by Allan Brandt
On June 20, 1997, Attorney General Moore, surrounded by colleagues from other states, announced with much fanfare the “global settlement” with the tobacco industry. The companies had agreed to pay $365.5 billion over the next quarter century to compensate the states for medical costs, smoking cessation programs, and other health care initiatives. The industry agreed that if youth smoking did not fall significantly, it would submit to FDA regulation of nicotine. The companies also acceded to stronger warning labels and new restrictions on advertising and promotion. In return, the industry would be freed from class-action suits and have its other litigation costs capped. Punitive damage awards for past misconduct would be banned. Moore called the agreement “the most historic public health achievement in history.”76
The proposed settlement went far beyond the authority of those at the negotiating table; they had traded that which was not theirs to give. The Global Settlement, as they called it, would require an act of Congress; it now crossed from the realm of litigation to legislation. Although many would suggest the settlement required congressional “approval,” this was a misnomer. It required a major—complex—piece of congressional legislation. At the time of Moore’s announcement, this was anything but a done deal.
In the secret negotiations, the industry revealed its concept of the future of cigarette marketing. Tobacco executives apparently saw potential in the introduction of “less hazardous products” that would be subject to FDA evaluation (which might have promotional value). After years of stonewalling, they sought to find a way of admitting the risks of smoking while securing the market for a new, legitimated, and regulated product. In exchange for stronger regulation of advertising, youth sales restrictions, and other limits, the industry would be free to promote cigarettes in other, unregulated markets around the world.77
While awaiting congressional action on the Global Settlement, those states with pending court dates moved forward to settle their cases. Clearly, the industry did not want to try these cases at the same time as it was lobbying for a comprehensive settlement through federal legislation. On July 3, 1997, Moore announced the settlement of the Mississippi Medicaid suit days before it was to go to trial. The industry agreed to pay $3.36 billion. With this settlement, Brown & Williamson reluctantly dropped its ongoing suit against Williams and Scruggs for their respective acts of spiriting away the documents and bringing them to public scrutiny. In August, Scruggs agreed to pay Williams $1.8 million as compensation for his controversial role in “assisting” the litigation.78 Settlements with Florida ($11.3 billion) and Texas ($15.3 billion) followed.
These agreements signaled the companies’ eagerness to see through a national settlement. Further, they showed just how vulnerable the companies were to disclosures and the attendant publicity. Witness testimony and the mountains of corporate documents placed in evidence in the Minnesota trial had brought daily revelations of the companies’ internal activities. After more than four months of trial, with the defense about to present its case, the companies settled for $6.1 billion, including an additional $469 million for BlueCross BlueShield. For many tobacco control advocates, giving up litigation at that point seemed like an unnecessary and potentially catastrophic concession.79
The battle over the Global Settlement fractured the public health community, a diverse collection of advocates with an eclectic range of approaches and theories regarding tobacco control. Matthew Myers, the well-known attorney and public interest lobbyist, now vice president of the National Center for Tobacco-Free Kids, was invited by the attorneys general to represent “the public health community” in the negotiations. But it quickly became apparent that there was no consensus about specific public health goals. As Myers observed, “We were a public health community—really a bundle of individuals—who never had to cope with hard, hard choices and competing values. We had all been able to operate at the level of broad rhetoric, because we had never before come close to achieving any of our most ambitious objectives.”80 Myers saw a remarkable opportunity to exact unprecedented concessions from the industry. But these would require compromise.
For some of the most seasoned tobacco control advocates, the very idea of negotiating with the tobacco industry was anathema. The principle successes of tobacco control had come from the grassroots local initiatives and hand-to-hand combat. There could be no “civil discourse” with an industry they deemed not only dishonest but fundamentally immoral. If the industry sought relief from the litigation that now depressed its stock value, that was precisely the time not to negotiate. From this perspective, no one had the authority to make concessions on behalf of public health.81 As Stanton Glantz would later explain, “The fundamental reality of tobacco is that the way to beat them is to beat them. I have never found a single instance anywhere, anywhere, where a compromise with the industry served the public health.”82 Glantz’s perspective emphasized an “incremental radicalism,” a step-by-step process to ultimately defeat the companies. Myers offered “global pragmatism,” which permitted strategic concessions for ultimate gains. Their respective world views reflected critical differences in approach and strategy for public health. In Glantz’s view, to give up the right of litigation, one of the antitobacco movement’s few credible weapons, on the eve of a significant—perhaps knockout—victory, seemed ludicrous. The movement’s more significant guerilla fighters refused to participate in a negotiated settlement.
Years of bitterness could not easily be forgotten. To sit around a table negotiating “compromises” seemed unthinkable to people who had steadfastly been committed to the destruction of antagonists whom they had come to view as fundamentally evil. Some movement leaders believed the negotiations conducted by attorneys general with little public health experience and their high-rolling trial lawyers eager to cut a deal might accomplish nothing except pull the companies back from the brink of obliteration. Their view was that anything the companies might agree to was a sham, and to negotiate with Big Tobacco was to “dance with the devil.”83 Their moral definition of tobacco control precluded pragmatic compromise. Now that the companies were in mortal danger, any agreement would be a sell-out.
Ultimately, the proposed Global Settlement Agreement brought to light an intense social and political debate about the role of litigation in the tobacco wars and in public health generally. Some advocates saw litigation as incremental, inefficient, and inappropriate. Any genuine public health policy to reduce tobacco use could only come from Congress. Others saw the history of congressional legislation as powerfully shaped, if not corrupted, by industry interests and largesse, and viewed the courts as the critical venue for public health reform.
Glantz was especially skeptical of the legal and moral appropriateness of removing a citizen’s right to sue. “It will undermine the vital role of tort liability in restraining corporate wrongdoing: If tobacco companies can get away with murder, then this will set a precedent for other companies that harm people or pollute the environment to escape accountability. And it will violate basic tenets of justice . . . to sacrifice a person’s right to recover damages against the tobacco industry without fair compensation.” Glantz noted presciently that “the tobacco companies will simply pass these costs through to their victims, leaving management and investors untouched. . . . The likelihood that industry officials and lawyers will face criminal prosecution drops.”84 To critics, like Glantz, it appeared that just as litigation had finally emerged as a critical threat to the industry, Myers and a group of come-lately attorneys general were willing to protect the industry from what it most feared, in return for regulation that could be enacted anyway without a “settlement.” Myers, said Glantz, was a “fool.” “The tobacco control community now has a real opportunity to end the tobacco industry in this century. If that opportunity is lost it will be because the National Center for Tobacco-Free Kids lost it for us.”85 Myers responded, “I continue to believe that I can do more in the room than outside.”86
Myers’s role as the sole r
epresentative of “public health” in the negotiations would ultimately alienate many allies, who would be critical to the settlement ’s success. FDA Commissioner David Kessler, former Surgeon General C. Everett Koop, and Congressman Henry Waxman were outraged to find themselves out of the loop. In retrospect, it is impossible to disentangle their personal and political objections. But it was nonetheless clear that many in the public health “community” saw Myers as a traitor. “In negotiating with the industry,” Glantz wrote, Myers “chose to ignore a consensus among public health groups not to enter a deal with the industry.”87
The wounds opened by the proposed settlement would not soon heal. Myers was subjected to intensive and sometimes personal criticism. “I view him as a tragic figure,” said Glantz. “He’s spent the last 15 years working on this issue and he’s going to go down in history as the guy who allows the industry to slime off the hook again.”88 The patriarch of consumer activism, Ralph Nader, opined that “the role of the National Center in the negotiations is doing serious damage to the public interest and imperiling decades of work by committed public health advocates to curb the ravages of the tobacco corporations.”89 Waxman also attacked the settlement, noting, “This is a Faustian bargain. We don’t pay polluters not to pollute, and we shouldn’t offer immunity and regulatory relief to get them to stop addicting our children.”90 Critics of the settlement argued that Congress did not need to grant any concessions in passing tough regulatory restrictions. “Why do you need a settlement? Why do you need to give the industry immunity?” asked Kessler. Nader worried about the precedent set by offering an industry relief from liability risks. The threat of litigation, he pointed out, was a powerful brake on all sorts of industry activities.91
Koop and Kessler, at Waxman’s urging, agreed to cochair a committee to review the Global Settlement. Five days after the deal was announced, their group pronounced their opposition to the agreement in its current form. In September 1997, President Clinton, who had closely followed the negotiations through intermediaries, released a statement of five broad principles upon which to structure regulatory legislation. He read the statement at a White House ceremony attended by Koop and Kessler.92 Clinton’s principles cut a middle path between supporters of the Global Settlement Agreement and its increasingly vocal opponents. They cleverly avoided the most contentious issues, especially regarding relief from litigation. Supporters of the settlement eventually concluded that the White House had abandoned them.93
Kessler, who had so aggressively sought FDA jurisdiction, feared that weak FDA oversight would only relegitimate the industry after it had been marginalized and stigmatized. This was the downside of regulation: it recognized the industry as a legitimate corporate citizen.94 Under the settlement regime, tobacco use might even increase. “Once everything is resolved,” Kessler argued. “and everyone declares, ‘peace now, peace forever,’ everyone goes home.” He had come to believe that the companies had to be fundamentally destabilized—or disbanded—for public health initiatives to succeed.95
In Congress, a bipartisan coalition of legislators began for the first time to push for serious regulation of tobacco. Now, the industry found itself on familiar ground. It had more than a half-century of experience in influencing federal regulatory initiatives and in 1995 had set a new record (since broken) by disbursing $4.1 million in congressional campaign contributions.96 It soon unleashed a characteristically impressive lobbying engine in the halls of Congress. No expense would be spared in the attempt to shape the coming legislation. The tobacco companies signed up former Maine Senator George Mitchell to lead their lobbying efforts; he was joined by former Texas Governor Ann Richards, former Republican National Committee Chairman Haley Barbour, and former Republic Majority Leader Howard Baker.97 Recruiting Mitchell was but one indication of the power the companies could invest in the federal legislative process. But many were aghast to see him take this role. “How can George Mitchell,” asked Maureen Dowd in the New York Times, “be both a statesman working against death in Northern Ireland and a shill for death in America?”98
Under the leadership of John McCain, Republican Senator from Arizona, the attorneys general’s proposed settlement underwent significant revision. The McCain bill surprised the Republican leadership in its aggressive approach to tobacco control, including higher taxes on tobacco to increase prices, FDA regulation of nicotine, and strong look-back provisions for the reduction of teen smoking. The proposed legislation raised the tobacco company penalties to be paid to the states and the federal government from the attorneys general’s proposed $385 billion to over $500 billion. In return, the industry would receive relief from litigation.99 Given the widely recognized shift in the litigation environment, such provisions were central to the industry’s support of the legislation.
In April 1998, McCain’s bill to codify and expand the negotiated Global Settlement Agreement was voted out of the Senate Commerce Committee for consideration by the full Senate and was immediately met by sharp attack from all sides. It drew the fire of tobacco farmers, those trial lawyers not involved in the settlement, and antitrust experts. Although Clinton claimed to support the deal, he did so at arm’s length, refusing to expend much political capital to see it through.100 Public health advocates decried the preemption of further litigation. As the public health provisions and dollar costs of the bill rose, the industry became increasingly alienated. The McCain bill was caught in the cross fire of public health advocates and industry lobbyists.
Critics of the legislation tended to focus on the provisions banning class-action suits and capping punitive damages. In the past, Congress had acted to limit liability among companies producing products in the public interest, such as vaccine manufacturers. Why, asked critics, would such unusual protections be offered to a hypocritical and socially deviant industry? 101 Other opponents of the legislation focused on what they saw as the industry’s ultimate goals in seeking such protections. Glantz, for example, suggested that the “dirty little secret” of the proposed deal was that it would free U.S. tobacco companies to recoup their domestic losses abroad. Despite the name “global settlement,” the deal imposed no limits on marketing outside the United States. “The real thing this deal does is clear the decks for international expansion,” explained Glantz.102 In China alone, 70 million people had started smoking since 1987; clearly, any loss in sales in the United States could be many times compensated for by recruiting new smokers in non-Western societies.103
Ultimately, the companies came full circle and worked to kill the legislation. Congressional Republicans, who at first had expressed provisional support, now labeled it an “$800 billion tax increase.” The companies deployed unprecedented resources to bring down the legislation. In addition to devoting a record $35.5 million to lobbying in 1997, a 23 percent increase over what it spent in 1996, the companies also sponsored a massive public relations effort labeling the legislation as a new tax targeted at working people.104 Now, the industry was back in its element, sponsoring a full-tilt media blitz to reframe the debate as being about taxes and “big government.” It spent $40 million on radio and television ads over a two-month period in 1998 to recast the bill as a grab for massive new taxes.105 “Washington has gone cuckoo again,” one ad noted, as a cuckoo clock exploded. “Washington wants to raise the price of cigarettes so high there’ll be a black market in cigarettes with unregulated access to kids.”106 The media campaign provided Republicans with cover—much to McCain’s chagrin—to kill the bill. Among other tactics, they loaded it up with amendments irrelevant to tobacco, and then opposed it on the ground that it was no longer a tobacco bill. The industry could no longer get whatever it wanted from Congress, but it still had the power to kill what it did not want.
For Matt Myers, this spectacle represented the wasting of an unprecedented opportunity for tobacco control. He bitterly concluded: “What we lost [in the McCain Bill] was staggering. The June 1997 settlement, as improved by Senator McCain, wouldn’t have so
lved the problem. But it would have made a great difference. If we believed our own rhetoric over the years, this legislation would have saved tens of thousands of lives.”107 But the antitobacco movement had never considered compromise as an element in its emerging ethos. Attorneys general, steeped in the give and take of politics, and liability lawyers, experienced in the brass knuckles of legal negotiation, had hammered out a deal, with public health advocates largely on the sidelines. Underlying the failure of the McCain bill was the fact that throughout the debate the public took little interest in tobacco legislation.108
Many who saw the defeat of the Global Settlement Agreement as a lost opportunity attributed its demise to personal arrogance and political rigidity. But it seems just as likely that deeper structural flaws in the negotiating process and the subsequent politics are to blame. A deal privately negotiated between attorneys general, tobacco executives, and trial lawyers was not likely to be sustained in the highly public legislative arena. Moreover, although there were intensive pressures in the negotiations to reach a “compromise,” these pressures quickly evaporated when the deal reached Congress.
With the state suits pending and unprecedented regulatory legislation being debated in Washington, some tobacco activists had predicted the beginning of the end of Big Tobacco. They greatly underestimated the continuing power of the tobacco industry to protect its interests. When the McCain bill failed, the momentum in the tobacco wars shifted back to the industry. In August 1998, as we have seen, the Fourth Circuit Court of Appeals overturned an earlier district court ruling supporting FDA regulation. Although it had been clear from the outset that FDA regulation would ultimately be decided by the Supreme Court or additional legislation, the decision nevertheless marked a critical setback for efforts to bring tobacco under regulatory authority.