Talks aimed at a sweeping resolution of massive tobacco litigation ran into a major snag Tuesday as lawyers for BAT Industries declared that the proposed settlement’s provisions on nicotine regulation were unacceptable, according to several sources participating in the negotiations.
The talks were halted until at least Monday. “It’s a serious problem, but people on our side think it can be resolved,” said one source close to the five state attorneys general negotiating with tobacco industry lawyers.
BAT, the British-based parent company of Brown & Williamson Tobacco Corp., which has 13% of the U.S. market, balked at giving full regulatory control over nicotine to the federal Food and Drug Administration, according to several people involved in the talks. The proposed settlement contains a clause stating that nicotine, the chemical component that makes cigarettes addictive, could not be banned for 10 years.
But BAT officials said that term was unacceptable because it created the possibility of a ban later.
BAT also objected to clauses that state that a cigarette company would be subject to a $10-million fine if they misreport anything concerning the safety of an ingredient or fail to report a new ingredient, sources said. That is 10 times greater than the current maximum fine that the FDA can impose.
Sources said BAT officials will come to New York from London for a Friday meeting with U.S. tobacco company representatives to see if a solution can be reached.
A Brown & Williamson spokesman declined to comment.
Public health advocates and several longtime tobacco foes in Congress have stressed that for any settlement to be acceptable, it would have to permit the FDA to have a sweeping mandate to regulate the tobacco industry, and in particular nicotine.
Mississippi Attorney General Mike Moore plans, via conference call today, to brief the attorneys general who have sued the tobacco industry to recover billions in Medicaid costs their states have incurred treating sick smokers.
Oregon and Idaho both sued the tobacco industry Tuesday, bringing to 36 the number of states seeking restitution for health-care spending related to illnesses allegedly caused by smoking.
Moore had hoped to present a finished or nearly finished deal in the conference call but that is not possible now.
Moore’s chief aide, Trey Bobinger, said his boss would return to Mississippi today and hoped talks would resume here Monday. The other attorneys general on the negotiating team indicated they were heading home, too.
At least one key industry negotiator, attorney Meyer G. Koplow, who represents Philip Morris, was going to be absent from talks today and Thursday even before the BAT problem arose. Koplow planned to return home to New York to celebrate Shavuos, a Jewish holiday that marks the giving of the law (Torah) on Mt. Sinai.
In recent weeks there have been fissures among the attorneys general, but Tuesday some of them said it appeared that the industry now had to unify its position. No BAT or Brown & Williamson official has been participating directly in the talks. They and other smaller cigarette companies such as Lorillard have been represented by Koplow and Arthur F. Golden, a New York attorney whose firm works for R.J. Reynolds.
After reviewing the proposed settlement, BAT representatives apparently came to the conclusion “that they’re not getting a very good deal out of this,” said Arizona Attorney General Grant Woods, a member of the negotiating team.
“We’re not going to budge on nicotine and we’re not going to budge on enforcement,” Woods said in an interview Tuesday. “I am disappointed. We’re to the point that the longer this drags on without resolution the more difficult it becomes.”
Meanwhile, a class-action suit was filed in San Diego County Superior Court on behalf of all California residents who were smokers on or before June 9 and desire to participate in a program that could help them quit smoking. The suit seeks to obtain smoking-cessation programs, medical monitoring and punitive damages, said lead counsel Mark Robinson of Laguna Niguel.
And a Washington state court judge dismissed several claims in that state’s Medicaid suit against the industry. The judge rejected the state’s claims for breach of special and general duties, unjust enrichment and disgorgement of the companies’ profits. A Philip Morris lawyer said the company was delighted with the decision.
But John Hough, Washington’s senior assistant attorney general, said the judge had reiterated an earlier ruling that the state could go forward with its claims of antitrust and consumer fraud violations against the industry. The case is scheduled for trial in September 1998.