Cornered

by Peter Pringle

  A: Yes.

  Q: And will you confirm for me, Dr. Tucker, that if such compounds had been identified in the laboratories of R. J. Reynolds Tobacco Company, that information was not shared with the personnel … in the meeting?

  A: That’s true.

  Dr. Tucker was due to come back for more questions the next day, but B&W counsel announced that he would no longer be available. They said he was a sick man. Wilner was furious. He was having more fun than he had ever imagined possible with the witness—especially one supposed to be “friendly” to the enemy, and he wanted to continue.

  Wilner considered Tucker’s withdrawal outrageous and unethical. “You are not allowed to take a witness that has been subpoenaed, or appeared under agreement, and tell him he can leave,” Wilner would say later. But he was not prepared for what happened next.

  Through his office fax machine came doctors’ letters from Louisville attesting that Dr. Tucker was indeed a sick man and should not complete the deposition. He had suffered a stroke in the early ’80s, he was unsteady on his feet, there were disturbances in eye movements and muscle tone, and cognitive changes that “make his recollection of past events unreliable.” One doctor wrote, “I think that any testimony that he might provide during a deposition or at the time of a trial would be suspect in reliability because of his advanced vascular disease secondary to, and including such factors as his underlying diabetes and hypertension.” Another physician, in an affidavit prepared for the court, advised that Dr. Tucker’s deposition should not be taken. If it was, then it should occur only under strict supervision. A medical “crash cart” with appropriate life-support equipment should be on hand at all times, with a certified “Advanced Cardiac Life Support” physician or technician in attendance. In any event, Dr. Tucker should be deposed for a maximum of two one-hour periods per day, with at least an hour and a half break between the two.

  A weary Woody Wilner complained, “There are ways to terminate a deposition under the rules where you seek a protective order. None of that was done. The problem here is that the courts have to get over their feeling that just because these tobacco lawyers are highly paid doesn’t mean to say that they’re not unethical.”

  * * *

  WILNER WOULD GO ON to lose his next trial in Jacksonville against R. J. Reynolds in the spring of 1997, but he had three others already lined up. By then, Wilner had become a phenomenon of the Third Wave, and his victory had given a big boost to secret negotiations for a truce opened up by Dick Scruggs and Mike Moore.

  15

  FIELD OF DREAMS

  I believe in the field of dreams theory. If you build it, they will come. Five billion dollars is an enormous amount of money.

  —Meyer Koplow, Philip Morris legal counsel on the future of lawsuits after a settlement

  FOR ALL THEIR CRIES of betrayal over the Liggett deal, Philip Morris and R. J. Reynolds were also anxious to settle their lawsuits. Legal costs were skyrocketing. Shareholders were nervous and complaining. The army of corporate lawyers with expertise in tobacco litigation was spread dangerously thin over the expanding battlefield. In the spring of 1996, R. J. Reynolds’s CEO, Steven Goldstone, gave an interview to The Financial Times of London that hinted at the possibility of peace talks to reach a reasonable solution to the permanent lawsuits. “Why wouldn’t the industry look at it?” he asked provocatively.

  In Pascagoula, Mississippi, Goldstone’s comment came just when the antitobacco forces were beginning to strain their budgets. Dick Scruggs had sunk more than $3 million of his small firm’s money into the Mississippi case and into lobbying other states to file Medicaid suits. He was wondering how much this war would cost him. The joke was that his Learjet was running on Southern mash. In Charleston, Ron Motley and his document guerrillas were running up millions of dollars in bills searching files from old court cases, and filing discovery motions in states suing for Medicaid money. (In Texas, the private lawyers working for the state agreed to pay for the gas for Motley’s plane.) In New Orleans, the Castano group was facing nettlesome delays as they put “son of Castano” cases into the state courts. Both sides were looking for a deal.

  In his war room in Pascagoula, Scruggs was working on a way to get the two sides together. He and Mike Moore discussed approaching Mississippi’s Trent Lott to nudge the tobacco boys to the table. Lott was about to be elected Senate majority leader. He knew the tobacco industry and he had received a chunk of tobacco campaign money—$63,900 since arriving in Congress in 1973, even though Mississippi is not a tobacco-growing state. He also happened to be Dick Scruggs’s brother-in-law. He could be the perfect link. On Capitol Hill, he was known as “Senator Smoothie,” a deal maker rather than an ideologue. One of his favorite maxims was, “I’d rather have 80 percent of something than 100 percent of nothing.”

  Moore liked the idea and he gave Scruggs the go-ahead. He was still locked in combat with Governor Kirk Fordice over Mississippi’s tobacco suit and, while he knew he would win out eventually since the law was on his side, Fordice (with the help of the industry) was dragging out the fight. Opening talks with the industry would be an insurance policy.

  Scruggs made the call: “Do you think it’s possible to pursue a resolution of the lawsuits through a national settlement sanctioned by Congress? And would you be interested?” Lott told Scruggs he would think about it.

  Two days later he called back. He didn’t want to be involved personally, he said, but he suggested that Scruggs should contact John Sears, a Republican lobbyist and international lawyer who had worked in the Nixon White House. Sears would be able to pass the idea on to the tobacco industry. Scruggs should also make use of Tommy Anderson, who had spent seventeen years working as Lott’s chief of staff. He knew the industry well.

  Scruggs immediately enlisted his chief legal theorists—Steve Bozeman, Charles Mikhail, and Lee Young, all veterans of the Mississippi Medicaid suit. This was not to become simply a settlement of the Mississippi lawsuit. Scruggs and Moore wanted nothing less than a blueprint for smoking and health for the next generation of Americans, a draft bill that could be sent up to Congress. It would be a new national tobacco-control policy that would completely change the way the tobacco companies did business.

  The first draft was a two-page outline. No fancy legal language, just bullets. The Liggett settlement gave them a starting point. “We’ve got to cover kids, money, and immunity,” Scruggs told his lawyers. “We knew the industry would not be interested in talking unless there was some kind of immunity from the lawsuits,” said Mikhail, one of the drafters. Scruggs would take the drafts to Sears, who would pass them to Tommy Anderson, who in turn passed them to RJR’s Goldstone. The message that came back was positive. “They made us think they were ready to talk,” said Scruggs later.

  The question was, Who were they? Was Goldstone speaking for the entire industry, or just RJR, or RJR and Philip Morris? That was never clear. Moore had settled Mississippi’s case with Liggett; perhaps the next deal would be piecemeal as well. “We felt we were dealing with four different companies, Philip Morris, RJR, Brown & Williamson, and Lorillard,” said Mikhail. “We thought that maybe we could do a deal with just two of them.”

  In July, a chance came to find out who really was on the other side of the table. Scruggs was invited to meet with the industry representatives. The idea was for them to explain their position. But he declined. “I thought we had a pretty good idea what the industry wanted. And I didn’t think they would agree to our demands. I wanted them to acquiesce; I didn’t want to be in a position of having to ask for their agreement.”

  While Scruggs was flying his Learjet between Pascagoula and Washington, Moore was putting together a committee of four attorneys general who would pursue the deal: Bob Butterworth of Florida, Scott Harshbarger of Massachusetts, Woods of Arizona, and himself. Moore, Butterworth, and Harshbarger had collaborated on the Medicaid suits from the beginning. They took part in what Harvard law professor Laurence Tribe called the “s
eminal” seminar on Medicaid suits that Tribe held in Cambridge in the summer of 1994. Mississippi had already filed. Florida had its special law. The discussion persuaded Massachusetts that the legal theory was viable. Woods came aboard later as the first Republican attorney general to file a Medicaid suit, in August 1996.

  * * *

  ON ONE of the trips to Washington, Scruggs and Moore went to see David Kessler at the FDA to try to discuss how the public health community would view such a deal. “We wanted to include everything Kessler wanted in the FDA ruling on tobacco,” said Scruggs. Kessler suggested they get in touch with Matt Myers, who had been counsel to the Coalition on Smoking or Health but was then in a new job as vice president of Tobacco Free Kids, a group aimed at curbing underage smoking. Throughout the Third Wave, Myers, with his encyclopedic knowledge of the industry, had become the media spokesman for the public health community. Myers would often be at odds with those he was supposed to be representing and, in the end, would leave himself open to accusations of selling out to the industry.

  By the beginning of August, the “term sheet,” as Scruggs called his outline of a possible deal, was still “very rudimentary.” Nonetheless, RJR and Philip Morris came back with an offer. Basically, they wanted full immunity from all future lawsuits for the next fifteen years and, although they would abide by most, if not all, of the FDA rules, they would not agree to its regulation of the industry. In return, they would pay out $150 billion over the next fifteen years to the states, the other class actions, and the individual lawsuits.

  Scruggs’s group was mulling over the offer at the beginning of August when Woody Wilner won his surprise victory in Jacksonville. Grady Carter’s $750,000 award was another alarm bell for the industry, and Scruggs and Moore decided to act on it. They called a meeting in Chicago of the thirteen state attorneys general that had either filed or were about to file Medicaid lawsuits. The date set was for the weekend of the Democratic convention. But other forces were now at work.

  On the eve of the meeting, The Wall Street Journal was leaked copies of the early drafts. “Someone in government did it,” said Scruggs. “We had left a couple of drafts up there. It wasn’t helpful.” Scruggs was known for his Southern understatements, and this was one of them. The leak split the antitobacco forces down the middle—as Scruggs always knew it would. Most of the attorneys general were for the concept of the deal, but they wanted the rights of individuals to sue to be preserved. The plaintiffs’ lawyers were in favor only if their ability to sue was preserved. Skip Humphrey, the attorney general of Minnesota, was an instant opponent. He had always been against any settlement (as had his legal team led by Mike Ciresi). Humphrey didn’t see why the tobacco industry should be treated differently from any other business. He favored public trials over private deal making.

  The health groups and the trial lawyers who were not involved in tobacco lawsuits were against the proposal. It sounded like tort reform to the lawyers. Key members of Congress also rejected it. For example, Henry Waxman called it a “sweetheart deal.” Many were put off by the urgency of Scruggs and Moore, who mistakenly had begun to believe that there could be a deal before the November elections. “There’s a tremendous amount of pressure for a quick fix,” said Stan Glantz, an influential voice in the health community from his base at the University of San Francisco. (Glantz’s book on the Merrell Williams documents, The Cigarette Papers, had just come out from his university’s press.) As Glantz saw it, the only winners would be the trial lawyers. “These guys [the lawyers] will walk away from this just richer than God.”

  Officially, the tobacco companies claimed no knowledge of the proposal. RJR Nabisco said firmly, “Our tobacco subsidiary is not interested in—and has no intention of—settling cases against it and remains confident in the strength of its defenses.” It was not true, of course. A spokesman for Goldstone admitted only to “the world’s shortest conversation” with intermediary John Sears as a “favor to someone.”

  The August leak killed progress on the talks until after the elections. But the contacts had been made, and the two sides would continue to talk. Scruggs’s phone call to Trent Lott had given rise to an idea that was to mature, slowly and often painfully, over the next year. By June 1997 there would be a proposal to restructure the commercial operations of the tobacco companies, end the culture of denial about the harmful effects of smoking, kill off Joe Camel and the Marlboro Man, and propose the costliest compensation and fines—$368.5 billion—in American business history.

  * * *

  THE WHITE HOUSE would play a pivotal role in the negotiations. Clinton had already been persuaded by Vice President Al Gore and then-presidential adviser Dick Morris to support the FDA’s drive to curb teenage smoking. White House counsel Bruce Lindsey would coordinate the efforts. For its part, the industry longed for a change in the presidency, of course, and, for the first time, the Republicans were receiving by far the greatest share of tobacco money. In the past, the industry had been quite evenhanded with its funds, hedging bets between the parties. In the 1988 congressional campaign, for example, it gave slightly more to Democratic political action committees and party organizations than to Republican coffers. But in 1990 the money began to shift. By the 1996 campaign, the Republicans received nearly $7.1 million, more than four times the Democrats’ $1.6 million. In the Senate, the largest PAC contributions went to three Republicans, Jesse Helms of North Carolina ($57,250), John Warner of Virginia ($39,150), and Fred Thompson of Tennessee ($47,000). In the House, Thomas Bliley of Virginia received $34,675, Edward Whitfield of Kentucky $33,600, and Charlie Norwood of Georgia $33,500, all from tobacco-growing states. During nearly three decades in the U.S. Senate, Bob Dole had accepted more than $400,000 in tobacco-related campaign contributions. (At presidential campaign rallies, Democrat activists plagued him with “Mr. Butts”—a supporter dressed up as a cigarette to look like the Gary Trudeau cartoon character.)

  Al Gore, who had taken tobacco money when he was a senator from Tennessee and whose family had once grown tobacco, nevertheless became Clinton’s point man against the industry, making an emotional speech at the Democratic convention in Chicago recalling his sister’s death from lung cancer. On the campaign trail, he kept goading Dole to say whether nicotine was addictive. Dole ducked the issue—but then made one of the great bloopers of the campaign by suggesting that nicotine might be no worse for some people than milk.

  In public, the industry would continue to deny any involvement in a deal for the next seven months, although Trent Lott’s messengers, Sears and Anderson, were still busily acting as intermediaries between them and Scruggs. “This industry has no history of settling litigation,” declared RJR’s spokesperson, Peggy Carter. “We are certainly not going to start with litigation that has no basis in fact,” she added, repeating the industry’s view of the state Medicaid cases. Philip Morris was silent. Scruggs said, “The industry had to have deniability that we were talking. And I wanted it, too. We just did all our talking through John Sears.”

  Considering their unfamiliarity with the ways of Washington and Capitol Hill, the two Mississippi law-school buddies, Scruggs and Moore, would cut an extraordinary swath through the national political landscape. It did not turn out to be the instant “global settlement” the two bold architects of this grand compromise had once believed it could be, but from the days when the lonely plaintiff fought against impossible odds, it was a gigantic step forward. The “term sheet” would become a blueprint for a national policy to deal with the tobacco epidemic.

  Scruggs and Moore would spend the next three months crisscrossing the country, drumming up support for the settlement among the other attorneys general, and picking up clients, at the same time. Wherever they went, Ron Motley would not be far behind (sometimes even in front) offering his services as co-counsel. He also went to state capitals that they didn’t have time to visit. Scruggs would end up being co-counsel to twenty states besides Mississippi; Motley to thirty.

 
And the Castano lawyers would return to center stage. At first, Scruggs had purposely excluded the group; it was too unwieldy to have representatives in the initial discussions. But the wily Gauthier would make his own way to the negotiating table. The names on the guest list at the 1994 Antoine’s Christmas dinner would reappear: Stan Chesley, Russ Herman, and John Coale. Elizabeth Cabraser, Professor Dick Daynard, and Dianne Castano, Peter’s widow, would all surface in one way or another. And there would be yet another Gauthier surprise. Hugh Rodham, Hillary Clinton’s brother and a Florida lawyer, would become the latest member of the Castano executive committee and provide the Castano group with special access to the White House.

  * * *

  DURING THE SUMMER, Tom Mellon, a personable young Castano attorney from Pennsylvania, had been working on a case in Florida with Hugh Rodham’s law firm and had reported back to Gauthier that Rodham was interested in joining the Castano group. Gauthier was only too happy. “I felt that Dicky Scruggs had Trent Lott as his brother-in-law, so we one-upped him. I told him, ‘Dicky, don’t worry, we just out-brother-in-lawed you.’” Rodham, however, had a reputation for not making use of his family connections. He was in Florida and mostly stayed there. He had run for the state senate and lost. Rodham didn’t know any of the Castano lawyers, so Gauthier gave Coale the job of introducing him. The two quickly became friends.

  Coale recalls one September evening in New Orleans when the two of them were at the Bombay Club, waiting for Gauthier and some other Castano lawyers to turn up for dinner. “Wendell’s never on time, so we were having fun,” said Coale, “and we got to talking about what to do with all these lawsuits, and Hugh agreed he would talk to the president over Thanksgiving, the next time he was scheduled to see him for a family meal.”

  In the meantime, Coale concocted his own version of how to get negotiations moving—a plan that was bound to clash, sooner or later, with Scruggs’s efforts. Coale put together a group of worthies—the “Three Wise Men,” he would call them—to oversee the settlement proposals on behalf of the White House. He chose two former U.S. senators, Howard Baker, a Tennessee Republican whose first wife, Joy, died of lung cancer, and Howell Heflin of Alabama. Heflin had been a successful trial lawyer before being elected to the Senate in 1978 as a Democrat. He had a reputation as a details man on the Judiciary Committee. The third man was Leon Panetta, the departing White House chief of staff. Gauthier embraced the plan and made it part of the Castano group’s approach, but before anything could come of the idea, word spread. Scruggs immediately called Gauthier, who was not in his office or at home.