Las Vegas Sun

March 28, 2024

States say verdict won’t affect anti-smoking settlement

SUN STAFF AND WIRE REPORTS

MIAMI -- In the aftermath of the record $145 billion award against five tobacco companies, state officials across the country believe the verdict will not affect money they are counting on from a national settlement to pay for anti-smoking campaigns and health programs.

But they are taking precautions in case the industry goes bankrupt, threatening their ability to collect approximately $250 billion over the next two decades.

"The consensus we reached was that any verdict up to $200 billion in our estimation would not have an adverse impact on the companies complying with our agreement," said Washington state Attorney General Christine Gregoire, lead negotiator in the 1998 states' settlement.

Attorneys for the five tobacco companies found liable Friday after a two-year trial said the huge punitive damages award would kill the industry.

The legal sparring is far from over.

A final order is needed to move a case to appeal. But the signing of the final judgment will be delayed while the tobacco industry pursues its argument that the trial isn't over until the individual claims of up to 700,000 sick Florida smokers are decided.

In court Monday, smokers' attorney Susan Rosenblatt argued that post-verdict issues, including an industry request to reduce the dollar amount as excessive, shouldn't delay entry of a final order.

Circuit Judge Robert Kaye said he hoped to sign the order this week, but lead tobacco attorney Dan Webb said he wasn't yet prepared to offer motions addressing the legal issues involved.

Meanwhile, the National Association of Attorneys General has hired a California law firm specializing in bankruptcy to represent them in case the tobacco companies declare bankruptcy, Gregoire said.

Steve George, spokesman for Nevada Attorney General Frankie Sue Del Papa, said that the California law firm was hired several months ago to protect the tobacco settlement money for the states.

George said this wasn't just for the Florida case but in the event other things crop up in which a tobacco company may file bankruptcy. The firm of Pachulski, Stang, Ziehl, Young and Jones has been working on an analysis of the states' options, if a tobacco company or companies did file for bankruptcy, George said.

Nevada has received about $27 million of more than $1 billion it will receive in periodic payments.

Colorado Treasurer Mike Coffman fought unsuccessfully last session for "selling" the state's $2.9 billion settlement share for $1.2 billion or less to pay for programs already established.

But lawmakers opposed that plan in favor of annual payments, saying there was no risk that the tobacco industry would go bankrupt.

"I did my best to convince the Legislature there are real risks with this settlement agreement and they shouldn't gamble on the tobacco industry," Coffman said Monday. "This is just one risk out of many."

Ken Lane, spokesman for Colorado Attorney General Ken Salazar, said programs funded in anticipation of getting tobacco money for the next 20 years are not in immediate danger because the $145 billion award likely won't stand.

In Louisiana, Treasurer John Kennedy fears the Florida decision could affect annual payments on the state's $4.6 billion settlement share. He wants to build security for the programs the settlement money is financing by selling bonds. Sun reporter

Cy Ryan contributed to this report.

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