$6.5 billion tobacco settlement announced

Talks resumed Thursday

Tobacco on trial

Tobacco settlements at a glance

Published Friday, May 8, 1998

$6.5 billion tobacco settlement announced

Steve Karnowski / Associated Press

ST. PAUL, Minn. -- Tobacco companies reached a $6.5 billion settlement of a lawsuit by the state of Minnesota and an insurance company today just as jurors were scheduled to hear more closing arguments in the 3-1/2-month-old trial.

``It is a historic day in Minnesota,'' the plaintiffs' lead attorney, Michael Ciresi, told jurors before they were dismissed.

One female juror began to cry as they were informed the case had been settled. The jury had been expected to get the case this afternoon.

Besides the payment of $6.479 billion to the state and the other plaintiff, Blue Cross and Blue Shield of Minnesota, terms of the agreement require the tobacco industry to:

-- Disband Council For Tobacco Resesarch.

-- Stop paying for tobacco product placement in movies or television shows.

-- Disclose money paid for lobbying.

Also, the industry may not offer or sell caps, jackets or bags in Minnesota bearing the name or logo of tobacco brands.

``They have surrendered and they have surrendered on our terms,'' state Attorney General Hubert Humphrey III said.

Minnesota, which becomes the fourth state to settle a tobacco lawsuit, would have received about $4 billion under a proposed $368.5 billion national settlement reached last summer that later fell apart.

Jim Tierney, a former Maine attorney general who is a consultant to the state tobacco lawsuits, said Humphrey ``has made history.''

``He crafted a remarkable agreement with worldwide implications,'' Tierney said. ``He got a settlement because the industry, once this truth was out, was afraid to let that truth go before a jury.''

Ciresi had been scheduled to give his summation, but Fitzpatrick opened the day's court session by announcing an immediate recess until afternoon.

Three other states settled earlier before testimony began in their cases: Mississippi for $3.36 billion, Florida for $11 billion and Texas for $15.3 billion. Besides Minnesota, 37 other states have lawsuits pending.

In closing arguments Thursday, a defense attorney asked the jury not to make a scapegoat out of the tobacco industry for the smoking habits of children. Attorney Robert Weber urged jurors to think critically as they weigh the state's and Blue Cross' $1.77 billion damage claim against the 10 defendants.

``It's easier to talk about children than to say you want a bunch of money,'' said Weber, who represents R.J. Reynolds Tobacco Co. ``Don't let emotion get in the way of facts.''

Summing up the industry's case, Weber said the plaintiffs failed to prove any wrongdoing by the defendants that caused the state or Blue Cross to incur additional health care costs.

Weber reminded the jurors that defense witnesses included the marketing executives behind Reynolds' Joe Camel ad campaign and the ``Marlboro Country'' campaign of Philip Morris Inc., who both testified that they never aimed their marketing efforts at children.

There are many reasons why adolescents smoke but advertising was not one of them, Weber said.

``I think the unfortunate fact is that the state and Blue Cross are looking for a scapegoat about youth smoking,'' he said.

Weber said it would be foolish to market to underage smokers, who he said buy only 2 percent of the cigarettes sold in the United States.

``Would smart businessmen and smart businesswomen put (their businesses) at risk to market to that 2 percent when the 98 percent is out there?'' he asked.

Weber also said defense witnesses had exposed as a ``sham'' the mathematical model the plaintiffs' used to arrive at their $1.77 billion damages claim. He accused the state and Blue Cross of playing ``statistical shenanigans'' with the jury.

Peter Bleakley, who represents Philip Morris, argued that the state failed to show that tobacco companies misled consumers about the hazards of smoking.

``The case is not about popularity,'' Bleakley said. ``Believe me, the defendants are well aware of the fact that they're not very popular these days.''

RJR Nabisco stock was up 37.5 cents at $28.12-1/2 on the New York Stock Exchange shortly after news of the settlement got out, while Philip Morris was up 6.3 cents at $38.75.