The State Of Texas And The Tobacco Industry Have Reached A $15.3 Billion Settlement That Would End The State's Tobacco Lawsuit Against The Industry

cnn.com/, Mar 10, 2005

The state of Texas and the tobacco industry have reached a $15.3 billion settlement that would end the state's lawsuit against the industry.

If U.S. District Judge David Folsom approves the deal, it will be not only the biggest payoff in the war between the states and the tobacco industry, but also the largest legal settlement in U.S. history.

Folsom said he would need the weekend to read the lengthy document and would not make a decision until Tuesday.

Texas Attorney General Dan Morales said the settlement would be paid out over 25 years, with the first $1.2 billion due this year. Much of the initial money is earmarked for a variety of health programs for children, including a foundation for children's health, anti-smoking programs and cancer research at state institutions.

"More than a million poor children in Texas without health insurance will receive the care they need," Morales said. "And the taxpayers of Texas are now fully compensated for the cost of providing health care to those afflicted with tobacco-related diseases."

Morales said that the fees for five private firms that helped the state and spent $50 million of their own money preparing the case would be paid either by the tobacco companies or from the federal government's share of the money.

How much to pay the lawyers has not been determined. The state and the firms had agreed that the lawyers would receive 15 percent of a jury award, but have now agreed to let the court decide the fees in light of the settlement.

Fees in the billions 'laughable'

Morales said it was "laughable" to speculate that the lawyers' fees would be in the billions of dollars, but added that whatever they get was well-earned.
 
Morales announces the record settlement   
He said the state could not have hoped to combat the industry attorneys without the help of the private firms. The industry's lawyers, he said, spent $200 million preparing their defense.

"These fellows," he said, gesturing to the attorneys retained by the state, "had we lost this case, wouldn't have been paid a dime."

The tobacco companies said in a statement that the settlement "again demonstrates that the industry is prepared to cooperate with government and the public health authorities to discourage underage tobacco use."

Texas is the third state to settle a lawsuit against the tobacco industry, and the deal is the largest. Florida and Mississippi settled last year with the industry for a combined total of $14.7 billion.

An end to billboard, transit ads

White House spokesman Mike McCurry said the settlement was "another indicator that tobacco companies will be held accountable, and another reason why there should be federal legislation to pursue these issues on behalf of all Americans."

He said tobacco companies are "clearly on the run and they're on the run for good reason."