Anti-Tobacco Fight Is Now Tale of Two Attorneys General

Suing states debate the merits of a settlement

The two attorneys general - one from Mississippi, one from Minnesota - are long-time foes of the tobacco industry.

Mississippi's Mike Moore became the first attorney general to sue cigarettemakers to recover the state's cost of treating smokers. He stood up to state Gov. Kirk Fordice (R), who tried to prevent him from bringing the lawsuit. He used whistleblowers to find information the tobacco companies did not want made public.

Up north, meanwhile, Hubert Humphrey III has spent the past three years digging up industry secrets in preparation for a suit brought by Minnesota. The state has accumulated 30 million pages of information about the industry, which has spent more than $125 million and hired 1,000 legal staff to try to stop him.

Now, the two men find themselves at odds over the next step in their historic march against the tobacco giants. Mr. Moore leads an effort to reach a broad settlement with the industry - one that presumably would extract enough concessions to satisfy 30 other states that have also sued, but that would grant tobacco companies some degree of liability protection in any future lawsuits. Mr. Humphrey, on the other hand, argues it's too soon to settle.

Their different views help to explain why a settlement may not be possible. The two epitomize an internal debate raging within the antismoking camp - and time may be running out to settle with Big Tobacco before the first trial begins in Mississippi July 7.

Moore has called a meeting of the attorneys general tomorrow in Dallas. "If we can't do something in the next one to two weeks, then we must go forward with the trial," says Trey Bobinger, assistant attorney general for the Magnolia State.

Mississippi officials say they are ready to go to trial. But Mr. Bobinger says, "What if Mississippi wins and Minnesota loses? Where are the citizens of Minnesota? ... The litigation may be the best alternative we have, but it's not a foolproof plan."

Minnesota's Humphrey, a go-for-the-jugular pit bull of an attorney, argues the tobacco industry will grant more concessions as damaging material becomes public. In January, he hopes to begin combing through 150,000 documents that the industry has tried to keep private.

"These are probably the real jewels, the ones the industry has not wanted anyone to see, and we believe there is some revealing information there," Humphrey said during a recent interview at the American Lung Association annual meeting in San Francisco.

BIG Tobacco for decades has battled each and every damage suit, but it came to the negotiating table two months ago in a weakened position. Among concessions that may be included in a pact: hundreds of billions of dollars to pay for treating smoking-related illnesses, dramatic changes in tobacco advertising, financing for antismoking programs, and a plan enabling the US Food and Drug Administration to regulate tobacco as a drug. In return, the industry wants some economic certainty - some way to limit damages from a flood of lawsuits.

As Moore considers the likelihood that Mississippi will proceed to trial, he may wonder if he is fully armed. Moore and his outside legal counsel, Dick Scruggs, do not have the same documents that Humphrey and his outside legal counsel, Michael Ciresi, possess. Instead, they will count on testimony from a Brown & Williamson whistleblower, Jeffrey Wigand, who tried to get the Louisville, Ky., tobacco company to produce a safer cigarette.

More differences exist between the two cases.

Mississippi has decided to bring its suit in chancery - an equity court that dates to Old English law. The state is arguing that, on the basis of common law, it is not just for a company to enrich itself by selling a product that allegedly results in illness or death. Because the state must pay for medical costs associated with such illnesses, "we think it is a violation of the unjust-enrichment doctrine," says Mississippi's Bobinger. To prove its case, the state must convince a judge that its citizens have not been equitably treated. There will be no jury.

Minnesota, by contrast, will take its case to a jury. It will argue the tobacco companies are guilty of consumer fraud, false advertising, and antitrust violations. The state will try to prove the existence of a conspiracy to stifle development of safer cigarettes and to conceal information on smoking and health. The state and its co-plaintiff, the private insurer Blue Cross and Blue Shield, are focusing on the conduct of the companies rather than the conduct of smokers.

Minnesota has invested much time in locating documents and witnesses to help prove its case. Some information, for example, includes a 1984 RJR Nabisco document on the strategy for reaching "younger adults," defined as those aged 18 to 24. But the RJR document begins tracking smoking among 13-year-olds.

Minnesota also uncovered a 1980 British American Tobacco document, in which the company considers improving its credibility by admitting that cigarettes "combined with other factors" cause disease. The same document also stated smoking is "addictive/habituative."

Many of these same documents are expected to surface at other trials if there is no settlement.

This is not the first time the two states have clashed over tobacco. In March, Mississippi and a few other states agreed to settle with the Liggett Group, the smallest of the major tobacco firms. But Humphrey thought the terms were too easy on the tobacco company, and seven months later Liggett agreed to a tougher settlement. "It wouldn't have happened without Minnesota," Humphrey says.

The disagreements continue. Minnesota's Mr. Ciresi believes the Mississippians are willing to negotiate away control over nicotine to get a settlement with the companies. Bobinger, for his part, says the issue is one that is "important" to his boss, Moore. Humphrey considers regulatory control of nicotine to be critical to any settlement.

Both attorneys general oppose giving the industry blanket immunity from future prosecution. "If there is immunity, and I say 'if,' it's got to be very narrow and extremely limited," says Bobinger. Humphrey wants virtually no immunity.

Both states have outside lawyers who win high marks for competency. Minnesota's Ciresi wins specific praise from Wall Street. "He is more thorough than anyone else," says Calvert Crary, author of the Litigation Review and a securities analyst with Stamford, Conn.-based Auerbach, Pollak & Richardson Inc. "He is very good at figuring out how much blood he can get." Ciresi's involvement makes Minnesota's case the biggest threat to the industry, says Mr. Crary.

If there is no settlement this week, Mississippi gets first crack, followed by Florida, Texas, and Minnesota.