Philip Morris May Negotiate Claims Privately
Leading cigarette maker Philip Morris said Tuesday that it might enter into closed-door negotiations aimed at reaching a sweeping settlement of the legal and regulatory problems that have engulfed the tobacco industry.
The announcement, contained in Philip Morris’ annual 10K filing with the Securities and Exchange Commission, was the most concrete statement yet of the firm’s interest in buying peace with government and private lawyers pursuing multibillion-dollar claims against the industry.
But analysts described the statement as consistent with other recent conciliatory remarks by Philip Morris, the world’s largest cigarette maker, and its rivals. And spokesmen for plaintiffs and the industry stressed, as they have in the past, that there have been no negotiations to date.
“There has been no talk between tobacco and plaintiffs,” said John Coale, a Washington, D.C., lawyer and spokesman for the Castano group, an alliance of private law firms pursuing a series of class-action suits against the industry.
“There still hasn’t been any agreement on the shape of the table, or if there’s ever going to be a table,” Coale said.
Since any settlement would restrict future legal claims against the industry, congressional approval is required. Such a legislative solution “would involve significant, and perhaps insurmountable, difficulties in reconciling the views of many competing interests,” Philip Morris said in its SEC filing.
But the company “will explore all reasonable measures that may be in the interests of shareholders and, toward that end, may enter into discussions with appropriate parties,” the statement continued. “Were that to happen, the company would not contemplate making any further comment as to the existence or progress of any such discussions.”
Tobacco executives confirmed three weeks ago that they had hired two powerhouse Washington law firms--one aligned with each major political party--to advise them on settlement issues.
The Democratic firm--Verner, Liipfert, Bernhard, McPherson & Hand--includes former Senate Majority Leader George J. Mitchell and Harry McPherson, a former aide to President Johnson. The GOP firm--Barbour, Griffith & Rogers--is headed by former Republican National Committee Chairman Haley Barbour.
According to some of the trial balloons being floated, a settlement might entail payments by the industry of up to $10 billion annually for as long as 25 years.
But experts believe the chances of a speedy resolution are almost nil. For one thing, there are fundamental disagreements within the warring camps about what would constitute a suitable agreement.
For example, there are at least two factions among the nearly two dozen attorneys general who have sued the industry to recover Medicaid expenditures to treat victims of smoking-related ailments. Deputy White House counsel Bruce R. Lindsey has been briefed by representatives of the hard-line faction, led by Minnesota Atty. Gen. Hubert H. Humphrey III, and by Mississippi attorney Mike Moore, who has been the most eager to settle, knowledgeable sources have told The Times.
While declining to discuss any meetings with Lindsey, a White House spokeswoman said that all sides in the battle “frequently update the White House on the status of these lawsuits, and possible non-litigation ways to resolve them.”
Anti-smoking groups have a different agenda than the attorneys general and private lawyers.
Matthew Myers, executive vice president of the National Center for Tobacco-Free Kids, is said to have briefed Vice President Al Gore on the possible pitfalls of a settlement. In the early 1980s, when Gore was a U.S. senator and Myers an anti-smoking lobbyist, the two were deeply involved in passing legislation that established the current series of rotating warning labels on cigarette packs.
“We don’t need Congress to pass anything,” said Myers, whose main concern is blocking any deal that would bar the Food and Drug Administration from regulating tobacco. He refused to say whether he has met with Gore. A Gore spokeswoman said she had no information on whether the meeting took place.
Another obstacle may be the reluctance of Congress and the White House to do anything that appears to benefit tobacco companies or trial lawyers. Given their unpopularity, “any kind of a deal is going to smell fishy, even if it’s a good deal,” said one longtime Washington insider.
“My intelligence is the White House is very wary of a deal, even though they’re willing to listen.”
Times staff writer Henry Weinstein contributed to this report.
