The Government and the Courts - Suing The Tobacco Companies
settlement documents billion industry
Between 1960 and 1988, approximately three hundred lawsuits sought damages from tobacco companies for smoking-related illnesses; courts, though, consistently held that people who choose to smoke are responsible for the health consequences of that decision. But in 1988, a tobacco company was ordered to pay damages for the first time. A federal jury in Newark, New Jersey, ordered Liggett Group, Inc., to pay $400,000 to the family of Rose Cipollone, a longtime smoker who died of lung cancer in 1984. The case was overturned on appeal, but the Supreme Court ruled in favor of the Cipollone family in Cipollone v. Liggett Group, Inc. (505 U.S. 504, 1992). In the 7-2 ruling, the Court broadened a smoker's right to sue cigarette makers in cancer cases. The justices decided that the Federal Cigarette Labeling and Advertising Act of 1966 (PL 89-92), which required warnings on tobacco products, did not preempt damage suits. Despite the warnings on tobacco packaging, people can still sue on the grounds that tobacco companies purposely concealed information about the risks of smoking.
The "Tobacco Wars"
In 1994 Mississippi became the first state to sue tobacco companies to recoup health care costs associated with smoking (The State of Mississippi v. American Tobacco et al., Case No. 94-1429). Minnesota and West Virginia soon followed. In 1995 and 1996, fifteen states would file suit against cigarette companies. About forty states, the cities of New York and San Francisco, the Commonwealth of Puerto Rico, and other third parties involved in paying for medical care have sued to try to recover Medicaid, Medicare, and other medical costs associated with tobacco-related health problems.
In February and March 1994, the ABC newsmagazine Day One broadcast two stories entitled "Smoke Screen" and "The List," which contended that Philip Morris and RJ Reynolds increased (or "spiked") the nicotine content of their cigarettes from outside sources, thereby making them more addictive. A few weeks later, Philip Morris filed a $10 billion lawsuit against ABC. In August 1995 the network apologized for its Day One broadcasts.
In May 1994 top secret documents from tobacco company Brown & Williamson were leaked to the New York Times and the University of California Tobacco Control Archive. These documents included memos, marketing reports, research papers, and corporate policy statements from the 1960s through the 1980s. The papers clearly indicated the company's efforts to conceal the health risks of their product.
In November 1995 the New York Times reported that CBS terminated a broadcast of a 60 Minutes interview with a former tobacco executive, later identified as Jeffrey Wigand. CBS was believed to have chosen not to run the story for fear of a lawsuit by Brown & Williamson, which would have come just as a $5.4 billion merger between CBS and Westinghouse Electric Corporation was about to take place. A New York Times editorial pointed out that "a multi-billion dollar lawsuit would hardly have been a welcome development" ("Self-Censorship at CBS," New York Times, November 13, 1995). Wigand would later testify before federal and state prosecutors about what he knew concerning the misleading and harmful practices of Brown & Williamson. His statements also included charges that company executives lied during Congressional hearings when they claimed to believe that nicotine was not addictive. (Mr. Wigand's story was later dramatized in the film The Insider.)
A POTENTIAL SETTLEMENT.
To avoid the onslaught of lawsuits, the tobacco industry sought a national settlement with the states, in return for future protection from lawsuits. In June 1997 the country's largest tobacco companies and forty states that had filed suit against the tobacco industry agreed on a settlement. According to the proposed agreement, tobacco companies would pay the states $368.5 billion over twenty-five years to reimburse them for their tobacco-related medical costs and to pay for tobacco-control programs to reduce tobacco use among teenagers.
In addition, tobacco companies would accept FDA authority to regulate tobacco products, restrict their advertising, and release internal research documents related to the health effects of their products. The states would drop all claims against the tobacco companies and grant the industry immunity from future class-action lawsuits (suits on behalf of large groups of people). This proposed settlement required changes in federal law before taking effect.
Over the following months, various members of Congress introduced their own comprehensive tobacco bills, broadly based on the settlement. Each of these efforts failed and by September 1997 the potential settlement was perceived by many to have unraveled. The states resumed negotiation with the tobacco companies to try to reach a more limited settlement, one that would not require federal legislation to take effect.
MORE STATE LAWSUITS.
In the meantime, the industry settled two of its pending state lawsuits. In the summer of 1997 tobacco companies agreed to pay Mississippi $3.4 billion and Florida $11.3 billion. In the Florida settlement, they agreed to remove tobacco billboards, public transit advertising, and vending machines. The Florida settlement also required that the tobacco companies release internal documents.
The tobacco companies had long denied that nicotine was addictive, that they had manipulated nicotine levels to make their products more addictive, and that they had targeted young people in their advertising campaigns. They had also denied that scientific research had demonstrated links between health problems and tobacco products. The release of the documents about Brown & Williamson in 1994 did offer some challenges to these assertions. In August 1997 two important events occurred in pretrial testimony for the lawsuit brought by the state of Florida.
First, the chairman of the Philip Morris Companies, Geoffrey Bible, testified that smoking-related diseases "might have" caused the deaths of one hundred thousand Americans in recent decades. Second, Steven F. Goldstone, chairman of RJR Nabisco Holding Corporation (the parent company of the RJ Reynolds Tobacco Company), testified that he believed cigarettes "play a role in causing lung cancer."
In April 1998 New York Attorney General Dennis Vacco filed a court motion to dissolve the Tobacco Institute and the Council for Tobacco Research, calling them "propaganda fronts" funded by the tobacco industry that allegedly misled the public about the health risks of smoking. In early 1998 the industry settled with Texas for $15.3 billion. In May, after having gone to trial but just before the case was to go to the jury, the tobacco companies settled with Minnesota for $6.6 billion. The Minnesota case forced the disclosure of millions of internal tobacco company documents, exposing deceptive conduct and laying the foundation for future legal actions. The Minnesota agreement required the industry to maintain depositories of these documents and to release an index to millions of previously released documents.