I’d Walk a Mile for a Fee

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 yachts—a 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 Moore—their 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.”¹

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.²

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.