A new element in the Third Wave was complicating old formulas, however. In four states—Mississippi, Minnesota, Florida, and West Virginia—an entirely fresh approach to tobacco litigation was being taken by the states’ attorneys general. They were seeking to recoup billions of dollars the states had paid under the Medicaid program to care for poor people with smoking-related diseases. The idea was to treat the tobacco industry like any other commercial enterprise whose product had caused harm—like asbestos and toxic waste dumps—and make them pay for the cleanup. Though the tobacco industry quickly dismissed these claims as frivolous and having no chance of success, in time they would become even more of a legal threat than Gauthier’s grand class action, providing the other half of the pincer movement that finally brought the industry to the negotiating table in 1997.
Tired though the industry lawyers had become and facing forces they had never before encountered, they still relished the looming conflict. Defending tobacco lawsuits was a lucrative business, one of the best, and they believed they could be victorious. They looked down on Gauthier’s group as a lower caste—greedy, attention grabbing, and a disgrace to the profession. They would prevail, as they had always done, or so they thought. In the Rex Room that night, Phil Wittman, a local lawyer representing tobacco defendants, said of Gauthier’s suit, “It’s a lot of smoke and mirrors. It’s stuff that’s been out there a long time.”
Wall Street didn’t think so. The financial risk to the industry was “staggering,” stock analysts had warned. Losing Gauthier’s suit could result in damages of $100 billion—twice the industry’s annual sales revenue.
In between the two groups of lawyers at Antoine’s that night, at a table in the open dining room, sat a group of four investment analysts from New York. They had flown down to attend the court hearing. They were so nervous, they wouldn’t talk. “We can’t say anything,” said the normally garrulous Gary Black, of Sanford C. Bernstein & Co. “There’s too much at stake here.”
In the President’s Room, Gauthier was rallying his forces with self-deprecating Cajun jokes. As the meal was nearing completion, he announced the arrival of Santa Claus. “We are going to send the tobacco lawyers a little Christmas present,” he said to loud applause. In walked a man in a red costume sporting a white flowing beard and carrying aloft on a silver platter one of Antoine’s baked Alaskas. Its sides were covered with “No Smoking” signs in red icing. “Take the tobacco companies their present,” ordered Gauthier, and the Santa walked out of the President’s Room, passed the table with Gary Black and the Wall Street analysts, and burst through the pine doors of the Rex Room singing, “Ho, ho, ho, Merry Christmas to one and all.” The company lawyers were appalled, refused to accept the gift, shoved the Santa out of the room, and left the restaurant in a huff, abandoning their brandies, and, of course, their cigars. The enemy had been engaged.
* * *
IN THE COMING MONTHS, New Orleans would be the headquarters of the antitobacco forces, a gathering place for the new challengers of Big Tobacco, whose ranks swelled with each new exposure of the industry’s deceitful past. Confidential documents were found in archives and attics and unearthed from the basements of courtrooms where long-forgotten members of the plaintiffs’ bar had lost contests with the industry. One cache of scientific reports came from a woman who sought revenge on her lover, a researcher from Philip Morris who had left boxes of company documents at her house. Each month, it seemed, brought fresh evidence of tobacco industry lies and deceptions; how they had hidden research into smoking and health, manipulated nicotine levels, and sneakily targeted children in their advertising and promotion.
The tobacco companies had finally met their match. Here for the first time was an enemy that showed no fear of their superior legal forces and unlimited funds. Here was an enemy that would play legal tricks and more besides. They turned company whistle-blowers into national heroes, put stolen industry files on the Internet, leaked protected court documents, and persuaded judges to release papers the tobacco industry had long hidden from public view. Finally, they did a secret deal with the smallest of the tobacco companies, dragging the bigger ones to the negotiating table.
The lawsuits against the industry would mushroom. The American legal system had never witnessed such a contest in civil actions as would unfold over the next three years. By the middle of 1997, at least 530 law firms and thousands of attorneys were engaged in the battle for the hearts and lungs of Americans. Half of the country’s largest law firms, charging fees of up to $500 an hour, were working for the tobacco companies. Another 182 firms had joined the ranks of the anti-tobacco forces. The annual legal bill for the Big Six tobacco companies—Philip Morris, R. J. Reynolds, Brown & Williamson, Lorillard, American Tobacco Company, and Liggett & Myers—amounted to $600 million dollars. More than 300 lawsuits were pending against them with potential damages of hundreds of billions of dollars. The long arm of U.S. civil law had even drawn in Britain’s biggest tobacco enterprise, BAT Industries.
America’s one-hundred-year war against tobacco seemed set for a final battle in court. The traditional crusaders against smoking, the “Health Nazis,” as the industry dubbed them—the American Cancer Society, the American Heart Association, the American Lung Association, Action on Smoking and Health, the Advocacy Institute, Ralph Nader’s Public Citizen, Doctors Ought to Care, and a host of small, independent tobacco education and control groups—took a backseat while the liability lawyers poured their much greater resources into the battle. “The antismokers want to get their message out, but we just want to kill them,” said “Bhopal” Coale of the tobacco companies. “If our methods work there won’t be any need to get the message out.”
Simultaneously, the Clinton administration would lead a sustained attack on the industry through the youthful commissioner of the Food and Drug Administration, David Kessler. For the first time in its ninety-year history, the FDA would be cleared by the courts to regulate tobacco as a drug.
In the end, neither side was anxious to go into court. A group of plaintiffs’ lawyers from Mississippi launched negotiations with the industry that would climax, in the summer of 1997, with a congressional proposal to radically change the way the companies had been doing business. After four decades of denying that smoking causes cancer, the industry’s leaders backed down and signed the biggest liability settlement in U.S. corporate history, promising to pay out $368.5 billion over twenty-five years.
* * *
NONE OF THE DINERS at Antoine’s that December evening would have imagined such an ending. Yet the early signs were there. On one side was an undisciplined guerrilla force, armed with an array of untried legal theories but able to move with lightning speed, energetic, motivated, and mischievous. On the other side were the larger, better equipped, and more experienced lawyers of the tobacco companies whose invincibility in court over four decades was legendary, but whose success had become a handicap. They could move only in blocks, their tactics were well known, their weapons old, and their leaders exhausted. This is the story of three tumultuous years that led to an astonishing truce in the century-old tobacco wars.
A federal court would rule that Gauthier’s class-action suit was too big to be managed in one trial and had to be broken up into smaller trials in state courts. But its effect, even out of court, was devastating to Big Tobacco. For two years, it generated a barrage of antismoking propaganda unprecedented in history. And it was this lawsuit that prepared the ground for the mass offensive by the states’ attorneys general to recoup medical costs.
The results were a surprise, but the uprising was inevitable. Big Tobacco had become so rich and powerful, no part of government at any level would take it on. Only the lawyers of the plaintiffs’ bar had the wit, the strength, and the prospect of big rewards to make it worth their while. Like all uprisings, it had several small beginnings. One of them occurred in a tiny Mississippi town on the edge of the Delta at the end of the 1980s, during the final phase of the Second Wav
e.
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A NOVEL OBSERVATION
“MR. ROSS: I feel that in time an objective study should be made into … cigarette smoking … to make certain that people who use [cigarettes] do not place an overdue burden on the others that do not use them and that the payment they make should be equal to the costs they create.
MR. SATTERFIELD: That is a novel observation, I must confess.”
—An exchange in 1969 between Arthur Ross, then chairman of the Franklin National Bank, and Congressman David Satterfield of Virginia during hearings to ban cigarette advertising on television
HOLMES COUNTY, Mississippi, is depressingly poor—fifth from the bottom on the federal poverty scale. One reason is the land. The county lies sixty miles to the north of Jackson, the state capital, on the edge of the Mississippi Delta. But, in contrast to the Delta’s fertile floodplain, Holmes County’s red clay is unworkable and barren. Small landowners raise a few cattle and a hog or two, but in high summer the land is abandoned, blanketed in great cascading sculptures of kudzu. The county seat is Lexington, a tiny town of 20,600 built around a central square. It has a handsome redbrick courthouse with a clock tower, a thirty-foot-high Civil War statue, and several stores doing a brisk trade in secondhand goods with advertisements such as “Used Tires Guaranteed 3 Months.” A mobile-home factory provides employment for the lucky few, the size of their wage packet being dependent to a large extent on the damage wrought to the Gulf Coast during hurricane season. A few miles outside Lexington, you could be in rural Central America. Poorly dressed children play in dirty backyards with underfed dogs.
* * *
INTO THIS SOUTHERN BACKWATER in the fall of 1987 rolled the frontline legal forces of the American Tobacco Company, maker of Lucky Strikes, Pall Malls, Tareytons, and Carltons. They were preparing to spend millions of dollars from the company’s $1.5 billion in annual tobacco sales to defend a lawsuit brought by a black carpenter named Nathan Horton. Aged fifty, Horton had smoked two packs of Pall Malls a day for more than thirty years, and he blamed the American Tobacco Company for his inoperable lung cancer. The image of this huge international tobacco company descending on tiny Lexington to squash the claim of a dying carpenter was the best, and the worst, example of what those plaintiffs’ lawyers who had been through a tobacco lawsuit and survived to tell the tale called “the Wall of Flesh”—a legal machine made up of hundreds of attorneys, paralegals, researchers, scientific advisers, and private investigators, not to mention public relations consultants, that form the defense team when any U.S. tobacco company is challenged in the courts. The American Tobacco Company was then owned by American Brands, which, like other tobacco giants, had diversified over the previous decade and also owned life insurance companies, a liquor company that included Jim Beam whiskey and Gilbey’s gin, and various other manufacturing enterprises, including makers of office products, padlocks, and golf clubs. Nathan Horton was a self-employed carpenter who had served in the navy, where he’d begun smoking two packs a day. He’d saved enough money to build his own house for his second wife and their six children, a step up from trailers and cement-block duplexes.
In 1986, Horton was hired by a sharp-witted, personable local lawyer named Don Barrett to help build a duck-hunting camp on the nearby Yazoo River. Barrett runs a family firm known as the Barrett Law Offices across the road from the courthouse and if Lexington had a squire, it would be Don Barrett. His home is only a short walk from the courthouse square, past the police station and the county jail. It is a Southern mansion set in a salient of prosperity amid live oaks, neat lawns, and well-groomed family pets. A great Shumard oak, said to 350 years old, guards the main entrance to Barrett’s house. The law practice was started in 1933 by his father, Pat, who still works there. Don Barrett is a graduate of the University of Mississippi Law School, class of ’69. He started specializing in toxic waste cases and personal injury law in the seventies and became chairman of the toxic torts section of the Mississippi Trial Lawyers Association.
Like many of his colleagues in the torts business, he kept looking for a chance to take on the tobacco companies. Horton, then fifty years old, had been told by his doctor that he had two years to live. Barrett offered to represent him on a contingency fee.
To Barrett, Horton looked like a good case, perhaps the best opportunity in a while to confront the industry. Mississippi was one of ten states in the union with a tort statute of “pure” comparative fault, which means that a plaintiff can win damages if a jury decides the maker of the product bore even a fraction of the blame for an injury. In almost all the other states, a plaintiff could not recover damages unless the defendants were found to be more than 50 percent responsible. In Mississippi, in theory, a manufacturer who was held just 1 percent responsible for Horton’s condition would be liable for a proportionate share of the actual damages awarded.
Horton’s suit was unusual in another respect. He claimed that the tobacco company had knowingly sold cigarettes contaminated with pesticides. Barrett had obtained an American Tobacco internal memo from 1976 stating that residues of the bug killer known as DDVP were present in cigarettes, in some cases in amounts more than four times higher than the federal maximum permitted in foods. A second memo a year later reported that American Tobacco was still “exposing unprotected finished cigarettes and little cigars as well as open bulks of tobacco and wrapping materials to DDVP aerosols.” The memo also said that the way the company was spraying DDVP was not in compliance with directions from the Environmental Protection Agency. It was not exactly a winning weapon, but Barrett was looking forward to using it in court.
Still another reason for Barrett’s confidence was that Lexington is one of the worst places for a large, wealthy corporation to defend a case against an aggrieved individual—especially a tobacco company against a local black smoker. It takes nine of twelve jurors to decide such a case in Mississippi. Holmes County is 75 percent black and an all-black, anti—big business jury was anticipated. Mississippi is also a nontobacco state where the tobacco companies were seen as symbols of big-city corporate culture, white-run businesses manipulating poor blacks from afar. Barrett could also count on some resentment of tobacco company marketing practices. Of late, the tobacco companies had been increasing their advertising targeted to blacks, a group disproportionately affected by smoking-related diseases. Cigarette consumption was falling among whites but it had increased among blacks, with young black females accounting for the fastest growing group of new customers. Black men had a 58 percent higher incidence of lung cancer than white men and blacks lost twice as many years of life, 8.1 compared to 3.8, because of smoking-related disease. Even so, R. J. Reynolds was preparing to market a cigarette targeted at blacks directly. Called “Uptown,” it was so roundly condemned by black leaders and doctors that it was eventually scrapped.
After looking at the American Tobacco Company’s finances, Barrett decided to demand one of the largest-ever sums for Nathan Horton’s illness: $2 million in actual damages and $15 million in exemplary or punitive damages, those intended to make an example of a company’s wrongdoing. Adding together Mississippi’s favorable law, the sympathy Horton could command from his peers, and the determination of Barrett and his colleagues, observers of tobacco litigation thought Barrett had the best chance yet. The veteran antitobacco campaigner Dick Daynard, of Northeastern University Law School in Boston, commented, “In Holmes County you have people who are not immediately going to assume the beneficence of established American institutions like tobacco companies.”
Wall Street was taking the case seriously, too. Tobacco stocks were already heavily discounted—that is, undervalued compared with other blue-chip stocks—because of pending lawsuits. Stock analysts, intent on sending back instant reports, were preparing to descend on the little Lexington courthouse with its one public pay phone. Some analysts were predicting possible drops of 15 percent, which in the case of the biggest company, Philip Morris, meant several billion dollars of lost v
alue.
Even as Barrett prepared the case for trial, Horton’s lung cancer was steadily sapping his strength. Once a robust six feet, one inch and 185 pounds, he was now down to 137 pounds. He was bent and weak of voice, preserved by blood transfusions and dependent on powerful painkillers and other medications. It became clear he would not survive to take part in the trial. Late in January, Morton Mintz of The Washington Post interviewed him at home. They talked about his son, who had studied pharmacy at Ole Miss, and about fishing, but also about death. Horton said, “I have some good days, and I have some days when I cry all day. Some nights,” he said, he was “scared to go to sleep, because this will be the end of it.” Other times, he had “nightmares about cigarettes. I get to dream about them, craving. If it were so that cigarettes did give me cancer, I wish people would know it. I would hate for anyone to be in the position that I’m in right now.” He died a few days later. He was buried in a tiny cemetery down the dirt road from his house. The Veterans Administration picked up the bill for the funeral and gave him a military headstone. His wife, Ella, took up the case on his behalf.
The first sign of American Tobacco’s extraordinary commitment to its defense in the Horton case came that fall. At the courthouse in Lexington, a team of private investigators arrived, having come all the way from Los Angeles to carry out a thorough examination of the five hundred names on the jury register and make background files on all of them. The staff at the courthouse was aghast. Earline Hart, a young black woman who was the deputy circuit clerk when the L.A. team arrived, particularly remembers a handsome surfer type named Steve. She never knew his surname. “They went through all the court dockets, civil and criminal,” she recalled, “including copies of marriage records or any liens against property. When they were finished with our records, they went to the Tax Collector’s Office to find out if they were property owners, and then they went to the Justice Court to see if they had any misdemeanors filed against them.” The courthouse had never witnessed this kind of pretrial investigation.
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