Administration May Back Protecting Tobacco Firms

The Clinton administration, tipping its hand for the first time on a key aspect of the mammoth tobacco settlement now under consideration in Congress, says it could accept special legal protections for tobacco companies.

David Ogden, a counselor to Atty. Gen. Janet Reno, told the House Judiciary Committee that limits on liability for the companies may be the price of securing the tobacco industry’s agreement to scale back its marketing and advertising and finance anti-smoking programs.

“If there is agreement on a comprehensive bill . . . then reasonable provisions modifying the civil liability of the tobacco industry would not be a deal-breaker,” Ogden said.

Ogden made clear, however, that the legal protections for the industry must be narrowed considerably from those that were part of the settlement reached last year between the tobacco companies and the 40 states that had sued them. He repeatedly emphasized that restricting liability is not the administration’s preference, and at the end of the day, many lawmakers and experts were still confused about exactly what the administration will accept.

Special legal protection for the tobacco industry is the linchpin of the proposed settlement. The industry agreed to drastically limit marketing and advertising aimed at children, accept regulation by the Food and Drug Administration, finance programs aimed at deterring young people from smoking and partially reimburse the states for their tobacco-related health costs in exchange for limits on their liability in damage suits.

The settlement depends on Congress to give the companies their legal protections and limited immunity from antitrust laws so that they can agree on prices for their products. But many lawmakers are reluctant to grant such preferences to an industry that is under criminal investigation by the Justice Department.

The legal protections sought by the tobacco companies and included in the settlement are:

* No future class-action or multi-case lawsuits against the companies.

* A cap starting at $2 billion and rising to $5 billion on the annual payments by the industry in judgments and settlements of lawsuits brought by individuals.

* No more lawsuits by states against the companies.

* No punitive damage awards against the companies for past conduct.

In commenting on the settlement, Ogden suggested that Congress consider combining limitations on the tobacco companies’ liability with provisions to make it easier for plaintiffs to recover damages from the industry. To date, individual smokers have won only one claim against the industry for tobacco’s health effects. Justice Department lawyers appeared to have in mind something along the lines of the workers’ compensation system.

“There have been compensation-type schemes developed under which procedures have been simplified . . . that would be one option,” said Ogden.

Ogden emphasized that Congress needs to give the industry incentives to turn over all its documents. Secret documents have proved to be the most powerful weapon for plaintiffs and lawyers against the industry.

He proposed that punitive damages “be retained with respect to claims based on facts not disclosed by the tobacco manufacturers to Congress and the public.”

The administration’s willingness even to entertain limitations on the companies’ liability opened the door to the possibility that Clinton would give members of Congress the political cover many are seeking on the highly charged issue. Some committee members heralded Ogden’s testimony as a major development, while others derided the administration for refusing to lay out the specifics of its position.

When Ogden started to explain his position, Rep. Barney Frank (D-Mass.) cut him off. “Spare me that. . . . I resent the administration’s unwillingness to get specific,” he said.

Similarly critical were anti-smoking advocates who believe it is a mistake to give away the legal remedies that have helped bring the industry to the bargaining table. Today’s testimony “surely weakens the administration’s negotiating position on what are ‘reasonable’ limitations on civil liability law,” said Alan Morrison, the director of Public Citizen’s litigation unit.

However, the tobacco industry and Republicans who are pushing for comprehensive tobacco legislation welcomed the administration’s position, vague though it was.

After praising the administration for entertaining the idea of limited liability, tobacco industry lawyer Meyer Koplow noted that he was not optimistic about the administration’s idea of a compensation arrangement that would make it easier for plaintiffs to recover.

“We don’t think those work very well,” he said.

But Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah), a fervent opponent of the industry, called Ogden’s testimony “a stunning breakthrough. [It] greatly increases the probability that broad, bipartisan consensus can be reached on the tobacco settlement.”

Times legal affairs writer Henry Weinstein contributed to this story from Los Angeles.