March 20, 1997 -Olympia - Washington state Attorney General Christine Gregoire and more than 20 other state Attorneys General today have signed a precedent-setting settlement with the Liggett Group, a Delaware-based cigarette maker.
"This settlement will finally begin to change the conduct of the tobacco industry and provide the public with information it has a right to know," Gregoire said.
"One goal of Washington state's lawsuit against tobacco companies is to get the industry to tell the truth about the health effects of tobacco products," said Gregoire. Cigarette smoking is the most deadly and preventable cause of disease and premature death in America, she added.
Under the settlement, Liggett President Bennett LeBow will publicly acknowledge that nicotine is addictive, that tobacco use causes serious health problems including lung cancer and heart disease, and that the industry markets to children.
"This settlement helps us break the insidious code of silence within the tobacco cartel," Gregoire said. "It not only proves the tobacco companies have been lying to the public, it also will provide us with sensitive, inside information which will help in our tobacco litigation."
Gregoire said the settlement will "crack open the door to the private world of the tobacco companies." Under the agreement, Liggett will make available all of its documents and records which are relevant to the state's lawsuit including all materials previously hidden from the public under attorney-client and attorney work product protections. "The industry for years has shamelessly used attorney -client privilege to hide research, marketing tactics and other material which the public has a right to know about," Gregoire said.
Under the settlement, Liggett will fully cooperate with states in their lawsuits against tobacco companies. Liggett employees will provide witness interviews, testify and help state attorneys with discovery.
In another dramatic break from the rest of the industry, Liggett agrees in the settlement to follow and abide by new Federal Food and Drug Administration rules to crackdown on tobacco sales to minors. Tobacco companies have challenged the FDA rules in court. Liggett also agreed to change its conduct by adding a prominent warning to its packaging that nicotine is addictive. In addition, Liggett has agreed to "scrupulously" avoid advertising which appeals to younger audiences.
The tobacco industry spends more than $6 billion a year on advertising and promotion much of it aimed at kids. Youth smoking is a public health concern because more than 80 percent of smokers began smoking before age 18. Each day another 3,000 American children become smokers and nearly one-third of them will eventually die because of their addiction.
"Our litigation is intended to change the conduct of this industry and make it stop preying on our kids," said Gregoire.
Liggett is a small player in the tobacco industry with only about three percent of the market share. "Liggett may be a small player in the industry, but I think this settlement will loom large in our lawsuit against the big tobacco companies," Gregoire said.
Like Washington, many of the states are attempting in their lawsuits to recover tax dollars spent on Medicaid for smoking related illnesses. Liggett has agreed to make annual payments to the states for the next 25 years based on a percentage of pretax income. The amount of the payments will rise and fall depending on Liggett's market share.
"While recoveries from Liggett will not be substantial, I believe this settlement will greatly enhance state lawsuits and will unleash billions of dollars in reimbursements to the states," Gregoire said.
A copy of the full text of the Liggett Settlement Agreement can be found here.