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Justice Department, tobacco companies to discuss settlement

By Major Garrett
CNN White House Correspondent

WASHINGTON (CNN) -- Lawyers representing the four major U.S. tobacco companies have agreed to meet with Justice Department attorneys to discuss a possible settlement of the federal racketeering and fraud lawsuit against them.

Justice Department spokeswoman Mindy Tucker declined to comment, but industry sources said the meeting will occur early next week.

The four companies -- Phillip Morris, Brown and Williamson, R.J. Reynolds and Lorillard Tobacco Co. -- each released statements Thursday regarding such a meeting.

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

Sources close to the industry said lawyers representing all four companies will refuse to negotiate any settlement with the government.

"No one is going to settle, no one wants to settle," said the industry source.

Initially, the industry was going to reject settlement talks outright, without ever discussing the case with Justice Department lawyers.

The industry reversed itself early Thursday, agreeing to the meeting. However, the industry source said that should not be viewed as a prelude to capitulation.

"Now, no one can say we didn't hear from them," said the source, a senior official with one of the nation's largest tobacco companies. "We don't want to be viewed as being unwilling to meet with them. But there's nothing to talk about. As far as this meeting is concerned it will be the same result, just a different theater."

Senior lawyers with tobacco companies agreed late Wednesday to reject any settlement offer, the source said. The companies believe the government's case is too weak to win and are eager, the source said, to prove that in court. A tentative trial date has been set for 2003.

The government's case alleges fraud in misleading consumers about the dangers of cigarettes and collusion in the marketing and sales of cigarettes.

It seeks billions in compensation for Medicare and Medicaid payments made by the government to patients with tobacco-related illnesses. During the Clinton administration, the Justice Department filed the suit in 1999 after the GOP-controlled Congress rejected comprehensive tobacco legislation. The bill sought to regulate tobacco sales and impose higher excise taxes to discourage cigarette consumption and pay for future health costs related to tobacco-induced illnesses.

• White House
• U.S. Department of Justice
• Philip Morris
• R.J. Reynolds

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