Today, somewhere in Seattle, lawyers for the tobacco industry and the state of Washington are meeting for secret negotiations. They are exploring ways to settle one of the biggest lawsuits in Washington history. If they fail, which is more than likely, a jury trial will begin in two months.
That trial is the next scheduled act in the government's theatrical, big-money battle with cigarette-makers. Dozens of states have sued tobacco companies, seeking billions of dollars in reimbursement for the medical cost of smoking-related illnesses. Washington Attorney General Christine Gregoire, aided by several private attorneys, is next in line to take her shot at the industry, with a trial in the King County Courthouse set to begin on September 14.
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Four states have already settled with the industry, winning a combined $35 billion. But while the popular perception is that tobacco companies are on the run, some experts believe the opposite. Gregoire could encounter more resistance than previous litigants because the legal momentum has shifted to tobacco's side.
Indeed, several parts of the Washington complaint have already been thrown out by a Superior Court judge. What remains are legal claims that are mostly untried, and possibly a stretch.
The state's case could be further stripped away later this month, when the judge hears the defendants' plea for summary judgment. Attorney John W. Phillips of Heller, Ehrman in Seattle, who represents Philip Morris Inc., says he's confident that less of the state's case will survive the weeklong hearings—"possibly far less." The summary judgment hearings may end up carrying more importance than the trial itself, for they'll determine the strength with which each side enters the inevitable last-minute negotiations.
Gregoire maintains that her case "has pretty well shaped itself up" and that "nothing dramatic" will come of the hearings. The more telling question, she says, is who will show up for the private mediation session currently under way. Gregoire says she'll only take the talks seriously if the industry sends in their lead attorneys from out of state. But that seems unlikely—in every previous case, the industry deployed its top guns only on the eve of trial or after a trial was under way.
Some experts believe that the industry's resolve may have stiffened. A year ago, a team of several state attorneys general, including Gregoire, agreed on a $368.5 billion national settlement with the companies, allowing them some desperately desired concessions, including a ban on future class-action lawsuits. But the agreement, which required congressional approval, was scuttled in DC for being too soft on tobacco companies. (Another proposed bill, which would have soaked the industry for more money, was killed by the Senate last month, after heavy industry pressure.)
With that deal now dead, the companies are "somewhat less likely to settle" at the state level, says Stanford law professor Robert Rabin. Gregoire notes: "There is talk they are going to draw a line in the sand."
Gregoire is charging the industry with decades of unlawful conduct: spreading misinformation about tobacco, suppressing scientific studies, marketing to children, conspiring to keep safer cigarettes off the market, etc. The substance of the complaint is similar to what has been alleged in other states, and Gregoire will back it up with an ever-rising mountain of incriminating documents, which the industry has been lately forced to release.
However, uncovering evidence of supposed misconduct is not enough. Gregoire has to prove that the Washington state government—as opposed to, say, individual aggrieved smokers—has suffered damages entitling it to billions of dollars in compensation from the industry. And on this issue, Gregoire and her team have already been dealt some setbacks.
Gregoire tried to argue that, based on certain "common law" principles, the industry should reimburse Washington state for the expenses it incurred paying for the smoking-related medical care of poor people on Medicaid. (Medicare, the insurance program for seniors, isn't part of the suit because it's fully paid by the federal government.) Superior Court Judge George Finkle dismissed the claim, ruling that only individual citizens have grounds to sue the industry on common law issues.
What's left are "statutory" complaints accusing the industry of violating specific state laws. By publicly lying about the addictiveness of nicotine, targeting minors with their advertising, and other practices, Gregoire contends, the tobacco companies violated Washington's antitrust and consumer protection acts. But even if the industry engaged in the behavior alleged, the state still must show that it suffered some damage as a direct result, and find some way to quantify that damage. And here Gregoire's case may start to border on the fanciful.
"Our position," says state attorney John Hough, "is that by concealing the true adverse health effects of smoking, and conspiring not to market a safer product," the industry was able to keep smoking rates—and the rate of smoking-related illness—much higher than they otherwise would have been. The state has made an estimate of just how much smoking would have fallen off over the last 40 years were it not for the industry's conspiratorial behavior. It has then calculated the difference between the Medicaid costs the state would have incurred over that time and the costs it actually did incur. Says Hough: "We're claiming as our Medicaid damages the difference between those two curves." For fairness' sake, the state has subtracted out the cost of those people who would have smoked anyway, regardless of any warnings, even if Virginia Slims had changed its name to Death-on-a-Stick.
