Tobacco Talks On, Deal Possible This Year

Critics of tobacco litigation settlement talks predict a final resolution is far away, if indeed possible, but insiders say progress is being made and a deal could be reached this year.

Lawyers involved in the talks said the industry is under intense pressure to work toward an agreement because of the number of upcoming trials this year and the sensitivity of the stock market to possible anti-tobacco verdicts.

The attorneys general of 23 states have sued cigarette makers to recoup Medicaid costs of smokers. Steve Berman of the Seattle law firm of Hagens & Berman, who has been part of the negotiations, said the attorneys general and their counsel had been sceptical at first when tobacco executives agreed to meet with them.

But they proved to us pretty quickly they were serious and that they had meaningful points of resolution they wanted to talk about, Berman said. Weve got them where they have to negotiate, Berman said. If we ever felt they were ever trying to play games with us, we would walk out and never come back.

Berman said the parties made a lot more progress than he had expected in a few weeks and he felt it was possible that a final resolution could be reached this year.

On Wednesday, the Wall Street Journal broke the news that for the first time the chairmen of the countrys largest tobacco companies, Philip Morris Cos. and RJR Nabisco Holdings Corp., sat down at the negotiating table with attorneys general to discuss resolving mounting litigation against the industry.

Some of the 23 attorneys general who have sued cigarette makers quickly confirmed the report. Minnesota Attorney General Hubert Humphrey told Reuters in a telephone interview that while he felt it was significant

that the tobacco industry has begun to negotiate he did not feel the proposals made so far were adequate. Massachusetts Attorney General Scott Harshbarger, who is also involved in the talks, warned that a settlement was not imminent.

Pressure is mounting on the tobacco industry to resolve the cases as the first of the Medicaid suits, which was brought by Mississippi, is scheduled for trial in July. Floridas case is set to follow in August.

A major second-hand smoke class action suit brought on behalf of airline flight attendants is also set to begin later this year.

And, this week, the plaintiffs lawyer who last summer won a verdict against Brown & Williamson Tobacco Corp., a unit of Britains B.A.T Industries, is trying a case against R.J. Reynolds Tobacco Co.