Tobacco Cos. Stop Negotiating
Tobacco Cos. Stop Negotiating
Nov. 10, 2000
NEW YORK (AP) _ Negotiations by two tobacco companies to reach a nationwide settlement that would protect them against punitive damage claims have broken off, lawyers involved in the talks said.
Lorillard Tobacco, a division of Loews Corp., and Liggett Group, a unit of Vector Group Ltd., have been in separate talks to settle numerous class action cases against tobacco companies pending before U.S. District Judge Jack B. Weinstein in Brooklyn, N.Y. The cases have been brought on behalf of sick smokers as well as by health insurers and union health funds seeking reimbursement for their treatment.
``We just couldn't come to terms,'' John Coale, a lawyer from Washington, D.C., who represents some smokers who have sued the industry, said Friday.
He said the talks with both tobacco makers ended a couple days ago.
On Thursday, Ronald S. Milstein, general counsel for Lorillard, said the negotiations were suspended because of differences over major but unspecified issues.
Lorillard is the nation's fourth biggest cigarette maker and has brands that include Newport and Kent. Liggett ranks fifth with brands including Eve.
They collectively account for about 10 percent of the U.S. cigarette market.
Industry leader Philip Morris and No. 2 tobacco concern R.J. Reynolds Tobacco had refused to enter the settlement talks, expressing doubts about whether a settlement would survive on appeal.
But some legal experts said a settlement that did stand up could have been used as a model for the bigger rivals.
Milstein said Lorillard had been in talks with the plaintiffs group for a couple of months with the intent of ``taking care of all punitive damage claims against Lorillard in the whole country.'' He said the discussions became serious about a month ago.
Lorillard was discussing the possibility of paying $7.5 billion over 30 to 40 years into a public health fund in exchange for being shielded from punitive damage claims.
Under that plan, individuals with claims against the industry would be able to seek compensatory damages from Lorillard, but could not seek punitive damages, Milstein said.
Liggett, far smaller than Lorillard, would have paid $500 million into the fund and received similar protection against punitive damage claims. Efforts to reach Liggett were not immediately successful.
While declining to discuss specifics, Milstein said ``one factor driving the talks'' was the record-setting $145 billion punitive damage award in Florida against Lorillard and the four other major cigarette makers. Earlier this week, Judge Robert Kaye of Circuit Court in Miami formally upheld the jury award reached in July in what is called the Engle case. The case is being appealed.
But Milstein said the formal entry of the Engle case decision wasn't the only factor in Lorillard's decision to suspend the settlement talks for the federal cases in New York.
He said he still feels that a national settlement for individual punitive damages ``could be accomplished'' but declined to speculate on chances the talks could resume.
``We are very far apart on major issues,'' he said.
A settlement of individual damage claims would be separate from the industry's settlement with the states two years ago under which it agreed to pay $246 billion over 25 years to settle the state's claims for costs of treating sick smokers.