Tobacco companies, states held secret talks
New York Times News Service
Negotiators for producers and state attorneys general held secret talks in recent weeks in an effort to devise a new tobacco settlement proposal, state officials and lawyers with knowledge of the discussions say.
The talks, which follow the collapse last month of a $516 billion comprehensive tobacco bill in the Senate, apparently grew out of a court-ordered effort to mediate an upcoming smoking-related lawsuit brought by the state of Washington against the tobacco industry.
The negotiations then expanded to include officials from other states with pending lawsuits, including New York, California and Colorado.
One lawyer, who represents numerous states in actions brought against cigarette producers, said that negotiations between the industry and state officials had broken off Wednesday night over monetary and other issues. And another person close to the tobacco industry confirmed that the talks had broken off over money.
But two state officials, who also spoke on the condition of anonymity, said that they had been told Thursday by colleagues that the talks were still alive and that details about them would be discussed during a national meeting of state attorneys general expected to start Monday outside Durango, Colo.
''The attorneys general have always said that if Plan A didn't work then we would always go with Plan B,'' said Jeffrey Modisett, the attorney general of Indiana.
Last June, the tobacco industry and 40 state attorneys general reached a $368.5 billion settlement plan that, if approved by Congress, would have settled lawsuits by states and smokers, restricted advertising by tobacco companies and required producers to pay fines if youth smoking rates did not decline. In return, the producers would have received protection from certain types of lawsuits and claims for punitive damages in smoking-related cases.
But a tobacco bill introduced by Sen. John McCain, R-Ariz., increased the settlement figure to $516 billion while lawmakers removed the legal protections sought by the industry. As a result, tobacco producers withdrew from last year's accord and launched an intensive effort that helped derail the McCain bill.
Still, tobacco company executives remained concerned about smoking-related lawsuits brought by states, which they consider the most difficult and costly cases pending against them. And some state officials have said that they also remain eager, in the absence of federal action, to settle their cases and reap the monetary and public health benefits.
Officials of Philip Morris Cos. and RJR Nabisco Holdings Corp., the parent company of R.J. Reynolds Tobacco, declined Thursday to comment on the settlement talks. A spokesman for Christine Gregoire, the Washington state attorney general who participated in the recent discussions, also said that she would not comment.
Gary Black, a tobacco industry analyst with Sanford C. Bernstein & Co., said that he estimated that a new settlement offer by the industry to the 37 states with remaining lawsuits would likely be in the range of $200 billion to $240 billion.
Under last June's $368.5 billion proposal, about $196.5 billion would have gone to the states, with the remainder going to the federal government. Over the past year, however, the tobacco industry has paid out about $36 billion to settle lawsuits brought by Mississippi, Florida, Texas and Minnesota.
From a public health perspective, any new proposal negotiated between state attorneys general and tobacco producers would likely be modeled around the $6.5 billion settlement reached in May between the industry and Minnesota.
That accord, which like previous state settlements bans tobacco advertisements on billboards and near schools, also bars producers from, among other things, misrepresenting the health hazards of smoking.
But any statewide plan would differ from last June's proposal because it is not expected to include a federal component: It would not deal with federal regulation of nicotine or provide companies with relief from lawsuits brought by smokers, insurers or municipalities.
According to people familiar with the talks, the new round of negotiations began about three weeks ago when a court ordered mediation to resolve the state of Washington's lawsuit against tobacco producers. That lawsuit, which is seeking to recover billions spent treating tobacco-related diseases, is scheduled to start in September.
During those talks, two tobacco industry lawyers, Arthur Golden and Meyer Koplow, and Joe Rice, a lawyer from Charleston, S.C., who represents about 25 states with tobacco lawsuits, met with Ms. Gregoire, the Washington attorney general, to discuss bringing other states into the talks, said lawyers familiar with the negotiations.
As a result, the talks were expanded to include several other states like New York and California, lawyers said.
Both Rice and Golden declined comment and Koplow did not return telephone calls Thursday. A spokesman for Dennis Vacco, the New York attorney general, declined comment and the office of Dan Lundgren, the California attorney general, did not return a telephone call.
However, versions of how the talks broke down differed sharply. While one person close to the tobacco industry said that state officials had demanded too much money, a state official said that producers had made a ''low-ball'' offer.
But even if talks resume, as some state officials expect, reaching a new deal may be complex because of the posture of both the tobacco industry and those states with unresolved lawsuits.
While some states are eager to settle or have done little work to advance their lawsuits, a few states like Wisconsin and Maryland have been working hard to prepare their cases and have shown little interest in settling prior to trial.
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