I'D WALK A MILE FOR A FEE

[a review of] Cornered: Big Tobacco at the Bar of Justice by Peter Pringle
352 pages, $27.50 (hardcover) published by Henry Holt

In parts of the country where labor unions are weak, especially the Deep
South, the organized left consists mainly of personal-injury lawyers. They
obtain, in a few dramatic cases, the economic redistribution that is out of
reach by legislation. The leading personal-injury lawyers are rich,
confident, aggressive people who are big political contributors and
therefore are in close consultation with Democratic politicians. They try
wholeheartedly to influence the direction of government and often succeed.
The form of the tobacco-control legislation now before Congress makes sense
only if the bill is understood as a product of the power of trial lawyers.

The true father of the tobacco bill is not its author, Senator John McCain,
but a lawyer in the Gulf Coast town of Pascagoula, Mississippi, named Dick
Scruggs. Scruggs made a substantial fortune suing asbestos companies, on
behalf first of workers with lung disease and then of the state of
Mississippi's program to remove asbestos from public buildings. Plaintiffs'
lawyers generally charge their clients no fee up front but collect a big
share of the damages if they win. Scruggs made $5 million from the state
asbestos case alone. By the early Nineties, the time of the opening of
Peter Pringle's Cornered, he owned a Learjet, two mansions on the beach in
Pascagoula, another house in Key West, and two yachts97a typical array of
possessions for a leading member of the plaintiffs' bar. He is an active
Republican, but in 1996 he contributed $40,000 to national Democratic Party
campaign organizations, and his law firm contributed another $20,000. He
has no trouble getting the attention of officials in either party.

It is exemplary of the clubby relationship between trial lawyers and
politicians that Scruggs is close to Mississippi's ambitious young attorney
general, Michael Moore97their friendship dates back to their student days
at Ole Miss. Moore hired Scruggs to try the state's asbestos case and was
pleased with the result. In 1993, another Mississippi trial lawyer called
Moore to suggest that the state sue the tobacco companies to recover the
Medicaid expenses associated with smoking. Moore put him in touch with
Scruggs, who by now was well acquainted with the ins and outs of lung
disease litigation. By the end of the year Scruggs was working on a
Mississippi lawsuit against the tobacco industry. S. 1414, the Universal
Tobacco Settlement Act of 1998, is a lineal descendant of this suit.

The first scientific experiment to demonstrate that tar from cigarette
smoke causes cancer in mice was conducted by Ernst Wynder of Memorial
Sloan-Kettering Cancer Center in 1953. During the forty years between
Wynder's study and the Mississippi lawsuit, cigarette manufacturers had an
amazingly successful run in the courts. As Pringle says: "The figures spoke
for themselves. Eight hundred and thirteen claims filed against the
industry, twenty-three tried in court, two lost, both overturned on appeal.
Not a penny paid in damages." The industry's strategy was a tobacco version
of the Colin Powell doctrine in military affairs: clear mission,
overwhelming force. The mission was to demonstrate that smokers know they
are taking a health risk, so if they get sick it's their fault, not the
tobacco companies'. The force included multiple law firms on every case,
extensive research into the backgrounds of potential jury members, the
hiring of local eminences as "consultants" to the defense, and the filing
of so many requests and motions that the understaffed plaintiff's side
couldn't possibly keep up. The best plaintiffs' lawyers are individually
much richer than their counterparts on the defense, but they don't run
large law firms and so can't match a full-dress corporate defense effort.

The situation changed in the early 1990s for several reasons. The idea of a
state rather than an individual suing the tobacco industry was a
breakthrough. It offered a way around all the case law the companies had
built up on the premise that smoking is a matter of individual choice.
Juries and judges have consistently been persuaded by tobacco-company
lawyers that the principle of caveat emptor applies to cigarettes. But
Mississippi hadn't decided to smoke, and smoking was nonetheless costing it
a lot of money in health benefits to people with smoking-induced lung
disease. Also, the plaintiffs' bar was coming off a fabulous run of
successful cases: the hotel fires at the MGM Grand in Las Vegas and the
Dupont Plaza in San Juan, the asbestos litigation, the Bhopal disaster, the
Dalkon Shield, and silicon breast implants, among others. These victories
generated not only a certain boldness, but also a pool of capital. A lawyer
in New Orleans named Wendell Gauthier performed the considerable diplomatic
feat of talking sixty strutting trial lawyers into each putting $100,000 a
year into a fund to pursue tobacco litigation. Gauthier's alliance gave the
plaintiffs' side the wherewithal to operate in the labor-intensive fashion
of a big corporate law firm, which leveled the playing field between the
trial lawyers and the tobacco companies considerably.

Then, during one week in February 1994, both the commissioner of the Food
and Drug Administration, David Kessler, and an ABC News program called Day
One accused the tobacco companies of deliberately manipulating the nicotine
levels of cigarettes. Logically, this should be a far less important issue
than the inherent dangerousness of smoking, which nobody disputes. If
cigarettes contained only naturally occurring levels of nicotine, they
still would be deadly; the Centers for Disease Control estimates that they
kill 420,000 Americans a year. But the issue of nicotine manipulation was
tactically important. It gave the FDA a rationale for declaring cigarettes
to be a drug and seeking the authority to regulate their production and
sale. Gauthier's group used addiction as the basis for an enormous national
class-action lawsuit against the tobacco companies that, like Scruggs's
Medicaid suit on behalf of the state of Mississippi, was supposed to get
around the tobacco companies' legally crippling argument that smoking is
voluntary. As Benjamin Weiser, writing recently on the anti-tobacco legal
strategy in the Washington Post Magazine, put it, "Addiction was a risk
that the industry had not warned about. If the industry secretly maintained
nicotine at addictive levels, smoking was no longer a matter of personal
choice; the industry was seeing to it that smokers could not stop."

Oddly, although the dangerousness of cigarettes themselves had never turned
the public against the tobacco industry, the idea of nicotine manipulation
(along with the idea that some tobacco advertising is aimed at teenagers)
somehow did. As Pringle points out, the tobacco companies had become
politically more vulnerable anyway, both because the number of
tobacco-producing states had shrunk to three (Virginia, North Carolina, and
Kentucky) and because the companies in the 1990s foolishly dropped their
practice of contributing equally to politicians of both parties and became
an essentially Republican lobbying group. In the spring of 1994
Representative Henry Waxman of California, a Democrat, created the enduring
picture of tobacco executives as bad guys by holding a hearing at which the
chief executives of the seven major cigarette manufacturers stood up,
raised their right hands, swore to tell the truth, and then said one by one
that they did not believe nicotine is addictive. By 1995 President
Clinton's Republican political Svengali, Dick Morris, was urging him to
attack the tobacco companies because it would be popular to do so.

Once tobacco-company perfidy, rather than the inherent deadliness of
cigarettes, became the master narrative, evidence of the companies'
misdeeds was required. Therefore the anti-tobacco forces needed internal
documents demonstrating the industry's awareness that nicotine is a drug.
The first important document cache they obtained was provided by Merrell
Williams, a paralegal for a Louisville law firm that represented Brown &
Williamson, who had surreptitiously made copies of tobacco-industry
research materials and brought them home. The most damning of Williams's
finds was a memo written in 1963 by Brown & Williamson's general counsel,
which said, "We are in the business of selling nicotine, an addictive drug
effective in the release of stress mechanisms." In the winter of 1994
Williams came to the attention of Dick Scruggs, who immediately realized
what a valuable asset he was. Scruggs relocated Williams to Pascagoula,
gave him a job, bought him a car and a boat, and took possession of his
boxes of pilfered documents. Soon the contents of the documents were
appearing in the press, notably in The New York Times, and on the Internet.

Thanks to the efforts of Williams and other leakers, including Jeffrey
Wigand, a former head of research at Brown & Williamson, and Hatsy Heep,
the spurned lover of a researcher at Philip Morris, there were soon enough
documents to create a coherent picture of the tobacco companies' behavior.
Pringle strikes an appealing balance between playing up the raffishness of
the leakers and explaining clearly what the documents they made public
actually say. Beginning in the mid-Fifties, the tobacco companies had
adopted a posture of intransigent resistance to criticisms of smoking. Some
people within the companies, such as the Brown & Williamson executive who
wrote the memo quoted above, wanted the industry to be accommodationist,
and to work to develop a safer cigarette. They lost. (In fairness to the
companies, safer cigarettes are available and most smokers don't like them.
As Pringle observes, even people who buy reduced tar and nicotine
cigarettes often cover the holes that have been put in the filter to dilute
the smoke, thus obviating the relative safety of the cigarette in order to
get a richer dose of smoke.)

The tobacco companies have sponsored and monitored research on smoking and
health for decades, but the guiding principle has been legal defense, not
the pursuit of scientific truth. The year after the Ernst Wynder study on
smoking and cancer, the companies set up a Tobacco Industry Research
Committee. Its scientific director was a strange character named Clarence
Little, a biologist who had been a rising young star in university
administration until he was forced out as president of the University of
Michigan for making eugenicist speeches. In 1929 he opened an independent
cancer lab in Maine, which over the years sank into penury. When he
attracted the patronage of the tobacco industry, the implicit bargain was
this: Little would get a grand title and funds to keep his lab going in
exchange for dropping his previous view that smoking causes cancer. The
Tobacco Industry Research Committee gave money only to studies, by Little
and others, that would claim to disprove the danger of smoking. Researchers
who came to inconvenient conclusions, Pringle convincingly demonstrates,
had their grants cut off.

When Jeffrey Wigand was head of research at Brown & Williamson, matters had
proceeded to the point where all scientific material would go first to
company lawyers for vetting, and then (if it was deemed safe from a legal
point of view) to him. Anything that might look damaging if made public in
the course of a lawsuit would be shipped overseas, out of subpoena range.
Inside the tobacco companies, words like "cancer" and "addiction" were
banned even from interoffice memos, lest they wind up bolstering a smoker's
lawsuit.

Pringle provides some evidence, though it isn't overwhelming, to support
the charge that the tobacco companies tried to make cigarettes more
addictive than they are naturally. He presents what he calls "a great
detective story" in which David Kessler, acting on an anonymous tip, had
the FDA staff check overseas patents taken out by tobacco companies, and
found a Brazilian one for a genetically engineered experimental strain of
tobacco called Y1 that had more than double the nicotine concentration of
ordinary tobacco. Then the FDA searched through customs invoices until it
found two that recorded a large shipment of Y1 from the Cayman Islands to
Brown & Williamson headquarters in Louisville. At this point B&W apparently
figured out that Kessler was on its trail and extirpated all traces of Y1
from its operations so, Pringle says, it is impossible to tell whether it
was ever used in products sold to the public. The story, which Pringle
tells very well, does prove, though, that the thought of nicotine
manipulation has at least crossed the minds of the tobacco companies.

Although Pringle cheerfully ignores the tobacco-company point of view in
his book (perhaps the companies wouldn't talk to him), it's not hard to
figure out why the companies would have begun, by the mid-1990s, to
reexamine their longstanding policy of total opposition to the trial lawyers.

In March 1996 Bennett LeBow, a corporate raider who had recently become
owner of the smallest cigarette company, Liggett, made a separate peace
with the trial lawyers. The essence of the deal was a cash settlement of
the lawsuits against Liggett. Michael Moore and four other state attorneys
general who had by this time followed his lead and sued the tobacco
companies to recover Medicaid payments, along with Wendell Gauthier and his
group of sixty lawyers suing over the issue of addiction, would drop their
claims. In exchange Liggett would pay out millions of dollars a year
according to a complex formula. The money would go partly to reimburse the
state Medicaid programs and the private plaintiffs, partly to fund programs
to get people to stop smoking, and partly, of course, into the lawyers'
pockets. The public face of the deal was that of a health-policy
breakthrough: what got the most attention was Liggett's promise not to
promote its products to adolescents. But the true heart of it was the
financial arrangement between the lawyers and LeBow. They got money and
legal ammunition for the other cases (LeBow agreed to release more
documents and to admit that tobacco is addictive); LeBow got protection
from the risk of catastrophically high legal judgments.

The day after the settlement, Liggett stock rose by 18 percent, which was a
sign of how worried Wall Street had become about the danger the lawsuits
posed to the tobacco companies' overall financial health. The big asbestos
companies, after all, had finally declared bankruptcy because they couldn't
pay all the judgments against them. Even absent large awards of damages,
the tobacco industry was by this time, Pringle says, employing half the law
firms in the country and spending $600 million a year on legal fees.

The level of fear among people whose fortunes are tied to the financial
condition of the tobacco companies ratcheted up another notch in August
1996, when a lawyer in Jack-sonville, Florida, named Woody Wilner won a
$750,000 judgment against Brown & Williamson on behalf of a man with lung
cancer. It was beginning to look as if there was a synergistic effect among
the various tobacco cases: Wilner won partly because he introduced into
evidence documents that had been pilfered from Brown & Williamson by
Merrell Williams and made public through the efforts of Dick Scruggs. The
day after the Jacksonville verdict the stock-market value of the biggest
tobacco company, Philip Morris, dropped by $12 billion, or 14 percent. The
other companies' stocks fell vertiginously too. That was another
demonstration of how seriously Wall Street now took tobacco litigation, and
it materially affected tobacco-company executives' personal fortunes, which
are tied to stock performance.

By the time of the Jacksonville judgment, Pringle tells us, Scruggs had
already entered into secret negotiations with the tobacco industry.
Scruggs, who seems to have a personal connection to everybody in
Mississippi, not only knew Michael Moore, he is the brother-in-law of Trent
Lott, the Mississippian who is Senate majority leader. Since what the
tobacco companies most desperately wanted, absolute nationwide immunity
from lawsuits, could plausibly be provided only by the federal government
(otherwise the companies would have to make individual deals with all fifty
states), in order to get them to the bargaining table Scruggs had to
persuade them that he, a small-town lawyer, could pull off the somewhat
unlikely feat of inducing the United States Congress to pass a major piece
of legislation on a matter it had always avoided. That prospect did not
daunt him; he called Lott, who authorized intermediaries to begin working
with Scruggs and Moore on a bill.

During the summer of 1996 Scruggs roughed out a set of terms and sent them
to Philip Morris and R.J. Reynolds, who together control three fourths of
the cigarette market. The two companies made a counterproposal: in return
for a payment by the tobacco industry of $150 billion to be divided among
all plaintiffs, they wanted full immunity from litigation for fifteen years
and exemption from regulation of nicotine by the FDA. At this point came
the $750,000 Florida verdict against Brown & Williamson, which quickened
the pace of the negotiations. Twelve attorneys general besides Michael
Moore joined the settlement talks. (As of now, twenty-three attorneys
general have sued the tobacco industry, and it is a further sign of what
Dick Scruggs hath wrought that many of the same attorneys general,
emboldened by their tobacco experience, have now sued Microsoft.)

Wendell Gauthier got wind of what was going on, and his group of sixty
lawyers launched a competing effort to bring the US government into a
settlement of their class-action suit. They hired such figures as Hugh
Rodham, Hillary Clinton's brother, Leon Panetta, the former chief of staff
for President Clinton, and former senators Howard Baker and Howell Heflin,
and began negotiating directly with the White House. This was a
particularly brassy move, because by now Gauthier's class-action suit had
been thrown out of court by the Fifth Circuit Court of Appeals (the lawyer
who argued for the tobacco industry was Kenneth Starr) and the only card he
held was the threat of filing many state versions of the same suit. When
Scruggs heard about Gauthier's White House gambit, he talked the sixty
lawyers financing the class-action suit into joining his negotiations in
return for a half share of the settlement.

Although at this point the two opposing sides in the settlement talks were
the tobacco companies and the plaintiffs' lawyers, as soon as a tobacco
bill was under discussion they were both, in a sense, on the same side. If
the companies wanted immunity, and if the lawyers wanted money for their
clients and themselves, it was necessary that the federal government agree
to enforce whatever deal they made with each other. If the government did
not agree, then the companies wouldn't have a true guarantee of immunity
and so wouldn't enter into a grand settlement which would mean there would
be no single large pile of money for the plaintiffs to divide. So both
sides had an interest in there being a bill.

When the settlement was finally announced, triumphantly, by the attorneys
general at a press conference in Washington on June 20, 1997, it was
presented as a regulatory victory over the tobacco companies. "We are here
today to announce what we think is... the most historic public health
agreement in history," Michael Moore said, tautologically. The parts of the
agreement that the attorneys general stressed and the press initially
played up were the bans on advertising campaigns featuring appealing
characters like Joe Camel and the Marlboro Man, and on the sale of
cigarettes near schools. It looked like the government had finally brought
the tobacco industry to heel. "Do you think tobacco community executives
will be going to jail?" Charlie Rose asked the guests on his show while the
settlement was being negotiated.

But the federal government's true primary role in the deal was as the
guarantor of a trade of cash for immunity. Pringle's account makes it clear
that the main energies of the negotiators went into this issue, not any
public-health provisions. For example, at one point the industry proposed
banning the award of punitive damages (though not actual damages) in future
tobacco cases. To the attorneys general and their allies from the
plaintiffs' bar, this was unacceptable. As Pringle writes, "The ban on
punitive damages, the kind of awards that often make the difference between
a plaintiff's lawyer breaking even or making a profit, was a deal breaker.
As elected officials, the AGs did not want to be party to curbing the
rights of tort lawyers. They saw it as unacceptable political baggage."

The ban on punitive damages did not break the deal because the attorneys
general took it out, in deference to the trial lawyers. In deference to the
tobacco industry, they gave up on the federal government's key demand,
which President Clinton had publicly endorsed: regulation of nicotine by
the FDA. The provision for attorneys' fees was left out of the deal
entirely because the total figure for those fees would be so high (Pringle
estimates $6 to $8 billion) as to draw public disapproval. In every case,
it was the need to satisfy both the tobacco companies and the trial lawyers
that determined the particulars. The tobacco deal was a legal settlement
wearing the garb of public policy.

The euphoria that followed the unveiling of the deal soon faded, and it
came to be seen as too favorable to the industry. Actually it was too
favorable to both the industry and the people who were suing it, and not
favorable enough to the government, whose interest was in regulation,
cigarette taxes, and anti-smoking programs, not a settlement of claims.
President Clinton wound up refusing to endorse the deal, even though the
White House had been involved in the negotiations. David Kessler actively
lobbied against it. Hubert Humphrey III, son of the late senator and
vice-president (who died of lung cancer), who as attorney general of
Minnesota served a state where liberal officials aren't quite so dependent
on the contributions of trial lawyers as they are in Mississippi, refused
to join the negotiations leading up to the deal. All the deal's leading
critics made the point that the government should be making its tobacco
policy on the primary basis of protecting the public from the hazards of
smoking to the greatest extent possible, rather than of disposing of
lawsuits. As Pringle somewhat delicately puts it, "It has become clear that
the legal system had reached its limits in the tobacco wars."

One can imagine a perfectly good tobacco bill that regulated the industry
and didn't address the question of the lawsuits at all. Regulation of food,
drugs, airline safety, and other matters isn't linked to legal immunity for
private companies, after all. Michael Massing made a persuasive case in
these pages in 1996 that the most effective anti-smoking policy would be a
total ban on cigarette advertising, or, failing that, an ambitious campaign
of ads against smoking. The tobacco bill does provide funds for
counter-advertising but that is one of the bill's distinctly minor provisions.

The bill now before the Senate represents a toughening of the original
tobacco deal: the FDA would get its regulatory authority, the tobacco
companies would have to finance counter-advertising and anti-smoking
campaigns, and the total cost of the bill to the industry (including
lawyers' fees, of course) has risen from $368.5 billion to $516 billion
over five years. (That is the government's estimate, which the industry
says is a severe underestimate.) The tobacco companies are now fighting the
bill. The head of R.J. Reynolds, Steven Goldstone, left the negotiations
this spring and pronounced the bill dead. Newt Gingrich has also come out
against it, partly because he thinks it raises federal cigarettes taxes by
too much (the price of a pack of cigarettes would go up by $1.10 over five
years). The original bill was based not so much on a grand consensus about
smoking and the government as on a calculation of financial interest by the
tobacco companies and the people suing them. Now that the calculation has
changed, it turns out there is a public consensus that the industry is not
a party to.

Pringle's book is a lively, funny account of the events leading up to the
1997 tobacco settlement, told completely from the trial lawyers' point of
view. He has done what must have been a difficult job of making a simple,
coherent story out of an immensely complicated mass of technical legal and
scientific material and of winnowing a cast of hundreds of characters down
to a manageable number. Pringle seems to have started out thinking that the
trial lawyers Gauthier had assembled were such an irresistibly colorful
bunch of characters that he ought to build the book around them. They do,
indeed, make good material, and Pringle has roguish fun with them:

[Gauthier's] list of some fifty guests included some of the most famous and
feared members of the plaintiffs' bar, that despised group of personal
injury lawyers who make their fortunes off human catastrophe. Gauthier's
list included "the King of Torts" (Melvin Belli from San Francisco);
Stanley Chesley, "the Master of Disaster," from Cincinnati; John "Bhopal"
Coale of Washington, D.C.; Russ "the Girth" Herman of Louisiana; and "the
Asbestos Avenger" (Ron Motley of Charleston, South Carolina).

The trouble is that Scruggs, who in Cornered is not the primary character,
turned out to be, more than Gauthier, the key figure in the story. When it
becomes apparent that Gauthier's case is never going to come to trial,
Cornered loses some of its narrative drive, just as it should be building
to a climax, with Gauthier facing down Ken Starr in the Fifth Circuit
courthouse in New Orleans and rushing out during the breaks to negotiate
the tobacco deal. Nonetheless, Cornered is the best place to get caught up
on the tobacco machinations of the period between 1994 and 1997, when the
companies finally displayed fear of their enemies. It is not a good place
to look for a cogent discussion of what government policy toward smokers
and tobacco producers ought to be, because such discussion is not at the
forefront of the story Pringle has chosen to tell. Consideration of the
national interest has not been the driving force in the making of tobacco
legislation thus far.

Checked-by: Richard Lake