The Great Tobacco Gold Rush 

Today's policymakers would rather litigate than legislate

Today's policymakers would rather litigate than legislate

As Tennessee prepares to take the money and run in the wake of the tobacco lawsuit settlement, it’s beginning to look like the campaign of John Jay Hooker was less a random performance than a harbinger of politics to come.

Because of the multi-state settlement of the tobacco litigation, a major issue of public health policy may be resolved by neither health officials nor legislators, but instead through the actions of state attorneys general and their trial lawyer paladins. The settlement gives Tennessee $4.8 billion over 25 years—the equivalent of a single lump-sum payment of about $1.7 billion—to drop any future claims for the cost of treating tobacco-related ailments. In addition, the tobacco companies agreed to some business restrictions, including putting Joe Camel out to pasture.

If the Hooker campaign broke new ground through reliance on the lawsuit as the central political act, the tobacco settlement clearly represents the triumph of adjudication as governance.

Deferring to the General Assembly’s hostility to seriously curbing tobacco use, Tennessee involved itself in no state suits against Big Tobacco but was a passive beneficiary of the litigation. States with more aggressive records, however, vaulted over the limits of the political process to punish manufacturers for doing what the states’ legislatures never had the nerve to do directly. It is a disturbing trend.

Consider two other contemporary examples of issues being fought in court. Both result from the absence of political will, or any consensus, to address underlying social and political issues on a more legitimate plane.

First, the city of New Orleans is currently suing gun manufacturers, hoping to recoup costs resulting from the illegal or accidental use of firearms. The action by New Orleans springs from a Pandora’s box opened by the mayor of Philadelphia, Ed Rendell, who hoped to use the threat of such a suit to negotiate with arms makers. What Rendell wanted was to force them to agree to tighter restrictions on distribution and to encourage the development of better gun safety devices. Within weeks of the New Orleans filing, Chicago filed its own $433 million suit against the gunmakers.

Another example of governing by litigation is the current Microsoft antitrust trial, in which the federal government has been joined by 20 attention-seeking state attorneys general in an effort to achieve undetermined remedies. The consequence of the lawsuit, given Microsoft’s central position in the computer industry, may be to establish a government regulatory scheme for the information culture. Again, this is something that could not be established politically.

Judge-made law is, of course, nothing new. The history books are full of important decisions made by the courts that created laws without the involvement of the legislative branch. Among them are Dred Scott; Gideon; Brown v. Board of Education of Topeka, Kansas; Miranda; and Roe v. Wade. Frequently, these new laws represented end runs around a deadlocked or unsympathetic legislative channel.

However, there is a difference between these decisions and the lawsuits now being tried. Whereas the great and famous decisions largely grew out of individuals asking for justice theretofore denied, arms of the government are now acting to effect public policy outcomes not otherwise achievable.

The key to the tobacco lawsuit was the plaintiffs’ bar, particularly the class-action-oriented trial lawyers. They have transformed the act of suing someone from an act of redressing grievances to an act of entrepreneurship.

Of course, to attract entrepreneurs, there has to be potential wealth, and the tobacco industry is flush with cash. The distinction between entrepreneurial lawyering and other forms of capitalism is that money is made not from willing customers, but from unwilling targets with deep pockets.

From a legal standpoint, a breakthrough in the tobacco litigation came when lawyers chose not to represent dead smokers but taxpayers as a class. Strengthening the case was the decision to focus on states that have laid out taxpayers’ billions to provide health care for those with smoking-related illnesses. Taxpayers, as an abstraction, are a decidedly virtuous class, especially when juxtaposed against Merchants of Death like the cigarette-makers.

However appropriate their claims’ appearance, there was something distinctly hypocritical about the states suing the tobacco makers. Much was made, in the various tobacco trials, of companies deceptively squashing information about the bad health effects of tobacco use.

A distinctly Casablanca-esque argument: As with the police prefect who was “shocked, shocked” to learn that there was gambling going on in the casino, legal actions regarding the perils of smoking did not come as news to anyone. While the tobacco companies invested considerable time, effort, and ingenuity into creating elaborate smoke screens to obscure the risks of inhaling tobacco, it would be difficult to find anyone successfully fooled since the surgeon general’s original, early-1960s report.

The states, with the power to regulate or impede the sale and use of tobacco, did nothing. Instead, they chose to collect tobacco taxes, knowing full well that the product was harmful. In Tennessee, at last count, the state was collecting $86 million a year in tobacco taxes. Subsequent demands for reparations, which grew out of their failure to do anything, is hypocritcal. Indeed, it smacks of contributory negligence.

Of course, national legislation that sprouted from the major class-action suit’s proposed settlement foundered after the politicians overreached. When cornered, the tobacco industry showed that a wounded behemoth can still be dangerous. It succeeded in stopping the whole proposition.

Like the states, Congress has always had the power to act—even without the legal gold rush—against tobacco companies by raising taxes and imposing sales restrictions. The only exceptional benefit coming from the settlement was the possibility of company cooperation in advertising restrictions.

Tennessee, it should be noted, did not take part in the festivities, although it would have received funds under the terms of the settlement. The office of the attorney general, under two different occupants, would always respond to inquiries about the non-participation by noting that officials were “monitoring” the suit. This was generally interpreted as meaning that Tennessee, a major tobacco-growing state, did not want to openly embarrass its tobacco growers by taking too visible a role in the pursuit of tobacco loot.

Still, Tennessee is not totally immune to hypocrisy. In the wake of the announcement that Tennessee would accept the arrangement, Gov. Don Sundquist characterized the deal as good for the state because it would still allow officials to go after the tobacco companies on behalf of tobacco farmers. This is of course pure politics, as tobacco farmers are a definable group of voters, and, as such, suitable for politician panderings—even when they would more aptly be called “unindicted” co-conspirators—rather than victims of the cigarette makers.

Anyhow, the collapse of the tobacco bill sent much of the conflict back to the courtrooms, where the tobacco lawyers have done better than expected, although the companies are still on the run. The current iteration of the settlement is less rich than the previous deal, which could have been worth twice as much on a national basis.

But now that the toothpaste is out of the tube, other kinds of mischief are in varying stages of development, such as the gun lawsuit and its variants. Beer (including poor Larry the Lizard), liquor, and managed care companies are also in the sights of the entrepreneurial bar.

Perhaps the advent of the lawsuit as an element of the political process is the natural conclusion to a natural conflict. Government has always been dominated by the kind of people who studied law, politics, history, literature, and some strains of economics (i.e. the people who weren’t any good in math and science). When the central issues of our time dealt with war and peace, civil rights, and social justice, those people were not just adequate to the task—they were the kind of people you would want to deal with those issues. Now our central issues revolve around science and commerce, and the liberal arts majors are finding themselves ill-equipped or irrelevant. Transforming these issues back into lawsuits helps get the political class back into the game.

It is a strategy that John Jay Hooker is still relying on. Indeed, when he said recently that he was going run for the Senate again in 2000 against incumbent Republican Bill Frist, he announced as well his intention to sue his opponent in a rehash of his oft-rejected argument about the illegality of out-of-state campaign contributions.


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