Jurisdiction in Liggett Suit Argued

By Garry Mitchell Associated Press April 27, 1999

MOBILE, Ala. (AP) -- Attorneys on Tuesday challenged an Alabama judge's jurisdiction over a proposed settlement of Liggett Group's tobacco litigation, saying he cannot possibly protect the interests of ``everyone in the United States'' who is covered by the class-action.

``No class-action has ever been this broad,'' said Houston attorney Steve Baughman, representing Trial Lawyers for Public Justice.

Baughman and other lawyers representing health-care providers and plaintiffs in pending tobacco cases in other states argued that Mobile County Circuit Court Judge Robert Kendall lacks jurisdiction over the settlement.

Attorneys for Liggett said the critics' arguments were without merit.

Liggett attorney Marc Kasowitz of New York said the only place for Liggett to settle the current dispute is in this class-action case, which creates a limited fund to compensate injured smokers.

But David Bagwell, an attorney for Blue Cross insurance, said Alabama law requires that objectors to the settlement be allowed to opt out of the settlement and file their own lawsuits against Liggett if necessary.

He also criticized Liggett's claim that it has financial difficulties. A financial representative from Liggett next week will give a deposition to the objectors' attorneys, who contend the company is better off than when it first proposed this limited-fund settlement.

Kendall, who inherited the Liggett case from a retired judge, did not immediately rule on the jurisdiction question. He scheduled a hearing June 3 to determine the fairness of the settlement.

Also Tuesday, Kendall agreed to allow attorneys for black smokers opposing the settlement to intervene with an argument that it could block future lawsuits by black smokers. Statistics have shown that blacks suffer higher rates of disease and death from lung cancer and other smoking-related illnesses.

Meanwhile, an attorney for Indian tribes was granted a request to have the tribes excluded from the settlement. Attorney Rhett D. Klok of Alburquerque, N.M., argued that tribes should be treated as a foreign nation when it comes to this settlement.

Liggett first proposed the class-action settlement here two years ago, but the case was transferred to West Virginia, where it was rejected as overly ambitious by a federal judge. Plaintiffs' lawyers came back to state court in Alabama last summer.

Under the proposed settlement, Liggett would cooperate with plaintiffs and their attorneys in lawsuits brought against other tobacco companies. Liggett is the smallest of the five major tobacco companies.

Liggett also would pay an amount equal to 7.5 percent of all its future sales into a fund that would be earmarked for compensating victims who have smoked its cigarettes, such as L&M, Lark and Chesterfield. If it fails to turn a profit in any given year -- and it hasn't posted net income for years -- the class is guaranteed $1 million annually.

Liggett also pledged to refrain from using outdoor or Internet advertising and would comply with regulations aimed at preventing youths from smoking. The proposal would place limits on the amount of damages that Liggett Group would pay to people claiming harm from the company's cigarettes.

About 30 objections to the settlement have been filed, with each objection containing numerous parties. Blue Cross, for example, represents 44 separate Blue Cross insurance plans from around the country.