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Legislators bewildered by settlement

April 04, 1999
By: Anna Brutzman
State Capital Bureau

JEFFERSON CITY BUREAU - If you feel confused or underinformed about the current state of Missouri's $6.7 billion settlement with the tobacco industry's largest manufacturers, you need not blush. Your legislators down in Jefferson City this week showed how confused they are, too.

These are some of the questions that have arisen recently:

At a special meeting of the Senate Judiciary Committee last Tuesday, Paul Wilson, the attorney general's lead attorney for the tobacco case, tried to clear up some of these issues for legislators.

Senators were most baffled by who would have to pay the as-yet-undetermined attorneys' fees for the case. Estimates have run into the hundreds of millions, and lawmakers don't want Missouri to be stuck with the bill.

Forty-six states, Washington, D.C. and four U.S. territories participated in the settlement. The major tobacco companies, which comprise 99.88 percent of the market, agreed to pay $206 billion to the plaintiffs over the next 25 years. They will begin April 15, 2000. The settlement also restricted the merchandising and advertising of tobacco.

But beyond that, it gets shrouded in smoke.

According to the 147-page agreement, manufacturers who signed on will pay the state's attorneys' fees. Simple enough. But the Senate passed an amendment to a bill last Tuesday that shows they aren't so sure about those manufacturers coming up with cash. The amendment, introduced by Sen. Peter Klarich, R-Cape Girardeau, gives the General Assembly control over tobacco lawyers' fees.

But Missouri has nothing to do with the fees, Wilson pointed out.

"That amendment says the only way a fee can be paid is out of the state treasury, which is exactly what we're trying to avoid," Wilson said.

The settlement requires the tobacco industry to negotiate with attorneys over what "reasonable" fees will be. And if those fees run into the millions, Wilson said, they are nevertheless well-earned: The special assistant to the attorney general for the case, Tom Strong, led a team of 40 lawyers from five private firms. They logged hundreds of hours and paid out-of-pocket for the testimony of several expert witnesses against an entire industry.

On Wednesday, Strong signed a release assuring lawmakers that he would ask Missouri for nothing, even if negotiations broke down and an arbiter had to be brought in over the fees.

Sen. Harold Caskey showed skepticism when Wilson praised the work of Strong and his team of more than 40 lawyers.

"I would like to ask the chairman to have these witnesses sworn in," Caskey said. Committee members and the audience laughed.

Despite the success of the case and the amount of work the lawyers may have put in, one Missouri lawmaker does not want to see the attorneys for the case getting overpaid.

"I don't care if the tobacco industry pays the fees," said Sen. Franc Flotron, R-St. Louis County. He said he didn't want to see the lawyers end up making $50,000 an hour. "That makes me sick."

In the midst of clearing up the fine points of legal fees, Wilson also explained when the settlement would be final.

Nixon signed the settlement on November 23. A judge needed to approve the settlement, however, before it could go into effect. St. Louis Circuit Court Judge Jimmie Edwards did just that on March 5. Anyone who disagrees with the settlement has 45 days to appeal the judge's order. But Edwards said Wednesday that that is unlikely.

After the appeals period is over, the state must then wait until 80 percent of the other state signatories have reached final compliance with the settlement. Then the money can come. Only about 40 percent are currently compliant.

Wilson urged lawmakers to pass legislation that will protect the major tobacco companies from a market-share loss once the impact of the tobacco settlement sets in. Off-brand cigarette companies, those not participating in the settlement, could otherwise undercut the prices of the major tobacco companies.

Missouri will keep getting its billions so long as the market share of the signatories does not dip below 95 percent. If it were to do so and Missouri had no off-brand tobacco law, explained Wilson, the terms of the settlement let the major tobacco companies stop paying.