Smoked out: The Attorneys General Cave In to Big Tobacco

[Robert Weissman <rob@essential.org>]

They've done it again. 

Faced with unprecedented risk in the face of innovative lawsuits from 40
U.S. states, Big Tobacco and its lawyers have again concocted a national
settlement proposal that will enable the industry to escape from its
current difficulties. 

The deal -- now accepted by 46 states, the District of Columbia and four
territories -- purports to offer just over $200 billion to the states over
a 25-year period plus some minor public health concessions in exchange for
the states dropping their claims. 

Without knowing more, the proposal can immediately be identified as an
industry-protection deal by the single fact that the companies gave states
just a week to accept the deal, on a take-it-or-leave-it basis. 

The only possible explanation for this arbitrary time limit is that the
industry did not want the state attorneys general who signed the deal --
and definitely not the public -- to understand what is in the proposed
agreement. The settlement proposal is more than 100 pages of complicated,
confusing and technical legal jargon. There was no way to analyze it fully
and carefully in a week. 

Still, a quick review is enough to show how weak and harmful the deal is. 

First, the $200 billion figure is inflated. Industry payments will be tax
deductible. Since they are so spread out and higher payments come later,
the real cost to the companies is less. The payments are less on a per
capita basis than Minnesota received in its individual settlement. Most
importantly, the $200 billion would only cover about one-third of the
Medicaid costs incurred due to smoking-related disease -- it was to
recover these costs that the states brought their suits. 

Second, the proposal's public health provisions are laughably weak and
riddled with loopholes. Instead of banning industry sponsorships, it will
permit each company to sponsor one sports event or concert series a year.
It bans the use of most cartoons (though remember, Joe Camel is already
retired in the United States), but permits the continued use of human
images -- meaning the Marlboro Man will continue to convey the values of
ruggedness and freedom to lure children into enslavement to nicotine
addiction and its attendant consequences of disease and death. 

There is little question that, under the deal, Big Tobacco will continue
to spend at least as much on promotion and marketing as it does now. The
main consequence of the settlement agreement will be to funnel it away
from billboard advertisements (most of which are banned) to other outlets. 

The deal does not contain "look-back" provisions, which would make the
tobacco companies responsible for reducing youth smoking rates, and
penalize them if they failed. 

Third, the deal contains several provisions which are out-and-out harmful.
The overly broad settlement language will prevent states from filing
important health-related suits against the industry in the future. States
will be barred, for example, from suing the tobacco companies to recover
the medical-care costs associated with second-hand smoke. 

Outrageously, the deal will also block local governments from filing a
wide array of suits against the industry, and may even impede city and
county governments' ability to enforce local tobacco-related ordinances. 

The worst part of the deal may be a provision that will cut the mandated
industry payments if the federal government taxes the tobacco companies
and then gives some of the resulting revenue to the states. There is no
way the federal government is going to give money to the states if those
payments will only serve to reduce industry's payments to the states. And
politically it will be very difficult for Congress to pass a cigarette tax
increase if it cannot transfer some of the revenue to the states. 

Thus, in cutting a deal with the states, Big Tobacco may succeed in
blocking federal action to address the smoking problem. 

Despite all these problems, however, the current settlement is still a
step up from the deal proposed last year. Crucially, this settlement does
not interfere with the ability of individuals to sue the tobacco
companies, either on their own or in class actions. 

The tragedy of the current tobacco deal is that there was an alternative
approach available. Each state could have continued preparing its case,
and brought it to trial or settled it individually. 

The four states that settled before the multistate agreement each included
a "most favored nation" provision in their settlements. Those provisions
stipulated that any better terms provided to later settling states would
automatically be given to the earlier settling states. 

This created a situation where each state was able to build on the
settlement that came before, getting a bit more money or adding a new
public health provision. This more cautious approach meant that mistakes
in one settlement could be fixed in the next, and the industry did not
have the chance to bamboozle the states, as it has now done. And, the
state-by-state approach denied Big Tobacco a once-and-for all settlement
that helps afford the tobacco companies the litigation peace they so
desperately crave.  

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor and co-director of Essential Action, a corporate
accountabiilty group that works on tobacco issues.  

(c) Russell Mokhiber and Robert Weissman

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