The Washington Post
Wednesday, 9/22/99, Page A01
by David A. Vise and Lorraine Adams
[continued from Index page back]
[Provided by the Bill Godshall Announcement List]
Now, the industry finds itself facing a new legal opponent, with
resources as extensive as its own.
"The American taxpayer has been forced to spend billions of
dollars due to smoking-related illnesses, and the Justice
Department is working on a way to get them their money back,"
a government official said.
The tobacco industry has questioned the administration's
authority to bring such a lawsuit since January, when President
Clinton signaled that the administration was considering doing
so in his State of the Union address, surprising both tobacco
executives and some lawyers in the Justice Department.
While Justice Department officials declined comment yesterday,
industry officials were swift to denounce the pending suit.
"We just don't believe they have a basis for filing this lawsuit,"
said Tommy Payne, an executive vice president of R.J. Reynolds
Tobacco Co., one of the companies named in the suit. "We are
going to vigorously defend the lawsuit. We are not going to settle
this lawsuit. And we anticipate that when this case is judged on
the merits and not on the press release, the law is going to find
that the Justice Department doesn't have a valid case against
the tobacco industry."
The filing of a lawsuit by the federal government could pose a
devastating threat to the industry, which last year fought off far-reaching
federal legislation intended to settle the state lawsuits
in exchange for concessions that included increasing cigarette
prices and imposing significant restrictions on tobacco
marketing. The bill was killed by Senate Republicans.
"They are trying to do in the courts what they weren't able to do
through legislation. They tried to impose burdensome tax
increases on the sale of cigarettes, and Congress rejected that
effort. Now, they are trying to use the court system to essentially
impose a tax," said Gregory Little, associate general counsel of
Philip Morris USA, the nation's largest tobacco company.
Last November, after the congressional efforts failed, industry
officials settled the states' suits by agreeing to pay them more
than $240 billion over 25 years. The settlement also required the
industry to remove all billboard advertising around the nation and
restrict its sponsorship of sports events.
Michael York, a Washington attorney for Philip Morris, called the
lawsuit "utterly political." York accused the Clinton administration
of "bullying some very professional people in the Justice
Department into doing something." The department indicated
misgivings about a lawsuit in 1997 in testimony on Capitol Hill.
Matt Myers, executive vice president of the Washington-based
Campaign for Tobacco Free Kids, said that the Justice
Department's lawsuit poses a great potential financial threat to
the industry. "The federal government's claims dwarf the claims
of the individual states and the private class actions," he said.
"The true reality is this will be a difficult case. The charges are
serious. And the claims have substantial merit. But no one knows
how this lawsuit's going to come out. For the tobacco industry,
this is Russian roulette. If they lose, they lose big."
Mary Aronson, a Washington litigation analyst, agreed that the
potential damages in a federal lawsuit against the industry could
be "mind-boggling" if the government prevails. She said the filing
of a Justice Department lawsuit alone would shift the momentum
against the companies, which at times have had the upper hand
as they prevailed in private litigation and beat back federal
"This is another example of the see-saw nature of the tobacco
issue," Aronson said. "Over the last five years, the industry and
its opponents have taken turns at winning battles."
Recently, the industry suffered a significant defeat in a class
action lawsuit by Florida smokers, in which the jury found that
cigarette makers addicted and defrauded smokers, and it could
be forced to pay billions of dollars in damages. The Florida
appeals court must make a final ruling on whether the plaintiffs
can recover punitive damages as a group or whether such
damages must be proven individually. Earlier, the court had
indicated that such damages must be proven case-by-case.
Staff writers Saundra Torry and John Harris contributed to this report.