Rubin Barney & Birger
March 13, 1996
THE WALL STREET JOURNAL
In Courtrooms, the Debate
May Never Be the Same
"We're not going to see any more of this
By MILO GEYELIN
AndRICHARDB.ScHMrrT
stonewalling and hiding documents,said
Staff Reporters of THE WALLSTREETJoURNAL
Russ M.Herman of Herman,Herman,
Liggett Group's tentativesettlement of
Katz&Cotlarin New Orleans.“If they've
agiant class-action suit against the to-
got them, we're going to get them."
bacco industry could alter thedynamicsof
Some people say theplaintiffs lawyers
tobacco litigation forever.
gaveup too much toget those concessions.
Plaintiffs would receive only a meager
Under the settlement's terms,Mr.LeBow
sum for smoking-cessation programs,but
could cancel the deal and terminatepay
somelegal expertspredictthesettiement
ments at any time if he decides too
willseta benchmark for the industry's
many smokershave rejected the terms and
legal liability andmayhelp potential ju
opted out.Mr. LeBow could also walk away
rors get used to the idea that tobacco
if his former co-defendants score a court-
companies should pay damages.
room victory.
Moreover,lawyers for the plaintiffs
At thevery least;the settlement would
anticipatemoreimmediatebenefits in the
enable Mr.LeBow to slash Liggett's $10-
class-action suit,known as Castano and
million-a-yearbillfordefendingitself in
brought on behalf ofeveryU.S.smoker
tobacco lawsuits. At current profit levels,
who claims to be addicted.The industry
Liggettwouldpayno more than$2million
is set to arguenext month before a federal
ayearfor25yearsunder the settlement.
appealscourtinNew Orleans that thecase
It“seems like a sweetheart deal’for
is toobigandunmanageabletoproceedas
Liggett,says Larry Schonbrun,an Oak-
a class action.The Liggett settlement, say
land,Calif.,lawyerwho is often critical of
plaintiffslawyers,willhelp them deflect
class actions.
that argument by showing that the issues
Some other tobacco litigants also criti-
can beresolved through negotiations.
cize the deal as a giveaway. “The settle-
“The principal objection is that this
ment is just an embarrassment,' says
case is so large and complex that it's not
Miami plaintiffs lawyer Stanley Rosenb-
manageable. This settlement will show
latt,who has a statewide class-action suit
that it not only is manageable but that
against the tobacco industry pending in
we've managed it, says Richard Hei-
Florida.Liggett'slawyers believe that the
mann of the San Francisco firm Lieff,
Castano settlementwill supersedeMr.Ro-
Cabraser&Heimann.
senblatt's claims against the company.
Thatargumentwill become even more
Stillunclear is whether Liggett can
compellingifBennettLeBow,who controls
persuade enough states to.join a separate
Liggett parent Brooke Group Ltd.,suc-
settleimenttoresolve anotherslewof law-
ceedsinhis bid to merge Liggettwith the
suits seeking compensation for the cost to
nation's second-largest tobacco company,
taxpayers ofproviding healthcare to
theReynoldsTobaccounitofRJRNabisco
Corp. If that happens,Mr.LeBow's settle-
mentwouldextendto thecombinedentity,
whichwould have a27%marketshare.
The44-pagesettlement,whichrequires
courtapproval,alsoincludes anumber of
provisions that couldfurther divide the
tobacco companies and give plaintiffs a leg
up in the fact-findingphase of the litiga
2047128093
tion.Chief among them is a provision
requiring Liggett to disclose“any fraudu-
lent or illegal conduct"by any tobacco
company that results in the suppression of
evidence or otherwise is “designed to
frustrate or.defeat"plaintiffs.
CG
