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Big Tobacco Fights Legal Battles

Updated July 1999

In the year since reaching a $206 billion settlement to end lawsuits by more than 40 states, the tobacco industry has continued to fight legal battles on other fronts. While it has won some verdicts, it lost a significant case this July.

In the first class-action suit by sick smokers to come to trial, a Florida jury found that cigarette makers addicted and defrauded smokers and could be forced to pay billions of dollars in damages. According to the verdict, cigarette companies had concealed cigarettes' dangers, conspired to hide their addictiveness and made a product that caused more than a dozen deadly diseases from heart disease to lung cancer.

While the ruling could be overturned on appeal, analysts said the jury's finding could lead to longer and more expensive battles around the country for the industry.

It may also be the most significant ruling in a year that has seen verdicts by juries around the country both for and against the industry. In March, tobacco won a major victory in March when an Ohio jury ruled against 114 union health funds seeking to recover hundreds of millions of dollars to treat sick workers. Two weeks later, a jury in Oregon ordered Philip Morris to pay $81 million to the family of a Marlboro smoker who died of lung cancer – the largest verdict ever against a tobacco company.

Meanwhile, the $206 billion settlement with the states, reached in November 1998, will pour billions into state treasuries over the next 25 years and provide about $1.5 billion for research and advertising against underage tobacco use – all of it coming from an industry that had never paid a cent in damages despite decades of litigation.

Another likely result is that cigarette makers will pass the cost along to smokers, increasing the price per pack by about 40 cents by 2003, which could translate into an even larger price boost for consumers.

The settlement, agreed to by 46 states, the District and four territories, is far narrower than either the unsuccessful tobacco deal proposed in 1997 or the tobacco bill championed in 1998 by Sen. John McCain (R-Ariz.) but killed by the Senate's Republican leadership.

Those measures would have forced huge price increases on cigarettes, granted the Food and Drug Administration broad authority over tobacco and imposed financial penalties if smoking rates failed to decline.

None of those provisions are included in the deal with the states.

The earlier proposals would also have included strong marketing and advertising restrictions. While they would have banished cartoon characters and human figures forever from cigarette ads, Philip Morris Cos.'s Marlboro Man remains alive under the deal with the states.

The Justice Department is also continuing its wide-ranging investigation of the industry.

Many health advocates have pronounced the deal a disaster, at best a pact that will bring money and some public health advances to states, and at worst one that will give the tobacco industry a weapon against more substantive anti-smoking measures.

Given the strong hand tobacco foes held as recently as five months earlier and the industry's defensive position at that time, the deal seemed an anticlimax. Then, the industry faced 40 state lawsuits and about a dozen class-action cases financed by some of the deepest pockets in the trial bar. A judge had ruled in favor of strong FDA jurisdiction over tobacco, and a Republican-controlled Senate committee had blessed a bill that would have raised cigarette prices $1.10 per pack in five years.

But Big Tobacco fought back. The industry spent millions of dollars lobbying, making substantial contributions to the Republican Party, and launching an unprecedented $40 million advertising campaign. In June 1998 Senate GOP leaders killed the McCain bill – which had a majority of votes in its favor – by setting a parliamentary hurdle of 60 votes.

This Tobacco Special Report includes key Post stories on five major tobacco-related topics: Politics and Policy, Lawsuits, Health Issues, Teen Smoking and Industry News. Each page also includes relevant Web links. You can also read the latest Post opinions and editorials.

© Copyright 1998 The Washington Post Company

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