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Damning Data May Kill Relief For Big Tobacco Losses Pile Up As Industry Settles Texas Lawsuit For $14.5 Billion

Fri., Jan. 16, 1998

New revelations that a top cigarette maker targeted young people could make it increasingly difficult for Congress to give the tobacco industry the one thing it wants most - protection from class actions, lawmakers and lobbyists said Thursday.

Tobacco companies have been pushing for broad legal relief as part of a proposed national settlement that must be approved by Congress. But a series of recent developments cloud those prospects.

And in a further sign of the industry’s weakened position, after vowing for months to fight a Texas Medicaid suit, the tobacco industry capitulated Thursday, tentatively agreeing to pay the state a record $14.5 billion, two legal sources said.

If the agreement is completed and announced today, it would mark the fourth time since July that the industry has agreed to settle rather than fight a major lawsuit.

No single development will turn the tide against the industry, both industry supporters and opponents said Thursday, but the steady battering is taking its toll.

“Who would be in favor of giving this industry any protections?” said former Food and Drug Administration commissioner David Kessler. “There can’t be any deal, there can’t be any trade after you’ve seen documents like these,” he said, referring to Wednesday’s release of 81 internal R.J. Reynolds Tobacco Co. documents.

On Wednesday, Rep. Henry Waxman, D-Calif., released the papers, which show the firm studied the smoking habits of teenagers and developed strategies for wooing young smokers for decades.

Last week, the Justice Department brought its first criminal charges arising from its tobacco investigation and strongly hinted more could follow.

More bad news may loom for the $50 billion-a-year industry. On Tuesday, one of the strongest cases against the industry is scheduled to go to trial in Minnesota. In addition, House Commerce Committee Chairman Thomas Bliley Jr., R-Va., has summoned top executives from the largest tobacco companies to Capitol Hill for questioning Jan. 29 in a session that could repeat a dramatic 1994 confrontation in which seven executives swore they were not in the business of hooking young smokers.

As tobacco’s image worsens, many question why Congress should shield the industry from punitive damages and major lawsuits.

Industry spokesman Scott Williams, however, insisted that legal protections are “an essential part” of the deal. “Today was a bad day, but we are going to have bad days. That is part of the whole, big process,” he said.

The nation’s top tobacco makers are so eager for civil liability protections they have offered to pay $368.5 billion and curb youth marketing in exchange.

Proponents of the deal say the Reynolds documents are further evidence of the need to pass a bill quickly. President Clinton on Thursday nudged congressional Republicans, saying they should enact sweeping tobacco control legislation this year.

“The documents that came to light today show more than ever why it is absolutely imperative that Congress take action now to get tobacco companies out of the business of marketing cigarettes to children,” he said.

But Clinton has not specificed what he wants in the legislation, a point Republicans seized on Thursday as the two parties positioned themselves for battle.

“Calling for action is not enough,” Bliley said. “We have yet to see a legislative proposal from the White House.”

The partisan bickering, combined with the complex nature of the settlement, could mean Congress passes a scaled-down version. Several congressional staffers said Thursday that Republican leaders are weighing the value of quickly passing a bill that simply focuses on curbing teenage smoking but does not address the more contentious issues.

Sen. John McCain, R-Ariz., called Wednesday’s documents “pretty damning” and said they complicate the prospects for a comprehensive deal.

“If the settlement is placed in jeopardy because of” Wednesday’s revelations, “we may have to just go after the issue of teen smoking” in a narrower bill, McCain said.



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