California Manufacturers Oppose Tobacco Lawsuit.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Sept. 27, 1999--

The California Manufacturers Association is strongly opposed to the U.S. Justice Department's recent multi-billion dollar lawsuit against the makers of tobacco products.

CMA President, Jack M. Stewart, condemned the filing on Friday, calling it misguided. "It is billed as a way to recover 'billions of dollars' in annual health care costs that the government spends on smokers," said Stewart. "But in fact, it is nothing more than a blatant abuse of the legal system designed to squeeze more money out of the tobacco industry and put it into the pockets of government and trial lawyers. As nearly 100 business groups, associations and private companies have already declared, there is no other plausible explanation for this ridiculous assault on a legal and legitimate industry."

The lawsuit filed last Wednesday claims that the tobacco industry has waged a lengthy campaign of fraud and deceit to market its products. It alleges that tobacco companies have intentionally hidden the potential dangers of smoking from the public. In addition, it asserts that health problems caused by cigarettes cost the government billions of dollars annually. Frankly, none of these charges are supported by fact, according to Stewart.

Tobacco does not cost the government billions in medical care, he said. On the contrary, the Congressional Research Service, in a 1998 report by its Economic Division on the cost of smoking determined that revenue generated by tobacco taxes produces savings of $29 billion per year. Furthermore, the federal government has been the official regulator of the tobacco industry for years. Its own scientists have in the past worked in conjunction with tobacco companies in efforts to develop a safer cigarette, and it has clearly been aware of the risks associated with tobacco for decades. Yet now it wants to exact "compensation" from the very industry it regulates? This is wrong, Stewart said.

The lawsuit also appears to ignore the comprehensive agreement between the tobacco industry and 46 states reached earlier this year, said Stewart. California alone is scheduled to collect $25 billion over the next 25 years from the settlement. But if lawsuits like this one proliferate, Stewart said, the legitimacy and benefits of this settlement could be in jeopardy. "This lawsuit sets a dangerous precedent against companies in all types of industries," said Stewart.

"Under this erroneous logic, businesses could be targeted simply because they manufacture an unpopular or controversial product. If a legal industry can be targeted for this type of punitive lawsuit, is the fast-food industry far behind? Will beer and winemakers be next? Or perhaps the candy industry?"

CMA is strongly urging congressional representatives and policy makers to heed the warning of business constituents. "This lawsuit is bad for more than just the tobacco," Stewart warned. "It holds peril for all businesses."

Jack M. Stewart is President of the California Manufacturers Association, which represents more than 800 manufacturers statewide. These companies employ more than 2 million California workers.