Tobacco Industry Still Has Foes to Face

Despite winning a major battle with the decertification of the huge Castano class-action lawsuit, cigarette manufacturers still face major litigation filed by state governments, the prospect of up to 50 new private class-action suits around the country, possible indictments by the federal government and the threat of Food and Drug Administration regulations.

“This industry is locked in a struggle against a combination of forces, some of whom wish to prohibit tobacco use by adults, while others want to enrich themselves with contingent legal fees,” said Philip Morris attorney Michael York.

Thursday’s class-action ruling by a federal appeals court in New Orleans “was a great win, but those forces aren’t going to change any time soon,” York added.

York made it clear that the industry would continue pursuing its aggressive legal strategy against proposed FDA regulations, cases brought by individual smokers and massive suits filed by the attorneys general of eight states seeking to recover money expended to treat Medicaid recipients with smoking-related illnesses.

Plaintiffs’ attorneys, meanwhile, were planning strategies and sounding remarkably upbeat Friday. The Castano lawsuit will now go forward on behalf of only four people rather than millions of smokers.

“Just remember: The good guys lost a lot of spaceships before they conquered the evil empire,” said Russ Herman, a New Orleans trial lawyer.

Herman said the plaintiffs expected an adverse ruling and had been laying the groundwork for other suits since early April. That was when federal judges in New Orleans indicated at the oral arguments that they were unreceptive to permitting the Castano class action to go forward.

“Two weeks ago, we had models for state class-action complaints that were drawn up and being circulated. I think we will move very rapidly; at least 30 states have significant opportunities,” he said.

Still, he acknowledged, California and Texas “pose special problems” because of laws passed in the past decade that insulate the tobacco industry from certain kinds of litigation. He added that the six southern states with a significant tobacco crop “pose different practical problems.”

Nonetheless, Don Howarth, a Los Angeles lawyer who is on the plaintiffs’ steering committee in the Castano case, said he thinks it is likely that a state class action will be filed in California within 30 days.

Moreover, at least one large California city has begun to seriously examine the possibility of filing a suit against the tobacco industry to recover health-care expenditures. It would be along the same lines as the ones filed by eight states.

In mid-April, San Francisco Supervisor Angela Alioto introduced a resolution urging the city attorney’s office there to bring such a suit against the industry. A senior official in the city attorney’s office said Friday that the possibility of filing such a case has been under review since March. The Board of Supervisors is scheduled to discuss the matter Tuesday.

R.J. Reynolds, the nation’s second-largest cigarette company, also faces another significant case in San Francisco Superior Court. The company is the target of a lawsuit alleging that it targeted minors with its Joe Camel advertising campaign.

RJR has denied those allegations. The suit has survived initial procedural challenges and may go to trial next year. The case is filed as a private attorney general suit by a San Francisco woman on behalf of all California residents. If she prevails, any monetary recovery would go into state coffers, attorney Patrick Coughlin of San Diego said.

Harvard law professor Laurence Tribe said the Castano decision has been “a major setback for the plaintiff class and the lawyers representing the class.” But he quickly added that he thinks that in “giving tobacco stocks a $5-billion bump” Thursday, Wall Street overreacted to the Castano decision, which had been widely anticipated.

“I don’t think . . . it is nearly the reprieve for the industry or the setback for taxpayer interests and public health that some of the early press reports seem to assume,” Tribe said. “The Castano decision has no real significance on the state suits or the FDA regulations.

“If anything, it increases the pressure on the government to be quite aggressive in pursuing the industry, since the industry has succeeded again in fighting off a legal assault,” added Tribe, who is advising several state attorneys general in their suits against the industry.

George Washington University law professor John F. Banzhaf III, a longtime critic of the $45-billion-a-year tobacco industry, agreed.

Being forced to proceed state-by-state “will cost the plaintiffs’ lawyers more money, time and effort. It will cost the defendants more too, but they have a lot more money.” He said, however, the plaintiffs now also have a greater number of forums in which they could win.

“The FDA situation still looks very good,” he said, referring to the agency’s proposed regulations. These would put restrictions on cigarette marketing by requiring that cigarette sales be face-to-face. Specifically, selling cigarettes in vending machines--which represents about 2% of sales--and by mail order would be prohibited.

The tobacco industry already has filed a federal court suit in North Carolina challenging the FDA’s ability to even promulgate the rules.

Banzhaf, who teaches administrative law, said he thinks that suit will fail but said he expects the industry to lodge another suit--after the rules are promulgated--contending the FDA has no jurisdiction to regulate cigarettes.

The FDA’s position is that cigarettes should be regulated because they contain nicotine, a substance that has a drug-like effect and that its makers intend those effects.