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Officials: Liggett to admit cigarettes are addictive, dangerous

March 20, 1997

WASHINGTON (AP) _ The maker of Chesterfield cigarettes will settle 22 state lawsuits by announcing agreement this afternoon to put warning labels on cigarette packs that smoking is addictive and causes cancer, state law enforcement officials said.

Appearing together this morning, attorneys general said the Liggett Group Inc. had not yet signed the deal, which was in final negotiations. But they scheduled a 4 p.m. news conference where they planned to unveil the settlement.

In a pre-emptive strike, Philip Morris announced it won a temporary restraining order this morning to prevent one part of the deal, Liggett’s agreement to turn over thousands of documents believed to incriminate the tobacco industry. The documents include conversations among industry lawyers, and Philip Morris, R.J. Reynolds, Lorillard and Brown & Williamson contend they are privileged attorney-client communications.

Philip Morris released no details immediately but said a state court in Winston-Salem, N.C., issued the restraining order on behalf of the four firms.

Before the restraining order was announced, Attorney General Scott Harshbarger of Massachusetts called the Liggett agreement ``one of the most important breakthroughs in the battle against Big Tobacco.″

Smallest of the major U.S. tobacco companies, the settlement also obligates Liggett to cooperate with the states in similar lawsuits against the other major companies, Harshbarger’s office said. The settlement does not end state litigation against Liggett’s competitors nor affect more than 200 private lawsuits pending against cigarette manufacturers.

Under the agreement, Liggett promises to turn over thousands of incriminating documents to the states and assist in interpreting them in their lawsuits, the attorney general’s office said. It also said Liggett will drop all confidentiality agreements so its employees can serve as witnesses against fellow tobacco suppliers. It is the turnover of the documents that Philip Morris and the others targeted in their court action.

In addition, Liggett will agree to place warnings on all of the company’s products and advertising warning that tobacco is addictive, the office said.

Finally, Liggett’s head, Bennett LeBow, will release a statement acknowledging that cigarette smoking causes health problems including cancer, nicotine is addictive, and the tobacco industry specifically markets to minors, the office said.

The agreement will encompass the 22 states whose attorneys general have sued the tobacco industry seeking to recover Medicaid funds spent treating sick smokers. They are Mississippi, Minnesota, West Virginia, Florida, Massachusetts, Louisiana, Texas, Maryland, Washington, Connecticut, Kansas, Arizona, Michigan, Oklahoma, New Jersey, Iowa, Illinois, New York, Utah, Wisconsin, Hawaii and Indiana.

Major tobacco stocks were off in morning trading on the New York Stock Exchange. Philip Morris Cos. was down $5.75 to $116.25, and RJR Nabisco Holdings Inc. $1.25 to $31. The owner of Brown & Williamson Tobacco Corp., BAT Industries PLC, fell 75 cents to $15.68 3/4 on the American Stock Exchange.

``The fallout from this agreement will be felt well into the 21st century and it should end once and for all the farce of industry denials about their illegal and deceptive conduct,″ said Harshbarger, head of the National Association of Attorneys General.

``Our states will now have the opportunity to go into court armed with the testimony of industry insiders and documented evidence about what big tobacco knew and when they knew it,″ he added.

Liggett broke with the industry in March 1996 when it settled with five states, including Massachusetts, seeking to recover the public health-care costs of treating sick smokers. Liggett also settled a federal class-action lawsuit filed by smokers.

Liggett, the Durham, N.C.-based maker of Chesterfield, Lark and L&M cigarettes, has agreed to extend the 16 other states the same deal it made with Massachusetts and its counterparts: up front cash of about $25 million, plus 2.5 percent of its pretax profits over the next 25 years, the attorney general’s office said.

ABC’s ``World News Tonight″ and The Wall Street Journal reported in January that the documents to be turned over include Liggett’s lawyers’ notes from about 30 years of meetings with attorneys from other tobacco companies.

Liggett will add a prominent warning to each pack stating that smoking is addictive, and acknowledge that smoking causes health problems, including lung cancer. It also will agree to government advertising, marketing and sales restrictions, the networks reported.

Despite the impending agreement with Liggett, the other tobacco companies are sure to fight release of documents from the Committee of Counsel _ the lawyers working for the tobacco companies.

``It would be improper,″ said Paul Eckstein, a Phoenix attorney representing Brown and Williamson.

R.J. Reynolds Tobacco Co. spokeswoman Peggy Carter said Wednesday night from Winston-Salem, N.C., that the company was not in a position to comment, calling the reports at the moment only ``speculation and rumor.″

Liggett is owned by the Brooke Group Inc. A spokesman for Brooke, based in Miami, declined comment on the reports.

The states have sued the industry to recoup millions of dollars spent to treat smoking-related health problems. About 46 million Americans smoke and the government says smoking kills 400,000 a year.

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