States settle tobacco suits: so who won?

• Author: Tubbesing, Carl

The states' battle with the tobacco companies is finally over. The states get large chunks of money, and the companies get guaranteed immunity from state lawsuits. A few questions remain, however.

It must be like winning the lottery. Win the lottery and you quickly discover friends you had long forgotten, cousins whose addresses you lost years ago, financial advisors promising to double your winnings in a year, and charities you never, ever heard of.

On Nov. 23, attorneys general from 46 states, four territories and the District of Columbia agreed to a massive and unprecedented settlement with the five major tobacco companies. A week later, the Colorado legislature held a hearing on what to do with the state's share of the $206 billion.

"It was standing room only," reported the Denver Post, "as public health advocates jammed a state Capitol hearing room to give officials advice on how best to spend the $2.7 billion Colorado will reap in a legal settlement from the nation's major tobacco companies. Filling the Capitol's Old Supreme Court Chambers to overflowing, an eclectic mix of hopeful persuaders clamored for a piece of the settlement pie."

Money talks. Lots of money draws lots of attention and lots of advice. Colorado's "eclectic mix of hopeful persuaders" was joined by the New York Times, whose lead editorial on Dec. 1 stated unequivocally that New York's share of the settlement "should be dedicated to anti-smoking programs and other health uses."

Lots of money also raises lots of questions. How much will my state get? Who decides how the money is spent? When does it start? Can the federal government claim any of it? Can this agreement take effect without congressional action? How does this agreement compare with the aborted 1997 settlement? Are the amounts listed in the agreement what states actually get? Here are a few answers starting with how this all happened.

Q. How did this all come about?

A. The events leading to the November 1998 agreement began in 1994 when attorneys general in Mississippi, West Virginia and Minnesota sued the tobacco industry. Although the tobacco companies had fended off several earlier suits, these relied on a different set of legal theories from the earlier unsuccessful ones. In 1995, the Liggett Company split from the other major firms and settled with 41 states for approximately $41 million over 25 years. In early 1997, Mississippi and Florida secured out-of-court settlements worth $3.6 billion and $11.3 billion, respectively. Texas and Minnesota negotiated similar settlements. Each of these involved large amounts of money and numerous other concessions, most of which were aimed at reducing smoking, especially among teenagers.

While attorneys general in 41 states pursued suits in court, several also entered negotiations with tobacco companies to produce a so-called global settlement. In June 1997, the attorneys general and the companies announced agreement on a global settlement. This agreement was so comprehensive that it required federal legislation to implement it. Attempts to move a bill ratifying the agreement foundered in the early summer of 1998. Shortly thereafter, attorneys general in Washington, Colorado, North Dakota, Oklahoma, California, New York, Pennsylvania and North Carolina began discussions with the industry on a settlement that would not require congressional approval. They announced their new agreement in mid-November.

Q. What are the major features of the new agreement?

A. The new agreement contains two components. One focuses on advertising, marketing and lobbying. Companies have to stop targeting young people in their...