The Fall of Big Tobacco
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Michael Lewis and colleagues
Michael Lewis conceived Mississippi's case, aided by his wife and law partner, Pauline Lane, left, and his legal secretary, Alice Craven.
(By Jennifer Davis/Press-Register)

Page Two

Making the Case

Mississippi attorney Michael Lewis hit upon the idea for a new kind of lawsuit that would terrify the tobacco industry after he visited a coronary ward, and he refined his legal strategy before the elevator reached the ground floor.

It was May 1993, and Lewis was visiting his secretary's mother in a Memphis hospital for the last time. The woman, at 50, was dying from heart disease brought on by 35 years of smoking. The treatment left her penniless, so Medicaid paid $1 million more for her last operations. The daughter asked Lewis about suing the tobacco industry, but Lewis said it was useless. Dying smokers or their families had filed 800 such lawsuits, but juries always found smokers bore responsibility for lighting up.

Then on his way out, he was startled by an idea: The state of Mississippi, not sick smokers, should sue the companies. After all, the state never inhaled a puff, but its Medicaid program bore the costs of caring for sick patients.

"I knew immediately it was a way to deny the industry its traditional defense," Lewis said.

Lewis laid out his idea to two University of Mississippi law school classmates, Moore and Scruggs, who took it one step further: to square off against the industry's notoriously tenacious legal defenses, the state would subcontract to private attorneys skilled in such cases. And they would make sure the battle stayed on their home turf – a strategy Scruggs called "home cookin'."

"We wanted that insular advantage," Scruggs said. "We spent a year trying to think as diabolically as the industry. ... We knew it would be a public relations war and a political war every bit as much as a legal fight."

Scruggs hired Morris – a onetime political consultant to Clinton and Lott – to poll potential juries on the strategy of suing to recover Medicaid costs. But the results were disappointing – Mississippians reacted against such a lawsuit, by 2 to 1.

So they filed their case in Chancery Court, where most cases are heard by judges, not juries. A throwback to English common law that survives only in a few states, chancery court is usually the province of divorce cases and truancy complaints. Because of its peculiar legal rules, chancery court offered Scruggs another benefit: He could demonstrate the health toll of cigarettes by using gross statistics, instead of the burdensome task of providing evidence on every single smoker's ills. That denied the industry its most valuable defense.

Despite Scruggs's planning, he and Moore still thought that their case was a long shot with a shaky legal foundation, and that the industry would bury Moore with campaign donations to his opponents.

"I was convinced when I filed it that it was going to be my last political act," Moore said.

Moore and Scruggs filed their lawsuit on May 23, 1994, in a shabby courthouse set in a former grocery store here. Then they took to Scruggs's Lear jet to recruit other attorneys general to file similar suits. The tobacco lobbyists were close behind, quoting industry polls skewed to show the unpopularity of anti-cigarette lawsuits and threatening political retribution for those who followed Moore.

Moore and Scruggs also took legal risks enlisting the help of a number of cigarette industry whistleblowers whose documents revealed many of the businesses' most sensitive secrets.

One whistleblower was Merrell Williams, who had been a $9-an-hour paralegal for a Louisville law firm representing Brown & Williamson Tobacco Corp. Over time, he smuggled out 4,000 pages showing the firm hid evidence of smoking's dangers and addictiveness. After he left, the company secured a restraining order barring him from releasing the papers. Scruggs then bought Williams a $109,600 home nearby, a $30,000 sailboat and two cars. Industry lawyers said it was improper help for a thief who broke a judge's order to keep the papers secret. But Scruggs prevailed, and a medical journal devoted an entire issue to the documents.

Scruggs's timing couldn't have been better. As his case proceeded, cigarette executives were starting to fear the future. Internal industry polls revealed that an overwhelming majority of Americans, approaching 80 percent, deeply mistrusted the companies. "The tobacco companies are seen as all darkness," said an industry pollster, summing up the surveys. "They finally understood they couldn't keep things from happening."

Company officials have said they decided it was only a matter of time before judges or juries punished them with multibillion-dollar judgments, sparking yet more runaway verdicts and, perhaps, bankruptcy.

Class-Action Roots

Dick Scruggs hasn't always owned yachts and a Lear jet. He grew up on the edge of poverty in Pascagoula, raised by his mother, who had divorced her husband when Dick was 6. She later went to work as a secretary for the town's biggest employer, Ingalls Shipbuilding, builder of many of the Navy's warships.

Scruggs enlisted in the Navy, serving as a pilot flying A-6 Intruder bombers and almost making it a career. Instead he went to law school, joined a big firm in the state capital of Jackson and soon grew bored defending insurance firms. He brought his family back to Pascagoula, a town of 26,000 people and a one-story skyline dominated by shipyard cranes. He opened a solo law practice and in 1984, he took on as clients some Ingalls workers who had trouble breathing. Tests showed they suffered from exposure to asbestos, and soon he had hundreds of shipyard clients suing the firm whose paychecks once supported his family.

Scruggs learned tactics then that have served him well in the tobacco wars. He spent money up front to earn a lot more later, and instead of going to trial, he negotiated settlements in most of the hundreds of cases he filed. Since then, he's raked in about $1.5 million a year.

Scruggs said he didn't enter the tobacco lawsuit for money – his 10-attorney firm is still housed in a modest storefront – but for the competitive challenge of besting an industry that had escaped accountability.

"I had a growing compulsion to take tobacco on," Scruggs said. "You just couldn't let them get away with it."

The tobacco lawsuit appealed to Attorney General Moore's itch to upend the powerful too – what a friend of Moore's calls his self-image as "St. George slaying the dragon." After the suit was filed, the friend was visited by tobacco lawyers. "I laughed and I told them, 'He's going to beat you.'"

Moore, 45, exudes an aw-shucks southern populism combined with the power to electrify audiences. A former altar boy and Eagle Scout, he has always radiated a straight-arrow earnestness, with the exception of his fondness for the media spotlight. Critics call him "Flashbulb."

He's also well acquainted with ambition. Moore had been an assistant district attorney all of three years before running for his boss's job. He won, becoming Jackson County D.A. at age 27. He made a name for himself exposing corruption in the local political machine, eventually securing convictions or guilty pleas from four of five county supervisors.

A congressional endorsement of the deal he helped broker could send him further – perhaps launching a run for governor, as has been rumored in Mississippi.

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