It's a phenomenal winning streak: Despite scores of cases blaming the industry for debilitating illnesses and deaths, cigarette makers have gotten off scot-free. With mountains of cash and seemingly unmatched legal stamina, they've convinced juries that smokers assume personal risk with each puff. It has proved an airtight defense.
But the legal landscape is changing fast. Tobacco cases are attracting well-heeled plaintiffs' lawyers willing to go the distance. The lawyers are bringing new, potentially more powerful lawsuits--class actions alleging that millions of people have been hurt by addiction. States are jumping in, too: On May 23, Mississippi sued to recover Medicaid and other costs of smokers' ailments; Florida is poised to follow.
A key element in all this maneuvering may turn out to be a set of 30-year-old documents. In early May, internal papers from Brown & Williamson Tobacco Corp. were leaked to key members of Congress and the press, including BUSINESS WEEK. The documents support claims that the industry knew--perhaps since the 1940s--that cigarettes are addictive, plaintiffs lawyers contend. "They've conducted a masterful fraud," says Wendell H. Gauthier, who has filed suit in a Louisiana federal court on behalf of all smokers.
GANGING UP. The industry response to all this? Don't believe the hype. Tobacco companies still argue that smoking is not addictive. Says Philip Morris Cos. attorney Charles R. Wall: "The [B&w] documents have been mischaracterized in the press." Since B&w claims they were stolen, the documents may not be admissible, Wall notes. Besides, he argues, "juries know that millions of people can and do quit smoking."
Millions more don't. That's where the class-action strategy comes in. The addiction argument opens the manufacturers' liability to a cross-section of plaintiffs. So far, the industry has been loath to settle cases, preferring to sap the financial strength of its adversaries. "They have shown the propensity to gang up on a plaintiff and just whip the heck out of them," Gauthier says. But Gauthier has enlisted 50 firms as allies. Together, they have committed at least $10 million to bankroll their attack.
The promise of megadamages is the key attraction. The list of powerful plaintiffs' lawyers now includes Melvin M. Belli, Stanley M. Chesley, and others who have won big in the legal brawls over asbestos and breast implants. States' Attorneys General are targeting the industry, too--with the deep pockets of state treasuries behind them.
FIRST STRIKE? The class-action strategy is gaining momentum. In Florida, an appeals court unanimously agreed to let a class action proceed on behalf of flight attendants who blame cancer and other diseases on secondhand smoke. The move reflects judges' willingness to consider tobacco litigation under the class-action rubric. Tobacco companies have asked the appeals court to reconsider.
Washington may well deal the decisive blow to tobacco makers long before the courts do. Convinced that the industry has the technology to manipulate nicotine levels, Food & Drug Administration Chief David Kessler hasn't wavered in his promise to explore regulating tobacco as a drug. "The evidence suggests that cigarette makers intend the obvious: that smokers buy cigarettes to satisfy their nicotine addiction," Kessler told Congress recently.
More likely, though, the first strike will come from Congress itself. Representative Henry A. Waxman's Subcommittee on Health & the Environment is pressing B&w for an explanation of the leaked documents. B&w CEO Thomas E. Sandefur Jr. is scheduled to testify before the subcommittee on June 20. B&w has hired Griffin B. Bell, a former Attorney General under President Carter, and Robert A. Bork to plead its case before Waxman. High-priced talent. But for the first time, their opposition is imposing.
CASTANO VS.AMERICAN TOBACCO
The class action, filed on Mar. 29, charges the tobacco producer with manipulating nicotine levels in cigarettes.
ALLMAN VS.PHILIP MORRIS
Filed in the Southern District of California on Mar. 30, this suit seeks to recover the cost of treatment for all smokers.
SPARKS VS.R.J. REYNOLDS
The class action charges Reynolds with deceptive business practices in targeting children with its Joe Camel ads.
MISSISSIPPI VS.AMERICAN TOBACCO ET AL.
The state sued on May 23 to recover smoking-related health-care costs paid by state programs.