.


    His working day begins by the wood-burning stove off the kitchen, as he sits with a laptop and a cup of coffee. He reads the news online, then composes a daily roundup and commentary for attorneys general and their staffs around the country. He fires o ff the missives via modem, then begins working the phones.


    The Great Facilitator


    "You can't decide whether he's brilliant or crazy," says Mike Easley, the AG for North Carolina and one of the lead negotiators of the new state settlement. "The things Tierney does good are the things you don't see. He keeps bad things from happening. "


    "He's a raconteur, he's a schmoozer, he's good company," says Richard Blumenthal, Connecticut's attorney general. "But he also understands the role of attorneys general. He's been there and faced many of the issues. So he can empathize as well as advise."


    Tom Miller, Iowa's AG, says Tierney smooths the tensions in tough situations like the seemingly endless negotiations toward a national tobacco settlement proposal in the summer of 1997.


    "Jim is one of the very best people at bringing the best out in people … helping them maximize their good qualities at the time and minimize their bad qualities," Miller says. "He just does that naturally" by keeping lines of communication open on all sides. "He just settles things down and solves problems," Easley says. "He's a good person to talk to. And he helps keep your focus."


    Now that state attorneys general are suing Microsoft, Tierney is again getting quoted often -- though, as always, most of his briefings for reporters are delivered on background, a deal in which he cannot be identified. Nonetheless, he is rich with zin gers aimed at his opponents.


    Some attorneys general rankle at the notion that Tierney gets more press than they do when they are the ones taking the political risks. Asked about Tierney's role in assisting them, one snapped, "There's no question that he has a knack for being quote d," but added that "I am not sure how substantive his role has been. Even on tobacco."


    Others, however, say they are happy to see Tierney quoted as saying the things that they cannot.


    "He's able sometimes to speak more openly and fully since he's not a direct party to litigation, and not bound by those restraints," Blumenthal says.


    Tobacco Meets Its Match


    Tierney, who got his law degree from the University of Maine, got his political education in the Reagan years.


    Attorneys general had been banding together in lawsuits since the 1970s, but the pace picked up when Republicans won the White House in 1980. The federal government wasn't all that interested in issues like consumer protection or antitrust, and across the country state AGs found themselves looking at nationwide problems -- exorbitant insurance charges, say, in the rental car business -- and seeing no relief on the way from Washington.


    "We had to learn how to do it," Tierney recalls. "If we didn't think about those things, nothing happened."


    But in 1990, Tierney, restless, decided to get out as Maine attorney general. "I had the sense that I had done what I was going to do in Maine," he says. He'd already served in his state house of representatives, having been majority leader at age 29, so he set his sights on Washington.


    "I knew I'd made a mistake as soon as I announced" for a seat in the U.S. House of Representatives, he says. "It didn't feel right."


    After the attorney general's relatively simple world of legal or illegal, honest or dishonest, the return to arm-twisting and horse-trading, the need to play to narrow interest groups, was disheartening. Then the voters decided the issue for him. He wa s beaten roundly in the 1990 election.


    So Tierney, unemployed and facing college tuition payments for his kids, decided to fashion a new gig working with former colleagues.


    "I had this theory that maybe I could make a living if I kept my overhead low enough -- and that means zero." He hung out a shingle offering to help attorneys general nationwide run big cases and train staff, as well as to dispense a blend of managerial and political advice to newcomers to the job, Democrat and Republican alike.


    His first client was Grant Woods, a newly elected Republican in Arizona and a man who had inherited no end of problems. The governor, J. Fife Symington III, was under constant legal scrutiny (and would eventually be convicted of savings and loan fraud) ; the office was in disarray. Tierney offered to come out and help shape things up. Woods hired him. At once, Woods recalled, he realized that he was not dealing with a slick management consultant. Tierney asked if he could crash at Woods's home -- and wo und up sleeping in the bed of his 7-year-old.


    Gradually, Tierney's plain-spoken style won over more and more state officials. Tierney proved especially adept in the role of honest broker in the middle of discussions about launching collective litigation, and in connecting staffers who were wrangling with the same problems.


    And then the biggest suit of all came along: tobacco. Just four years ago, Mississippi became the first state to sue the cigarette industry for reimbursement of smoking-related health costs; Minnesota followed soon after. At the same time, the Food and Drug Administration was considering declaring nicotine in tobacco products a drug that could be regulated by the agency. In addition, a group of trial lawyers was readying a series of class action cases on behalf of smokers.


    But after an initial flurry of litigation, the number of state lawsuits stalled at four. Mississippi Attorney General Mike Moore was crisscrossing the country trying to garner new recruits, but hadn't been able to get more to take the leap.


    Tierney helped jump-start the process by contacting Richard Daynard, head of the Tobacco Products Liability Project at Northeastern University in Boston. Daynard has long served as a resource for attorneys suing the industry. Tierney became his liaison with the attorneys general. They organized a pivotal November 1995 conference of attorneys general in Boston, where trial lawyers and public health groups laid out their case against the tobacco companies. The assembled state officials, Tierney says, beg an to see "just what a huge lawbreaker the tobacco industry was."


    He says the attorneys general began asking themselves, "How can I go after driveway pavers and telemarketers and not go after tobacco?" Within a year and a half, the number of suits had climbed from four to 41.


    The industry decided that it was time to cut a deal. In June 1997 the attorneys general, many of the private attorneys suing the industry and the tobacco companies reached a $368 billion proposed settlement. It would have granted the industry a measure of protection from lawsuits in return for public health concessions and broad advertising restrictions.


    A bill based on the agreement, however, foundered in Congress after the industry declared that its terms were too restrictive and too expensive.


    Activists are already denouncing yesterday's deal by the states as a sellout to Big Tobacco. The deal, which does not require congressional approval, does include the creation of a national tobacco education and research foundation, reduction but not elimination of tobacco advertising and sponsorships, and other modest public health gains. The opponents say that, at a minimum, any such deal should include an agreement for the industry to be regulated by the FDA, and stiff penalties if, after the deal is struck, underage smoking does not decline.


    Tierney acknowledges that the settlement doesn't have the teeth of the June 1997 agreement. However, he says that the AGs led by Christine Gregoire of Washington state are smart to be considering a settlement now because they're playing with a weaker h and. Many of the AGs are leaning toward accepting the settlement precisely because it is narrow. It does not, he notes, preclude the thousands of individual lawsuits that he predicts will be coming thanks to millions of pages of internal industry document s, most of them released as part of Minnesota's case against the industry.


    "The state AGs carried this from nothing to this amazing point," Tierney says. "They ought to be proud of it. They might not have gotten everything they want, but they should be very proud of it."


    "Lawsuits are a lousy way to make public policy," he grouses. "The only reason the states are here was because everyone else" -- by which he means federal lawmakers -- "had failed."


    Now it's the turn of Congress, Tierney says, to come back and devise a national tobacco policy that finishes the job that the attorneys general started.


    The Un-Lawyer


    In a political world obsessed with status and achievement, Tierney is almost ostentatious in his simplicity. Many of the private lawyers who sued the tobacco industry zip across the country in their personal jets. But when Tierney needs to get into Boston, he often takes the bus, spending $23 for the round trip. He drives a Dodge Aries station wagon that, at one time in the distant past, was a definable shade of blue. The upholstery is mostly dog hair.


    Still, he's not shy about making sure he gets paid. In the Microsoft case, the bills are being covered by one of the many players that feel squashed by the software giant: Sabre Group, the pioneering online travel agency. Microsoft has unveiled its own online travel services. "They've been treated by Microsoft the way Microsoft has treated just about everybody," Tierney says.


    Although some of what he does on behalf of Sabre sounds an awful lot like old-fashioned, Washington-style lobbying, Tierney argues he has not compromised his principles.


    "I'm loyal to the institution," he says. " .. . . I won't represent a private party who will criticize an attorney general." Instead, he tries to find clients who are going the same way as his attorney general buddies, and then tries to get the client to pay the freight. That hasn't created a conflict of interest yet, said Jeffrey Modisett, Indiana's Democratic attorney general. "He's not going to give you advice that helps Jim Tierney and hurts you," Modisett said.


    But when Tierney does get rolling -- as in the Microsoft case -- watch out.


    "They're not cases, they're jihads," Tierney explains. "I don't like monopolies. I think they breed inefficiencies in the economic system, but they also breed arrogance."


    So how would Tierney describe his role in these cases?


    "When I was a young legislator," he recalls, "my predecessor in this office said, 'You know, you should always give people something when you see them.'


    " 'What can I give them?' I thought. So I got road maps," which the state highway department made available to the citizenry free. "I put them in the back of my Volkswagen Bug. Every Saturday, I'd go out and visit people and hand them maps. They didn't need a map -- they always went to the same places."


    But they still loved getting something for nothing from their scrawny representative, and reelected him consistently.


    "I'm still giving road maps," Tierney says.


  • 6 The Tobacco Wars


    The Tobacco Wars


    The Courier-Journal Louisville, KY

    Copyright 1997

    Wednesday, April 1, 1997


    THE TOBACCO WARS: Strategist of smoking assault calls shots from Maine farm Lawyer's roles: Spin doctor, consensus builder HUNT HELM, The Courier-Journal STAFF


    Control Central for the 35 attorneys general and 200 private lawyers pressing the vast legal assault on Big Tobacco is, incredibly, the perfect rural stillness of a weathered old farmhouse near tiny Lisbon Falls, Maine.


    Up the stairs, in a small bedroom that affords a view of his neighbor's pasture and occasionally yields up the wafting fragrance of his own ancient apple trees, James E. Tierney is a one-man information clearinghouse in the wave of lawsuits that is expected to redefine the role of cigarettes in U.S. commerce and society.


    This rangy, 50-year-old man wearing blue jeans, a green plaid shirt and dusty old hiking shoes - a regular Mainer, you might say -is the spin doctor, coordinator and a key strategist for the attorneys general who are suing to make tobacco companies repay Medicaid money spent to treat smoking-related diseases.


    On a typical day, he is up in this bedroom at a folding metal table, operating two lap-top computers, a multiline telephone and a fax machine, clicking away with fingernails he keeps long for playing guitar. He is by turns explaining the complex daily developments in the Tobacco Wars to the nation's leading newspapers (almost always off the record), and working hard to hold together the unwieldy army of lawyers who are doing the front-line fighting.


    Tierney is a private lawyer and a business consultant who doesn't have any partners. His remote venue, bony frame, denim attire and cartoon-like, doubled-up laughing postures do not immediately project an awesome presence. But as the signs on Maine's Interstate 95 warn: Watch for Moose in Roadway.


    Tierney was Maine's attorney general from 1980 to 1990, "the best attorney general the state of Maine ever had," according to friend and former schoolmate Stephen King in the novel "Tommyknockers." Tierney has advised officials in Eastern Europe's emerging democracies, has supervised national elections in Croatia and Albania, and was special counsel in the investigation of the corrupt Pennsylvania Supreme Court in the early 1990s. He is a regular commentator on Court TV. His lawyer-clients call him "America's 51st Attorney General."


    And although he can be a flamboyant showman, "he's the one person in the country who is trusted by every A.G.," says Jeffrey Modisett, Indiana's attorney general. "He was the perfect person to bring into the tobacco talks, which have been a little more fractional than most issues. He's a consensus builder, that's the main thing you need to know about him."


    THE HOME OFFICE where the phone never stops ringing, even when Tierney is on it, is comfortable and spare. Besides the communications equipment, there's a floor-to-ceiling bookshelf heavy on historical biographies (Lincoln, Truman, Rizzo), and with a row of compact discs (Mozart, Dvorak, Jelly Roll Morton). His daughter's calm dog, Oshi, is usually in the room, perhaps to avoid the four cats. Oshi puts his chin on a visitor's knee while Tierney tries to reach Matthew Myers, general counsel for the Center for Tobacco-fre Kids, who has stepped away from his desk.


    "I don't accept the bathroom excuse!" Tierney thunders with mock indignation. "Doesn't he have a cellular phone? We're trying to save kids' lives here!"


    The challenge this day, June 2, is to perform some damage control in dealing with The New York Times, The Wall Street Journal, The Washington Post, The Associated Press, Reuters, MSNBC and Bloomberg News.


    The tobacco industry has broken off the settlement talks because the attorneys general won't cut a deal that exempts the industry from punitive damages - awards that come on top of actual damages - in future suits. Some attorneys general favor them as a way to deter corporate misbehavior; others want to eliminate punitive damages, but preferably through tort reform legislation, not the tobacco settlement talks.


    Richard "Dickie" Scruggs is an aggressive private lawyer who helped Mississippi Attorney General Mike Moore file the first anti-tobacco suit, using the Medicaid reimbursement strategy that has become the linchpin of the whole assault.


    Scruggs has taken it upon himself to call a couple of key reporters, apparently raising with them the possibility that he might free-lance a deal that does protect the industry against punitive damages, regardless of whether it is sanctioned by the attorneys general as a group.

    So now The Wall Street Journal is telling Tierney it wants to poll the attorneys general to see whether they are for or against a settlement agreement shielding tobacco from punitive damages.


    Tierney doesn't want that story to appear. Such a poll, he thinks, would be divisive for his side, have no bearing on how the settlement talks actually come out, miss the point and be misleading. Tierney wants to get the national media off this idea and onto something else.


    To this end, he seizes on a news item barely mentioned in the day's stories - a report that U.S. Health and Human Services Secretary Donna Shalala says her Cabinet will review any settlement proposal and won't be pressured to finish that review before Moore's Medicaid case in Mississippi comes to trial July 7 - a deadline, of sorts, that has been driving the talks. Tierney pounces on this angle.


    "That's the important thing," he tells reporters. "That's the real news, not some poll of the A.G.s. The A.G.s are back together again on this! Dickie just had a bad hair day. We had a great conference call last night, Scruggs apologized and we all sang 'Kumbaya.' Yes, tobacco left the table, but they'll be back.


    "But if Shalala's going to review anything we come up with, then we aren't settling cases, we're just making a recommendation to a bureaucrat. If I were a newspaper with your resources, I'd find out if she is speaking for the president. That's the real news here."


    Then he takes the dog for a walk and rides into Lisbon Falls for lunch.


    AT MARIO'S RESTAURANT on Main Street, an old-time, town square kind of place with a counter and booths, Tierney tries the taco salad.


    "Each attorney general knows his own case and his own office, but. . . they all have different cultures. For example, Mike Moore is working on this by himself, and with private lawyers. His assistants are not involved.


    "One A.G. called me the other day and said, 'Hey, I called Mike Moore's office with one small tobacco question, said I didn't need to bother him, could one of his assistants help me, and they said I couldn't talk to anybody but Mike Moore on tobacco. What is going on?' He felt snubbed until I explained that Mike Moore is the only one who could help because nobody else in his office knows anything about the tobacco stuff. Just cultural differences I help them straighten out."


    The news comes on a TV behind the lunch counter, Tierney darts from the booth to watch, then returns.


    TIERNEY SAYS he got this job after the tobacco industry persuaded the National Association of Attorneys General to stay out of the whole dispute. Coordinating multistate litigation by attorneys general is the kind of thing the association does all the time, Tierney says, "but they wouldn't go against Big Tobacco."


    The attorneys general filing the suits were not allowed to use any of the association's facilities or resources to coordinate their efforts.


    Ed Cafasso, a spokesman for Massachusetts Attorney General Scott Harshbarger, who is the president of the association, says the group has remained neutral in the tobacco litigation "because all of its members are not suing the industry." He acknowledged, however, that the group has helped in other multistate cases that did not involve all the states.


    In the absence of help from the association, Richard Daynard, the law professor at Boston's Northeastern University who heads the Tobacco Products Liability Project, lined up a grant from the Robert Wood Johnson Foundation. Individual offices of attorneys general put some money into the pool, and so did some private lawyers and The Center for Tobacco-free Kids. Tierney was hired.


    ONE OF THE first things he did was to create an Internet presence so attorneys general, members of the news media and the public could get the latest information.


    "I'm a big e-mail guy," Tierney says, "and I saw right away, frankly, that I couldn't handle all the press calls. And the A.G.s were saying, 'Fax me the documents,' and I was saying, 'But it's 200 pages!" So Tierney thought up the State Tobacco Information Center (at www.stic.neu.edu), and a lawyer at Northeastern was hired to maintain the site. It has a map of the United States that shows which states have filed suit.


    Indiana filed in February. Kentucky has not filed. A statement released by the office of Attorney General Ben Chandler says, "It would not be appropriate for the attorney general to attack those hard-working Kentuckians" who grow tobacco.


    After lunch, Tierney returns home, launches himself up the stairs, retrieves seven messages, returns calls, faxes a document, stands up abruptly to change shirts and put on a jacket and tie over the jeans for a TV interview, then bombs along the winding state road to WMTW-Channel 8, the ABC affiliate in Auburn. Tierney remarks that he is available for this interview only because his 8-year-old daughter, the youngest of his five children, does not have a softball game tonight.


    DURING THE DRIVE, Tierney acknowledges that a growing group of attorneys general and private plaintiffs' lawyers - in no way a duly constituted body of government - seems poised to set national public health policy through these settlement talks. He acknowledges that the lawyers, working on a contingent-fee basis, stand to save a tremendous amount of time and earn a tremendous amount of money if they settle - regardless of whether that settlement is in the best interest of the nation's public health.


    "I wish it would be done another way," Tierney says. "In a perfect world, judges and juries would not be deciding these issues. Problem is, tobacco has had a lock on Congress forever, and a tobacco friend in every key place. Tobacco lawyers and tobacco money, until very recently, until (President) Clinton, have been successful in persuading the government that cigarettes are neither a food nor a drug and can't be regulated. So tobacco brought it on themselves by refusing to compromise, and now they're coming down like the Berlin Wall.


    "We wouldn't even be here without the private lawyers. No A.G. would have filed on his own. There are warehouses with millions of documents that lawyers have to read. The private lawyers are spending millions of dollars out of their own pockets, spending hours and hours on depositions."


    AT CHANNEL 8, evening anchorman Patrick Greenlaw appears on the set, shakes hands with his guest and asks: "Are you aware they've called off the tobacco talks?" Yes, replies Tierney, who has been working on that very situation all day, "I knew that."


    The big question on the air is, "Why isn't Maine one of the states suing the tobacco industry?" Tierney answers with care, saying that it is his understanding the attorney general has asked the legislature to provide the resources and is waiting to hear back.


    In reality, Tierney is deeply bothered. His wife, Susan, a psychiatric nurse, says he cares more about the tobacco issue than any other he has tackled, and he has tackled many, including, but not scratching the surface: bait-and-switch tactics, acid rain, hazardous materials disposal, Internet advertising, the 1994 Major League Baseball strike and the size of nuclear power plant evacuation zones.


    Tierney hates the fact that his state - so clean and natural, so environmentally sensitive that it once banned the juice box as insufficiently biodegradable - ranks as high as it does in youth smoking. In Maine 32.6 percent of youths in grades nine-12 have smoked in the past month, according to the federal Centers for Disease Control and Prevention. Among all states, the average is 30 percent.


    "Jim Tierney is always with the White Hat issues," Florida Attorney General Robert A. Butterworth says. "He will never turn up on the Dark Side."


    THE NEXT MORNING Tierney is sitting under his apple trees, a spot also popular with the biting black flies, drinking coffee and reading, with considerable gratification, the nation's newspapers. The stories this morning are not about a divisive poll of attorneys general on the issue of punitive damages. They are, as Tierney had wanted, about Shalala's statement that there will be "a full-scale, strict scrutiny (and) public health review" of any proposed settlement.


    White House press secretary Michael McCurry says in the stories, however, that Shalala's statement reflects no change in the administration's position, that the president is not signaling any skepticism about the talks.


    Tierney's gratification is short-lived. The Wall Street Journal is calling again, still interested in polling the attorneys general. The tobacco industry, he suspects, is trying to use the media to drive a wedge in the united front, singling out for blame Connecticut Attorney General Richard Blumenthal for intransigence on the issue of punitive damages.


    Reporters are also seeking any information to confirm a tip that, even though the talks have officially broken off, Moore and Scruggs will soon present to the tobacco industry a proposed settlement that would limit punitive damages, whether the attorneys general are all together on it or not.


    Tierney is on the phone again, trying without luck to straighten this out before a visit to a high school class in Brunswick


    "The A.G.s' primary concern is regulatory," Tierney says while driving down the road to Brunswick, "and protecting kids from starting to smoke. They are interested in cessation programs. How to get the Medicaid money back. And law enforcement: We think these guys broke our conspiracy laws and should be punished civilly. "Congress will probably want to add provisions on the international issue - exporting cancer to Africa, for example. And they will want to help the farmers."


    TIERNEY IS LATE for the social studies class, but he grabs and holds the kids' attention. "We could literally fill your school from floor to ceiling with internal tobacco company documents!" he declares. He tells them what a class action suit is - a common cause of action against an allegedly defective product or marketing practice that injures a group of people. He says that tobacco causes $2.09 in health-care costs for every pack of cigarettes sold. "That's the size of this epidemic," he booms. "AIDS? Alcohol? Drugs? Forget it! Tobacco is the single biggest health problem in the nation."


    (These are claims that the tobacco industry still publicly rejects. Tom Fitzgerald, a spokesman for Louisville-based Brown & Williamson Tobacco Corp., says later that Tierney's remarks "appear to be the same regurgitated rhetoric that has been part of anti-tobacco rhetoric for years.")


    After a Q & A session, Tierney runs to a pay phone to check messages, and he calls Blumenthal in Connecticut, who has left two of the five. Tierney drops his lanky body on the floor in a pile of knees and elbows.


    "I can tell you exactly what it's about," he tells Blumenthal regarding a reporter's call, which Blumenthal hasn't returned yet. "Her question is going to be 'Who said among the attorneys general that punitive damages are the most important issue?' " Tierney is back on his feet now. "The other side is trying to demonize you and isolate you. I told her that it isn't one person, that six to 12 A.G.s believe as a matter of policy that punitive damages have to be there."


    Then, apparently remembering Scruggs' bad hair day and the reporters' tip that Moore and Scruggs might be working on a settlement proposal, Tierney adds: "Mike and Dickie are flying to Nashville. I think they might have one more kooky thing left in them."


    HEADING BACK home to Lisbon Falls, Tierney is thinking about what he will say when he addresses a Chamber of Commerce breakfast in Portland the next morning. He has an outline already. He will address the audience as neighbors and friends, because Maine isn't doing so well on this issue. He will say that, "If nothing else, the litigation brought by the attorneys general has put the truth before the public."


    What truth?


    "That the No. 1 health problem in the United States has been caused by hugely profitable corporations who, with full knowledge of the health risks, marketed a highly addictive drug to everyone - especially children - with the full knowledge that it was killing 450,000 Americans every year."


    Tierney will tell them that the whole country is addicted to tobacco, not just the people who smoke.


    "Tobacco is a most profitable item, so our retailers are addicted. It is a huge client, so our law firms and our advertising agencies and our stock brokerages are addicted. It is a good return on investment, so our pension funds - public and private - are all addicted. It's a major taxpayer, so our state and federal treasuries are addicted. It is philanthropic, so our museums and hospitals and festivals are addicted. In many states, our hard-working farmers are addicted. In many states, our candidates for public office are addicted."


    "And most important of all," he will tell them, "our friends and our loved ones and our kids are addicted. And to kick this addiction we need to work together. It is a very long and hard road.


    "All we have to save is ourselves."


    Former Attorney General James Tierney stays on top of tobacco-lawsuit news with computers, a multiline telephone and a fax machine at his Maine farmhouse. "I'm a big e-mail guy," he said.


    BY DAVID ROGERS, SPECIAL TO THE COURIER-JOURNAL; BY DAVID ROGERS, SPECIAL TO THE COURIER-JOURNAL"I wish it would be done another way," James Tierney said of smoking-related litigation. "In a perfect world, judges and juries would not be deciding these (tobacco-related) issues."


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