Judge Limits Liability in Tobacco Lawsuit

A San Diego judge Friday limited the potential liability of the tobacco industry in a massive lawsuit filed by Lt. Gov. Gray Davis.

Superior Court Judge Robert May dismissed Davis’ attempt to recover hundreds of millions of dollars to compensate the state for health care expenses that state taxpayers incurred treating smokers. May ruled that such a suit, parallel to that filed by 24 states, cannot be lodged under the state’s business and professions code.

Attorneys for the cigarette companies did not challenge Davis’ right to file a lawsuit alleging that the tobacco industry committed fraud against California citizens by suppressing information about the health hazards of smoking for more than four decades. So part of the suit will go forward, meaning that the state could still recover hundreds of millions of dollars, said Laguna Niguel attorney Mark Robinson, who is serving as one of Davis’ special counsel.

Both sides claimed victory.

“I’m very pleased,” Davis said. “The thrust of our case has been the fraudulent conduct of the tobacco industry to conceal the harmful nature of their products.”

But James Speyer of Arnold & Porter, who represents Philip Morris, characterized the latest development quite differently.

“Three months ago, with great fanfare, Gray Davis announced that he was filing suit seeking to recover [health care] costs for taxpayers because of smoking. The judge said he has no legal basis to make that claim,” Speyer said.

May gave the tobacco companies 30 days to file a formal answer to the fraud charges.

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Davis sued the tobacco industry on behalf of the state as a private citizen in January after Atty. Gen. Dan Lungren, his potential rival for governor next year, declined to join 24 other states suing the industry, contending that a California product liability law prohibited that type of lawsuit.

Since that time, bills have passed both houses of the Legislature that would void the 1987 statute and make it possible for Lungren to sue. But those bills are not identical and it is likely to take at least a month for them to be reconciled or for one of the two to become law.

On Friday, Davis, who has frequently criticized Lungren for failing to sue the tobacco companies, invited the attorney general to intervene in his case. “I hope we can be united under a common banner and put our best foot forward against the tobacco interests.”

He stressed that Lungren, because of his elected post, has greater legal options than someone suing as a “private attorney general.”

“He can seek civil penalties. He can make a much stronger case for restitution,” Davis said.

A Lungren spokesman said Davis should lobby the Legislature to secure passage of a bill that would make it possible for Lungren to sue.

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The thrust of Davis’ fraud suit is similar to allegations lodged in lawsuits filed by 24 attorneys general nationwide--that the cigarette industry engaged in a conspiracy since 1954 to conceal information about the hazards of smoking, suppressed information about their internal studies on smoking and health, and manipulated nicotine levels to addict smokers. The industry has denied all these charges.

In a related development Friday, Sen. Barbara Boxer (D-Calif.) announced that she is seeking President Clinton’s help to allow 15 California counties and the city of San Jose, who have sued the tobacco industry, to participate in the settlement discussions between the tobacco industry and the states suing the industry.