Feeling the heat
it has come at a time when the us tobacco companies thought that they had successfully weathered the string of lawsuits by states and federal governments over the past two years. On September 22, the us Justice Department filed a huge civil lawsuit against them, alleging that cigarette smoking costs the federal government us $25 billion annually in health-related expenses. It added that it was seeking to recover those funds on behalf of taxpayers. Tobacco companies are engaged in consumer fraud by conspiring to conceal from the public the risks of cigarette smoking, says the lawsuit.
This lawsuit was set in motion last January, when President Bill Clinton, in his State of the Union address, hinted that his administration was considering such a suit. Industry officials denounced the suit. "We just do not believe they have a basis for filing this lawsuit,' said Tommy Payne, an executive vice-president of R J Reynolds Tobacco Co, one of the companies named in the suit. "We are not going to settle this lawsuit. The law is going to find that the Justice Department doesn't have a valid case against the tobacco industry.'
The lawsuit poses a major threat to the industry, which last year fought a far-reaching federal legislation intended to settle the state lawsuits in exchange for concessions that included increasing cigarette prices and imposing significant restrictions on tobacco marketing. The bill was killed by Senate Republicans. "They are trying to do in the courts what they weren't able to do through legislation. They tried to impose burdensome tax increases on the sale of cigarettes, and Congress rejected that effort. Now, they are trying to use the court system to essentially impose a tax,' said Gregory Little, associate general counsel of Philip Morris usa , the nation's largest tobacco company.
Last November, after the congressional efforts failed, industry officials settled the states' suits by agreeing to pay them more than us $240 billion over 25 years. The settlement also required the industry to remove all billboard advertising around the nation and restrict its sponsorship of sports events.
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