BY BEN L. KAUFMAN
The Cincinnati Enquirer
If RJR Nabisco Inc. makes good on Wednesday's threat to abandon the tobacco settlement, "you'll have chaos," Cincinnati lawyer Stanley M. Chesley warned.
Mr. Chesley, a lead negotiator when the settlement was reached last year, said an RJR pullout could sink the $368 billion accord and send dozens of lawsuits back for individual trials in state and federal courts.
That bleak possibility was raised by Steven Goldstone, chief executive officer at RJR.
He told a National Press Club audience in Washington that the deal was "dead . . . I have told my colleagues in the industry that effective today I no longer see any purpose in working toward the June 20th national settlement."
Among the cases that would go to trial is Ohio's claim for at least $5 billion for Medicaid money to cover the cost of treating people with tobacco-related illnesses.
Chris Davey, spokesman for Ohio Attorney General Betty Montgomery, said Mr. Goldstone's critique had to be taken seriously, but legislation in Congress would accomplish virtually everything the state sought in the settlement if it survives court challenges.
Norman A. Murdock, a Cincinnati lawyer on Ms. Montgomery's tobacco litigation team, added that Ohio wasn't counting on the national settlement or pending legislation: It asked Franklin County Common Pleas Court for a trial date sometime in the next year for its suit against the tobacco companies.
The problem is Congress, according to Mr. Goldstone and Mr. Chesley. It must approve any deal. Last year's settlement between the tobacco companies and 40 states was the basis for legislation being shaped by Sen. John McCain, R-Ariz.
Sen. McCain's bill already has raised the ante to $506 billion and it deletes valuable protections from further lawsuits. If that bill were adopted, Mr. Goldstone said, RJR's share could bankrupt his company.
That's no bluff, Mr. Chesley said, based on figures obtained during negotiations. Diving into tobacco's deep pockets is understandable, he continued, but it could be counterproductive.
"There is so much negative feeling against tobacco that there is a tendency to load it up," Mr. Chesley said of the cost of the settlement. Not only do individual trials hold out the possibility of seemingly endless appeals, but there might not be enough money to go around if juries bring in anti-tobacco verdicts.
Still, Mr. Chesley was "cautiously optimistic" that the deal wasn't dead and he could persuade the companies, states and Congress to continue talking.
Mr. Chesley, who called himself "no friend of the tobacco industry," said the original settlement reflected a "fine balance" between tobacco's ability to pay and people's needs for compensation. There also were concessions that "we could not get in a courtroom," Mr. Chesley said.
For instance, the proposed settlement eliminates much tobacco advertising and obligates the industry to pay a multibillion-dollar penalty if the number of young smokers doesn't drop sufficiently. Mr. Chesley said an involuntary advertising ban might not survive a court challenge, and that's why the original settlement is so valuable.
Mr. Goldstone said he supports the original settlement but said the Clinton administration, Congress and public health advocates had all worked to undercut it.
"The administration, while publicly praising the concept, privately dismantled it piece by piece," Mr. Goldstone said. "This . . . cried out for strong, bold political leadership. Precious little was forthcoming."
Sen. Mike DeWine, R-Ohio, said the action by the major tobacco companies should not deter Congress from pressing forward with enacting a tobacco policy, especially measures to reduce youth smoking.
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