RULING GIVES BOOST TO TEXAS' TOBACCO SUIT

Deceptive Trade, Product Liability Laws OK'd

By R. G. Ratcliffe

AUSTIN Texas got a major boost in its multibilliondollar lawsuit
against the tobacco industry Wednesday as a federal judge reversed an
earlier ruling and said the state can sue under its deceptive trade
practices and product liability laws.

Tobacco industry lawyers had hailed U.S. District Judge David Folsom of
Texarkana in September when he ruled that the state could not sue under
those laws, calling Folsom's original ruling "significant."

Folsom largely reversed himself in an order released Wednesday. But the
judge, in saying the state could sue under the Deceptive Trade Practices
Act, said Texas would not be entitled to recover financial damages, which
can be three times the amount of actual damages.

Attorney General Dan Morales said Folsom's ruling enhances the state's
ability to win the case.

"This bolsters our case and provides the state with additional
opportunities to show a jury how the tobacco industry deliberately deceived
the public and government regulators, resulting in death or serious health
problems for hundreds of thousands of Texans," he said. "We are eager to go
to trial."

But Greg Little, a lawyer for Philip Morris, said Folsom's latest ruling is
still a victory for the tobacco industry because the state won't be able to
collect damages under the Deceptive Trade Practices Act.

"We are pleased that Judge Folsom stood by his ruling that any claim for
monetary relief is barred," Little said. "We look forward to going to trial
in January and believe that ultimately we will be successful in this case."

Jury selection is set for Jan. 12.

The state originally sued the tobacco industry on 17 counts that claimed
Texas is due as much as $14 billion for public health care costs associated
with smoking.

Folsom in September threw out three of those counts and ruled that the
state was not a consumer who could sue under the Deceptive Trade Practices
Act.

In reversing himself, Folsom ruled that Texas could sue the tobacco
industry under the act, but could not collect any money under that law.
Financial recovery would still be possible under some of the lawsuit's
other allegations against the industry, according to the attorney general's
office.

Morales spokesman Ron Dusek said Folsom's ruling will allow the state, if
it wins, to seek injunctions that could affect tobacco advertising and
marketing in Texas and require broader public disclosures.

By reinstating the state's allegation involving the product liability laws,
Texas now will be able "show how the contamination of tobacco products with
hundreds of cancer causing agents violated state law" and hurt Texans,
Dusek said.

Folsom also ruled that the lawsuit's list of defendants should include
B.A.T. Industries, a British company that is the parent of Brown &
Williamson Tobacco Corp.

The company had argued that it should not be included in the lawsuit
because it is a foreign corporation that did not do business in the United
States. But the attorney general's office gave the judge evidence that
B.A.T. Industries had control of its U.S. tobacco subsidiary.

Morales called B.A.T. "another bad actor that must face the consequences of
its illegal activities."

Copyright 1997 Houston Chronicle Austin Bureau