The battle to revive a form of the tobacco legislation killed in the Senate continues. What should the next try at a law be like? Elizabeth Farnsworth leads a discussion.
ELIZABETH FARNSWORTH: After a month of debate the Senate last week killed a $516 billion tobacco bill targeting teen smoking. The bill would have raised the cigarette tax and subjected the tobacco industry to increased federal regulation. Since the bill's demise, Senate Majority Leader Trent Lott and House Speaker Newt Gingrich have said they will push for a limited version of the tobacco legislation before Congress recesses later this year. Today President Clinton issued an executive order directing the Department of Health & Human Services to survey teens to see which brand of cigarettes they smoke, thus implementing a part of the bill killed last week. Meanwhile, 37 states till have lawsuits pending against tobacco companies to recover state public health costs attributed to tobacco.
And there are class action and individual lawsuits too. Late today, a Florida appeals court overturned a large verdict won by a smoker two years ago against the Brown & Williamson Company. To assess the political and legal state of play, we're joined now by Richard Blumenthal, Attorney General of Connecticut, who has filed a state lawsuit against the industry; John Garrison, chief executive officer of the American Lung Association; Manny Goldman, a tobacco analyst for Paine Webber; and Rod Kuegel, president of the Burley Tobacco Growers Cooperative Association, representing about 60,000 tobacco farmers in five states. Thank you all for being with us. And John Garrison, what next, another attempt at a bill that can pass?
JOHN GARRISON, American Lung Association: Well, I think that the battle is going to be ongoing, and there are at least three things that are going to happen. Number 1, we have to realize that the industry has not gotten immunity from legal action, and there are 800 lawsuits that have been filed. They will be coming. Number 2, there are-there has been no preemption by federal government of state and local efforts, and you have to remember, it's really the state and local governments that have led the way in the tobacco-controlled battle, and there have been nine states in the last six months that have raised excise taxes, for example, on tobacco. And thirdly, I think that we're going to hear more from Washington, because the Republicans can't go to the electorate in November with their current record on tobacco. So these battles are still going to be going on. And the fact of the matter is that the tobacco industry is in much worse shape than it was a year ago, particularly with all the documents that have come out. So it's going to be very interesting.
ELIZABETH FARNSWORTH: Manny Goldman, we've got a lot of issues here, but just on the issue of whether there will be another attempt at legislation, what do you think about that?
MANNY GOLDMAN, PaineWebber, Inc.: Well, I think that there will be, but it might not be until next year. I think what you're going to see is next year a kind of a revival of call it son of the June 20th agreement, that is, there was a June 20th agreement, $368 ½ billion, and that got shot down, preempted, moved over, killed by the McCain bill. Now, the McCain bill was understood as basically a revenue-raising measure for everybody's pet project, and, therefore, was shot down. But I think as you go into next year there's one key thing that really keeps coming up, which is you have in this $368 ½ billion number a huge amount of money for the states, for a number of health advocate groups, for the FDA, so it may not be that exact bill.
But as you get into next year I think you'll have something like that, and I think part of that will be some sort of legal pap as far as the liability that the companies will be subjected to.
ELIZABETH FARNSWORTH: Rod Kuegel, do the members of your tobacco-growing coop want another try at a bill?
ROD KUEGEL, Burley Tobacco Growers' Cooperative: Well, Elizabeth, we've always supported restriction of youth smoking. I think the problem with the McCain bill is that it exited those parameters and actually became a monster that nobody could control. I think as tobacco farmers we will look at any legislation, and look how that affects youth consumption, but not only youth consumption but adult choice, and the impact that it has on adult choice will be where we draw the line and where we will receive damages from any kind of legislation that goes outside of the youth smoking. I think all farmers would support whatever decline in production that we would do for youth smoking.
ELIZABETH FARNSWORTH: Okay. And Richard Blumenthal, is a bill still favored by attorney generals, state attorney generals?
RICHARD BLUMENTHAL, Attorney General, Connecticut: I think there are a lot of attorneys general, myself included, who feel that it will be very difficult to go back to the future, so to speak. We have been there. We've done that. Our focus now really is on the courtroom, where we are very definitely, emphatically stronger now than we were a year ago, partly because of the documents that have been disclosed that show irrefutably that the companies have manipulated levels of nicotine; they have marketed to children; they've misrepresented the harm of their products to the American public year after year, but also because we have now a consciousness and indignation on the part of the American public that simply wasn't there before this settlement. So I would say there's diminished interest in a settlement. Needless to say, the door is still open.
We'd still be willing to talk about the fundamentals of public health protection that were so important a year ago, such as FDA regulations, a genuine look back provision that penalizes companies on a brand specific and company specific basis. And, of course, secondhand smoke marketing restrictions, all of the kinds of measures that we can't achieve in our individual losses, but only if they are genuine public health achievements that go beyond money and what we can achieve in our separate court actions state by state.
ELIZABETH FARNSWORTH: Mr. Blumenthal, not all the court cases are going your way. There was the Supreme Court decision, for example, today. Tell us about that.
RICHARD BLUMENTHAL: The Supreme Court decision today, which involved Connecticut and was joined by 46 states as amicas curies, friends of the court, went against us a very narrow technical procedural issue. Without belaboring or delving into all the details it will not slow or stop Connecticut's lawsuit or any of the others, because instead of dismissing the preemptive strike the tobacco companies tried to launch against us, the federal courts probably will stay or hold them in abeyance. So we see our state court actions as going forward unabated, undiminished, in spite of the Supreme Court ruling today on the narrow issue before it. It simply declined to reverse or review a second circuit court of appeals decision that we think was very narrowly limited in its effect, if it any practical effect at all.
ELIZABETH FARNSWORTH: Mr. Goldman, how do the tobacco companies see the cases, as going more in their favor?
MANNY GOLDMAN: Well, I can't speak for the tobacco companies. I'm a securities analyst, so I sort of try to forecast things so investors can make, you know, proper decisions, but I can give you my impressions anyway. I think the tobacco companies are in an interesting situation. If you look going last year, June 20th, they thought that there was something good that they could resolve a lot of these issues, and then when they adopted a low profile and looked weak, everyone jumped on 'em and things didn't go so well, but I think with the McCain bill not making it through the Senate, my guess is the tobacco companies feel pretty good, and that they feel that once again their position is one of some strength, notwithstanding all the things that Mr. Blumenthal talked about.
But it's certainly a better position than they had before, and that's why I think going into next year, I think that when something is taken up in terms of a tobacco bill, the companies I believe will feel a lot better than they would have even a month ago. And I think that plus, even though there may be-the state cases can go one by one, but by the time they get through-every state would get through the court, with all of the appeals and the appeals on the appeal, you'd be in the year 4000.
And some sort of national legislation like a June 20th type of agreement as a framework but not necessarily the exact thing could resolve all this pretty quickly, and a lot of people would get a lot of money quickly. And that's why I think that you will see something next year.
ELIZABETH FARNSWORTH: John Garrison, overall, do you think the tobacco companies came out-you've sort of said this-but expand on it-weaker, with less clout last week?
JOHN GARRISON: I think there's no doubt that but what the tobacco industry is much weaker now. They are in a very tough position as far as litigation is concerned. I don't think they're ever going to get immunity. There's just too much opposition to that. I don't think that's going to happen. And before we get to bills next year there's still a very active bill that's being considered in the House right now-the Hanson/Meehan/Waxman bill-which is a strong bill. And Speaker Gingrich has said he wants a narrow bill.
But as we get closer to election and Republicans are going to have to meet the electorate, I think that anything can still happen in Washington. Combined with what's happening in the states and localities, the tobacco industry is in a very tough position, as they should be.
ELIZABETH FARNSWORTH: Rod Kuegel, do you feel that way as a tobacco grower, do you feel more vulnerable, or do you feel somewhat heartened by the defeat last week?
ROD KUEGEL: Well, I've got to say that the defeat last week was on a bill that had become so cumbersome that nobody could recognize the youth smoking issue. And the bill that's in the House now has some potential. I think that there's a lot of people who are up for re-election in the House that want to vote on something for tobacco. I don't know if we have enough time to put something together through conference and back through both houses to work like that, but we would hope that we would get the youth access issue addressed, and we would hope also that we would go back and look at the $368 billion settlement that was talked about on June 20th of last year and have some facsimile of that that everybody could agree to on both sides.
ELIZABETH FARNSWORTH: Richard Blumenthal, there have been some press reports of talks, or at least feelers, going out between the tobacco companies and the state attorneys general. Is there any truth, is there any truth to those reports?
RICHARD BLUMENTHAL: I don't think there's any truth to reports that there are the kind of global settlement discussions that we participated in negotiating a year ago this June, and it took us three months, by the way, to even reach the point where we could propose a global settlement. So I think a similar kind of effort would take some time. It is a very complex subject, and so time, I agree, is a major obstacle to reaching a settlement that could go through Congress.
But there is one driving force, and that is the fact that all of the members of the House of Representatives will be up for election this year, of course, unlike most the Senators, who don't have to face the accountability that the anti-tobacco advocates, the public health advocates, and others like myself have promised that we will hold them to. So I think there is still some momentum for national legislation. I'm not optimistic, because I do think that the states are very determined with renewed vigor to pursue our individual actions and seek relief in the way that others have so far.
MANNY GOLDMAN: Elizabeth.
ELIZABETH FARNSWORTH: Yes.
MANNY GOLDMAN: Excuse me for interrupting, but I would just point out one thing; that there are a lot of companies on the other side of the tobacco table from the tobacco companies that I would think would want to see a settlement, because when the cases go to juries, it seems that the anti-tobacco side of the table doesn't do so well. Juries don't seem to vote in the anti-tobacco way very much.
RICHARD BLUMENTHAL: Well, I disagree, most respectfully, in this respect: Those who have failed so far, and many have, I agree, most have so far, have been former smokers. We now have a different kind of plaintiff. We not only have the states, which are seeking more than money, public health measures, and we're not advocating on behalf of smokers, we're advocating on behalf of the citizens of our state but also the pension funds, the cities, and others, who don't represent the kind of vulnerable, if you will, vulnerable plaintiff that juries can say, well, it was her fault or his fault.
MANNY GOLDMAN: I'm not a lawyer.
ELIZABETH FARNSWORTH: Yes. Manny Goldman.
MANNY GOLDMAN: I'm not a lawyer, okay, so I really don't want to get into a lawyer discussion. But, as I understand it, those are rather complex and controversial issues. And what you get back to is the individual. And then you have this whole thing that someone smoked, they got sick. And then the case is did the person know what they were doing, that, indeed, by smoking they might get sick, and that's why the plaintiff side of things doesn't do too well, because people understand that if someone smokes, they're supposed to know it might not be so terrific.
And that's what makes it hard for the other side of the tobacco table, and why I would think when you get into next year, you will see the forces coming together, as happened last June 20th. Maybe the coming June 20th you might have something again.
ELIZABETH FARNSWORTH: And, meanwhile, Mr. Garrison, could important parts of the bill that was defeated last week be implemented little by little, like the president's executive action today?
JOHN GARRISON: Well, certainly the president has started to do just that. And the Food & Drug Administration has also started to enforce what we feel are powers they already have, so this is all going to be happening. And I must make one comment about whether people choose to smoke or not. We should not forget that 90 percent of all smokers begin before they are 18, and after they have smoked, they have become addicted. The companies knew this. They knew they were marketing to kids. They knew they were addicting kids. And that's why I think we're going to see some big differences on the basis of documents that have revealed this information as we go down the litigation path.
ELIZABETH FARNSWORTH: Okay. Well, thank you all very much for being with us.