Debate and Issues Index

draft settlement

ALA and Next Generation Write Judge in California

The ALA and the Next Generation Alliance (which includes ALA, ACS, AHA, ANR, CMA, and others) has written the judge in California asking for a hearing on the deal.

November 24, 1998
Honorable Ronald S. Prager
San Diego Superior Court
Department 46
330 West Broadway
San Diego, CA 92101

RE: Tobacco Cases I Coordination Proceeding Special Title (Rule 1550 (b)). Judicial Council Coordination Proceeding No. 4041

Dear Judge Prager,

I represent the American Lung Association of California ("Lung Association") and the Next Generation Tobacco Control Alliance ("Tobacco Control Alliance"). I am informed that the parties to coordinated tobacco litigation are about to present the Court a proposed settlement and consent decree.


Both my clients have a deep interest in tobacco control policy in California, and in reducing the use of tobacco products and the attendant public and private health care costs.

The Lung Association is a nonprofit corporation founded in 1907. Its mission is the prevention and control of lung disease. The Lung Association was a proponent of Proposition 99 (also known as the Tobacco Tax Initiative), which was adopted by the voters at the 1988 statewide general election and which imposed an additional 25-cent-per-pack tax on cigarettes. The Lung Association attempts to influence public policy on tobacco control issues through lobbying and through a wide range of educational activities.

The Tobacco Control Alliance is a statewide coalition and Public Health Institute program designed to reduce the use of tobacco in California. The Tobacco Control Alliance is governed by a broad-based steering committee that includes the state's preeminent tobacco control and research organizations, major healthcare and medical associations, minority healthcare coalitions and networks, voluntary organiztions, and representatives from the managed care and entertainment industries.


We have reviewed the November 20, 1998, letter to the Court from Senators John Burton and Adam Schiff. That letter asks the Court to conduct a fairness hearing, and we agree with that letter. We will simply note here additional reasons why a fairness hearing is essential in this coordinated proceeding.

First, the scope of the rights released pursuant to the proposed settlement is breathtaking and unprecedented. It appears that the proposed settlement attempts to settle every conceivable claim that the State of California could assert against the tobacco industry defendants now or in the future, as well as many claims that could be asserted by others. We are not aware that such a wide ranging settlement has ever been proposed, much less approved. The downstream consequences of the settlement are numerous, complicated, and at this point perhaps unforeseen. For this reason alone a fairness hearing is essential.

Second, the proposed settlement purports to settle claims of the public against the tobacco companies. Specifically, in the second, third, and fourth causes of action, the California Attoney General seeks relief in a representative capacity on behalf of the People of the State of California. (First Amended Complaint PP 70, 75, 81). Because the proposed settlement seeks to settle significant public claims, those affected should be given an opportunity to comment.

Third, without casting aspersions on the parties to the existing litigation, it cannot be overlooked that the proposed settlement would pay large sums of money to the public entity plaintiffs and to their attorneys. (Nationwide, the amount available for attorneys' fees apparently exceeds $1.35 billion. See MSA XVII(c); Exh. O 7(b).) Such large sums of money have the potential to cloud the judgement of normally somber people. A fairness hearing is necessary to allow an evaluation by interested parties and counsel who will not benefit financially from the settlement.

Fourth, even in the normal run of litigation, court approval of a consent decree is not automatic. Before approving a consent decree, the court must satisfy itself that the agreement is a "just" one. Although the court cannot change the terms on which the parties have agreed, it can reject the agreement if it is contrary to public policy or contains any erronous rule of law. (California State Auto Assn. Inter-Ins. Bureau v. Superior Court (1990) 50 Cal. 3d 658, 993.) Indeed, the proposed consent decree in this action asks the Court to make a finding that the settlement "is in the best interests of the State of California." Approval of this extraordinary settlement requires a careful inquiry as to whether it is contrary to public policy.


For the reasons set forth above, the Lung Association and the Tobacco Control Alliance respectfully request that this Court Conduct a fairness hearing before deciding whether or not to approve the proposed settlement and consent decree in the coordinated tobacco litigation.

Very truly yours,


George Waters
Olson, Hagel, Leidigh, Waters, & Fishburn
Sacramento, CA