Tobacco settlement controversial on Capitol Hill.

The proposed global tobacco settlement is leading the news, and it may overshadow many other civil liability issues on Capitol Hill. Numerous committees may assert jurisdiction over parts of the complex settlement that was negotiated among state attorneys general, attorneys for the tobacco companies, representatives of anti-smoking groups, and trial lawyers representing individual plaintiffs.

While some of the negotiators may have believed that the U.S. Congress would accept the agreement and enact it expeditiously and without amendment, it seems clear Congress will take its time and consider all aspects of the proposal before taking any action. There is every chance that the final package will be significantly different from the one that was proposed by the litigants--if any agreement is ever enacted.

Role of Congress

The proposed agreement must be passed by Congress before it can take effect, because it includes regulatory changes and liability limitations that would have to apply nationally to have their intended impact.

In the first hearing on the proposed settlement before the Senate Judiciary Committee on June 26, 1997, Sen. Arlen Specter (R-Pa.) called the idea of a group of private litigants asking Congress to enact statutory changes in federal programs to help settle their disputes "unprecedented." However, tobacco opponents may feel obliged to support the agreement for fear that the tobacco giants will go unpunished and tobacco victims uncompensated if the deal falls through.

The ATLA Board of Governors took a clear stand on any tobacco settlement during the winter convention in January. The Board identified four key provisions that could draw ATLNs opposition to any proposed agreement:

* providing immunity from appropriate federal Food and Drug Administration regulation;

* allowing the tobacco industry to escape responsibility for the harm its products have caused millions of Americans and their families;

* allowing restrictions on trial by jury, preemption of state law, or limits on compensatory or exemplary damages;

* allowing tobacco companies to shield or destroy records that document wrongful acts or culpability for the health impact of their product.

The settlement is currently being analyzed by ATLA leaders and staff.

On Capitol Hill, questions are already being raised about the impact of this agreement and its implications. For example, several senators mentioned their concern about the tax treatment of punitive damages under this bill. Normally, punitive damages are not a deductible business expense by an entity paying them.

Yet, under this agreement, the massive punitive damages to be paid by the tobacco companies--some $60 billion--would be entirely tax deductible, as would the $308 billion in reimbursements to the states. Senators from both sides of the aisle cited this huge tax write-off as a serious concern.

Questions and concerns

Questions also were raised about whether the proposal would apply to new tobacco companies. Since many of the provisions, particularly the limitations on advertising, are contractual, new companies would not be bound by agreements unless they joined as parties.

Government action to force the severe advertising limits under the proposed agreement on new companies would run into First Amendment problems. These concerns are almost certain to receive much more scrutiny by Congress.

The tobacco litigation has been both positive and negative for trial lawyers. On the positive side, the litigation has demonstrated to many people the value of the civil justice system in our society. Sen. Patrick Leahy (D-Vt.), the ranking Democratic member of the Senate Judiciary Committee, put it this way:

The very existence of this settlement agreement

is a credit to our civil justice system. In

fact, without the use of class actions

and the likelihood of punitive damage

recoveries, does anyone believe that the

tobacco companies would have ever

come to a negotiating table or offered to

contribute $368.5 billion over the next

25 years? Without the willingness of

private attorneys acting on behalf of

their clients, taking significant financial

and professional risks, and pursuing

these matters so diligently, we would

not be here today. At a time when some are

trying to limit legal rights and remedies

through national legislation, this proposed

agreement reminds us that our state-based

tort system remains one of the greatest and

most powerful vehicles for justice anywhere

in the world.

On the other hand, the agreement has already been used by some on Capitol Hill to again launch an attack against trial lawyers. Rather than tying to defend the actions of the tobacco giants, some are attacking trial lawyers for their work in negotiating the settlement.

ATLA message

Regardless of these concerns, the high profile of the tobacco deal drives home to members of Congress a central point of the association's lobbying effort: There are dangerous products in the marketplace and sometimes even reckless companies selling them to consumers.

The civil justice system is vital to deter dangerously defective products from being introduced into the American marketplace and to compensate people who have been injured by them.

As the tobacco agreement moves slowly through the Congress, it can teach Americans a powerful lesson about the civil justice system.

Philip Buchan is an associate director of ATLA Public Affairs.