Back in March, Philip Morris U.S.A. announced it supports passage of legislation granting the Food and Drug Administration (FDA) authority to regulate tobacco products. After the company’s high profile fight to oppose FDA regulation in 1996, the seeming turn-about caused surprise and consternation in many corners, including this one.
Don’t stop reading this essay if you don’t smoke, or if you are anti-smoker. This is a story about much more than tobacco. It’s about things that threaten everyone’s rights, smokers and nonsmokers alike.
Full disclosure: I drink a can of Miller Genuine Draft beer and smoke a cheap cigar at the end of every day. A Philip Morris subsidiary brews the beer, but it doesn’t manufacture the cigars. Philip Morris contributed about 1.5 percent of Heartland’s budget last year.
The Marlboro Man Speaks
Philip Morris says it wants the FDA to have “meaningful, tough, and effective regulatory authority over tobacco products.”
Steven Parrish, a senior vice president, says “if there are issues or problems involving your product, you have to be part of the solution process. If you’re not, your problems will only increase.” FDA regulation, according to Philip Morris, is “inevitable.” Continued resistance means anti-smoking forces will resort to legislation and litigation rather than regulation, and the company will face different rules in 50 states. Regulation by the FDA could preempt state efforts and provide “legal certainty” and “regulatory predictability.”
For years, tobacco companies have waged a successful battle against regulators, legislators, and litigants. Only one tobacco company (Brown & Williamson) has ever paid a plaintiff in a lawsuit filed by an individual, and that case has been appealed. In 1997-1998, the industry defeated federal anti-smoking legislation that had broad bipartisan support in Congress. In March 2000, the U.S. Supreme Court held the FDA does not have authority to regulate tobacco products.
Nevertheless, Philip Morris sees the writing on the wall. They are showing “leadership,” they say, by helping to draft legislation giving their products “exceptional status” rather than be regulated under existing rules for drug-delivery devices.
Fruits of Appeasement
In 1998, Philip Morris and other major tobacco companies signed a Master Settlement Agreement (MSA) with 46 states and five territories, hoping it would take the wind out of the sails of anti-tobacco legislation and litigation. The agreement promised the states an incredible $246 billion over 25 years plus $1.45 billion to a foundation to run anti-smoking ads, and imposed sweeping restrictions on advertising and marketing of cigarettes, including a ban on use of the Marlboro Man in outdoor advertising and mandates to prevent youth smoking.
Cigarette prices jumped 45 cents a pack after the settlement was signed and 21 cents since then. Tobacco consumption fell 8 percent in the first year after the settlement, and about 2 percent last year. States (and the plaintiff’s lawyers they put on partnered with) are having a ball spending their tobacco settlement windfalls. But this act of appeasement hasn’t helped the tobacco industry.
States still try to pass and enforce laws that are more strict than the MSA. Chicago and the state of Massachusetts are in litigation over anti-smoking laws that exceed what current federal law seems to allow. The U.S. Justice Department, under then-Attorney General Janet Reno, filed suit in 1999 seeking $20 billion a year, supposedly to recover the government’s cost of treating smoking-related illnesses. Last summer, a Florida jury in a state class-action case hit the five biggest cigarette makers with a $145 billion punitive damage award. In June of this year, a California jury hit Phillip Morris with $3 billion in punitive damages.
The Justice Department case, like so much of the Clinton era, was all politics and little law: Attorney General John Ashcroft is wisely seeking to settlement the suit. The two civil court decisions are being appealed and the punitive damages are likely to be drastically reduced even if the verdicts aren’t overturned. But more civil suits are in the pipeline, and Philip Morris’s stock took a beating after the California judgement.
It’s Not Just Tobacco
Smoking isn’t a new recreational activity — archeologists have found 8,000-year-old pipes. Its risks have been printed on packs, billboards, and other advertising for 35 years. Surveys show smokers almost universally over-estimate the true health risks of their habit. Little wonder why tobacco companies easily convince juries that smokers voluntarily assumed the risk by not quitting.
Smoking and its risks aren’t new, but federal lawsuits and billion-dollar class-action suits are. What has changed? Cigarettes have stayed pretty much the same, but law-suit abuse, sometimes called the “liability explosion,” is new and expanding rapidly. Leftist advocacy groups, activist politicians, and greedy lawyers have fine-tuned the system for demonizing an industry and its products.
Anti-business lobbying organizations, such as Ralph Nader’s Public Citizen and the American Lung Association, have made a lucrative business out of using taxpayer funding and cash from plaintiff’s attorneys to whip up public fear and loathing of targeted products or industries. Politicians follow in their wake, getting front-page attention for proposing draconian taxes and bans to “protect the children.”
Plaintiff’s attorneys then file highly publicized class-action lawsuits, filed in parts of the country with the most lenient judges and pro-plaintiff juries, seeking tens of billions of dollars in damages. Hit simultaneously from three sides and fearing that their investor’s confidence will be undermined by reversals in court, the victims often choose appeasement to devastation. Legal settlements put hundreds of millions and even billions of dollars into the hands of the victorious lawyers, who use the money to fund litigation against the next victim.
This cycle of demonization, appeasement, and renewed assault has destroyed companies and industries with any association, however remote, to asbestos and silicon breast implants. It is tightening a noose around the necks of the lead paint industry and gun manufacturers. It is circling the plastics, automotive, biotech, and pharmaceutical industries.
We Are All at Risk
Whether or not you smoke, the attack being waged on smokers is an attack on you: It undermines the rule of law and what economists call the sovereignty of consumers. “Legislation by litigation” is worse (if this can be imagined) than legislation by politics. The interests of litigants are not the same as those of consumers, and those of the so-called public interest groups are at odds with sound science, individual freedom, and the Rule of Law. Billions of unearned and undeserved dollars are flowing into the coffers of fewer than a hundred law firms, posing a grave threat to the legal system and to democracy itself.
The decision to smoke may not be a rational one, but neither is the war on smokers. While smoking may be noxious to some and unhealthy to the smoker, the war on smokers is much worse: It is unraveling our legal system and our long and cherished tradition of individualism and self-governance. As Llosa also wrote, “What sort of freedom would it be that allowed us only to choose what is good for us?
Philip Morris may not be the most attractive poster child for democracy and individual liberty, but it’s capitulation to calls for regulation by the FDA is a warning sign we ignore at our own peril. This dangerous trend won’t end until public outrage convinces elected officials to stop participating in the demonization process, new rules are adopted that restrict mass tort abuse, and anti-business groups are defunded, declawed, and discredited. Expressing outrage over the tobacco litigation is a good place to start.
The Marlboro Man is dead. Let’s make sure our freedom isn’t the next victim.
