DOJ's Tobacco Settlement Talks Surprise Some

The Justice Department's decision Tuesday to take steps to settle its lawsuit against the tobacco industry caught many off guard -- including cigarette manufacturers, health advocates and lawmakers.

Some health advocates said they were worried the administration will not seek a strong settlement. And tobacco companies signaled they were not about to charge to the settlement table.

``We will not settle this lawsuit for any amount of money,'' said Seth Moskowitz, a spokesman for R.J. Reynolds Tobacco Co., based in North Carolina.

Philip Morris Inc., the nation's largest cigarette manufacturer, reiterated in a statement that the lawsuit was without merit.''

Justice Department officials told Fox News Tuesday that Attorney General John Ashcroft had decided to enter settlement negotiations with tobacco companies as the lawsuit continues to wind its way through the courts.

The Justice Department negotiating team will consist of three career attorneys from the Civil Division. Those attorneys spent the day meeting with Justice Department trial lawyers who have been litigating the tobacco lawsuit.

Officials said Ashcroft's decision was based on the recommendation from career Justice Department employee Stuart Schiffer, the acting Assistant Attorney General in charge of the Civil Division.

Two Bush administration sources said Tuesday there has been concern about the government's case against the industry. These officials, speaking on grounds of anonymity, said the department would prefer to go for a settlement now rather than risk losing later.

No meeting has been scheduled so far, but officials told Fox News they expect Justice Department attorneys to meet soon with tobacco attorneys.

In filing the suit in September 1999, the Justice Department, then under the leadership of Attorney General Janet Reno, said federal health care plans spend more than $20 billion a year treating smoking-related illnesses.

Ashcroft was critical of the lawsuit brought by the Clinton administration when he was a Republican senator in Missouri.

``This is news to us. We have been contacted by no one,'' said Mark Smith, a spokesman for Kentucky-based Brown & Williamson Corp.

``Did we know they were going to consider this? No,'' said Moskowitz, the Reynolds spokesman.

Health advocates said they were shocked and expressed hope that the administration will fight for a strong settlement agreement. Some feared the government already may be on the defensive.

``No good faith negotiator would settle their litigation by announcing at the beginning that they might lose,'' said William Corr, executive vice president of the Campaign For Tobacco-Free Kids.

John Garrison, CEO of the American Lung Association, said he was concerned a settlement would protect cigarette makers from future lawsuits.

``Under no circumstances should the Bush administration consider granting immunity or limits on liability to the tobacco industry,'' Garrison said.

The government's case suffered a setback last year when U.S. District Judge Gladys Kessler dismissed two counts that would have allowed the government to recover some expenses related to sick smokers. The Justice Department is appealing part of that decision.

Kessler has ruled the government can pursue a racketeering case against the industry to recoup profits allegedly earned through fraud. The government contends cigarette companies conspired to mislead the American public and concealed information.

On Capitol Hill, most lawmakers said they had no idea the administration wanted to settle.

Sen. Ernest Hollings, D-S.C., was among a few congressional appropriators briefed by Ashcroft on Tuesday.

``The attorney general and I spoke this morning, and he promised me that he will keep the litigation alive while he pursues a mutually agreeable settlement,'' said Hollings.

Unlike Hollings, most tobacco-state lawmakers oppose the suit.

``The story the Justice Department leaked today that it is seeking to settle its lawsuit against the tobacco companies is quite curious,'' said Rep. Bob Etheridge, D-N.C., and a tobacco farmer. ``The department says it wants to settle because it is afraid it will lose. I agree. The administration should end this meritless lawsuit immediately.''

Democrats who support the litigation have accused the administration of trying to kill it by not requesting enough money pursue an aggressive case. The Justice Department earlier this year asked for $1.8 million to pay salaries and staff costs, the same amount requested by the Clinton administration. But the Clinton White House had sought help from other agencies to cover additional costs.

Rep. Frank Wolf, R-Va., chairman of the appropriations subcommittee that funds the Justice Department, pledged Tuesday that there would be sufficient funds to pursue the case in court.

The suit is against Philip Morris, R.J. Reynolds Tobacco Co., American Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard, British American Tobacco Ltd., Liggett and Myers Inc., the Council for Tobacco Research-USA and the Tobacco Institute.

-- Fox News' Bryan Sierra in Washington contributed to this report.

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