U.S. Judge Urges Cigarette Makers To Settle Case
By VANESSA O'CONNELL and BRIAN BLACKSTONE
Staff Reporters of THE WALL STREET JOURNAL
June 21, 2005; Page A2
The federal judge overseeing the lawsuit against the nation's largest cigarette makers urged both sides in a closed-door meeting to settle the case.
U.S. District Judge Gladys Kessler, who is presiding over the Justice Department's civil-racketeering case against the cigarette makers, wrote in a court order that in a "routine, informal discussion" she had urged the parties "once again, to consider the advantages of settling this case rather than the risks of litigating it." The trial in Washington has lasted nine months.
Attending the meeting at Judge Kessler's chambers were the two top lawyers from the Justice Department trial team and the lead outside counsels for Reynolds American Inc.'s RJR and Altria Group Inc.'s Philip Morris. Also there were Michael Szymanczyk, head of Philip Morris USA, and Susan Ivey, chief executive of Reynolds American.
Attendees declined to comment on their discussions about the six-year-old case, saying the judge had warned them not to discuss the meeting. "We went to the meeting under the judge's request," said William Ohlemeyer, associate general counsel of Altria. He was joined by Philip Morris USA attorney Dan Webb.
Judge Kessler has been pressing both sides to settle, particularly since the government two weeks ago scaled back the amount of damages it would ask for, partly to make a settlement easier. Judge Kessler recently provided government lawyers with a deadline of the end of this week by which they must list their demands in the case.
While talks could collapse, one of the provisions currently on the table includes an agreement by the defendants to use standard definitions of the word "light" and "ultralight" to describe cigarettes, said people familiar with the situation. Lawyers for the Justice Department argue that the term "light" is fraudulent, because it misleads smokers into believing that low-tar cigarettes are less harmful than full-tar smokes, possibly inducing them to delay quitting. Currently, there is no defined range for the use of those descriptions on packs and in advertising.
One person close to the case said a settlement could be reached within weeks. The possible settlement could place new restrictions on tobacco companies' marketing of "light" and "low tar" cigarettes, and could force the companies to extend their funding of smoking-cessation programs.
Another likely settlement provision is an agreement by the defendants to fund antismoking programs. In the trial that ended earlier this month, government lawyers asked the judge to force the cigarette makers to spend roughly $10 billion over five years to fund smoking prevention and cessation programs -- far less than the $130 billion over 25 years that one government witness had previously suggested.
Executives at the major tobacco companies argue that even $10 billion is too much. They point out that big cigarette makers already have spent roughly $1.45 billion over five years to bankroll antismoking programs as part of a separate 1998 settlement of lawsuits brought by 46 states.
The tobacco companies and Justice Department lawyers also might agree to a series of marketing restrictions that closely resemble those in the states' earlier lawsuit settlement, tobacco company executives add. The 1998 agreement required cigarette manufacturers to eliminate billboard ads for their brands and to cease advertising to young people. But Justice Department lawyers believe the tobacco companies may have skirted terms of the 1998 settlement by allegedly selling so-called kiddie packs and using cartoon images to promote a cigarette brand. Folding the earlier state lawsuit agreement into its own settlement would enable the Justice Deparment to add its own enforcement powers to ensure the terms are met.
Jonathan Turley, a George Washington University law professor, said the attendance of corporate heavyweights, in addition to the attorneys, at the closed-door meeting is telling. "Courts usually confine these types of meetings to the counsel," he said. Executives only attend when there's a violation of a court order, which doesn't appear to be the case at this stage in the trial, or "when there's a settlement being discussed," he said.
If the Justice Department and the tobacco companies fail to come to terms this week, then government lawyers must file new documents laying out their demands for Judge Kessler. She isn't likely to rule until this fall. |
