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Tobacco
Second Wind
Liability
Is Big Tobacco Reeling?
Maybe Not; It Wins
Some Cases Settled
Last year, the industry settled the first
New Rounds in Court
two state cases set for trial, in Mississippi
and Florida, to avoid damaging disclo-
sures while trying to win congressional
approval of the now-dead national settle-
Now States, Union Coalitions
ment. The companies also settled in Texas
in January for the same reason and in
Face Quite a Fight to Get
Minnesota last month because the risk of
losing after a 15-week trial was too high.
Medical Reimbursements
But the recent court rulings in other states
make future settlements less likely.
& Of course, tobacco companies aren't
A Tougher Stance on the Hill
home free. State-court judges have refused
to dismiss Medicaid claims in Wisconsin,
AI
Nevada, Illinois and a handful of the other
By MILO GEYELIN
37 states with cases pending. State law-
Staff Reporter of THE WALL STREET JOURNAL
makers could pass new laws such as
You might not think so from the head-
Florida's landmark legislation authorizing
lines, but Big Tobacco's prospects are
state claims against the industry and
looking up in court.
stripping tobacco companies of their tradi-
Never mind that the industry has
tional defenses. Maryland and Vermont
agreed to pay a breathtaking $36 billion to
passed similar laws in April.
four states to settle lawsuits seeking reim-
And other legal threats still loom. A
bursement for health-care costs linked to
class-action suit on behalf of all addicted
smoking. Or that it has been forced to hand
smokers in Florida is set to go to trial in
over millions of internal documents that
state court in Miami next month. Similar
could help 37 other states in their own
statewide class actions also have won a
high-stakes battles with the industry.
go-ahead from state courts in Louisiana
Little-noticed court rulings, including a
and Maryland.
recent state supreme-court decision, have
Federal-Court Dismissals
gone its way, undercutting the ability of
But federal courts in Pennsylvania,
some states and local governments to
Kansas and Puerto Rico have dismissed
recover health-care outlays for treating
sick smokers. A wave of similar suits
smoking-related class actions. The courts
cited a U.S. Supreme Court decision last
brought by union health funds to recover
year that created doubt about whether
their payouts linked to smoking also has,
sprawling class actions on behalf of thou-
by and large, hit a wall.
sands of diverse victims should be allowed
Companies Emboldened
to proceed as a single suit. Although those
The trend has emboldened the tobacco
opinions aren't binding in other states.
companies and was a major factor in their
many judges look to federal courts for
decision in April to stop negotiating with
guidance in complex litigation.
Congress and to fight antismoking legisla-
Meanwhile, suits brought by individ-
tion that would impose stiff penalties on
uals also seem less threatening than they
them. The industry had set the debate in
did two years ago, when a former smoker
motion last year by agreeing to a proposed
whose lung cancer is in remission won a
$368.5 billion national settlement that, if
historic $750,000 state-court verdict in
approved by Congress, would have given
Jacksonville, Fla. That verdict is still on
the industry immunity from big-ticket
appeal. Since then, the industry. despite
state and class-action lawsuits. The indus-
massive negative publicity, has won three
try balked when Congress proposed to
cases brought by families of smokers who
raise the price tag and drop most of the
died, as well as a case brought by the
liability protections.
husband of a nonsmoking nurse who con-
In light of the recent court rulings,
tended her exposure to cigarette smoke at
Steven F. Goldstone, RJR Nabisco Hold-
a veterans' hospital caused her death.
ings Corp.'s chairman and a lawyer by
Another smoking-death case, now under
training, now views a return to all-out war
way in state court in Jacksonville, is
with the industry's adversaries as a viable
expected to go to the jury next week.
option, according to one RJR insider.
Now, the threat of megaverdicts in
"Given the strengthening record of how
state Medicaid-recoupment cases appears
these cases are being disposed of, that's
to be receding. The companies' most-
not the worst alternative," this person
important victory came in April, just after
says. "When you peel away the rhetoric,
they walked away from the congressional
we think that these cases are fundamen-
talks. The Iowa Supreme Court, upholding
tally manageable."
a lower-court decision, became the highest
At Philip Morris Cos., the nation's No. 1
in the country to rule that a state cannot
cigarette maker, Steven Parrish, senior
sue the industry directly to recover dam-
vice president for corporate affairs, calls
ages calculated by statistical models as
the trend "very encouraging." He adds:
reimbursement for smoking-related Med-
"Our initial view of the strength of our
icaid payouts. The court found that Iowa's
defenses, we believe, has been validated
Please Turn to Page A6, Column 3
by a lot of these recent rulings."
THE WALL STREET JOURNAL
FRIDAY, JUNE 5, 1998
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"ocrText": "Tobacco\nSecond Wind\nLiability\nIs Big Tobacco Reeling?\nMaybe Not; It Wins\nSome Cases Settled\nLast year, the industry settled the first\nNew Rounds in Court\ntwo state cases set for trial, in Mississippi\nand Florida, to avoid damaging disclo-\nsures while trying to win congressional\napproval of the now-dead national settle-\nNow States, Union Coalitions\nment. The companies also settled in Texas\nin January for the same reason and in\nFace Quite a Fight to Get\nMinnesota last month because the risk of\nlosing after a 15-week trial was too high.\nMedical Reimbursements\nBut the recent court rulings in other states\nmake future settlements less likely.\n& Of course, tobacco companies aren't\nA Tougher Stance on the Hill\nhome free. State-court judges have refused\nto dismiss Medicaid claims in Wisconsin,\nAI\nNevada, Illinois and a handful of the other\nBy MILO GEYELIN\n37 states with cases pending. State law-\nStaff Reporter of THE WALL STREET JOURNAL\nmakers could pass new laws such as\nYou might not think so from the head-\nFlorida's landmark legislation authorizing\nlines, but Big Tobacco's prospects are\nstate claims against the industry and\nlooking up in court.\nstripping tobacco companies of their tradi-\nNever mind that the industry has\ntional defenses. Maryland and Vermont\nagreed to pay a breathtaking $36 billion to\npassed similar laws in April.\nfour states to settle lawsuits seeking reim-\nAnd other legal threats still loom. A\nbursement for health-care costs linked to\nclass-action suit on behalf of all addicted\nsmoking. Or that it has been forced to hand\nsmokers in Florida is set to go to trial in\nover millions of internal documents that\nstate court in Miami next month. Similar\ncould help 37 other states in their own\nstatewide class actions also have won a\nhigh-stakes battles with the industry.\ngo-ahead from state courts in Louisiana\nLittle-noticed court rulings, including a\nand Maryland.\nrecent state supreme-court decision, have\nFederal-Court Dismissals\ngone its way, undercutting the ability of\nBut federal courts in Pennsylvania,\nsome states and local governments to\nKansas and Puerto Rico have dismissed\nrecover health-care outlays for treating\nsick smokers. A wave of similar suits\nsmoking-related class actions. The courts\ncited a U.S. Supreme Court decision last\nbrought by union health funds to recover\nyear that created doubt about whether\ntheir payouts linked to smoking also has,\nsprawling class actions on behalf of thou-\nby and large, hit a wall.\nsands of diverse victims should be allowed\nCompanies Emboldened\nto proceed as a single suit. Although those\nThe trend has emboldened the tobacco\nopinions aren't binding in other states.\ncompanies and was a major factor in their\nmany judges look to federal courts for\ndecision in April to stop negotiating with\nguidance in complex litigation.\nCongress and to fight antismoking legisla-\nMeanwhile, suits brought by individ-\ntion that would impose stiff penalties on\nuals also seem less threatening than they\nthem. The industry had set the debate in\ndid two years ago, when a former smoker\nmotion last year by agreeing to a proposed\nwhose lung cancer is in remission won a\n$368.5 billion national settlement that, if\nhistoric $750,000 state-court verdict in\napproved by Congress, would have given\nJacksonville, Fla. That verdict is still on\nthe industry immunity from big-ticket\nappeal. Since then, the industry. despite\nstate and class-action lawsuits. The indus-\nmassive negative publicity, has won three\ntry balked when Congress proposed to\ncases brought by families of smokers who\nraise the price tag and drop most of the\ndied, as well as a case brought by the\nliability protections.\nhusband of a nonsmoking nurse who con-\nIn light of the recent court rulings,\ntended her exposure to cigarette smoke at\nSteven F. Goldstone, RJR Nabisco Hold-\na veterans' hospital caused her death.\nings Corp.'s chairman and a lawyer by\nAnother smoking-death case, now under\ntraining, now views a return to all-out war\nway in state court in Jacksonville, is\nwith the industry's adversaries as a viable\nexpected to go to the jury next week.\noption, according to one RJR insider.\nNow, the threat of megaverdicts in\n\"Given the strengthening record of how\nstate Medicaid-recoupment cases appears\nthese cases are being disposed of, that's\nto be receding. The companies' most-\nnot the worst alternative,\" this person\nimportant victory came in April, just after\nsays. \"When you peel away the rhetoric,\nthey walked away from the congressional\nwe think that these cases are fundamen-\ntalks. The Iowa Supreme Court, upholding\ntally manageable.\"\na lower-court decision, became the highest\nAt Philip Morris Cos., the nation's No. 1\nin the country to rule that a state cannot\ncigarette maker, Steven Parrish, senior\nsue the industry directly to recover dam-\nvice president for corporate affairs, calls\nages calculated by statistical models as\nthe trend \"very encouraging.\" He adds:\nreimbursement for smoking-related Med-\n\"Our initial view of the strength of our\nicaid payouts. The court found that Iowa's\ndefenses, we believe, has been validated\nPlease Turn to Page A6, Column 3\nby a lot of these recent rulings.\"\nTHE WALL STREET JOURNAL\nFRIDAY, JUNE 5, 1998"
}