Special Edition: Florida's Cigarette Victory (continued)
Making Big Tobacco Pay the Damages
Florida Emerges Victorious
We arrived as requested on Sunday evening at Team member Bob Montgomery’s home only to find that the Governor had been delayed. Governor Chiles eventually arrived with Mrs. Chiles and General Butterworth. As we were sitting down to dinner, Governor Chiles proposed a toast, which was a first, but none of us suspected anything other than a pat on the back and “go get ‘em” speech. What came next however was a short review of the case by the Governor. He started with some of the earlier events and gradually worked his way up to the fact that he had just been in North Carolina on vacation, when he got a call from the Tobacco lawyers. They said they were ready to deal and wanted to settle the case and had officially retired Joe Camel as a good faith gesture. At some point in his toast, Governor Chiles began referring to the Tobacco case in the past tense. He also threw in some comments about Tobacco billboards in the past tense. I turned to the Team member sitting next to me and asked him if it sounded like the case was settled, and his response was, “it damn sure does!” About this time, the Governor told us we had a settlement and gave us the terms. We were all so exhausted at this stage of the case that some of the Team seemed to be in shock. One Team member broke down and began crying while many of us were stunned, not moving or saying anything.
The
settlement amount was published as $11.3 billion but the actual amount
is much greater. Shortly after our initial settlement, the States of Texas
and Minnesota settled their own cases with Tobacco. We were able to utilize
some of the conditions of those settlement agreements with a clause in
our settlement documents commonly known as a “most favored nations clause.”
This increased our settlement amount to approximately $13 billion. What
the press didn’t know, and only those of us involved in the case knew,
is that the real amount to be paid to the State of Florida is even far
greater than $13 billion. The $13 billion figure was released because
some total value for the settlement had to be announced to the public
and it was determined by using a 25-year payment period for the entire
settlement. In reality, the payments to Florida go on for as long as cigarettes
are sold in Florida, which will likely be far beyond 25 years. Additionally,
as each year passes, the payments to Florida increase by a minimum of
3% and are offset by any decline in domestic tobacco volume sales. Utilizing
this formula set forth in the settlement documents and taking into consideration
the anticipated decline in smoking due to anti-smoking programs funded
by the settlement, the actual payments to Florida over the first 25 years
exceed $17 billion and continue after that as long as cigarettes are sold
in Florida.
Another benefit to the State of Florida from our case and settlement, of which most Florida citizens are unaware, are the non-economic benefits. These are the benefits to Florida’s citizens other than monetary payments from the Tobacco Industry and include the results of the anti-smoking campaigns funded by the settlement. Other non-economic benefits Governor Chiles extracted from the Tobacco Industry include the following:
- Immediate removal of tobacco billboards within 1,000 feet of schools.
- Substitution of advertising to discourage underage smoking on existing billboards.
- Prompt removal of all other tobacco billboards in Florida.
- Child accessible cigarette vending machines banned.
- Tobacco advertising banned on public transit systems.
- Tobacco advertising banned in sports arenas.
Industry required to support legislative and administrative initiatives to:
- Prohibit cigarette sales in vending machines except in adult-only locations.
- Strengthen civil penalties for sale of tobacco products to underage children.
- Strengthen civil penalties for possession of tobacco products by underage children.
- Prohibit distribution of merchandise or promotional items bearing tobacco brand names or logos.
- Disclose payments used to influence state or local government or administrative action relating to tobacco products.
- Disclose payments to third parties to testify at hearings.
- Report gifts by industry, affiliated agencies and lobbyists to state or local officials.
- Give Florida authority to enforce a nationwide ban on payment to movie producers to use or display tobacco products in motion pictures.
One of the many consequential, long-term benefits of these non-economic factors is the increased productivity of our workforce, which will be the result of less tobacco disease related illness. A healthier work force is a more productive one, which will impose less of a burden on State finances.
Economic experts have computed the value of these non-economic benefits to Florida at more than $30 billion over the next 50 years. These same experts predict that anti-smoking campaigns funded by the settlement and increases in the cost of cigarettes (which reduce consumption) will save more than 205,000 lives in Florida over the next 50 years. You should also realize that Florida paved the way in Tobacco litigation for non-economic benefits and now every state in the nation has copied our settlement by insisting on these type benefits. It was Governor Chiles who refused to talk settlement with Tobacco until they first conceded to these non-monetary conditions.
