Magazine article New Statesman (1996)

Don't Choke the Tobacco Firms; Excessive Punitive Action on Cigarette-Makers Helps No One but Lawyers

Magazine article New Statesman (1996)

Don't Choke the Tobacco Firms; Excessive Punitive Action on Cigarette-Makers Helps No One but Lawyers

Article excerpt

Excessive punitive action on cigarette-makers helps no one but lawyers

Peter Pringle in "Big tobacco cuts a beautiful deal" (New Statesman, 20 February) missed the point by insisting that "there had to be a catch".

The settlement's proponents were drawn from a wider circle than just "big tobacco". It was negotiated by representatives from public health bodies, state attorney-generals, the plaintiffs bar and the White House, the latter two being more entwined than usual in the person of Hugh Rodham, Hillary's brother!

And it was very tough indeed on the US tobacco companies. They stand to pay $368.5 billion in the first 25 years, funded by draconian price increases phased in over five years. They will also have to be regulated by the Food and Drug Administration, give up their constitutionally protected rights to advertise to adults and be penalised further if under-age tobacco-use reduction targets are not met in the future.

A total of $60 billion is to be paid in settlement of past claims for punitive damages, a staggering sum that exceeds the entire amount for punitive damages awarded in the history of the US. Class actions and state attorney-general lawsuits are dropped but individual claims, including those involving future punitive damages, can still be brought, subject to a cap of $5 billion in any one year.

The US tobacco companies signed up for two principal reasons. First, to provide shareholders, employees and consumers with a greater degree of certainty; and second, in the hope that over time it would be possible for all interested parties in the US to adopt a more balanced attitude to cigarette smoking, given the massive revenue for health programmes that would be generated as a result.

The point to grasp, and the one that Pringle misses, is that the US tobacco industry can generate far more money for good causes and successful individual plaintiffs as a going concern than it can in liquidation.

The alternative to the proposed settlement is the very real possibility of a couple of jackpot judgments, in which a few groups of plaintiffs and their lawyers scoop the pool, putting the industry into bankruptcy and leaving no money either for public health programmes or other plaintiffs. Bankruptcy would also eliminate much of the $35 billion per year that the industry contributes in tax revenues, as well as 1.8 million jobs, accounting for more than $50 billion a year in wages and other compensation.

The settlement is not the only blind alley up which conspiracy theorists are so enthusiastically vanishing. During the recent debate about whether the proposed resolution should be enacted, considerable attention has been given to a 1973 internal memo that discussed smoking trends among those aged 16-24. …

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