Justice Dept. Drops Tobacco Talks for Now

The Bush administration and cigarette makers stand so far apart in efforts to settle a multibillion-dollar lawsuit against the tobacco industry that the Justice Department has shelved further negotiations for now, a senior department official disclosed Wednesday.

With the talks seemingly deadlocked, the department now plans to seek significantly expanded funding to pay for the lawyers and resources needed to pursue the landmark litigation, Stuart Schiffer, an acting assistant attorney general, told a Senate panel.

Schiffer’s remarks were meant to answer sharp attacks from Democrats on Capitol Hill who charge that Bush administration officials are looking for a way to abandon a lawsuit that they never liked. The suit was initiated in 1999 by then-President Clinton.

But the Bush administration’s pledge to pursue the lawsuit did little to convince skeptics.

“The Department of Justice’s management of this case seems unprofessional at best. At worst, they are killing this lawsuit and don’t have the political courage to admit it publicly,” said Sen. Richard Durbin (D-Ill.), who led Wednesday’s Senate Judiciary Committee hearing.

Durbin noted that Atty. Gen. John Ashcroft, who opposed litigation against the tobacco industry while serving in the Senate, declined an invitation to appear before the judiciary panel, citing scheduling conflicts.

“If he’s been converted to support this lawsuit, it would be nice to hear it from him directly,” Durbin said in an interview.

Durbin also said Ashcroft’s aides “have been bad-mouthing this lawsuit through back channels for months. That doesn’t build my confidence that they’re committed to this lawsuit.”

But Schiffer said the case has been well handled by competent, career litigators who are committed to the case.

The federal government’s lawsuit against the tobacco industry has stood on shaky legal and political ground ever since Clinton directed the Justice Department to find a way to bring one of the biggest civil suits in the department’s history.

A coalition of states extracted a $246-billion settlement from the tobacco industry over allegations that cigarette makers had engaged in fraudulent and dangerous marketing practices for decades. But the federal lawsuit has faced a more difficult path: A U.S. District Court judge threw out key portions of the suit last year, ruling that the government waited too long to try to collect health care costs spent on ill smokers.

The ruling left intact the government’s claim that the tobacco industry had engaged in a 45-year pattern of racketeering, and that portion of the lawsuit is scheduled to go to trial in 2003.

Ashcroft decided in June to initiate settlement discussions with the tobacco industry, saying Justice Department aides had advised him that the court rulings had hurt the government’s chances of winning the case at trial.

Critics charged that Ashcroft’s decision would undercut the government’s position and force his lawyers to negotiate from a position of weakness. But such complaints may prove moot.

Schiffer, acting head of the Justice Department’s civil division, told the Senate panel that negotiators have met once about a possible settlement, but the discussions proved so fruitless that they have decided not to schedule any further meetings. Schiffer would not discuss specifics of the negotiations but said the two sides were “quite far apart.”

One sticking point, according to a source close to the negotiations who asked not to be identified, was the Justice Department’s insistence that any settlement include further marketing restrictions on tobacco products. Industry lawyers maintained that the types of restrictions sought are already in place, either as a result of the states’ 1998 settlement or through voluntary reforms by cigarette makers.

Peggy Roberts, a spokeswoman for Philip Morris Cos., the nation’s biggest cigarette maker, said the company was troubled to learn of Schiffer’s comments.

“We’re very disappointed that this administration has chosen to pursue this purely political lawsuit that was initiated by the former administration. We don’t think the lawsuit has any merits, and frankly, we think it ought to be dropped,” she said.

Funding for the lawsuit has proved controversial because Ashcroft has sought only $1.8 million in next year’s budget to finance the litigation. More than $23 million is allotted for the case in the current budget.

But Schiffer said Wednesday the department now plans to seek $44 million for the suit. Much of that money would come from other federal departments that have a stake in the lawsuit, such as the Defense Department and the Department of Health and Human Services, he said.

Schiffer said Ashcroft has given the Justice Department’s civil attorneys “unfettered discretion” to pursue the case, and he has seen no signs of efforts aimed at grounding it.

“If I didn’t think we had a strong case, I wouldn’t be proceeding,” Schiffer said. “The case is going forward.”