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Judge May Pursue Tobacco Settlement

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Times Staff Writer

The judge in the Justice Department’s massive racketeering suit against the tobacco industry has summoned chief executives of top cigarette makers to a closed-door meeting Monday to push for a settlement, people close to the situation said Friday.

U.S. District Judge Gladys Kessler, who heard closing arguments last week after an 8 1/2 - month trial, has made no secret of her desire to see the case settled, even mentioning it in court June 7 during the government’s summation.

In a notice attached to a document filed under seal late Thursday, the Justice Department alluded to a court appearance Monday that had not been previously scheduled. People familiar with the situation, speaking on condition of anonymity, said Kessler planned to discuss with top tobacco executives and Justice Department officials the status of talks initiated at her insistence.

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Earlier this year Kessler directed the two sides to meet with mediator Eric Green, who brokered a settlement in a Microsoft Corp. antitrust case. Neither Green nor participants in the talks have said whether they’ve made headway.

Justice Department and tobacco company representatives declined Friday to discuss the purpose of the Monday session, and calls to Kessler’s chamber were not returned.

But John Coffee, a Columbia University law professor and expert on white-collar crime, said he thought “the only reason you would bring a chief executive in at this point in this case is to try to cajole, induce and intimidate them into a settlement.

“It is not unusual for judges to call in senior representatives of both sides, try to knock heads together and force them to negotiate a settlement,” he said.

Close observers of the case believe Kessler is likely to find that cigarette makers did violate the Racketeer Influenced and Corrupt Organizations Act, in what government lawyers described as a 50-year conspiracy to deceive the public about the addictiveness of nicotine and the risks of smoking and of secondhand smoke.

But the measures available to her have been severely constrained by a federal appeals court ruling that limited sanctions for civil violations of the RICO law and by 1st Amendment protections for commercial speech.

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Complicating settlement prospects is the turmoil that erupted last week when the government drastically lowered the toughest sanction it had sought, reducing from $130 billion to $10 billion its demand for an industry-funded smoking-cessation program.

The sudden reduction was ordered by senior officials at the Justice Department over the objections of their trial team. The department’s Office of Professional Responsibility has launched an investigation at the request of Democratic lawmakers, who charged that improper interference by political appointees in the Justice Department was behind the move.

Observers said the lower figure could facilitate a settlement by narrowing the distance between the two sides.

“I’m confident you will not see a verdict in this case,” said a person close to the trial team. The reduction will make it easier for negotiators “to reach a number that is not too politically offensive.”

But in a letter Wednesday to Atty. Gen. Alberto R. Gonzales, 50 Senate and House Democrats urged that he “not enter into a settlement at this time based on the unreasonably weak demands made by the government.”

Defendants include Philip Morris USA, a unit of Altria Group Inc.; Reynolds American Inc.; and the Lorillard Tobacco unit of Loews Corp.

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