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Florida Settles Tobacco Suit; Firms to Pay $11.3 Billion

By John Schwartz
The Washington Post

The nation's largest tobacco companies settled Florida's lawsuit against them Monday by agreeing to pay the state $11.3 billion over the next 25 years and to take steps aimed at reducing underage smoking.

"The tobacco industry has conceded defeat and we have a settlement of historic proportions," Democratic Gov. Lawton Chiles said at a televised news conference after signing the deal in the West Palm Beach courtroom where jury selection for the state's suit had been underway.

In a joint statement, the tobacco companies called the agreement "another step in a process to end the climate of confrontation and litigation that has marked the national debate on tobacco related issues."

The deal - possibly the largest approved legal settlement in history - is similar to a settlement with Mississippi, and is the latest sign that the industry has shifted away from its historic posture of fiercely battling every legal challenge.

The agreement could boost the momentum of the proposed national tobacco settlement, which Congress will take up after the summer recess. That proposal calls for the industry to pay $368 billion over the next 25 years and to sharply reduce advertising and promotion of tobacco products in return for protection from some lawsuits. Florida's settlement would be superseded if the national deal goes through.

Under the terms of the Florida deal, the companies will pay the state an initial $550 million and another $200 million for an anti-smoking campaign by Sept. 15. The cigarette makers will remove their billboard ads within 1,000 feet of schools right away, and those ads will be replaced with anti-tobacco advertising funded by the settlement. Other billboards will be removed over the next few months. Ads in sports stadiums and on mass transit also will go. The industry has agreed that the public health provisions of the Florida settlement will continue regardless of whether the national deal is approved.

The agreement also calls for the removal of vending machines in any area accessible to minors, and for the industry to hand over hundreds of internal documents that it had fought against releasing in the state's case. By releasing the documents, "We've blown away the smoke screen of lies," Chiles said.

The companies signing the settlement were Philip Morris Cos. Inc.; Reynolds Tobacco Co., a unit of RJR Nabisco Holdings Corp.; Brown & Williamson Tobacco Corp.; Lorillard Tobacco Co.; and U.S. Tobacco Co.

Settlement talks have been going on between Florida officials and the industry since soon after the announcement of the national settlement proposal. That settlement must be approved by Congress, however, and so the individual state suits have moved forward pending legislative action.

Mississippi, the first state to file such a suit to recover the Medicaid costs of treating sick smokers, and the first with a trial date, announced its separate settlement with the industry just days before the case was to go to trial. That settlement brought Mississippi $3.6 billion, but none of the public health initiatives that Mississippi Attorney General Michael Moore and colleagues had pushed for in the national deal.

Florida got the public health measures, in part, because it had a stronger case than Mississippi. The state legislature had passed a law making a third-party suit by the state against the industry possible. By suing in place of smokers, the state was able to brush away the powerful defense that has helped the industry win so many suits: that smokers assumed the risks of smoking and should bear the responsibility for it.

The Florida negotiations had stalled in recent weeks. But depositions last week by the heads of Philip Morris and R.J. Reynolds were crucial in getting a settlement, attorneys for the states said. In those depositions, both CEOs admitted - after caveats that they were speaking from personal belief, not stating corporate policy - that tobacco products kill. Lawyers suing the industry claimed that the statements by Geoffrey Bible and Stephen Goldstone showed a new attitude in an industry that allowed Florida - and, eventually perhaps, Congress - to strike a deal.

Far from being a spontaneous corporate change of heart, however, the statements were actually negotiated word for word in the final days of settlement talks between attorneys general and the industry, Moore said - part of the change in corporate culture called for in the text of the deal. "We were not going to enter the settlement until we knew that they were going to answer the questions truthfully," Moore said in an interview.