Tobacco Dealers Sue To Block
AG Settlement As Unconstitutional and Unlawful

         The 1994-1999 Attorney General litigation to recover some tiny portion of the taxpayers' money that had been spent for decades on cigarette costs did not just happen. Pro-tobacco apologists used to allege that tobacco is a financial BENEFIT to society!!

         Cost analysis research was involved in refuting that claim. My October 1980 paper led the way. It showed over $130 billion dollars in damages to society from tobacco that year alone.

         Now in 1999 [now, 2002] essentially everyone (including Attorneys General and the tobacco defendants) agrees that tobacco is a cost drain on society. What a major change since 1980!! when the opposite was being said nationwide

         For example, data from the office of Michigan Governor John Engler says tobacco health care costs alone cost Michigan $800 million per year.

         When I wrote the cost analysis, my intention was for more than getting cost recovery. I intended that the laws be enforced, e.g., the ones concerning illegal sales to children, the ones concerning deleterious products, and the mental health laws against people's behavior posing a danger to themselves and others, etc., examples of some of which are cited at the above website.

         I am disappointed that two decades have gone by, yet the tobacco "holocaust" (the 1971 term used by the Royal Society of Physicians in its book Smoking and Health Now (London: Pitman Medical and Scientific Pub Co, 1971), p 9, to refer to the then mere 27,500 cigarette-caused deaths) is still in process, and the protective laws remain unenforced.

         Even Michigan's MCL § 750.27, MSA § 28.216, the safe cigarettes' law, a smokers' rights law (the reight to a safe product that does not injure or kill when used as the manufacturers and sellers intend) remains unenforced, setting Michigan up for more tobacco-caused injuries, deaths, and costs now and in the future. Michigan could be an example to the nation, and world, and is missing the opportunity.

         To this writer, the AG deal does not really do the job, was an 'enabling act' to continue tobacco-caused deaths, and misleads the public into thinking it might be effective at eliminating the tobacco epidemic. There was some challenge by some, e.g., by clients represented by California lawyer Donald W. Ricketts, Esq. Nonsmoker groups except in Pennsylvania (with Dr. Robert B. Sklaroff) generally decided to go along. Fortunately, Dr. Sklaroff decided to oppose the deal. Examples of materials from his case file are at the following webpages:

Dr. Sklaroff's Homepage
Nov 1998 Petition To Intervene
Overview Material
Court Decisions
State-By-State Status
List of AG Websites

         As the AG deal is quite defective, it was likely that others besides pro-health people would also challenge the AG deal. And such has occurred. On 19 August 1999, I learned that a law firm, Bennett & Fairshter, did in fact file suit on behalf of discount cigarette distributors to challenge and overturn the deal, and related legislation.

         Bennett & Fairshter issued a statement to this effect:

  • "A group of Discount Cigarette Distributors filed, in United States District Court, Central District of California, Case No. 99-0835NM, a multi Billion Dollar lawsuit which challenges the national tobacco settlement reached between the Philip Morris, R.J. Reynolds, Brown & Williamson, Lorrilard, and Liggett Group (Big Five Tobacco Companies) and the Attorneys General for 46 States.

  • "This lawsuit asserts anti-trust and constitutional violations and seeks remedies which will overturn this settlement, strike down two statutes which seek to implement the settlement, seek certain injunctive relief, and mandate that any settlement proceeds which do get paid to be deposited into a national trust to pay for health care costs of persons who are suffering smoking-related illnesses, instead of the pork barrel projects for which most of the States are now proposing to use the money.

  • "This lawsuit will also address the fact the Attorneys General, National Association of Attorneys General, and the tobacco Companies have engaged in a collusive monopolistic practice of acting like commercial thugs against the Discount Cigarette Distributors in violation of the law and constitution.

  • "Plaintiffs seek to invalidate the Master Settlement Agreement of November 23, 1998 (hereafter called the "MSA") between the Big Five Tobacco Companies and the Attorneys General of forty-six (46) States, and the settlement entered into by the State of Texas and Defendants Philip Morris, R.J. Reynolds, Brown & Williamson, Liggett Group, and others, on January 16, 1998 (the "Texas Settlement").

  • "The MSA and the Texas Settlement collectively and individually constitute an unconstitutional and coercive scheme and contract, combination and collusion made for the purpose and having the effect of limiting competition between existing tobacco manufacturers and excluding new competitors, such as Plaintiffs, who engage in domestic cigarette sales, thereby imposing artificially high prices on the consumers in that market.

  • "The MSA and the Texas Settlement collectively and individually are unconstitutional and violate the Sherman Act, Clayton Act, Civil Rights Act, and other related statutes and the common law.

  • "On November 23, 1998 the Tobacco Companies and the Attorneys General did enter into a sweetheart deal, the MSA, which specifically crushes competition, is unfair, and perpetuates a monopoly in favor of the Tobacco Companies. As a result, the Attorneys General and States are now directly sharing in the cartel's profits.

  • "It should be noted that the MSA is not simply a twenty five year agreement. It is in fact a joint venture agreement in which the Attorneys General and States are going to share in the cartel's profits in perpetuity, i.e. Forever.

  • "The MSA is a permanent arrangement in which the Attorneys General and States now have a financial interest directly tied to the successful sale of cigarettes in the United States. The more cigarettes sold, the more the Tobacco Companies will pay to the Attorneys General and States, and the more the politicians become dependent on Cartel Profits to fund their pet projects.

  • "Although these payments will be made, there are no safeguards in place which mandate that these funds be used to pay for the costs of smoking related illnesses. In fact, in most States the vast majority of the money is being used for programs and projects having nothing to do with the healthcare costs of persons who suffer from smoking related illnesses.

  • "There are also no safeguards in place to prevent the Tobacco Companies from gouging the public with higher prices and racking in huge additional profits at the expense of the American Consumer. In 1999, it is estimated that the Tobacco Companies will use their November 24, 1998 huge price increase of 45 cents per pack, justified by Big Tobacco to pay for the settlement, to increase profits more than 100%.

  • "There are no safeguards in place which will prevent the Big Tobacco Companies from increasing prices further to generate even more profits.

  • "On June 20, 1997, a national settlement of lawsuits and claims brought by the Attorneys General in each of their States was agreed upon with the Big Five cigarette companies (the "National Settlement"). The basic allegations set forth in the Attorneys General's lawsuits and claims was that these companies, and others, were a cigarette cartel which had engaged in various violations of law, including state anti-trust, state unfair competition, state fraud, and state consumer protection laws.

  • "The Attorneys General were suing this cigarette cartel for the lies and deception they had practiced upon the public and the politicians for the last forty years, including their testimony before Congress that nicotine was not addictive. In suing the Tobacco Companies, the Attorneys General were seeking reimbursement for health care costs incurred over the last forty years which the states and territories had incurred due to the affects of smoking on health.

  • "The National Settlement was presented to the United States Congress, Senate Bill 1214 authored by Senator McCain, for approval and the enactment of legislation necessary to implement it. The United States Congress, after lengthy consideration, disapproved of the National Settlement and rejected it on June 17, 1998. Thereafter, the Tobacco Companies and the Attorneys General did proceed to defy the will and decision of the United States Congress by entering into the MSA.

  • "The Tobacco Companies, seeing that the Attorneys General needed a victory after the previous rejection by Congress, did play a shell game by offering a settlement in exchange for certain liability protections. The Tobacco Companies, as the cigarette cartel, has had a long history of monopolizing the cigarette market and crushing their competition. The Tobacco Companies saw an opportunity to take advantage, outmaneuver, and outwit the Attorneys General and ultimately further their monopoly in the cigarette market in which they could continue to sell cigarettes in the United States FOREVER, free from competition. The perpetuation of this monopoly has been the goal of the cigarette cartel for almost one hundred years.

  • "What the Tobacco Companies sought was a sweetheart deal, without letting the Attorneys General know what was going on. The Tobacco Companies succeeded in their game and the Attorneys General are now refusing to recognize the harm they are now causing to both the American marketplace and consumers.

  • "Because the Tobacco Companies and the Attorneys General were frustrated by the actions of the United States Congress, and in direct confrontation to the rule of law, the Attorneys General sold out the sovereignty of their States and their high office to the Tobacco Companies' cigarette cartel in exchange for a minuscule (less then 2% of the Tobacco Companies total revenue) share of the cigarette cartel's profits.

  • "Although the Attorneys General have stated that they settled with the Tobacco Companies to gain money for health care, the MSA specifically does not provide that the cartel profits are to be used by the Attorneys General and/or States for health care. In point of fact, the Attorneys General and States are largely using the cartel profits for everything but paying for the health care costs of smoking related illnesses.

  • Plaintiffs are being represented by Matthew J. Fairshter, Esquire, of BENNETT & FAIRSHTER, P.A., 225 S. Lake Avenue, 9th Floor, Pasadena, Calif. 91101, 626-568-1200.

    BENNETT & FAIRSHTER, P.A., Pasadena
    Matthew J. Fairshter, 626/568-1200
    626/568-8930 (fax)"

See also
  • Hise v Philip Morris, Inc, 208 F3d 226 (CA 10, Okla, 17 Feb 2000). SCB: 46 F Supp 2d 1201 (smokers challenging the states' case settlement under anti-trust law)
  • the Star Scientific, Inc challenge, asserting the Atty Gen deal with tobacco companies (supposedly to recover tobacco-caused health-care costs) violated its rights to equal protection and due process of law.

  • "Action on Smoking and Health" News On The Subject

    "A Public Health Analysis of the Proposed Resolution
    of [the 1997 United States] Tobacco Litigation

    "The 'global settlement' with the tobacco industry: 6 years later"

               A proper settlement should have enforced the cigarette control laws and rules. For example, we are all used to "speed limits." Cigarettes emit deleterious emissions that exceed the "speed limits" for toxic chemicals in the air. The AG deal should have enforced those limits. Cigarettes' toxic emissions above the legal 'speed limits' are due to cigarettes' inherently deleterious nature and ingredients. The U.S. Department of Health, Education and Welfare (DHEW), Smoking and Health: Report of the Advisory Committee to the Surgeon General of the Public Health Service, PHS Pub 1103, Table 4, p 60 (1964), lists examples of deleterious emissions (citing the numbers above the chemicals' 29 CFR § 1910.1000 "speed limts") including but not limited to:

    Cigarette ChemicalEmission Quantity
    "Speed Limit"
    acetaldehyde 3,200 ppm 200.0 ppm
    acrolein 150 ppm 0.5 ppm
    ammonia 300 ppm 150.0 ppm
    carbon monoxide 42,000 ppm 100.0 ppm
    formaldehyde 30 ppm 5.0 ppm
    hydrogen cyanide 1,600 ppm 10.0 ppm
    hydrogen sulfide 40 ppm 20.0 ppm
    methyl chloride 1,200 ppm 100.0 ppm
    nitrogen dioxide 250 ppm 5.0 ppm

               In this context, it is easier to understand why cigarette emissions are so fatal. The "speed limit" for carbon monoxide is about 100, whereas it's doing 42,000.

               All cigarettes contain deleterious ingredients. In fact, medically, cigarettes are inherently dangerous. This fact has received judicial notice in cases such as Banzhaf v F.C.C., 132 US App DC 14, 29; 405 F2d 1082, 1097 (1968) cert den 396 US 842 (1969). The Department of Health and Human Services (DHHS), Reducing the Health Consequences of Smoking: 25 Years of Progress: a Report of the Surgeon General, Publication CDC 89-8411, Table 7, pp 86-87 (1989), lists examples of deleterious ingredients including but not limited to:

    acetaldehyde (1.4+ mg)arsenic (500+ ng)benzo(a)pyrene (.1+ ng)
    cadmium (1,300+ ng)crotonaldehyde (.2+ µg)chromium (1,000+ ng)
    ethylcarbamate 310+ ng)formaldehyde (1.6+ µg)hydrazine (14+ ng)
    lead (8+ µg)nickel (2,000+ ng)radioactive polonium (.2+ Pci)

               Judicial notice of cigarettes' "inherent" deleteriousness was taken pursuant to an 1897 Tennessee law, in Austin v State, 101 Tenn 563; 566-7; 48 SW 305, 306; 70 Am St Rep 703 (1898) affirmed 179 US 343 (1900). The Michigan law specifying that only safe cigarettes can be manufactured, given away, and sold was passed soon thereafter, in 1909.

               Thomas Edison exposed an aspect of the cigarette hazard in 1914. The cigarettes and cancer connection was published as long ago as 1925. The Michigan House of Representatives received a report on cigarette hazards over a century ago, in 1889.

    Other Writings by Same Author

    "Are You Missing $omething?,"
    26 Smoke Signals 4 (Oct 1980)
    (discusses cigarette costs to society, following my practice of
    consolidating in one narrative, data from a multiplicity of sources,
    refuting the then notion that cigarettes are a cost plus to society)

    "Smoking as hazardous conduct,"
    86 N Y St J Med 493 (September 1986)
    (discusses workplace smoking as already illegal
    pursuant to OSHA's 29 CFR § 1910.1000 emissions limits,
    which cigarettes regularly exceed)

    "Alternative Models for Controlling Smoking Among Adolescents,"
    87 Am J Pub Health 869-870 (May 1997)
    (discusses prevention of smoking among children
    by doing for them as for all other people:
    a law providing that only safe products
    be manufactured, given away, and sold)

    Also Recommended Reading

             With respect to Michigan's cigarette control law, designed to end cigarette harms to people, Michigan Governor John Engler and staff have been supportive of action to enforce it, issuing five pertinent memoranda.

    Exec Order 1992-3 Law Support Letter #1 Anti-Cigarette Smuggling Finding Law Support Letter #2 Governor Engler's Overview

             You are urged to join with us at The Crime Prevention Group in getting the laws enforced. Even supportive politicans and officials need encouraging letters. If you live in Michigan, please join our letter writing campaign requesting enforcement of the Michigan cigarette control law, MCL § 750.27, MSA § 28.216, by writing to Governor John Engler and to Attorney General Jennifer M. Granholm, requesting enforcement. Also, please write to your legislators (senators and representatives) asking for

         (a) enforcement of the law, and
         (b) hearings on why the law has not been enforced.

             Elsewhere, to help achieve the goal of reducing cigarette harm and costs to society, please use our proposed sample letter to write asking that your jurisdiction (assuming that it does not already have such a law) pass a similar law (only safe cigarettes are allowed, no unsafe ones). Write to your Governors, Attornies General, legislators, MP's, Senators, and/or Representatives, asking for them to work for such a law.

             Another approach to help end the cigarette catastrophe is to stop cigarette advertising. See our handout for readers to distribute to advertisers.

             There has been a record of governmental corruption so the allegations against the tobacco cartel have credibility.

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    Copyright © 1999 Leroy J. Pletten