Tobacco Inc. Faces a Tough Row to Hoe

Unprecedented number of federal, state court challenges in the year ahead

Tobacco companies are known for aggressively defending themselves in court, and next year they will get ample opportunity.

In 1997 the tobacco industry, which might face two cases in a normal year, could be in at least 10 separate court rooms, battling federal attorneys, state attorneys general, and plaintiffs' lawyers.

The legal onslaught could make this a watershed year for an industry that has yet to pay a dime in damages. New federal rules could severely restrict tobacco's marketing scope and a February court fight over these rules could determine the extent of free speech protection given to commercial advertisements.

"This coming year is the moment of truth for the industry," says Richard Daynard, head of the Tobacco Liability Institute at Harvard University.

The legal challenges come at a time when the debate over the sale and marketing of tobacco products remains a hot political issue. President Clinton made efforts to curb teenage smoking part of his reelection campaign. In dozens of congressional races this fall, candidates traded accusations over tobacco industry contributions. This year, after studying teenage buying habits, the government will begin its own anticigarette marketing campaign.

Free speech challenge

The biggest challenge, however, for the tobacco industry arrives in February when it will go to court to challenge new rules from the Food and Drug Administration that place restrictions on tobacco marketing.

In a possible preview of the battle, last month the Fourth US Court of Appeals in Richmond, Va., upheld First Amendment restrictions to protect children from pornography. The government is arguing its tobacco advertising restrictions are also designed to protect children. The industry argues that the FDA does not have regulatory jurisdiction over tobacco and that its rules violate commercial free speech rights.

"What happens to that rule will have more to do with what this nation does about tobacco than any other action since the Surgeon General's initial report [in 1963]," says Matthew Myers, executive vice president of Campaign for Tobacco Free Kids, a Washington lobbying group.

Unless prevented by the courts, the FDA will begin to implement the new rules on Feb. 28 by setting a national age of 18 to buy tobacco products. On Aug. 28, the bulk of the restrictions will go into effect. These include banning the advertising of tobacco products within 1,000 feet of a school or playground, restricting almost all other ads, such as billboards, to black and white text, and prohibiting the brand-name sponsorship of sporting or entertainment events. In addition, vending machine sales, free samples, and loose packs of cigarettes would be banned.

The new FDA regulations would affect 400,000 retail outlets which would have to make sure they aren't selling tobacco to minors. The industry would have to revamp its $5 billion marketing machine and fund a $150 million annual effort to educate kids about the health risks of tobacco.

And at some point in the year, the Occupational Safety and Health Review Commission will issue its final rules on smoking in the workplace. The proposed rule would ban smoking in almost all workplace settings. Mr. Daynard of Harvard says he expects the tobacco industry to challenge these rules in court as well.

The industry is also facing a frontal assault from states, including Florida, Mississippi, and Texas, which have filed some 20 lawsuits to recoup the medical cost of smoking.

There are several class-action suits as well, including a June trial in Dade County, Fla., where tobacco lawyers will argue against a suit filed by flight attendants exposed to environmental tobacco smoke. As always, there are some individual suits ready to go to trial too. "Everyone is after them now," says Daynard.

But industry lawyers note that tobacco firms have yet to make any payments to anyone suing them (Brown & Williamson is appealing an August $750,000 award against it). And they say that filed suits often don't go to trial. In 1987 and 1988, for example, hundreds of suits were filed against R.J. Reynolds. "There were many more scheduled for trial that never got tried," says Dan Donahue, deputy general counsel at R.J. Reynolds Tobacco Co. in Winston-Salem, N.C.

Tobacco industry lawyers dispute class action suits in principle, arguing that it's impossible to put together an actual class of people who have been injured.

With the attorneys general's suits, the tobacco industry maintains that individuals made the choice to smoke and have been sufficiently warned about the risk. And industry lawyers assert that the state must prove tobacco smoke has injured each person.

Battle for teens

When they aren't in court, the industry will be facing its first spate of ads aimed at educating teens about the risks of smoking. In Atlanta, the Office of Smoking and Health, part of the Center for Disease Control, has been studying companies like Adidas and Levi Strauss & Co. to learn more about teenage consumer behavior.

"We are looking at countermarketing, trying to come up with images to reach kids to deglamorize tobacco use," says Dr. Michael Eriksen, director of the government organization.

It is an uphill battle. Teenage smoking rates are on the rise, particularly among girls. Between 1991 and 1995, the percentage of eighth and 10th grade smokers increased by 34 percent. Among 10th graders, daily use is up 16.3 percent.

A recent report on CBS' "Sixty Minutes" highlighted the challenge of convincing teens that smoking is bad for them while their idols light up on screen. A recent USA Today survey found smoking in 90 percent of the movies. "It undercuts our efforts to portray smoking truthfully," admits Dr. Eriksen.