Tobacco Case Nears Trial, Questions Remain
Sun Sep 19,10:54 AM ET
By Peter Kaplan
WASHINGTON (Reuters) - On the eve of a $280 billion racketeering trial of major cigarette makers, political and legal uncertainties are still seen hanging over the U.S. government's long-awaited case.
With opening arguments set for Tuesday, observers of the largest racketeering case in history say the outcome could still depend on twists and turns outside the courtroom of U.S. District Judge Gladys Kessler.
The racketeering lawsuit, filed by the Clinton administration in 1999, could be drastically curtailed or snuffed out entirely by an appeal still pending, or a settlement in the aftermath of the November presidential elections, say financial analysts and anti-smoking groups.
If it runs its course, the trial is expected to take about six months and feature testimony from more than 100 witnesses. Even before it begins, the two sides will have exchanged nearly 120 million documents.
Justice Department officials express confidence they can persuade the judge that the cigarette makers deliberately misled the public about the risks of smoking in a massive conspiracy going back to the 1950s.
"The government has provided extensive evidence to support our case. We look forward to presenting it in court," said Peter Keisler, assistant attorney general in the department's civil division.
Tobacco companies are equally confident. "We do not have any plans to settle this case," Peggy Roberts, a spokeswoman for Phillip Morris USA. "We're focused on going to trial, defending ourselves."
The lawsuit targets Altria Group Inc. and its Philip Morris USA unit; Loews Corp.'s Lorillard Tobacco unit, which has a tracking stock, Carolina Group ; Vector Group Ltd.'s Liggett Group; Reynolds American Inc.'s R.J. Reynolds Tobacco unit and British American Tobacco Plc unit British American Tobacco Investments Ltd.
It seeks to force the industry to give up $280 billion worth of past profits and impose tougher rules on marketing, advertising and warning claims on tobacco products.
The companies have denied any wrongdoing and say they have drastically changed their marketing practices since 1998, when they signed a landmark settlement with state attorneys general that severely restricts marketing and subjects cigarette makers to oversight.
Tobacco foes worry that the immediate aftermath of the November election will give President Bush (news - web sites) an opening to either drop the five-year-old racketeering case or settle it on terms favorable to the tobacco companies.
"One has to be very concerned immediately after the election -- whatever the result -- that this administration will try to settle the case to the profit of the major tobacco companies," said Matthew Myers, president of the Campaign for Tobacco-Free Kids.
Myers and other anti-tobacco advocates worry that, regardless of whether Bush is re-elected, the time between the election and inauguration in January will provide a politically safe time for officials to drop or settle the case.
Another question mark hanging over the case is an appeal by the industry challenging whether the government has the legal authority to pursue the $280 billion penalty.
In May, Kessler ruled against the industry, concluding that the government was within its rights to seek "disgorgement" of past profits.
The appeals court is scheduled to hear oral arguments in November. If it were to overrule Kessler, it would take the biggest penalty off the table.
Anti-smoking groups have always harbored doubts about the Bush administration's commitment to the case, their fears stemming from a previous attempt by the administration to settle the case and efforts by some Republicans in Congress to de-fund it.
Some analysts on Wall Street believe a settlement may be in the cards after the election, but probably only if the appeals court throws out the $280 billion penalty.
"It becomes politically feasible at that point, I think, to have a resolution by non-litigation means," said one Wall Street analyst, who spoke on the condition of anonymity. |
