Private Attorneys Seen as Key in Tobacco Deal

The giant tobacco truce is only the most recent and dramatic case of plaintiffs’ lawyers shaping public policy in matters of health and safety, where lawmakers and regulators often fear to tread.

The massive lawsuits by state attorneys general that triggered the settlement happened only because private lawyers offered themselves as strategists and foot soldiers on a contingency-fee basis, allowing the states to seek a huge payday without spending their own money.

The proposed $368.5-billion tobacco accord, now under review by the White House and Congress, has plenty of detractors, including health groups and lawmakers who think the anti-smoking forces failed to fully exploit their leverage and let the industry off too easy.

Even so, the public health measures contained in the accord dwarf, in number and scale, all previous efforts by Congress, which traditionally is a burial ground for anti-smoking legislation.

The tobacco settlement “speaks to the failure of our policymaking by legislation and regulation,” said Dr. Ronald M. Davis, former director of the federal Office on Smoking and Health and editor of Tobacco Control, an international journal.

“We had to wait for the lawyers to get involved,” said Davis, adding, “It’s not the first time that that’s happened to achieve progress in public health.”

“The private lawyers and the state attorneys general stepped into a vacuum,” said Matt Myers, executive director of the National Center for Tobacco-Free Kids, who helped negotiate the deal. “Thirty years after the first surgeon general’s report . . . Congress had done virtually nothing to set in place . . . policies to reduce tobacco use.”

The irony is that lawmakers are likely to strengthen the deal if they ratify it at all. Changes would be aimed at a host of perceived defects--including provisions limiting the authority of the Food and Drug Administration and penalizing the industry if teen smoking isn’t reduced by targeted amounts.

But “in a sense, you can say it’s the tort system which has forced Congress to take actions which it would never take on its own,” said Michael Pertschuk, former head of the Federal Trade Commission and a veteran tobacco foe.

It is not the first time civil litigation has had the effect of regulating health or safety threats. In the 1970s, for example, lawsuits after injuries and deaths linked to exploding Ford Pinto fuel tanks eventually triggered a federal investigation and a recall of the cars.

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And in the biggest example before tobacco, an avalanche of lawsuits over lung damage to workers from asbestos all but eliminated use of the hazardous mineral.

The asbestos litigation was not a shining moment for the civil justice system. Studies by the Rand Corp.’s Institute for Social Justice found that only about 38 cents of every dollar spent on the lawsuits went to compensate victims. Fees to defense and plaintiffs lawyers and other litigation costs absorbed the rest. Still, the private lawsuits, not government bans, caused the dramatic reduction in asbestos use.

“However greedy and unattractive the trial lawyers may be, the tort liability system has been the one functioning system in our society to hold . . . large corporate power accountable,” Pertschuk said.

As consumer activist Ralph Nader put it, corporate interests are adept at tying up regulators and Congress, but “they can’t lock up hundreds of courtrooms.”

Nader, as it happens, is no fan of the tobacco truce, arguing that the anti-tobacco forces backed off just when they had gained the upper hand. Moreover, his general support for the social role of trial lawyers is not shared by business groups and others, who accuse them of undermining economic growth and personal responsibility.

“To me, this [the settlement] is the regulatory state just run amok,” said Robert A. Levy, a senior fellow at the Cato Institute, a conservative think tank in Washington, D.C.

“Alcohol is probably next, and who knows after that? Maybe . . . fast food [and] red meat.”

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Plaintiffs attorneys shouldn’t get full credit--or blame--for the tobacco deal. Attorneys general provided leadership, support and cover. The litigation also drew momentum from events in Washington--including the FDA’s investigation of nicotine and explosive hearings in 1994 chaired by Rep. Henry A. Waxman (D-Los Angeles). Still, the plaintiffs lawyers were indispensable in bringing the industry to the table.

A nationwide consortium of law firms, known as the Castano group, exerted pressure by filing 21 statewide class-action suits against the cigarette makers. More potent still were the lawsuits filed by 39 state attorneys general, who assigned the real work of the cases to private lawyers.

In Mississippi, which filed the first of these suits in May 1994, private lawyers brought Atty. Gen. Mike Moore the idea of suing the industry to recover tax funds spent treating sick smokers. Moore then hired private firms to handle the case--not that he had much choice.

Facing a hostile reaction from the state’s governor and Legislature, Moore could only pursue the case on a no-cost basis.

It was much the same for other attorneys general who later joined in. Few, if any, had the political or budgetary freedom to commit millions of dollars in state funds to a novel assault on an industry that had never lost in court. Only with private lawyers fronting the expenses and doing the work could the suits proceed.

It was a case of mutual advantage, said Stephen Gillers, a New York University law professor. The attorney general got “to bring a case that his office was probably unequipped to bring,” while the private lawyers got “a halo effect” from having “the people” as their client.

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Whatever its flaws, the proposed deal announced June 20 represented a dramatic shift in U.S. tobacco policy, which had been long on scathing rhetoric but short on substance.

Among other things, the settlement requires the industry to: pay $500 million a year for advertising campaigns to “discourage and deglamorize” smoking; spend up to $1.5 billion annually on cessation programs for smokers who want to quit; provide hundreds of millions of dollars to help the FDA enforce laws banning cigarette sales to minors; eliminate tobacco billboards and accept other limits on advertising; and protect nonsmokers by accepting a ban on smoking in most workplaces.

Moreover, to fund the settlement it is estimated that tobacco companies would have to raise cigarette prices about 60 cents per pack, which would be the steepest jump in history. Price increases are known to reduce smoking--particularly by the young and the poor--and “if there is a vice in the settlement, it’s that the price of cigarettes doesn’t go up enough,” said Stephen McG. Bundy, a law professor at UC Berkeley.

The provisions are especially striking when compared to the record of Congress, whose legislative actions on smoking and health can be counted on one hand.

In one of its biggest moves, Congress mandated the first caution statement on cigarette packs in 1965, revising the warning in 1969 and again in 1984. Cigarette makers went along, correctly perceiving that the warnings would cost them little or nothing in sales, while providing a protective shield against liability suits.

Congress also banned broadcast cigarette ads in 1971. Tobacco companies also supported the ban, knowing that when they exited the airwaves, anti-smoking counter-ads required by the Federal Communications Commission’s “Fairness Doctrine” would disappear too.

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Over the years, Congress also has set tobacco taxes at the lowest level in the industrialized world.

Cigarette taxes in 15 other industrialized countries range from about $1.30 to nearly $4 per pack, according to figures compiled by the International Union Against Cancer. By contrast, in the U.S., cigarette taxes average about 53 cents per pack, including a federal tax of 24 cents and state taxes averaging about 29 cents.

In the 1950s, taxes made up nearly half the price of a pack of cigarettes, but are a much lower percentage today, prompting tobacco foes to complain that Congress has actually gone backward.

“We’ve had 30 years of virtually daily studies showing how awfully dangerous tobacco is, and yet we’re taxing it effectively less than we did thirty years ago,” said Donald Garner, a Southern Illinois University law professor. “So who’s to say there’s not a role for trial lawyers here?”

* LEGAL BILL: Accord is silent on fees to be paid to lawyers. A10