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Settlement reached in Minnesota tobacco case

Minnesota tobacco graphic May 8, 1998
Web posted at: 2:18 p.m. EDT (1818 GMT)

ST. PAUL, Minnesota (CNN) -- The tobacco industry has agreed to a settlement with the state of Minnesota, a judge announced Friday. A source told CNN the industry will pay the state of Minnesota and Blue Cross and Blue Shield of Minnesota $6 billion over 25 years to recover costs from smoking-related illnesses plus punitive damages.

The deal, which means the industry will dodge a jury verdict in the 78-day trial, was reached at 7 a.m. (8 a.m. EDT) after attorneys agreed to reduce their demands for fees in the case, according to the source, who was involved in the talks.

The key was a concession by Michael Ciresi, lead attorney for the state, to drop his own fee demand from 25 percent to 7 percent of the state's share of the settlement, the source said.

Participants had agreed on the basic money figure, except for the attorneys' fees, before the talks broke off Wednesday, sources told CNN.

Hopper explains how the money will be paid to the plaintiffs (icon 183K/17 sec. AIFF or WAV sound)   

Attorney Robert Hopper, who helped negotiate last year's national settlement with the tobacco industry, told CNN he understood as of Thursday that the attorneys' fees were the remaining points to be settled.

"My understanding as of yesterday ... was that the attorneys' fees (issue) was still a major sticking point, as to whether they would be paid outside of the scope of the settlement," Hopper told CNN on Thursday.

Hopper said the issue of how to deal with future lawsuits brought by counties and cities was also one of the final issues to be negotiated.

Industry to make intial payment of $600 million

Both CNN's source and Hopper said the industry would make an initial lump payment of $600 million.

Friday morning, Judge Kenneth Fitzpatrick recessed court to 1:30 p.m. (2:30 p.m. EDT) to allow the parties to finalize the settlement, which Fitzpatrick must approve.

As Ciresi went into court Friday morning he confirmed that settlement talks had resumed. The talks had broken off sometime between Wednesday evening and Thursday morning. The negotiations resumed Thursday while attorneys for the defendants gave their closing arguments to the jury.

Tobacco under attack

  • Brief history of tobacco

  • Text: Tobacco settlement

  • Tobacco company internal documents

  • Tobacco attorneys finished their closing arguments on Thursday. Plaintiffs' attorneys were scheduled to give their closing arguments Friday, provided no settlement was reached.

    On Thursday, the defense attorneys told the jury, which includes three smokers, that the tobacco industry may have made mistakes -- but it owed nothing to the state or to the insurance company.

    "There's no proof that anything these companies did caused Minnesota any damage," said Robert Weber, the attorney for the R.J. Reynolds Tobacco Co.

    Instead, Weber said, the plaintiffs were using bad damage models and a wave of anti-tobacco sentiment to force the industry to hand over an award.

    "You're a tobacco company, and you're unpopular, so you write me a check for $1.7 billion," Weber said.

    On Friday, Weber told reporters he wasn't happy that a settlement had been reached. Weber said he'd spent nearly four months in court and felt the jury would have reached a verdict that favored the tobacco industry.

    The Minnesota case is the nation's first trial of the tobacco industry brought by a state attorney general. Several states have sued the companies, but previous cases have been settled out of court.

    Correspondent Tony Clark contributed to this report.


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