12 from Jersey hold up $1.9 billion tobacco deal

By Robert Schwaneberg Star Ledger October 3, 1999

When a dozen New Jersey smokers sued the tobacco industry two years ago, they said they were looking for more than just money.

They demanded that the cigarette makers stop manipulating nicotine levels and targeting their product at children. They also demanded that the industry pay for an anti-smoking publicity campaign, stop-smoking clinics and medical monitoring of nicotine addicts -- not just for themselves, but for every smoker in New Jersey.

But suddenly, their lawsuit has become all about money.

It is the only thing stopping New Jersey from immediately collecting $92.8 million it is owed from last November's historic settlement ending lawsuits filed by 46 states against the tobacco industry.

Under that settlement, all appeals must be ended and the time for filing any further any appeals must have expired before a state's settlement is finalized.

The snag is frustrating for New Jersey officials who plan to use the money for various health-related programs, including an $18.6 million anti-smoking campaign.

But the snag reaches far beyond New Jersey. Because of fine print in the multibillion-dollar settlement, the 12 Jersey smokers are standing in the way of payments totaling $1.9 billion to 44 states and territories.

That settlement agreement provides that before money can be paid out, the deal must be finalized in states entitled to 80 percent of the money. When California dispensed with its final legal challenges earlier this month, it left the states just 29/100ths of a percent short of reaching that threshold, according to Dennis Eckhart, a senior assistant attorney general in California. If New Jersey were to finalize its settlement tomorrow, it would open the door for all the settling states to collect.

"You could say you're holding up everyone's money, ours and everyone else's," Eckhart said.

Virginia's attorney general announced Friday that his state's supreme court had dismissed the last legal challenge, but the time for any further appeals must expire before its settlement is considered final.

So far, New Jersey's courts have refused to consider the case on an accelerated basis. A trial court judge in January formally refused to let the smokers intervene in the state case and they appealed. The case was sent to the Appellate Division but has not been scheduled for oral argument.

Attorney General John Farmer Jr. said the state is "doing everything we can to accelerate this matter." His office recently filed a third request for expedited treatment of the case after two earlier ones were denied.

Farmer said he is confident the state's settlement will be upheld.

A drawn-out court battle could hold up New Jersey's second annual payment of $247.9 million early next year. In a worst-case scenario, if the dispute is not resolved by Dec. 31, 2001, New Jersey would drop out of the settlement and never collect the $7.6 billion it is scheduled to receive over the next 25 years.

None of this deters Bergen County Bar Association President Terry Paul Bottinelli, who is convinced the Attorney General's settlement with the tobacco companies shortchanges his clients and another 1.7 million New Jersey smokers.

He said he and co-counsel Marc Saperstein are determined to see that their clients get their day in court. "I put my head on the pillow at night and I know what I'm doing is for the people," Bottinelli said.

But Paul Armstrong, counsel to New Jersey Breathes, an anti-smoking coalition that supports the settlement, worries that the benefits it offers to the entire state are being jeopardized by Bottinelli's appeal.

"The end result is neither their clients nor eight million New Jerseyans will benefit," Armstrong said.

Woodbridge lawyer Christopher Placitella, the state's outside counsel, contends Bottinelli was "misguided" and "hopelessly late" when he moved to intervene in the attorney general's suit just two weeks before settlement.

Ronald Fraser, a 32-year-old truck driver who lives in Neptune, is one of Bottinelli's clients. He began smoking at the age of 12, and now, he said, he cannot quit.

"I try all the time, I just can't seem to do it," Fraser said. He said he has tried using a nicotine patch and switching brands.

"You're a slave to it. You try to get lower nicotine, but then you smoke more because they're 'light,' and you're addicted to the nicotine," Fraser said. "You still want a cigarette, even though you know it's killing you."

Patricia Watkins, 73, of Closter is another client. According to court papers, she began smoking at 13 and quit two years ago, when she was diagnosed with emphysema. She now relies on bottled oxygen.

"When I talk to her," Bottinelli said, "she says, 'I don't want my grandchildren smoking. Please, what can you do to help?'"

Supporters of the settlement call it the state's best hope for keeping another generation of children from becoming addicted to nicotine. When then-Attorney General Peter Verniero, now a state Supreme Court justice, approved the settlement last year, he said it included unprecedented restrictions on marketing cigarettes to youngsters, including a ban on tobacco billboard advertising.

Gov. Christie Whitman has pledged to use a substantial part of the settlement for anti-smoking efforts, something only five other states have done, according to the Campaign for Tobacco-Free Kids in Washington, D.C. The Legislature has approved Whitman's plan to spend $18.6 million this year on anti-smoking efforts, including $2.6 million to help smokers break the habit.

But it is not enough to satisfy Bottinelli. He wants the money for stop-smoking clinics written into the settlement agreement, and not dependent on the whims of future lawmakers who might want to use the money for roads.

He also said the settlement should pay for regular chest X-rays, cancer screening and other medical examinations for smokers who got addicted to nicotine as youngsters, like his clients. Nothing in either the settlement agreement or New Jersey's current spending plan provides for such medical screening.

By settling, Bottinelli says, Verniero traded away his clients' right to make the tobacco companies pay for such screening in return for an agreement that has "a ton of loopholes."

He is not the only one criticizing the settlement. In Pennsylvania, Dr. Robert Sklaroff, an Elkins Park cancer specialist who says the deal is a giveaway to the industry, has filed a legal challenge that is holding up that state's initial payment of $137.9 million.

Regina Carlson, who was crusading against tobacco at the Statehouse in Trenton long before it became fashionable, also thinks the settlement is "a bad deal," as does George Washington University Law Professor John Banzhaf, founder of Action on Smoking and Health.

But Prof. Richard Daynard, founder of the Tobacco Products Liability Project at Northeastern University, thinks that while the states might have been able to squeeze more out of the industry originally, it is probably too late to strike a better deal now.

"Personally, I don't see much to be gained in general by opposing the settlement," Daynard said.

As a practical matter, he aid, the tobacco giants might make additional concessions to the U.S. Justice Department, which just filed its own lawsuit, but they have no reason to sweeten the deal for one state when virtually all the others have dropped their lawsuits.

"The state cases are over," Daynard said. "This particular train has left that particular station."