For tobacco companies, there's trouble in the air Once hard to beat in court, industry considers settling


After Cathy Ryan's first operation for cancer of the vocal cords, her doctor told her: Stop smoking or die. For weeks, she struggled to quit.

Finally, on Valentine's Day last year, she awoke in a fury at the nicotine shackles she had worn for 30 years.

She tore her last pack of Marlboros to shreds, dumped the mangled cigarettes in a glass jar and added water.

When she longed to light up, she'd stare at the foul concoction instead.

The 46-year-old bookkeeper from Takoma Park hasn't smoked since. She has had a second cancer operation.

Like cigarettes, cancer has become a family affair: Her father has throat cancer. So does her aunt.

Now Ryan lives in fear of more bad news and pleads with her 13-year-old son never to smoke.

"I don't like the tobacco industry's lies," says Ryan, seething. "I think they should pay. I don't think they should be allowed to advertise the Marlboro Man.

"I think they should be required to advertise what smoking really does to you."

For more than 40 years, smokers have tried to make cigarette manufacturers pay for the medical devastation their product causes.

And the tobacco companies have accumulated an almost unbroken string of victories, persuading juries it is not their fault if smokers choose to smoke.

But now the very American drama of tobacco, in which commerce mixes uneasily with morality, has taken an unexpected turn.

Secret talks held sporadically since last year between tobacco lawyers and those suing them have suddenly grown serious, discussing a global, multihundred-billion-dollar settlement. The once-invincible industry is on the defensive.

"For years, they've put overwhelming legal resources into every case, and they've simply outgunned the plaintiffs' attorneys," says Oscar S. Gray, professor emeritus of the University of Maryland School of Law. "But now they have to ask themselves what the risk is if they start to lose. And the risk is bankruptcy for the entire tobacco industry."

Cigarette makers have long shown a knack for prospering against the odds, and their market overseas is still growing. But pressure to settle has been building at home.

Since 1994, industry whistle-blowers have unveiled evidence that the tobacco companies hid what they knew about the appalling health effects of smoking.

Other documents undermined the companies' claim that adult smokers freely choose to smoke, by showing that their advertising targeted young people and their nicotine research sought to keep customers hooked.

Presented with a taste of such evidence, juries have begun to award damages against cigarette companies. Last month a small company, the Liggett Group, broke ranks and promised to share its trove of damning documents with plaintiffs' attorneys.

Meanwhile, the scale of tobacco lawsuits has shifted from retail to wholesale. Attorneys general in Maryland and 22 other states have sued to be reimbursed for the Medicaid costs of millions of smokers.

And since a national class action suit was thrown out by an appeals court last year, private attorneys have filed separate class actions in most states, including Maryland.

"Now the claim is not just one client with cancer," says Gray, a consultant to the Maryland suit. "The claim is billions of dollars for thousands of patients. A big law firm can gamble for that big a payoff."

In Maryland, the big law firm is that of Peter G. Angelos. In return for 25 percent of any award, Angelos is paying the costs of the suit filed in Baltimore Circuit Court on May 1 by Attorney General J. Joseph Curran Jr. seeking $3 billion in Medicaid costs and $10 billion in punitive damages for the state.

Three weeks later, Angelos -- like Curran, an ex-smoker -- followed up with a separate class action suit on behalf of all ailing Maryland smokers and their survivors. The suit gives no numbers, but more than 700,000 adult state residents smoke.

The lawsuits read more like mob indictments for mass murder than civil complaints. The state's suit charges that "through a campaign of fraud, lies, intimidation and deception, [the tobacco companies] have succeeded in avoiding legal responsibility for engineering and selling the most lethal consumer product in the history of humanity."

The industry's "despicable marketing strategies" have contributed to "a human tragedy practically beyond comprehension," the suit says, including the death from smoking of 425,000 Americans a year. In Maryland, the toll is about 20 deaths a day.

Hyperbolic language might be a legal tactic, but it reflects the outrage of a medical community that struggles daily with the ravages of cigarette smoke.

"My practice is probably 50 percent tobacco injury," says Paul F. Castellanos, the University of Maryland head and neck surgeon who treated Ryan.

He gives patients a blistering anti-smoking talk, replete with examples of necks rotting away and dying patients who smoke by holding their cigarette to the tracheotomy tube in their throat.

"I consider nicotine more addictive than heroin or alcohol," he says. "I've had [patients] look at me and say, 'I know this is killing me, but I just can't quit.'

"It's heartbreaking."

Angelos, owner of the Orioles, made his millions suing asbestos companies on behalf of shipyard workers and others exposed to the deadly material on the job. That background, shared with several other tobacco plaintiffs' attorneys, makes tobacco industry representatives wary.

"They've pretty well destroyed the asbestos industry," says Daniel W. Donahue, senior vice president and deputy legal counsel at R. J. Reynolds. "They've run out of deep pockets to sue. So now they've set their sights on us."

Angelos replies: "The asbestos industry should be destroyed, and very likely the tobacco industry should be destroyed, too."

From hero to villain

If it now is a villain, tobacco was long a Maryland hero. When George Calvert first sought a land grant on the Chesapeake from Charles I, he did it "to do the King and my Country more service there by planting of Tobacco."

Early Maryland colonists grew so much of "the magic weed" that the legislature ordered every tobacco planter to grow at least 2 acres of corn. When currency ran short, tobacco sufficed to pay debts and taxes.

Baltimore was chartered as a tobacco port in 1729, and wooden hogsheads of tobacco were rolled to the city -- some along Rolling Road -- for shipment around the world. As late as 1950, Swiss cigarette companies were so fond of the state's leaf that they created the Maryland Tobacco Improvement Foundation. To this day, the Charles County Fair honors the harvest by crowning "Queen Nicotina."

In a more innocent time when such a title would have raised no eyebrows, many of the smokers who are potential plaintiffs in Maryland's class action were kids inhaling for the first time.

Ed Churchman, 77, whom emphysema forced into early retirement in 1978 from his job selling real estate, recalls his father's promising him a gold watch if he wouldn't smoke until 18. He made it to 14.

"They said it would stunt your growth," Churchman says. "But they didn't know the extent of what the damn things did to you."

Churchman and his wife, La Rue, 74, buried her 51-year-old daughter last month -- dead of lung cancer even though she had quit smoking in 1989, after her father died of lung cancer.

That generational toll was unimaginable in the days when Old Golds claimed "Not a cough in a carload" and some brands trumpeted doctors' endorsements.

Older smokers remember cheap, ubiquitous cigarettes. Army retiree Curtis Davis, 80, of Severn, diagnosed last year with lung cancer, started with dried corn silks wrapped in newspaper, graduated to 10-cents-a-pack "Wings" during the Depression and got five cigarettes in each World War II ration pack, three times a day. (He admits reluctantly that he still smokes a pack a day. "I'm afraid my chemotherapist will read the newspaper," he says.)

Virginia Hafele, 67, a lung cancer patient from Ocean City, recalls cigarette promoters' offering free samples outside Catonsville High School in the late 1940s.

"They were Camels and Chesterfields," she says. "I tried the Camels, and I liked 'em."

Alarm in the industry

By the early 1950s, the first studies associating smoking with cancer were beginning to appear. Alarm in the tobacco industry led to an event that has become a gift to plaintiffs' lawyers: a meeting at which, they say, the conspirators launched their fraud.

On Dec. 13, 1953, tobacco company presidents gathered at New York's elegant Plaza Hotel to hear a proposal from their public relations firm, Hill and Knowlton. Tobacco stock prices were sliding, and salesmen were worried.

The executives agreed to create the Tobacco Industry Research Council, which they launched with an announcement in newspapers across the nation, including The Sun.

Headlined "A Frank Statement to Cigarette Smokers," the ad declared that research data on mice linking cigarettes to lung cancer "are not regarded as conclusive." In fact, lung cancer might have "many possible causes," since there is "no agreement" among scientists and "no proof" of a link to smoking.

But the ad declared that customers' health was "a basic responsibility, paramount to every other consideration in our business." The executives pledged to form a board of "disinterested" scientists to conduct and review research and to let "the people" know the results.

The lawsuits charge that the council was pure public relations gimmick, managed by Hill and Knowlton from one floor below the firm's office in the Empire State Building to extinguish what industry memos called "the big scare."

In the four decades since, the industry's official line on health has not materially changed. As independent scientists established the smoking-illness link, tobacco companies continued to assert that nothing had been proved, that statistical associations do not amount to cause and effect.

On at least one occasion, a company paid a free-lance writer to submit articles to True magazine and the National Enquirer asserting that smoking had not been proved harmful.

But thousands of industry documents, most of them from Brown & Williamson, maker of Kool and other brands, show that the industry admitted privately what it denied publicly: that tobacco is a carcinogen, that smoking increases the risk of heart disease, that nicotine is addictive.

"We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms," a Brown & Williamson official wrote in 1963. In 1972, a Phillip Morris report advised: "Think of the cigarette pack as a storage container for a day's supply of nicotine."

To make sure potentially damaging research reports stayed secret, the lawsuits charge, they were routed through tobacco lawyers. That way, the companies could shield the papers with a claim of attorney-client privilege -- another element in the alleged fraud.

Shrewd marketing

But just keeping the bad news quiet wasn't enough. As the U.S. surgeon general and health groups began to lobby against smoking in the 1960s, the industry countered with marketing campaigns considered landmarks in the art of shaping consumer preferences.

If cigarettes polluted indoor air, Salem would offer pastoral scenes that invoked fresh country breezes.

If smoking was risky, Marlboro would create the image of the ruggedly independent cowboy who scoffed at danger. Cathy Ryan said the Marlboro ads determined her choice: "That strong personality really intrigued me."

If women were worried about their weight and inspired by feminism, Virginia Slims would tell them, "You've Come a Long Way, Baby."

If African-Americans were put off by the white-dominated ads for other brands, they could see themselves in targeted ads for Newport or Kool.

More than 80 percent of adult smokers started before the age of 18, and Maryland's lawsuit pointedly charges that the industry targets children, a practice it calls "wanton, reckless and unethical and vitally important to the tobacco industry."

The obvious example is the notorious Joe Camel, whose familiar leer has allegedly worked magic on young smokers. The lawsuit alleges that the 10-year-old campaign has increased Camel's share of the under-18 market from less than 1 percent to nearly 33 percent.

But there can be far more subtle appeals. Many ads feature high-risk activities such as motorcycle racing, hang-gliding and mountain-climbing, appealing to boys and implicitly suggesting that smoking is just another daring pastime.

In recent years, R. J. Reynolds has run numerous public-service advertisements in youth magazines ostensibly aimed at persuading children not to smoke. The lawsuits say that by omitting any mention of the lethal effects of smoking, and by emphasizing that choosing to smoke is "an adult decision," the ads actually subtly encourage young people to smoke.

And this year, even as the Federal Trade Commission considers action against the Joe Camel ads, R. J. Reynolds has targeted young adults with a hip ad campaign for its revived "Kamel Red" brand. "Back for no good reason/ Except they taste good," the ad says.

Time to cut a deal?

There might be a whiff of panic these days mixing with the cigarette smoke around the North Carolina headquarters of Phillip Morris and R. J. Reynolds, with their "Thank You for Smoking" signs.

Trouble looms on the calendar.

A Florida trial is under way on behalf of a Salem smoker who died of lung cancer in 1995; pioneering anti-tobacco attorney Norwood "Woody" Wilner, who represents the survivors of Jean Connor, won $750,000 in a similar trial last August. That was only the third time a jury has awarded damages against a tobacco company.

In June, the first of the lawsuits by attorneys general to recover Medicaid money opens in Mississippi, to be closely followed by Florida and Texas. Also set for June is a national class-action suit of airline flight attendants claiming damage from secondhand smoke. In those cases, the plaintiffs are not themselves smokers, so the cigarette companies' traditional defense -- that the plaintiffs were responsible for their own injuries -- might not work.

Meanwhile, the Justice Department continues its criminal investigation of the industry for fraud in its marketing and in executives' statements to Congress and in court. The Food and Drug Administration is pushing to regulate tobacco as a drug; the FTC is broadening its probe of cigarette ads.

With a legal bill that industry analysts estimate at $600 million a year and rising, the cigarette companies are well armed for combat. But some of their pricey lawyers are telling them to cut a deal.

Sources familiar with the negotiations, which are reportedly scheduled to resume today, say the two sides have agreed on a rough outline: a fund to pay smokers' claims over 25 years, some FDA regulation, drastic restrictions on advertising -- and an act of Congress to grant the industry immunity from lawsuits.

Plaintiffs say the fund should be well over $300 billion, while tobacco negotiators are talking about $250 billion, the sources say. But even the $300 billion figure named in the Wall Street Journal last week sent tobacco stock prices soaring.

That's because a 60-cent-per-pack price increase could pass the entire $12 billion annual cost of the settlement on to customers, in effect requiring future smokers to pay the medical bills of past smokers. And since most smokers can't or won't give up nicotine, the tobacco industry can weather price increases relatively smoothly.

That's why some anti-smoking advocates are wary, figuring that any deal cigarette makers will accept has got to be a bad one for the public health.

"I am nervous about it," says Castellanos, the Baltimore head and neck surgeon. "The tobacco companies are making the final economic equation. I'm afraid they'll make a deal that leaves them free to pursue people starting at age 21. And I just don't think they should ever be indemnified against claims for the damage they've done."

A source on the plaintiffs' side counters that the court system simply cannot handle the alternative to a global settlement, possibly 35 million individual lawsuits. "The alternative is to try 50,000 a year until you break the industry," he says. "But in 20 years you've only done 1 million cases, and you've run up huge litigation costs."

The crux in the settlement talks might come down to non-economic issues. For public health advocates -- and for Curran and other attorneys general -- measures to slow drastically the recruitment of new, young smokers are paramount.

Six of Cathy Ryan's seven siblings still smoke. But she is determined that her eighth-grade son, John, will never take a puff. John says his mother's experience has dissuaded him, but a quarter of his classmates at Takoma Park Middle School are already smokers.

"I guess they want to be cool," he says.

His mother says she will take him on a hospital tour to witness the grotesque work of tobacco.

"If he chooses to smoke," Ryan says, "he won't be able to say 20 years from now, 'I didn't know.' "

Pub Date: 4/20/97

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