Judge Michael Myers, left, and lawyer Dick Scruggs take a walk through Pascagoula, Miss. Myers's terse rulings gave Scruggs several big victories. (By Scott Fisher for The Washington Post)

Second of three articles

By John Mintz and Ceci Connolly
Washington Post Staff Writers
Monday, March 30, 1998; Page A1

PASCAGOULA, Miss. – Dickie Scruggs had the tobacco industry just about where he wanted it in the spring of 1996. A small-town lawyer with a reputation for winning money from large companies, Scruggs helped concoct a new kind of lawsuit against Big Tobacco that had panicked the once-invincible cigarette companies. Then, sensing his opponent's desperation, Scruggs placed a telephone call to another hometown boy he thought could help close the deal.

"You might think this is crazy," Scruggs said he told his brother-in-law, who happened to be the majority leader of the U.S. Senate. "Would you be an intermediary to the tobacco industry to see whether they would talk about a resolution of these lawsuits? You're someone they could trust and who I trust."

Trent Lott said he'd get back to him, but added tartly, "You know what I think of your lawsuits."

Lott spends most holidays sipping drinks around Scruggs's pool, and the two men's wives are so close they're known as the Thompson twins, even though they were born years apart. Scruggs and Lott are said to be fond of each other as well, but Scruggs, a liberal Democrat, and the conservative Republican Lott generally avoid political debate, friends say.

But within days, Lott phoned the chief executive of RJR Nabisco Holdings Corp., then contacted some Washington political consultants. Soon he had his intermediaries shuttling between the company's New York headquarters and Scruggs's clients, a half-dozen state attorneys general. Early maneuvering evolved into formal negotiations – led by Scruggs's best friend, Mississippi Attorney General Michael Moore. Those ended on June 20 in a historic settlement of tobacco litigation, under which the industry agreed to pay the eye-popping sum of $368.5 billion, if Congress and the president ratify it.

The story of how Big Tobacco came to grief at the hands of a band of crafty lawyers, and then was rescued by them, is in many ways a buddy movie about two old classmates from Ole Miss law school who call each other "Mo" and "Scro." It began in this Gulf Coast shipbuilding town in 1994, when Scruggs and Moore filed a lawsuit in the state's name against the cigarette industry before a sympathetic judge in a courthouse down the street.

The story moved to Capitol Hill, the temporary neighborhood of that other son of Pascagoula, Trent Lott. The majority leader has recused himself from voting on legislation arising from the June 20 deal. But chances are good, congressional officials and lobbyists said, that Scruggs's brother-in-law will eventually weigh in to support a deal akin to the one reached last June. Lott will do so, they believe, because when all the speeches are over, it is good politics for the GOP to expunge its reputation as a tobacco front by voting for a deal that curbs the industry. Which Scruggs knew when he called on Lott in the first place.

While they started as the industry's enemies, Scruggs and Moore now have a vested interest in helping the tobacco business get the deal approved by Congress, which plans to take up the legislation in earnest this week. Tobacco executives, knowing they themselves are mistrusted, partially rely on Scruggs and Moore to lobby for the deal, and the pair have flown to Washington once a week since summer. The telegenic Moore, as spokesman for 40 attorneys general, and Scruggs, representing dozens of law firms that filed the states' tobacco lawsuits, represent a potent constituency both in terms of politics and campaign contributions.

Based on three months of grueling negotiations with cigarette executives last year, Scruggs and Moore believe this deal is the best anyone can get. The concessions the industry wants – mostly protection from some lawsuits – don't amount to much, they say, since so few anti-tobacco lawsuits have ever succeeded. And even if a few more concessions could be wrung from the companies, the pair argues, Congress should embrace the deal and immediately start to reduce youth smoking – 3,000 kids start puffing each day now – rather than be delayed by politics or dreams of a perfect settlement.

Of course, Scruggs stands to gain huge legal fees – up to $1 billion. But he says he's not in this deal for the money. Or, not just the money. In many ways, the giant tobacco settlement is Scruggs's deal.

A millionaire from his days suing asbestos firms, Scruggs in the mid-1990s became the behind-the-scenes general of the anti-tobacco movement, appearing ubiquitously on the fringes of news conferences, court hearings and photo ops wherever tobacco's enemies huddled.

Scruggs paid $5 million to finance the state of Mississippi's trailblazing lawsuit. Then he and Moore persuaded 39 more states to file similar actions. They also nurtured industry whistleblowers, worked closely with public-health activists and swapped data with Food and Drug Administration officials seeking to regulate tobacco for the first time.

Scruggs formed a strategy with Dick Morris, at the time President Clinton's political adviser, to convince the president that it was politically safe to crack down on the cigarette companies. When Morris needed poll data to back him up at a crucial point, Scruggs wrote the check to pay for it.

Finally, Scruggs was the first anti-tobacco player to push the industry to the bargaining table. Some industry lawyers believe Scruggs, 51, whose short gray hair and lock-on eye contact recall the Navy carrier pilot he once was, has been the anti-tobacco movement's most brilliant operative.

"Scruggs was the other side's tactician, engineer, their politician," said an industry attorney. "He was entirely underrated by us. But the fact he initiated the settlement talks shows he has a big view. Scruggs was the only one who saw all the sides would be gathered around the table."

Now he just has to keep them there.