Academic journal article Vanderbilt Law Review

Pretext, Transparency and Motive in Mass Restitution Litigation

Academic journal article Vanderbilt Law Review

Pretext, Transparency and Motive in Mass Restitution Litigation

Article excerpt

This Article assesses the legal claims against the tobacco industry by the states that led to the $250 billion settlement now known as the Master Settlement Agreement ("MSA"). I assume that the critics of the MSA are mostly correct, and argue that, in spite of its flaws, the MSA is nonetheless a satisfactory second-best response to the legal and political challenges posed by the history of tobacco consumption in the United States. The Article asks why, given the very serious legal infirmities of the states' suits, the tobacco companies agreed to the regulatory burdens contained in the MSA. I argue that the "pretext" upon most of the litigation was based-that the states could pursue claims for compensation based on their health care expenditures for smokers without running into the same problems that doomed smokers' personal injury cases-obscured a deeper, more dangerous legal claim based on consumer fraud statutes. These statutory consumer fraud claims still depended on controversial assumptions about proximate cause but were sufficiently strong from a legal point of view that they could have persuaded the tobacco industry to accept "legal peace" with the states. I conclude by suggesting that the structure of the MSA, which employs a set of public-law remedies, is a fitting response to the litigation, which cloaked laudatory political aims within the pretext of a claim for redress under private law.

I. INTRODUCTION: THE PAST FORETOLD

On February 23, 1993 The Washington Post published an article entitled, "Tobacco's Last Gasp? Towards a Smoke-Free Society."1 The article tested the hypothesis that in the near future no one would smoke in the United States. Its focus was on means: how would America reach a point when virtually no one smoked? The predictions ran the usual gamut of policy devices. Although their order of appearance may be random, the list was as follows: legal prohibitions on smoking in public, taxes, social pressure, increased health insurance costs to smokers, and (finally) litigation.

The Washington Post article noted that just one year earlier the United States Supreme Court opened the door to lawsuits based on fraud, but that "so far" tobacco lawsuits had been ineffective.2 It quoted one lawyer who suggested that, like asbestos, soon the "floodgates" would open and there could be "hundreds of thousands of lawsuits."3 What would be the key to breaking the dam? The lawyer quoted in the article hypothesized that, to get around the fact that many smokers bought cigarettes after warnings were placed on them in the late 1960s, the lawsuits would have to identify some way in which smoking indirectly harmed the plaintiff-such as by enhancing the risk of disease of the children whose parents had smoked or by synergistically increasing the risk of other hazardous substances used by workers who smoked. The lawyer was unsure. But he made this prediction: "The tobacco industry goes the same way of the asbestos industry if it has conspired to hide the facts and sweep them under the carpet."4

Eleven years later the predictions made in the Washington Post article have unfolded in ways far more interesting than the author of the article might have imagined. First of all, while America is far from smoke-free, the decline of smoking in the United States has continued. In 1993, 24.8 percent of Americans smoked; in 2002, 23.1 percent smoked.5 The most recent figures confirm a secular trend that began about forty years ago: in 1965, 41.9 percent of Americans smoked, and since then that figure has steadily declined.6 Legal prohibitions on smoking have increased tremendously since 1993; many major cities, including New York, have banned smoking in most public places.7 Social pressure has also arguably increased, although one might note that there has been an "anti-anti-smoking" backlash.8 Cigarette taxes have increased, especially in the past two years. On average, since 1998, state cigarette taxes have doubled to an average of seventy-three cents per pack, with sixteen states charging more than one dollar tax per pack. …

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