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Tobacco firms to meet DOJ
June 21, 2001: 2:51 p.m. ET

Philip Morris, R.J. Reynolds agree to discuss federal suit with Justice
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NEW YORK (CNNfn) - Philip Morris and R.J. Reynolds agreed Thursday to meet with U.S. Justice Department officials to discuss the government's civil lawsuit against the tobacco industry, but maintained their stance that the suit should be dismissed.

"While we continue to believe the lawsuit is without merit and should be dismissed, we intend to meet with the department's representatives and listen to what they may have to say," New York-based Philip Morris (MO: up $1.16 to $47.66, Research, Estimates) said. "We do not intend to comment any further about the meeting."

In its own statement released several hours after Philip Morris, Winston-Salem, N.C.-based R.J. Reynolds (RJR: up $1.13 to $55.94, Research, Estimates) said it was willing to discuss the suit with the Justice Department, but that it had no intentions of settling it.

"We do not believe this lawsuit has any legitimate basis, and we are continuing to prepare our defense," Reynolds said in its statement. "We have no intention of settling this suit. However, we are willing to listen to what the Department of Justice may have to say."

Sources told CNN Tuesday that U.S. Attorney General John Ashcroft had assembled a team of three lawyers to work on a possible settlement of the government's civil suit against tobacco processors.

A Justice Department official told Reuters that lawyers representing the tobacco companies had been contacted, and that the settlement team was in the process of setting up meetings.

The official, who asked not to identified, declined to give any details about what the Justice Department might seek in any settlement.

The official flatly denied that the department began the settlement overtures because the case had been viewed as weak, adding, "At this point in time, we thought we were in the strongest position to start settlement discussions."

The civil suit filed by the Justice Department seeks to compensate taxpayers billions of dollars spent on smoking-related health care since the 1950s. The government charges tobacco companies with conspiring to conceal the health effects of smoking and addictiveness of nicotine to the American public.

In addition to Philip Morris, and R.J. Reynolds, other big cigarette makers have been named as defendants, including Lorillard Tobacco Co., a unit of Loews Corp. (LTR: up $1.14 to $65.40, Research, Estimates), and Liggett Group, a unit of Vector Group (VGR: down $0.55 to $31.30, Research, Estimates).

The tobacco industry has been slapped with numerous lawsuits since 1994, when the public began to learn companies had hidden information about the harmful effects of smoking.

Last July, a Florida jury ordered tobacco companies to pay $145 billion in damages to hundreds of thousands of smokers in a class-action suit charging the industry with failing to disclose information about smoking's harmful effects.

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Tobacco companies currently are appealing that case.

And earlier this month, a Los Angeles jury ordered Philip Morris, the No. 1 U.S. tobacco maker, to pay a record $3 billion in damages to a Marlboro smoker with incurable lung and brain cancer.

Ann Gurkin, a tobacco analyst at Davenport & Co., said the companies are hoping to craft some sort of agreement with Justice that may include advertising restrictions and other regulations rather than a financial settlement.

"They want to further efforts to come up with some restrictions or guidelines. I think it's driven more by that desire," Gurkin said. "The industry is hoping to have some sort of discussion on regulation."

Lorillard spokesman Steve Watson said the company will be part of those discussions, which he understands will be in a couple of weeks.

"We have always maintained that this case is without merit and should be dismissed," Watson said.

A spokesman for Brown & Williamson said the company is still evaluating the situation. Liggett did not immediately comment on the talks. graphic

From staff and wire reports


Tobacco stocks fall after Philip Morris verdict - June 7, 2001

  RELATED SITES - Big Tobacco ordered to pay $145 billion in punitive damages - July 14, 2000 - Ashcroft awaits court rulings in tobacco suit - Apr. 27, 2001

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