The many virtues of tobacco litigation.

In the failed global settlement, the tobacco industry almost freed itself from the civil justice system.

Last summer, a number of Wall Street stock analysts pronounced the imminent death (or at least dismemberment) of tobacco litigation.(1) In their view, the remaining 37 cases brought by state attorneys general would soon settle on terms that would have little effect on tobacco sales or company profitability. Other cases that remained unsettled would be manageable, posing little or no threat to the viability of the industry.

There are many reasons to believe that their predictions are far off the mark. The third wave of tobacco litigation will, in all likelihood, succeed in finally bringing the tobacco industry to justice--if it is allowed to proceed without legislative impediment.

After more than 40 years of litigation, plaintiffs are using legal strategies designed to circumvent the tobacco industry's tactics of blaming the victims and crushing their attorneys. The industry is now facing class actions, case-management orders that keep its lawyers from unreasonably drawing cases out, and lawsuits by government entities and other third-party payers seeking reimbursement for money spent on smoking-related medical expenses. Consequently, the civil justice system is poised to achieve some of the basic goals of tort law vis-a-vis the tobacco industry: compensation, deterrence, and a measure of justice.

But the chilling fact is that the predictions from Wall Street would have been right on target had the industry's efforts at a global settlement been successful--and they almost were. The industry ensured that the settlement proposal it reached with state attorneys general on June 20, 1997, limited the rights of future plaintiffs--and of other people and organizations not at the negotiating table--by prohibiting the use of the very legal tactics that had brought the companies to the table.

The attorneys general were suing to recover Medicaid expenditures and to obtain court orders requiring the companies to stop marketing cigarettes to kids. Plaintiff attorneys involved in the negotiations represented addicted smokers seeking damages, assistance in quitting, and medical monitoring.

Although these lawyers obtained landmark concessions from the tobacco industry, the settlement proposal also allowed the industry to kidnap the agenda in a variety of ways. For example, the proposal rolled back the jurisdiction of the U.S. Food and Drug Administration (FDA) over nicotine-containing products and limited the legal rights of future plaintiffs and others not represented in the negotiations.

The first two waves

The first wave of tobacco litigation (1954-1973) was sparked by several clinical studies of the health effects of smoking that appeared in popular journals like Reader's Digest.(2) The second wave of tobacco litigation (1983-1992) sprang from the successes of plaintiff attorneys in asbestos and other toxic tort cases in the early 1980s.

During the first and second waves of the litigation, the industry steadfastly maintained that its products were not harmful and paradoxically argued with great success that smokers had freely chosen to smoke and had assumed the risks of smoking, negligently contributing to their own harm.

Plaintiff-blaming defenses were greatly strengthened in 1965 by passage of the Federal Cigarette Labeling and Advertising Act (FCLAA), the federal law requiring warning labels on all cigarette packaging and advertising.(3) Jurors tended to blame plaintiffs who had continued to smoke despite health warnings about the link between smoking and disease, instead of identifying the industry as the cause of tobacco-induced illnesses.(4)

During the first and second waves of tobacco litigation, the industry also successfully pursued a "king of the mountain" strategy(5) by taking countless depositions and filing and arguing every possible motion, threatening to bankrupt any attorney who took on a tobacco company. This strategy was succinctly described by J. Michael Jordan, an attorney who successfully defended R.J. Reynolds in the 1980s, in an internal memo to his colleagues:

   The aggressive posture we have taken regarding depositions and discovery in
   general continues to make these cases extremely burdensome and expensive
   for plaintiffs' lawyers.... To paraphrase General Patton, the way we won
   these cases was not by spending all of [R. J. Reynolds'] money, but by
   making that other [guy] spend all his.(6)

The experience of the lawyers who pursued the landmark case Cipollone v. Liggett Group, Inc., is illustrative of what happened in many individual lawsuits in the first and second waves. More than 100 motions were filed, and most were argued. There were four interlocutory applications, one resulting in the Third Circuit's initial decision on preemption.(7) After a four-month trial, there was an appeal from the final judgment,(8) followed by two petitions to the U.S. Supreme Court. One was granted, resulting in an argument and later a reargument before the Court.

The law firms advanced more than $500,000 in out-of-pocket expenses and about $2 million in lawyer and paralegal time in connection with the Cipollone trial. They spent more than $150,000 in out-of-pocket expenses and more than $900,000 in attorney and paralegal time during post-trial proceedings.(9)

The Cipollone trial resulted in a $400,000 verdict that was overturned by the Third Circuit on various technical grounds, and the case was remanded for trial.(10) The trip to the Supreme Court strengthened the plaintiff's case, but the law firms representing the estate of Rose Cipollone, faced with the loss of hundreds of thousands of dollars, withdrew from the case before it went to trial again.(11)

In Cipollone, the Supreme Court specified the state law tort claims that were preempted by the FCLAA. In particular, the Court held that the act, as amended by the Public Health Cigarette Smoking Act of 1969, preempted state law damage claims based on "failure to warn and the neutralization of the federally mandated warnings to the extent that those claims rel[ied] on omissions or inclusions in [the manufacturers'] advertising or promotions."(12) However, the Court also held that the amended act did not preempt claims based on strict liability, express warranty, intentional fraud and misrepresentation, or conspiracy.(13)

The third wave

The innovative legal strategies that plaintiff attorneys are using in the third wave of tobacco litigation (1994 to the present) make it unlikely that the industry's usual tactics will continue to bring it success. Cases pending at the time the global settlement proposal was reached included dozens of Medicaid reimbursement suits brought by state attorneys general, statewide class action lawsuits, and third-party payer actions brought by various cities and labor union health and welfare funds.

The expenditure of time, money, and resources on behalf of thousands or millions of plaintiffs in the class actions enables plaintiffs to overcome the tremendous resource advantages previously enjoyed by the industry. Some of these cases are marked by an absence of blameworthy plaintiffs, in that they seek to help those smokers who want to quit.(14)

It is also unlikely that jurors would have blamed the nonsmoking flight attendants who worked in smoke-filled airplanes and later contracted a variety of tobacco-related health problems.(15) Their case settled before trial.

The industry's resource advantage is also being overcome through strategic choices by plaintiff lawyers and helpful orders by judges in cases brought on behalf of individual plaintiffs. Attorneys can conserve their resources by filing several cases and doing carefully limited preparation on each. Judges can promote equal access to justice by issuing case-management orders setting firm schedules, limiting discovery, and providing backup cases to move up for trial when a case scheduled for trial is delayed or dismissed.

These strategies allowed Jacksonville, Florida, attorney Norwood "Woody" Wilner to take four tobacco cases to trial in the past two years and to win substantial verdicts in two of them. On August 9, 1996, the first jury to decide a case in the third wave of tobacco litigation--and the first jury to see the damning information contained in leaked Brown & Williamson Tobacco Corp. (B&W) documents--awarded a verdict against B&W of $750,000 to Grady Carter, a longtime smoker diagnosed with lung cancer, and to his wife.

Because the defendant refused Wilner's pre-trial settlement offer, Carter was awarded substantial attorney fees. The Carter verdict was recently overturned by an intermediate appellate court in Florida,(16) but a further appeal is planned.

Wilner's second winning verdict occurred earlier this year, when a jury found B&W liable for the wrongful death of smoker Roland Maddox and awarded his family compensatory and punitive damages.(17) Wilner has taken two additional cases to trial resulting in jury verdicts for the defense.(18)

The third equalizer in the current wave of tobacco litigation is the medical cost reimbursement actions. In these cases, the plaintiff is not the smoker but the third-party payer. Judges in these cases have generally held that the smokers' possible negligence or assumption of the risk is irrelevant, since the third-party payer did not itself smoke.(19)

Furthermore, the ability of a third-party payer to sue for its accumulated damages in a single action levels the playing field. These plaintiffs have the resources to acquire sophisticated trial counsel on a contingent fee basis.

Global settlement proposal

The global settlement proposal(20) that was reached last year between tobacco companies and the attorneys general would have retilted the playing field in favor of the industry. Title VIII of the proposal established protections for the industry from various forms of litigation and civil liability and prohibited the use of the innovative legal devices that have made the third wave of litigation so successful.

Subparagraph A to Title VIII eliminated all future attorney general actions and similar actions brought on behalf of government entities, class actions, parens patriae actions, and nicotine dependency actions. Third-party payer suits filed before June 9, 1997, would not be settled but would be subject to the limitations in the settlement proposal governing civil liability for past misconduct.

Subparagraph B provided wide-ranging restrictions on the recovery of damages due to the industry's past misconduct. These restrictions included (1) no punitive damages; (2) no class actions, and removal to federal court should a state court certify a class; (3) prohibitions on joinder, aggregations, consolidations, extrapolations, or other devices to resolve cases other than on the basis of individual trials; (4) limits on who can sue (only individuals or their heirs except for third-party payer suits filed before June 9, 1997); (5) restrictions on who can be named a defendant (manufacturers and/or the manufacturers' agents); (6) prohibitions on the use of evidence of "reduced risk" or safer products at trial; and (7) limited exposure to damages.

Subparagraph C provided that the same restrictions on lawsuits for past misconduct would apply to lawsuits for future misconduct except for the restriction against punitive damages and the joint liability of the defendant manufacturers who signed on to the deal. It also explicitly prohibited future third-party payer lawsuits not based on a subrogation theory.

Tort law furthers the public interest by compensating injured parties, deterring potential wrongdoers' harmful behavior, and exposing wrongdoers' misconduct. The global settlement proposal would have thwarted these fundamental policy goals of tort law.

Punitive damages. Title VIII would have granted the tobacco industry complete immunity from any punitive damages for its past misconduct. Although subparagraph B1 claimed to include some measure of punishment "as part of overall settlement," this claim was inconsistent with Title VI D, which provided that all payments under the proposal were "ordinary and necessary business expenses," and no part of any payment was "in settlement of an actual or potential liability for a fine or penalty (civil or criminal)...."

The amount of the payments contemplated by the proposal also prevented them from being construed as a substitute for punitive damages. Smoking imposes about $100 billion in direct and indirect costs on the U.S. economy each year (including medical costs, lost productivity, and other expenses).(21) Since the settlement addressed at least 44 years of wrongdoing by the tobacco industry (counting forward from 1954, when the industry kicked off its disinformation campaign with full-page advertisements announcing its doubts about the dangers of smoking and the creation of what became the Council for Tobacco Research), the total costs imposed on the U.S. economy are about $4.4 trillion. Since smoking-related deaths will continue to occur for several more decades, one could argue that the total costs actually approach about $6 trillion.

A cash settlement of even $400 billion amounts to only 7 cents on the dollar.(22) Yet the settlement proposal would have included payment of only $368.5 billion over 25 years. This payment could not possibly be construed as containing any punitive damages whatsoever.

In a joint statement, the four major U.S. cigarette makers described the proposed settlement as "a bitter pill" that required them to make "previously unimaginable concessions."(23) But, according to calculations performed by Massachusetts Institute of Technology economics professor and physician Jeffrey Harris, the industry could actually afford to pay a great deal more than $368.5 billion.(24)

Collectively, the industry's pretax income is about $7.7 billion annually(25)--a figure that has been used as a basis for determining how much the industry could ultimately afford to pay. However, accepting this figure as an upper limit assumes that cigarette manufacturers cannot raise cigarette prices, when in fact they are likely to do so to help cover the cost of a settlement.

Harris contends that the industry's ability to pay damages is bounded by "the maximum amount of money it could extract from smokers if the price of cigarettes were set at its full ... profit-maximizing level."(26) He estimates this price to be about $4 per pack. At this price, the industry's pretax income would rise to more than $32 billion annually--far in excess of the yearly settlement obligation.

Providing the tobacco industry with protection from punitive damages makes no sense from a social justice standpoint. Why should an industry that has addicted millions of children to a product it knows to be both harmful and addictive be protected from punitive damages? Punitive damages were designed to punish exactly the sort of reprehensible behavior--behavior that evinces an utter disregard for the safety and welfare of others--in which the tobacco companies have engaged.

The elimination of punitive damages also hampers the fundamental tort goal of providing adequate compensation to victims. Without the possibility of collecting punitive damages awards, fewer attorneys will invest the enormous resources required to bring cases against the industry. The removal of punitive damages also considerably weakens the plaintiff's negotiating strength.

Limited exposure to damages. Although the settlement proposal technically permitted punitive damages for actions based on future conduct, the cumulative limit on damages effectively removed the usual deterrent value of punitives. That is because subparagraph B9 to Title VIII allowed the industry to deduct 80 percent of any damages it paid from the amount it would have otherwise owed under the proposal.

Subparagraph B9 limited the tobacco industry's annual liability to an amount that would have begun at $2 billion and reached $5 billion after nine years. In view of the 80 percent deduction, however, the industry's exposure to liability would have initially been a mere $400 million annually, rising to $1 billion after five years. Thus, the limit would have guaranteed that so long as the industry washable to obtain more than the present value of $1 billion annually from continuing its pattern of misdeeds, it could ignore the future costs of wrongful behavior.

Even worse, with more than 400,000 Americans dying each year of tobacco-related illnesses, awards or settlements for actual damages in just a fraction of these cases could exceed the $2 billion to $5 billion annual limits. With actual damage awards exceeding total exposure to liability, the industry would have little reason to be deterred by the prospect of any additional punitive damages.

Class actions, third-party payer cases, and consolidated claims. The only possible purpose of eliminating these legal devices in the settlement proposal was to make it impossible for plaintiff attorneys to bring, or state courts to process, cases against the tobacco industry in an efficient and cost-effective manner. Banning these types of actions would have left the tobacco companies free to pursue the "king of the mountain" strategy that worked so well for them earlier.

Immunized defendants. Title VIII restricted "permissible defendants" in tobacco cases to "tobacco product manufacturer[s]," defined to include only domestic tobacco subsidiaries of the international tobacco conglomerates. Immunizing these conglomerates, which profited from sales to U.S. smokers, left a drastically smaller asset and income base for paying off American tobacco claims. Ironically, if bankruptcy was a genuine concern, this immunity provision lowered the bankruptcy threshold to a fraction of what it would otherwise have been.

This provision also immunized tobacco industry law firms that had begun to be named as defendant co-conspirators in some of the state cases.

Senate action

Most of the restrictions on plaintiffs' substantive and procedural rights in the proposed settlement were incorporated in various pieces of proposed legislation. The most prominent bill was introduced by Sen. John McCain (R-Ariz.) and modified by the Senate Commerce Committee.

Aside from the restrictions on plaintiffs' rights, the bill would have been a strong piece of tobacco control legislation. Building on the concessions obtained from the industry in the settlement agreement, the McCain committee bill would have protected Americans from the industry in a variety of ways, including:

* requiring the tobacco industry to pay $516 billion (as compared to the agreement's $368.5 billion) over 25 years to help states and the federal government bear the medical costs of smoking-related illness;

* raising cigarette taxes by $1.10 per pack over five years, drastically reducing consumption among youngsters;

* preserving the FDA's ability to regulate the industry in ways that the settlement agreement did not; and

* drastically reducing cigarette marketing, advertising, and promotion.

An amendment introduced by Sens. Judd Gregg (R-N.H.) and Patrick Leahy (D-Vt.) would have fixed most of the civil immunity problems in the McCain committee bill. On May 21, 1998, the Senate rejected a motion to table the amendment, effectively adopting it. Most observers thought at that point that the industry's efforts to use the legislation to obtain de facto legal immunity had failed.

But on June 16, 1998, the Senate indirectly reinserted immunity into the bill by approving an amendment offered by Sen. Slade Gorton (R-Wash.) that would have limited plaintiff attorney fees in all tobacco litigation filed after June 15, 1998, to $500 an hour (limited, of course, to cases in which the plaintiff ultimately prevails). While this sounds like fair compensation for any professional, when applied to the highly speculative area of tobacco litigation, such a restriction would have discouraged attorneys from taking tobacco cases. This amendment, then, added a kind of de facto civil immunity for the industry to the McCain committee bill.

Tobacco cases are taken by the plaintiff lawyers as speculative investments--the lawyer has to invest hundreds or thousands of hours of time, and tens or hundreds of thousands of dollars, with a substantial likelihood of zero return. He or she is in the same position as any other entrepreneur or investor. The possibility of outsized returns if the case is successful is what keeps lawyers doing this work. The Gorton amendment would have eliminated the financial incentive for lawyers to take these risks.

Ironically, the tobacco industry ended up torpedoing its own victory. On April 8, 1998--nine days after the Commerce Committee endorsed the preliminary version of the McCain committee bill, and before the Gregg-Leahy amendment had reached the floor--Steven Goldstone, RJR Nabisco's chief executive officer, announced that his company was pulling out of the congressional process for developing comprehensive tobacco legislation. The industry launched a huge advertising campaign that painted the McCain committee bill as a big "tax-and-spend" proposal.

Emboldened by the advertising campaign's effect on public opinion, the industry's Senate allies twisted the McCain committee bill by adding a series of amendments. Some of them, like the Gorton amendment, worsened the bill's impact on public health, and some of them were arguably not germane to the bill's real subject matter.

On June 17, 1998, the day after the Gorton amendment passed, the bill died through a series of industry-supported parliamentary maneuvers. But the bill the industry killed had already been shorn of almost all its funds for tobacco control, and the industry had been given, thanks to the Gorton amendment, a backdoor form of the immunity it coveted.

Litigation revisited

The growth of individual tobacco litigation during the third wave has been exponential. For example, the R.J. Reynolds Tobacco Co. reported that there were 68 cases of all sorts pending against it in July 1995; 203 cases in July 1996; and 516 cases as of December 31, 1997.(27)

Third-party payer suits are also proliferating, and courts are recognizing the validity of claims by these new tobacco plaintiffs. For example, in 1996 the Minnesota Supreme Court rejected a tobacco industry challenge that Blue Cross and Blue Shield of Minnesota could not remain as a co-plaintiff in the state's action to recoup Medicaid costs.

This ruling permitted the insurance company and the state to pursue their claims directly against the defendants, rather than on behalf of individual smokers.(28) The industry settled with both plaintiffs last May.(29)

Additional third-party payers, such as labor union pension funds and Blue Cross/ Blue Shields in other states, began to file suit in 1997 and 1998. In March 1998, two Minnesota health maintenance organizations filed a separate suit against the industry, with claims similar to those in the state's case.(30) The following month, Blue Cross and/or Blue Shield plans in 37 states combined forces in three legal actions to sue the major tobacco companies and their public relations firms to recover damages allegedly caused by a conspiracy to addict their insurance plan members to cigarettes.(31)

In late 1997, various asbestos companies, as well as trusts representing personal injury claimants against bankrupt asbestos companies, began suing the tobacco industry. These lawsuits allege that the diseases suffered by asbestos-exposed workers were at least partly attributable to, or were exacerbated by, the workers' tobacco use. These companies and trusts seek to make tobacco companies pay a fair share of the compensation due to victims for asbestos-related diseases.(32)

If any of the current claims flourish, foreign claims will likely be presented to U.S. lawyers and filed in U.S. courts. Cases are currently pending in the courts of Argentina, Brazil, Canada, England, Finland, France, Israel, and the Marshall Islands. On May 12, 1998, the Republic of Guatemala became the first nation to file a lawsuit in a U.S. court against the U.S. tobacco industry for recovery of public health care costs.(33)

The best proof that federal legislation is not necessary to produce public health gains stems from the fact that, while the battle over the global settlement was raging, a process of case-by-case settlement was under way. If this process is allowed to continue, it promises to achieve many of the public health objectives the proposed settlement purported to achieve. Consider the following settlements reached in 1997:

* The Liggett Group, Inc., settled with most of the states in return for a fraction of future profits, public admissions of the dangers and addictiveness of nicotine and the past misbehavior of the industry, and disclosure of secret industry documents.(34)

* R.J. Reynolds settled a case brought against it by a dozen California cities and counties, which had alleged that the company's Joe Camel campaign was aimed at minors. Reynolds agreed to discontinue the campaign in California and to pay $9 million for a counter-advertising campaign.(35)

* The industry settled the first phase of a class action brought on behalf of nonsmoking flight attendants for substantial damages and other concessions.(36)

The most dramatic settlements, however, have been in the first four state Medicaid cases to be ready for trial.

Mississippi. On July 2, 1997, Mississippi settled its claims so that it would receive at least $3.3 billion over 25 years, with annual payments of at least $135 million continuing in perpetuity. A provision of the settlement agreement guaranteed Mississippi "most favored nation" (MFN) treatment, which meant that Mississippi would get the benefit of any better terms that a later-settling state might achieve. This provision was little noticed at the time but has since proven immensely important.

Florida. Florida settled its case on August 25, 1997, for at least $11 billion over 25 years, with annual payments of at least $440 million continuing thereafter. It also obtained its own MFN clause, as well as an additional $200 million for a two-year initiative to reduce youth smoking; an agreement to ban cigarette billboards and transit advertisements; and an agreement by the industry to lobby for a ban on cigarette vending machines. Because of Mississippi's MFN clause, that state received similar benefits.

Texas. On January 16, 1998, Texas settled its clams for at least $14.5 billion over 25 years, with annual payments of at least $580 million continuing thereafter, as well as public health provisions similar to those negotiated by Florida. It also obtained its own MFN clause.

Minnesota. The most comprehensive settlement terms reached to date were obtained in Minnesota. In the midst of closing arguments at the end of a three-month trial, the state settled its case on May 8, 1998. The industry agreed to do the following, among other things:

* pay about $6.1 billion to Minnesota and $469 million to Blue Cross and Blue Shield of Minnesota over 25 years--an amount that is substantially larger proportionately than the three earlier state settlements, resulting in large increases in their settlement packages under the MFN clauses;

* disband the Council for Tobacco Research;

* stop paying for tobacco placement in movies (a provision that obviously extends beyond Minnesota's borders);

* remove all tobacco billboards in Minnesota within six months and eliminate ads on buses, taxis, and bus shelters;

* refrain from targeting minors in future advertising and promotions;

* refrain from misrepresenting the evidence on smoking and health;

* release internal indexes to millions of previously secret industry documents, providing a road map to make it much easier for attorneys and researchers to find relevant information;

* maintain at industry expense for 10 years a depository of millions of tobacco documents in Minneapolis and another in Great Britain; and

* give Minnesota its own MFN clause, limited to improved public health provisions in future state settlements.(37)

Many of the public health concessions that Minnesota obtained are being incorporated into the prior agreements under their MFN clauses.(38)

At the time of this writing, the tobacco companies were involved in discussions with a group of state attorneys general, aiming to settle some or all of the remaining state cases. According to published reports, "The states have decided to use the concessions gained by Minnesota as part of its $6.5 billion settlement as a starting point."(39)

Looking ahead

While comprehensive federal legislation could--in a more salutary political environment--produce tremendous health benefits, much can be accomplished through the civil justice system as well as state and local legislation. In the absence of federal legislation, the tobacco industry will continue to feel the heat from lawsuits brought by a variety of parties. And states, counties, cities, and towns across the country will continue to regulate the sale and use of tobacco products, restrict tobacco advertising, and limit smoking in public places.

Further underlining the importance of tobacco litigation is the Fourth Circuit's 2-1 decision last August declaring the FDA without jurisdiction to regulate either nicotine or tobacco products.(40) If it is not reversed by the full Fourth Circuit, the Supreme Court, or Congress, this decision will invalidate existing FDA regulations restricting tobacco marketing practices and sales to minors and eliminate the FDA's potential to protect smokers through product regulation. In that event, the civil justice system would be the only means of indirectly regulating tobacco industry conduct.

Congress may yet resolve the future of tobacco litigation. But if lawmakers will not give the American people legislation that truly protects their health, then the people are better off without legislation from Congress.

Notes

(1.) See, e.g., GARY BLACK, SANFORD C. BERNSTEIN & CO., TOBACCO: REVIEWING OUR INVESTMENT THESIS--HISTORY REPEATING (1998).

(2.) See RICHARD KLUGER, ASHES TO ASHES: AMERICA'S HUNDRED-YEAR CIGARETTE WAR, THE PUBLIC HEALTH, AND THE UNABASHED TRIUMPH OF PHILIP MORRIS 160-65 (1996).

(3.) 15 U.S.C. [subsections] 1331-1341 (1994).

(4.) See Richard A. Daynard, The Third Wave of Tobacco Products Liability Cases, TRIAL, Nov. 1994, at 34.

(5.) Id.

(6.) Haines v. Liggett Group, Inc., 814 F. Supp. 414, 421 (D.N.J. 1993).

(7.) 789 F.2d 181 (3d Cir. 1986).

(8.) 893 F.2d 541 (3d Cir. 1990), aff'd in part, rev'd in part, 505 U.S. 504 (1992).

(9.) Smith v. R.J. Reynolds Tobacco Co., 630 A.2d 820, 824 (N.J. Super. Ct. App. Div. 1993).

(10.) Cipollone, 893 F.2d 541.

(11.) Smith, 630 A.2d 820, 822.

(12.) Cipollone v. Liggett Group, Inc., 505 U.S. 504, 530 (1992).

(13.) Id. at 522-30.

(14.) See, e.g., Scott v. American Tobacco, 959 F. Supp. 340 (E.D. La. 1996).

(15.) Broin v. Philip Morris Cos., 641 So. 2d 888 (Fla. Dist. Ct. App. 1994).

(16.) Brown & Williamson Tobacco Corp. v. Carter, No. 96-4831, 1998 Fla. App. LEXIS 7477 (Fla. Dist. Ct. App. June 22, 1998).

(17.) Widdick v. Brown & Williamson Tobacco Corp., No. 97-03522-CA (Fla., Duval County Cir. Ct. June 10, 1998). In August, an appellate ruling granting the company's pre-trial request for a change of venue put the future of the verdict in question. Brown & Williamson Tobacco Corp. v. Widdick, No. 98-894, 1998 WL 476268 (Fla. Dist. Ct. App. Aug. 13, 1998).

(18.) Karbiwnyk v. R.J. Reynolds Tobacco Co., No. 95-04697-CA (Fla., Duval County Cir. Ct. Oct. 31, 1997); Connor v. R.J. Reynolds Tobacco Co., No. 95-01820-CA (Fla., Duval County Cir. Ct. May 5, 1997).

(19.) This fact has not stopped tobacco companies from asserting that the states have been contributorily negligent by failing to aggressively regulate tobacco sales.

(20.) The text of the settlement proposal is available at http://ash.org/june97/6-20-97-1.html.

(21.) Action on Smoking and Health (ASH), Tobacco Negotiators Settled for Cents on the Dollar (June 21, 1997) http://ash.org/june97/6-21-97-2. html.

(22.) Id.

(23.) John M. Broder, The Tobacco Agreement: The Overview, N.Y. TIMES, June 21, 1997, at 1.

(24.) Jeffrey E. Harris, American Cigarette Manufacturers' Ability to Pay Damages: Overview and Rough Calculation, 5 TOBACCO CONTROL UPDATE 292 (1996).

(25.) Roger Lowenstein, Intrinsic Value: Even with Settlement, Big Tobacco Can't Lose, Wall St. J., July 3, 1997, at C1.

(26.) Harris, supra note 24.

(27.) Richard A. Daynard, Litigation by States Against the Tobacco Industry, Presentation to the Tenth World Conference on Tobacco or Health (Aug. 27, 1997) http://tobacco.neu.edu/tot/97-3/special. htm.

(28.) State v. Philip Morris, Inc., 551 N.W.2d 490 (Minn. 1996) (en banc).

(29.) Henry Weinstein, Big Tobacco Settles Minnesota Lawsuit for $6.6 Billion, L.A. TIMES, May 9, 1998, at A1.

(30.) Glenn Howatt, New Challenges in Tobacco Case; Medica, HealthPartners Sue to Recover Health Costs, STAR-TRIB. (Minneapolis), Mar. 12, 1998, at 1A.

(31.) See, e.g., Blue Cross & Blue Shield, Inc. v. Philip Morris, Inc. (E.D.N.Y. filed Apr. 29, 1998).

(32.) See, e.g., Falise v. American Tobacco Co., No. 97-CV-7640 (E.D.N.Y. filed Dec. 31, 1997).

(33.) Guatemala v. Tobacco Inst., 13.3 TOBACCO PRODS. LITIG. REP. 3.121 (D.D.C. 1998).

(34.) Attorney General v. Liggett Group, Inc., 12.1 TOBACCO PRODS. LITIG. REP. 3.1 (1997).

(35.) Mangini v. R.J. Reynolds, No. 939359 (Cal., San Francisco County Super. Ct. Sept. 8, 1997).

(36.) Broin v. Philip Morris, Inc., No. 91-49738 CA (22) (Fla., Dade County Cir. Ct. Oct. 9, 1997).

(37.) Minnesota v. Philip Morris, Inc., No. C1-94-8565 (Minn., Ramsey County Dist. Ct. May 8, 1998).

(38.) See Reed Branson, Mississippi New Tobacco Payments Should Go for Health, COMM. APPEAL (Jackson, Miss.), July 8, 1998, at B1.

(39.) Barry Meier, In Latest Tobacco Negotiations, States Lack Clear Health Goals, N.Y. TIMES, July 27, 1998, at A10.

(40.) Brown & Williamson Tobacco Corp. v. Food & Drug Admin., No. 97-1604, 1998 WL 473320 (4th Cir. Aug. 14, 1998).

RELATED ARTICLE: Judge rejects EPA secondhand smoke report

In January 1993, the EPA published Respiratory Health Effects of Passive Smoking: Lung Cancer and Other Disorders (EPA/600/6-901/006 F), which classified environmental tobacco smoke (ETS) as a known human (Group A) carcinogen. Soon after, the tobacco industry launched a high-profile advertising, public relations, and litigation campaign to cast doubt on the report's conclusions. In at least one forum, it seems, the campaign succeeded.

Last July, U.S. District Judge William Osteen issued a ruling that purports to "vacate" major portions of the report. (Flue-Cured Tobacco Cooperative Stabilization Corp. v. Environmental Protection Agency, 4 F. Supp. 2d 435 (M.D.N.C. 1998).) In his opinion, Osteen--a nonscientist--adopts the industry's version of what is good science, overruling the unanimous conclusions of an independent panel of experts.

Disregarding basic tenets of administrative law, Osteen denied the agency's motion to dismiss the case even though the EPA never issued an official action--such as promulgating regulations to restrict smoking--that would be subject to judicial review.

Further, the tobacco companies did not have proper standing to bring the lawsuit in the first place. The companies argued that they have been economically harmed because smoking restrictions adopted in the wake of the EPA report lowered cigarette sales. They argued that a permanent injunction requiring the EPA to withdraw the report would prevent further economic and other injuries--even though scores of other medical studies were prompting businesses and government bodies to ban or restrict public smoking.

In a 1995 ruling in the case, Osteen, though admitting this "chain of causation is tenuous," denied the EPA's motion to dismiss the lawsuit, ruling that there was a "substantial likelihood" that the requested relief would redress the industry's alleged injuries. (1995 U.S. Dist. LEXIS 7521 (M.D.N.C. May 23, 1995).)

The suit against the EPA was not the first instance of industry attacks on scientists and their work on the health effects of ETS. Internal tobacco company memos were cited by the Wall Street Journal in an article that began, "Determined to keep reports about secondhand smoke dangers from mushrooming, the tobacco industry mobilized a counterattack in the mid-1980s to systematically discredit any researcher claiming perils from passive smoke." (Suein L. Hwang, Tobacco Memos Detail Passive-Smoke Attack, Wall St. J., Apr. 28, 1998, at B1, B8.)

According to the Journal, in a February 25, 1985, letter, Anthony Colucci, who was a top scientist at R.J. Reynolds Tobacco Co., wrote to H.E. Osmon, a director of public affairs at Reynolds, "We anticipate that if [then-EPA scientist James] Repace runs true to form there will be a good deal of media copy written about [Repace's and naval researcher Alfred Lowrey's] analyses, and thus we should begin eroding confidence in this work as soon as possible."

The industry counterattack has continued throughout the 1990s. The St. Paul (Minn.) Pioneer Press reported in August that internal memos revealed that the industry paid thousands of dollars to scientists to write letters critical of the EPA report to influential publications. Thirteen scientists were paid more than $156,000 for their letters, even if their materials were not published. (David Hanners, Scientists Paid to Write on Tobacco, Pioneer Press (St. Paul), Aug. 4, 1998, at 1A, 5A.)

Even so, the industry cannot expect every judge to ignore the mountains of evidence showing that ETS exposure is a serious health risk. Less than three weeks after Osteen's ruling, U.S. District Judge Jacob Mishler denied a request by restaurant owners for a preliminary injunction against a law that prohibits smoking in the bar areas of restaurants in Suffolk County, New York.

"It is beyond dispute that secondhand smoke is a carcinogen," Mishler ruled. (Sayville Inn 1888 Corp. v. County of Suffolk, No. 98-CV-4527 (E.D.N.Y. Aug. 3, 1998).)

In September, the EPA appealed Osteen's ruling. While it may take more than a year for the appeal to run its course, attorneys who represent victims of ETS have little cause for concern from Osteen's decision. Scores of peer-reviewed studies show how dangerous ETS exposure can be to nonsmokers. Lawyers can also cite Mishler's decision holding that ETS is a carcinogen.

Edward L. Sweda Jr. is senior attorney at the Tobacco Products Liability Project at Northeastern University School of Law in Boston.

Richard A. Daynard is a professor at Northeastern University School of Law in Boston and chairman of the Tobacco Products Liability Project at the law school. Graham E. Kelder Jr. is managing attorney of the Tobacco Law and Policy Project at the Tobacco Control Resource Center, Inc., also at Northeastern University. The research underlying this article was supported by a grant from the National Institutes of Health/National Cancer Institute. Any opinions or conclusions expressed are those of the authors and do not necessarily reflect the views of the sponsor.