U.S. SENATE COMMITTEE ON THE JUDICIARY HOLDS HEARINGS ON THE GLOBAL TOBACCO SETTLEMENT
Transcript of July 16, 1997 Panel Discussion
Participants:U.S. SENATOR JEFF SESSIONS (R-AL)
U.S. SENATOR DIANNE FEINSTEIN (D-CA)
LAURENCE H TRIBE, PROFESSOR, HARVARD UNIVERSITY LAW SCHOOL
ROBERT A LEVY, SENIOR FELLOW, CATO INSTITUTE
SESSIONS: Well, the next panel will come forward. If we could -- if we would go on and get this panel started. We are running behind on our schedule.
I believe we're settled and I would introduce the panel at this time. The second panel will analyze the legal ramifications of the civil litigation provisions of the global tobacco settlement.
Our first panelist is Professor Laurence Tribe of Harvard Law School. Profession Tribe has testified before this committee on a number of occasions, and we welcome him once again. Professor Tribe has been a member of the Harvard faculty since 1968. He is one of the nation's most notable constitutional law scholars and has written a number of books on all aspects of the law.
Our second and final panelist is Mr. Robert Levy, senior fellow at the Cato Institute here in Washington, D.C. Mr. Levy joined Cato in 1996 after 25 years in business. He is an adjunct professor at Georgetown University Law Center and has published a book and dozens of articles on investment and various legal issues including tort reform.
Welcome, gentlemen.
I think, first, I would recognize Senator DeWine, if you'd like. Oh, excuse me, we'll do our remarks. I'm not used to this chairing committees yet. Professor Tribe, would you like to do your opening remarks. And our time limit is five minutes, give or take.
TRIBE: Thank you very much, Mr. Chairman and members of the committee.
I'm honored by the committee's invitation that I help explore the constitutional issues presented by the proposed legislation and by the settlement as a whole.
TRIBE: And if I might, I'll simply ask that my prepared statement be introduced into the record so that I can avoid wasting your time by reading from it.
I do think as a first observation I should say that it's very important to separate the constitutional analysis from one's views either way of the merits. That is one might be sympathetic with Senator -- with the position of Attorney General Humphrey that, until you see all the documents, it's unwise to move. Or you might be sympathetic with the view of the other attorneys general who were here saying that with every pause we lose more children and we can't afford to wait for that further diamond in the rough.
Either way, there are basic questions of constitutionality that I think it would be improper simply to leave to the courts given this committee's own obligation to assess the constitutionality of proposals before it.
And so I do think one should separate the issue of constitutionality, and I'm especially glad that you asked me to address it.
The second point I'd stress is something that Attorney General Norton of Colorado noted in her testimony. And that is it is very important to distinguish those things that this Congress is asked to enact and impose upon the industry, the states, possible litigants, from those things that are in the consent decrees or in the contractual protocol because a number of things that this settlement puts in the consent decrees and the protocol -- in particular the restrictions on advertising and the requirement that the industry pay over $368 billion, give or take -- are things that almost certainly this Congress would not have the constitutional authority to demand by way of an exaction.
And yet the constitutional problems that would otherwise be presented under the First Amendment with respect to the marketing limitations and under the takings clause with respect to the demand that $368 billion be paid are not presented when it is part of a consensual arrangement. And I think that's very important.
My third observation is that assessing the proposed statute in separation of powers terms, which is the first set of constitutional issues that I very briefly want to sketch, requires attention to detail rather than just broad-brush observations about how unusual it might be to use an act of Congress to shut down proceedings pending in courts around the country.
Yes, it may be somewhat unusual, but the U.S. Supreme Court made clear in the Seattle Audubon case in 1992 and in its 1995 decision in the Spendthrift Farm case that separation of powers does not stand in the way of a congressional statute which settles, and indeed terminates, pending litigation by changing the underlying substantive law as long as vested rights under final judgments are not disturbed.
And as I think you learned in the first panel, that line has been carefully and precisely observed in this settlement.
There is an Article III, Separation of Powers problem here, and I want to call it to the committee's attention.
There's a problem in the way that Title II would let states challenge certain decisions by the FDA only in the D.C. Circuit, with no review in the U.S. Supreme Court. I don't think that, to name a rather old precedent, that's a violation of Marbury v. Madison because it conflicts with the very definition in Article III, Section 2 of the Supreme Court's original jurisdiction, which includes cases involving states.
I think that would have to get fixed. It's not hard to fix it. One would give the D.C. Circuit concurrent rather than exclusive jurisdiction. One would permit review in the Supreme Court.
There may also be Article III problems that I detail in my prepared statement in the way in which Appendix 8 of the settlement proposes to use three Article III judges to render opinions outside actual cases or controversy on the status of particular documents.
TRIBE: That, too, I think can be repaired, but it's worth noting.
My fourth observation is that evaluating the proposed statute in terms of concerns of federalism and states rights, which I was glad to see the committee take very seriously, requires that one focus on the structure and text of the Constitution, yes, but also on a rather important line of Supreme Court precedent. Even under the current court's jurisprudence, including decisions like the one striking down the gun-free school zones law and certain aspects of the Brady act, it is clearly that Congress has affirmative power, under the commerce clause of the Constitution, to regulate the tobacco industry as an interstate commercial activity, including the litigation that surrounds it. And states are not immune from that regulation.
Senator Torricelli's question somehow suggested that if one believed in some way in states' rights under the Constitution, one would end up having to doubt -- I'm afraid I see the red light go on, but if I could round out the thought, I'd appreciate it.
SESSIONS: Yes, please, round out your thought, and...
TRIBE: Thank you, Senator Sessions. I think Senator Torricelli was suggesting that an otherwise valid act of Congress might somehow be powerless to end litigation if the state happens to be a plaintiff, as opposed to a private individual, as though states got more protection than private individuals in that context. The fact is there's nothing in the Constitution or in the court's decisions suggesting that. The Eleventh Amendment does protect the states in a special way in their capacity as defendants in a federal court. There's no corresponding protection in the Tenth Amendment when Congress is exercising its enumerated powers, and is not commandeering the states, no corresponding immunity that says an otherwise valid law ending a certain kind of lawsuit has to make an exception if the plaintiff happens to be a state that has been injured.
I do want to say that there is an important problem in terms of states' rights and the Tenth Amendment with the current draft. I think that replying to Senator Feingold, Attorney General Blumenthal noted the problem, and that is, trying to tell the states in the way that they run their own courts that they are not allowed to consolidate cases through class actions or other aggregating devices would clearly be impermissible. It would be an impermissible commandeering of state authority.
Recognizing that, this settlement purports to provide removal to federal court as the remedy if a state judge has the temerity to try
to consolidate. That won't work unless the case happens to be removable within the terms of Article Three. These are not federal question cases, so the question becomes, are they diversity cases? Many of them will be, and then it's fine to remove. But in that category of cases that doesn't fit within the diversity jurisdiction, this settlement could not constitutionally, in my judgment, prevent a state court in state litigation by a mass of tobacco victims, from aggregating their claims and bringing a class action.
SESSIONS: (OFF-MIKE) we will make your remarks a part of the record, your complete remarks, but if you'd like to, if you could conclude.
TRIBE: I just -- let me say 15 or 16 words about what I haven't had a chance to talk about.
SESSIONS: OK.
TRIBE: The rights of individuals with respect to punitive damages, with respect to class actions and with respect to causes of action affected by this statute, I've paid careful attention to. I'm satisfied that in no respect are they violated by anything here, but I would expect that you would want to press that by asking some more detailed questions. Thank you.
SESSIONS: Mr. Levy.
LEVY: Mr. Chairman and distinguished members, thank you for inviting me. And along with my prepared statement, I've submitted a more detailed policy paper which I request be inserted into the record.
SESSIONS: We'll make it a part of the record, yes.
LEVY: Thank you. My objections to the proposed tobacco settlement are threefold. First, future claimants may not litigate as a class, recover punitive damages for past acts, or collect compensatory damages above a specified cap. Those claimants, therefore, lose common law rights arguably guaranteed under the Constitution.
Second, Congress, if it approves the settlement, will be interceding in product liability cases that have long been the prerogative of the states and exercising a national police power beyond what is enumerated in the Constitution.
My third objection, and the focus of my remarks today, has both due process and public policy implications -- and that is that states that have retroactively manipulated the law in a scheme to fund their Medicaid programs will be rewarded for their misbehavior.
This settlement is not consensual. It is quite simply a shakedown. Over 40 years, there's not been one final award for a smoking-related injury. Jurors have understood that we are each at liberty to consume the products we wish, but we are accountable for our behavior.
To get around that insight, 40 states have simply changed the rules after the fact, so that they could obtain through litigation what they were not willing to impose through taxation, revenues to replenish their Medicaid budget.
Like any other insurer, when Medicaid pays for an injury that's caused by a third party, it can sue the third party to recover. But it must meet the same burden of proof and it's subject to the same defenses as the injured party would be subject to.
Florida by statute, in the other states by so-called equitable principles, eliminated that dual burden. When Medicaid is the plaintiff, tobacco companies can no longer point to the smoker's personal responsibility. Thus, the industry's liability depends on the victim's Medicaid status and mere happenstance.
The states are also permitted to dispense with the usual showing that a particular person's illness was caused by smoking. All the states have to produce are generalized statistics, indicating that certain diseases are more prevalent among smokers than nonsmokers.
The industry can be held liable even if the injured party fell asleep with a lit cigarette, even if the injured party never smoked, indeed, even if he wasn't injured and simply defrauded the Medicaid program.
It's not really health concerns, in my view, that are driving these lawsuits. It's cold hard cash. When military personnel sued the U.S. government for tobacco-related illnesses, VA Secretary Brown announced it would be a borderline absurdity to pay for something the soldiers brought on by choice.
When Florida was sued by a prisoner seeking a nicotine patch for his alleged addiction, the state denied that it had any more responsibility than if the prisoner had bought candy at the canteen.
If the government is immune from liability for these kinds of suits, then why not private companies? Of course, the states are caught in the dilemma. They are legitimately concerned over smoking-related illnesses. Yet they already collect far more in excise taxes than they spend on those illnesses. And of course, they don't want to turn off that faucet.
Their two-pronged solution -- first, create a new legal right to coerce the tobacco industry into paying $370 billion for Medicaid reimbursement and other programs; second, press forward on the health front by regulating nicotine and draconian restrictions on tobacco ads.
Unhappily, the regulatory prong is both self-defeating and destructive of individual liberty. FDA regulation will lead inevitably to black market transactions, another war like our endless and fruitless war on drugs. So rather than wipe out Colombian coca fields, we could find ourselves combing the back roads of North Carolina searching for tobacco farms.
We never seem to learn. Michigan, New York, California, Maryland hiked their cigarette tax, and the result is rampant smuggling from low-tax neighboring states, from military bases, from Indian reservations, even exports to Mexico that are then smuggled back into the United States.
Canada raises its excise tax, only to find that 30 to 50 percent of cigarette consumption is smuggled.
LEVY: Then, of course, Canada lowers its excise tax to keep the smuggled cigarettes away from children.
And with regard to advertising, we give First Amendment protection to flag-burning Klan speeches, even gangster rap, but if Tiger Woods shows up wearing a Joe Camel tie tack, our speech guardians plan to bring the boot of government down on the neck of R.J. Reynolds. The issue here is whether there's a link between cigarette ads and the decision of teenagers to smoke. And there's no evidence to support that link. The purpose of tobacco ads, like automobile ads, is to encourage consumers to switch brands. In the six European countries that have banned tobacco ads outright, consumption has increased. Marijuana ads are indisputably illegal, but teenage usage in the U.S. is skyrocketing.
How have we come this far only to be faced with a proposed settlement that will create many more problems than it will solve? Much of the blame, I fear, can be traced to the private attorneys and to the state attorneys general, who dreamed up the novel theories that underlie the Medicaid recovery suits. Some of them hired for contingency fees, ranging from 10 to 30 percent of damages. Those attorneys now wield the sword of the state while retaining a financial interest in the state's litigation.
It's as if the state hired private criminal prosecutors and only paid for convictions. The duty of a state attorney is to see that justice is done, and that includes guaranteeing due process for the defendant. We read stories that legal fees from this settlement will run to the billions of dollars. My vote is to give these lawyers the opportunity to earn their money in court.
It's the court and not the Congress where private product liability disputes are traditionally resolved. Let the smokers, their insurance companies, and the state Medicaid system fight it out, applying even-handed and objective principles of tort law. Congress can legitimately invoke the commerce clause to preempt state tort law, like the Florida statute, that impedes the free flow of interstate trade.
As for the settlement, I say kill it. Then Congress can eliminate tobacco subsidies and the state can vigorously prosecute illegal sales to minors. Otherwise, I fear that the nanny state will not be able to resist the temptation to protect us from a variety of bad habits: Alcohol, chocolate, diet foods, sports goods, you name it. Today it's tobacco, tomorrow it could be any of us, and the essence of a free society is to protect all members, especially the least popular. Mr. Chairman, thank you for inviting me.
SESSIONS: Thank you very much. I appreciate both of your remarks. I know that there are other senators who are not here, but this will be made a part of the record. And I consider it real important, and I'm honored to have the opportunity to be with you and ask some questions that have been a part of my concern for several years.
I was attorney general of Alabama just before January of this year, when I was elected to the Senate. I was approached about this litigation. And my first question was, because I come from a philosophy that we have too much litigation, too many matters that ought to be settled in the public policy forum are being settled by virtue of lawsuits that have particular special interests involved in those cases. And I said what are your causes of action.
And as I've raised earlier today, I think -- and as the lawyers who wanted me to file the suit who are involved in the litigation told me -- present causes of action are insufficient, or at least it would take an expansion of the present understanding of traditional causes of action before I -- before the suits can be successful. And I didn't feel comfortable about expanding the cause of action.
Now, Mr. Levy, you talk about holding people liable to standards that, retroactively, I shared some of those concerns in my own mind, although I didn't express that.
SESSIONS: And I became under intense pressure politically -- that is, even though I'd taken no money from the tobacco industry and believe that it is a very unhealthy substance, of which I think there is no doubt, I didn't feel comfortable (OFF-MIKE). So I was one, and I think some 10 states at this point have not chosen to file suit.
But are you concerned, as a business man, that other industries under the same type of circumstances could be subjected to the same- type pressures by multiple lawsuits that would have a damaging effect to the legal and business part of our economy?
LEVY: I'm not concerned about multiple lawsuits, because I believe that if the tobacco companies have caused these illnesses, and in fact, if they have mislead consumers through deceptive advertising, and if in fact, the consumers have relied upon the deception, then the tobacco companies in court should be held accountable.
So I do not defend the tobacco companies if the evidence shows that they should be liable. And I would not defend any other industry if similar evidence showed that they should be liable.
What I object to and what I do fear with respect to other industries is that states have been able to alter the rules of the game after the fact, to change the rules that were in effect when the products were sold, so as to make it impossible for the tobacco companies to defend themselves in these Medicaid recovery suits.
SESSIONS: Well, could that apply to the liquor industry...
LEVY: .It certainly could...
SESSIONS: ... or coal industry or the petroleum industry or even the automobile industry?
LEVY: It certainly could. And I think the limits of the regulatory state know virtually no bounds. We have already heard a proposal, for example, from the Yale Center on Eating Disorders that we should tax fatty foods. We should rate the foods in accordance with their fat content, tax them accordingly, and take the money and devote it to the public construction of biking trails and jogging paths.
SESSIONS: Well, how do you feel about the fact that the tobacco companies have, in fact, settled, and are asking along with the attorneys general that this Congress help pass legislation that would effectuate that settlement in a way that would be more evenhanded, less aberrational, and less jackpot justice kind of way than we get with individual lawsuits?
LEVY: Well, I think that goes directly to Professor Tribe's point -- and that is that while he might otherwise have seen some constitutional impairment in this settlement, the fact that the tobacco companies have agreed to it eliminates the constitutional impairment.
I don't concur in that judgment. I don't think that the tobacco companies have volitionally come to the table and entered into this settlement agreement. I think what we have is out-and-out extortion.
The tobacco executives have a fiduciary responsibility to their shareholders. The tobacco executives know that if they go into state court in 40 different states with the rule of law having been tilted so that they cannot defend themselves, they are likely to lose. And that is why they have settled. This is not consensual.
TRIBE: Could I speak to that?
SESSIONS: Well, yes. And well, first, let me ask you now, I think you said pretty clearly that you believe that it is appropriate and constitutional, as has been done in other historical situations, for this Congress to pre-empt litigation of both state and private parties in circumstances such as this. Is that...
TRIBE: That's correct, Senator.
SESSIONS: Go ahead. And you have your own...
TRIBE: Yes. With respect to that question, I just don't think there is any legitimate issue about whether this is within the broad concept of interstate commerce and its regulation. It is true that on the current court, the vote might not be unanimous on that. But it would be 8-1. And I think it's really very widely settled, after carefully reading the opinions through the current term.
TRIBE: I did want to say something about the overall picture that Mr. Levy has painted. I don't think it would be helpful to take the committee's time with every aspect of it. That is, there are --he has a whole conception of the way the world works in this area that I think might make an interesting debate in a different forum.
But focusing on the issues before this committee, it seems to me the idea that this poor, pathetic industry is just not capable of defending itself against the giants, the 40 attorneys general, and that it was a shakedown or a holdup -- I don't know whether it should be vertical or horizontal; whatever it was -- is frankly not serious.
This industry spends a vast amount of money hiring almost all of the top law firms in the United States. When I started advising Attorney General Moore in Mississippi back in 1994 and wanted to find some other lawyers to work with me, I had to call 50 times as many as I ordinarily would because they were all conflicted out. They were all on some kind of a retainer by RJ Reynolds or Philip Morris. And the main purpose of the retainer was to make them unavailable to the other side.
Now, the fact that this industry confronted by the supposedly cockamamey lawsuits decided finally to do what many of us thought five years ago would not happen in our lifetimes, make all of these concessions and put $370 billion on the table, is not a function of the fact that they were powerless or that they are pariahs or that our state courts are so insane that you're bound to lose even an absurd lawsuit in one of them and then go broke.
SESSIONS: Well, I would just add that I think that was a factor in it.
TRIBE: Well, it may be...
SESSIONS: ... the political power of a large number of attorneys general, the fact that you filed the cases. And I heard it said that in Mississippi, they had it before a good judge and that things looked good. I was told that in Alabama, we can get it before a good judge, you get a few verdicts.
You get -- Florida passed a law that really opened the door to some litigation there, I think. And so, politically, there was some -- it was bigger than just the law, wouldn't you admit? There was some forces that worked bigger than just a strict law?
TRIBE: Yes. Senator Sessions, I think psychology is always at work. But to take every one of those examples would take a long time.
But just take Florida -- in the Florida case, where a statute was passed -- Massachusetts also passed a statute. Everywhere else, they were relying on pre-existing common law.
The argument that Mr. Levy makes that this changed the rules of the game in midstream was fully and thoroughly ventilated. I ended up arguing against that position, against two former chief justices of Florida. And even they didn't persuade a Florida judge that it had any merit. And then they tried to take the case to the Supreme Court.
SESSIONS: I guess I'm just saying it was put -- let me defer to Senator Feinstein. Now, if you want to finish just briefly.
TRIBE: If I could finish the sentence -- my point is that this is in fact -- it's possible sometimes that there are games that are not zero-sum. This is something where the tobacco companies do gain by making concessions. But the idea that a gun was being held to their head and that we should assess this the way we would a coerced plea bargain, I think, is simply frivolous.
SESSIONS: Senator Feinstein.
FEINSTEIN: Thank you very much, Mr. Chairman. Let me thank you, Mr. Levy, and Professor Tribe for being here. You've waited a long time, but I for one very much appreciated. I'm one up on you, because I nipped out and devoured a hamburger in the back room. But thank you very much.
Let me just -- one thing, Professor Tribe. The gun-free schools bill that Senator Dorgan and I co-authored has not been struck down. I think it's still alive well and operational. There's been one New York case involving a slightly different situation.
FEINSTEIN: But the bill we authored -- I just don't want anybody out there to get the idea that the -- that schools can now...
TRIBE: No, didn't I mention -- I meant to mention the Gun-Free School Zones Act, which set the zone around the school...
FEINSTEIN: I didn't hear "zone."
TRIBE: ... and which was involved in Lopez.
FEINSTEIN: That's right. But I just want everybody to know that this is alive and well still. It's very important.
TRIBE: Yes, it certainly is.
FEINSTEIN: I appreciate that was a different bill. And I appreciate what you're saying. Let me ask both of you this question. The agreement states -- and this has been discussed before --individual trials only, not class actions or joinder, consolidations, extrapolations, aggregations or other devices to resolve cases other than on a basis of individual trials without defendants -- without the defendant's consent.
Now by eliminating all of these class action and multi-party suits, are the tobacco companies effectively achieving virtual immunity from litigation, given their track record, as has been expressed already today that they have a record, they win all individual cases?
TRIBE: Senator Feinstein, I don't think they are. I am somebody who believes that in general, without the benefit of the class action device, one is often is the position that's almost hopeless.
And especially without the attraction of punitive damages to attract lawyers on contingent fee basis, one is really very isolated. But two things about class actions and individual lawsuits that I think it's important to note.
One is that class actions don't necessarily, in an area like this, give you all that much help, especially after the Supreme Court's decision striking down in Amchem, the $1.3 billion asbestos class action settlement.
It's much clearer now than it was before. That for toxic torts and for other kinds of disparate physical injuries, the class action device is not going to add that much leverage. Not nearly as much as we use to think.
With respect to the individual lawsuit, a point was made by Attorney General Norton. I don't know if it was when you were in the room or not. But she made, I think, a very telling point.
And it was in her forecast of whether, if we get rid of what Senator Sessions, I think, wisely calls "jackpot justice" and replace it with something more rational, and her forecast of the different scenarios that world might face.
The scenario in which we have this settlement, with its limitations, also includes the situation with a massive depository of documents and after a relatively short time, things will get routinized. Individual victims will have claims whose value can be actuarially established, in much the way it happened in the asbestos area, very late in the last wave of asbestos litigation.
And those cases will be quite quickly settled. Lawyers will get their piece of the action. It is not the case that just because, as in the early stages of a new kind of harm, nuclear or chemical, one might need the class action device to provide added leverage that one automatically needs it here as well.
So I think that, in fact, litigation will remain possible. But the bulk of the benefit from the settlement comes not from the trickle of lawsuits that will continue forward, but from what can be done with the $368 billion. And from the consensually -- I would insist -- established restrictions on marketing to young people and a number of other health-related programs.
LEVY: I agree with Professor Tribe with respect to the impediments that are posed by the Amchem case. And I also think the Metro-North case makes it more difficult to bring class actions.
And I find myself in the perhaps surprising position of being willing to go further than Professor Tribe in holding against the industry on this particular issues.
LEVY: I don't believe the industry should have immunity from these class actions, but before I say why, I'm going to make my position absolutely clear, and that is that this injustice to claimants I think pales by comparison with the injustice that has been imposed upon the industry by this settlement. So I am certainly not advocating lifting from this settlement the class action immunity provisions, and suggesting that the industry should have no immunity from class actions, and leaving in place or indeed stiffening the remaining terms of the settlement agreement. I think that would be the worst of all solutions. But I do think -- I'm sorry?
FEINSTEIN: I was just going to take this to the next step. Doesn't this effectively eliminate all Medicaid and health care cost suits because these suits rely on the epidemiology of groups rather than individuals?
LEVY: Are you asking me?
FEINSTEIN: Yes.
LEVY: Yes. It should and it does. We should not be able to show causation using epidemiological data. Epidemiological data has never been used in any suit to my knowledge to prove causation. It has been used to establish a factual predicate, which is then subject to corroborating evidence demonstrating specific causation that a particular illness was caused by a particular causal factor.
FEINSTEIN: Let me just codify your answer. Your answer was that it does eliminate all Medicaid and health care cost suits?
LEVY: You're talking about the state recovery suits?
FEINSTEIN: That's correct.
LEVY: I think they are akin to class actions in that...
FEINSTEIN: Do you agree, Dr. Tribe?
TRIBE: I guess I disagree completely with the reasoning, and it's important. But the bottom line I think is right. They're explicitly eliminated. That's why they're eliminated. That is, the agreement says that third-party actions such as state attorney general actions, are ended. If it didn't say that, then we'd have a quite hard problem to solve, because they're not like class actions.
The reason that epidemiological data is relevant to them is that those suits are not suits on behalf of a whole bunch of sick people.
That's why the particular comparative fault of those sick people -- Mr. Levy says they might have been smoking in bed -- their particular comparative fault is irrelevant.
The theory of all those suits, as we developed that theory back in 1993 and '94, was that whatever the causation of any particular smoker's disease, if the states have a federally imposed obligation, as a condition of taking part in the Medicaid program, of covering all lung cancer victims, let's say, you can know epidemiologically what percent of that cost was attributable to this industry. And the suit is brought not in the shoes of the victims.
That's why it doesn't change the rules of the game to say that their assumption of risk is irrelevant. The suit is brought for the innocent taxpayers, the ones who didn't inhale, the ones who weren't in any way helped by the warning on the package. Now those suits are ended because they're settled in this way.
And I think it is right that it's an issue for this Congress, whether the settlement is adequate. There isn't, in my judgment, enough money in here for the federal government. The fact is that the federal government, which I agree with the state attorneys general, could and should have brought a similar action long ago under the 1962 Medical Care Recovery Act, was too little and too late. And now the relevant question for Congress, if it wants the federal government to recoup more of the money that has been wasted by virtue of the duplicity and the deception of the industry, the question is, how, without upsetting this particular apple cart, to increase the numbers correspondingly and get more for federal taxpayers?
LEVY: I would like to clarify one thing.
LEVY: I thought you had asked whether these Medicaid suits would no longer be permissible under the settlement agreement. And my response was, yes. And then, I added that they are akin to class actions.
I don't think that impermissibility is because they are akin to class actions. I agree with Professor Tribe -- they're impermissible because it says so in the settlement agreement.
Now, I would like to add also that I have a good deal less faith in Professor Tribe in epidemiological data. The demonstration of causation is very, very difficult.
There is apparent association, for example, between math scores and shoe size. And nobody's going to suggest that as your feet grow bigger, you become smarter in math, and nobody's going to suggest that because you're smarter in math, it makes your feet grow.
The obvious confounding variable is age. As people get older, they have bigger feet. As people get older, they do better in mathematics scores. That's the real big problem in sorting out causation, when you're dealing with epidemiological data.
Now, we have all kinds of confounding variables to take into account when we're dealing with smoking and its relationship to some of these pulmonary diseases, including weight, age, diet, exercise, how long the person smoked, how much he smoked. There's almost a countless number of variables we'd have to take into account.
So Professor Tribe is convinced, as I am not, that the statisticians can come up with the percentage of smoking-related illnesses that, in fact, can be traced to the smoking of cigarettes.
FEINSTEIN: Let me just thank you. You've helped me know why my feet have just grown a size.
(LAUGHTER)
TRIBE: I had a geometry teacher in the 10th grade. I couldn't avoid thinking about her when Mr. Levy was speaking. She had feet like an isosceles triangle. And she was the most inspiring teacher I ever had. And I think there was a correlation.
(LAUGHTER)
FEINSTEIN: Let me, if I might indulge on you, Mr. Chairman, just a moment, touch on the enforcement provisions. Obviously, much of the
enforcement takes place at the local level. So the question is does the agreement provide sufficient funding for this to happen.
In the case of California -- and I noticed a city attorney from San Francisco is here today, where she represented 14 cities in another state bringing a suit -- most of this enforcement will go down the local level. There is no guarantee that any of the funding given to the state is going to really get to the local level based on this agreement. Is that not correct?
TRIBE: I think that is correct. But I would think that since the agreement is only a proposal for congressional legislation, it's content is terribly important just so that one keeps in mind the parameters of what the world might permit.
But it would be very strange for Congress not to think about such questions as should the FDA have a little more power than this agreement gives; should we return it at least to where the federal district court in North Carolina left it; should there be some added dollars for local enforcement; should the relationship between the states and the localities not necessarily be the same in the statute, as it looked through the one of another end of the telescope used by the state attorneys general who were at the bargaining table.
I doubt that most of those things would be deal breakers within certain parameters.
FEINSTEIN: Let me ask you this. This is a moral question, not a legal question, but it really bothers me. I mean, we all know nicotine is addictive, and we know that if you addict somebody to something and they use it and it's got carcinogens in it, now they're going to get cancer.
So as a product of this agreement, we continue the use of nicotine or permit it for at least 12 years unless there's contraband. Of course, there's going to be contraband, which means to me we allow the continuation of a fundamentally addicting substance. Is that morally a good agreement?
TRIBE: I think it's a very deep question, Senator Feinstein, and a very, very hard one to answer. I think the answer for me depends on whether the Congress in drafting this legislation is doing as much as it plausibly can to eliminate what it recognizes is a terrible scourge, to prevent it from hooking another 3,000 children every day, to prevent it from lasting any longer than it must.
FEINSTEIN: (OFF-MIKE) hook them overseas. I mean, that's what this agreement provides -- nothing for overseas marketing, sales, advertising.
TRIBE: Well, first, I was going to say, I mean the question...
FEINSTEIN: That's along the moral line.
TRIBE: The question was hard enough within this territory. You know, if one goes overseas, it gets harder still. But it seems to me even within the boundaries of the United States, the problem is a difficult one. I think the compromise struck in this settlement which says, on the premise that in fact the FDA didn't have any plans in place for phasing out nicotine, and didn't have any science to back it up, as some have testified, I think even on that premise, making it possible to delay forever the phasing out of nicotine, simply by pointing to the inevitable existence, as you say, of a black market and of contraband, I don't think if Congress did only that it would be doing as much as it reasonably could. I think that, in other words, it should be easier, more quickly, for the FDA to force down the level of nicotine, even recognizing that there will be a difficult-to-control black market.
But one can't eliminate the black market altogether. And it therefore follows among other things that there's nothing the Congress could do, any more than it can with currently controlled substances, and any more than it can in a number of other areas, to bring about, really, the ideal world, which is a world in which people would not become addicted to substances that then killed them with cancer.
LEVY: Two parts to your moral question. First, with respect to kids. It is illegal in every state to sell tobacco products to underage smokers. I am entirely in favor of vigorous enforcement of those laws. I think we should prosecute retailers that violate those laws. I think proof of age requirements at retail establishments is entirely reasonable. I think we ought to regulate vending machine sales to the extent that those sales take place in locations that children frequent, like arcades and schools.
However, with respect to adults, not only is it moral to allow an addictive product to be sold, but it is positively immoral to prohibit that addictive product to be sold. We do not elect in the Food and Drug Administration. It is not accountable to us to make choices about what products we consume. Indeed, we should not even have Congress perform that function for us. The most that the federal government should do, or the state governments for that matter, is to be a repository of information, to disseminate information. And, frankly, I think a private company could do that just as well.
FEINSTEIN: And you would legalize cocaine and heroin?
LEVY: I would. I absolutely would.
(UNKNOWN): And I would not. For the record.
(LAUGHTER)
FEINSTEIN: Neither would I. Thank you.
LEVY: Bearing in mind, now, the distinction between adult consumption and underage consumption. I certainly would maintain the illegality with respect to underage consumption, and vigorously enforce it.
FEINSTEIN: Thank you very much. Thank you, Mr. (OFF-MIKE).
SESSIONS: What about marijuana?
LEVY: I think that medical use of marijuana, as in California, poses a different issue. But, happily, we're not testifying about that.
SESSIONS: OK. Well, I think that's our challenge as to how far we want to go in restricting the rights of people in this country to make choices on their own. I have supported laws against marijuana and cocaine, and at a time when we're talking about loosening those, we're talking about increased restrictions here.
On the question of your theory of the Medicaid recovery, it is that -- and you would agree that procedure of the great protections of American Law and Liberty Act, in the procedure itself, one of the procedures I understood it was you normally had to stand in the shoes of the individual who is to be, you were going to recover for.
SESSIONS: And if that person individually didn't have the right to recover, then the state couldn't sue in their stead and recover. And it seems to me that you've taken a new and novel theory that somehow that since the taxpayers lost, because of the individual decision of the smoker, that the taxpayers are entitled to recovery. Isn't that an expansion of the traditional theory of subrogation?
LEVY: It would be, Senator Sessions, it would be a complete distortion of the theory of subrogation. But my theory, several years ago, was that this has nothing to do with subrogation. There's a separate cause of action. It's expressed in statute in some jurisdictions, actually in the federal statutes and in the statutes of Florida and of Massachusetts -- and there's one statute in Texas that I think might have this meaning -- it's a separate cause of action. It's a cause of action to the state or federal fisc caused by a third party who engages in tortuous behavior.
SESSIONS: Well, that is a good, interesting theory. It takes a person -- but it has not been established by affirmation or been affirmed by any appellate court in the land as of this date, has it?
LEVY: I don't know the best way to answer that. There's no authoritative appellate opinion expressing it in full. But there are appellate opinions in Florida saying there's nothing all that novel about it, and it's not retroactive.
SESSIONS: Well, that's based on the statute, based on the statute in Florida. And before that statute was passed, the Florida Supreme Court did toss the lawsuit, did it not?
LEVY: No, not really. It was just a small part of it.
SESSIONS: Well, maybe I'm off (OFF-MIKE) on that one.
LEVY: But I guess the point, the very brief point I just wanted to make was, that I think that the more the lawyers for the tobacco industry studied the briefs that tried to show this wasn't all that novel, the more they realized that they were confronting something that could not simply be dismissed by saying this is gossamer speculation, otherwise they would never -- even if you're right, that sometimes you pick a favorable judge here and there -- they would never on that basis have caved the way they have. It's because there is discernible, common sense merit in these causes of action. I'm genuinely convinced that that's what brought them to the table.
SESSIONS: Well, I'll leave it at that. And I really, that's just a sort of a matter that was of interest to me, and Mr. Levy, I
think it goes to your idea that we've retroactively applied law. We have a professor at Harvard, he's thought up a theory that is not indefensible but had never been applied before, and all of a sudden it's being applied, and as a practical matter, that is unusual, and it has great impact on industries and could apply to others.
LEVY: Now, Senator, I should add that it has been thrown out by West Virginia, Washington, Maryland and San Francisco, where it's been considered in court.
SESSIONS: But, back to where we are, Professor Tribe, I tend to agree with you. And let me ask you this. If you were a member of the Congress or the Senate of the United States, and you are presented with this proposed settlement and asked to in effect sort of ratify it through legislation, wouldn't you feel that your responsibility to instead of, to move away from just the parties in that lawsuit, to look at the whole problem of tobacco, addiction, children, cancer, and try to craft legislation that would incorporate some of the basic premises of that agreement, but to really draft legislation comprehensively that attempts to deal with this matter in a rational way?
TRIBE: I completely agree. I think just taking this as a kind of a package in gift wrapping that I would be asked just to approve or disapprove would be really unacceptable.
TRIBE: I think that zero-based budgeting is what's needed, looking at the whole picture.
But I do think the agreement is an important point of reference. It does convey a great deal of information about what is achievable or what at least some people manage to achieve. And I certainly wouldn't disregard it, but I would regard the whole issue as really kind of a de nouveau question. What's the best thing we can do in these circumstances?
SESSIONS: Well, Attorney General Humphrey said the question is whether we should involve ourselves. I think that's right, Mr. Levy. I think either we should get in and develop -- see it comprehensively, and try to pass legislation which we're empowered to do. That's what we're hired to do. Now, we're not hired to ratify lawsuits. We're hired to pass public policy.
We either need to go in that direction and develop a systematic review of this whole area of law, or we ought to stay out of it completely and let the litigants fend for themselves.
LEVY: Senator Sessions...
SESSIONS: Would you all agree on that?
LEVY: Well, I think I must say, at the risk of sounding even more radical than I may have sounded up until now, I think you should step away from it altogether, but not because it's a good idea or bad idea, although I do have my views on that -- I do think it's horrible as public policy.
You should step away from it, because in my view, you are not empowered to do it. The Commerce Clause has been distended beyond recognition to accommodate a boundless array of economic and social programs.
It's a -- now, we really have sort of a regulatory (state that touches every facet of our life. And I think the Commerce Clause properly understood would permit Congress to act only if a national rule was necessary to make sure we had free flow of trade, or alternatively, if the states were passing incompatible regulations that so impeded commerce, that Congress could step in and preempt those regulations.
Neither of those circumstances exist with respect to this tobacco situation.
SESSIONS: Well, we have the power to tax, and we have the power to make illegal cocaine. And I suppose we could make illegal tobacco if there was a justifiable case for it. So I think we have a right to regulate tobacco.
That's just the way we are at this point in time in our constitutional development. Sometimes I think...
(UNKNOWN): (OFF-MIKE)...
SESSIONS: ... I agree with you, the Commerce Clause has been stretched beyond the breaking point. But on the constitutional theories prevalent today, we could certainly do that.
TRIBE: But even John Marshall -- I mean, I really think we shouldn't blame ourselves and our generation for having messed it up so thoroughly. John Marshall would spin in his grave to hear Mr. Levy's description -- and I think you recognize that.
His view of the commerce power was much more sweeping. So, I don't think you should feel that uncomfortable.
SESSIONS: How do feel about the theory that we ought to either get in or get out on this litigation?
TRIBE: Well, all or nothing theories bother me a little. It seems to me, on the one hand, I don't think you should regard this package as something that you should either take or leave.
But there was one formulation you used a little while ago, Senator Sessions, that bothered me a bit. And that was unless we canvas the whole area -- and if by the whole area, you mean maybe all dangerous products, all dangerous substances, everything that could potentially be relevant -- we shouldn't touch this. Well, I think, you know, that's impossible.
SESSIONS: I don't really think that's so.
TRIBE: Right.
SESSIONS: I don't think that we're bound that.
TRIBE: OK.
SESSIONS: I think, if we deal with this, my view would be let's deal with the tobacco problem just like we deal with the cocaine problem or the marijuana problem, and develop a public policy toward that problem, and recognizing the litigation that's there, the reality, and other things, too, and try to develop what's sound for America.
People -- I don't think this nation is prepared to prohibit people from smoking or using tobacco. That being the case, we have to develop public policy that allows them to make that choice without unduly restricting it, but at the same time, protecting the health and safety of the country.
LEVY: Senator, so I can take a moderate position on one issue, I agree 50 percent with your question about getting in or getting out. The part about getting out, I agree with that.
SESSIONS: All right. I respect that. You know, I think that's a serious choice for us. Should we be involved in blessing a group of lawsuits around the country? And if we do bless those lawsuits through litigation, it ought to express our will and not the will of the litigants, it seems to me, necessarily.
TRIBE: Could I add -- there's something about that way of putting it, Senator Sessions, that I think, at least in a way, with all respect, may have it upside down.
I don't see it as blessing lawsuits. You earlier said that you thought sometimes that we have too much litigation and more should be done in a more systematic way, less jackpot justice. And I like that phrase.
It seems to me one of the problems here -- yes, there's a tobacco problem. There's also a litigation problem.
In this area, as in many others, there is a problem of courts becoming more and more actively involved in figuring out what to do and in distributing resources. And the time and energy of those courts, which needs to be devoted to other issues, is devoted to asbestos, in one case, or to tobacco in another.
And part of the problem, inescapably, is that there are a bunch of lawsuits that are at least not so much beyond argument that people could just blow them off, and people involved in those lawsuits have found a way to make peace on an issue that is of paramount importance to our children, to our nation.
It seems to me in that circumstance, it's not blessing litigation, but blessing the opportunity to be done with litigation and to replace it with something more constructive that one then figures out. That's what I think should be done.
SESSIONS: Do you, how do you view the idea that in, like in black lung circumstances, that the government creates a fund and compensation mechanism, taxing the industry, in effect, to support that fund. That does away with, to me, with the retroactive problem that if you have a new tobacco company, how can they be bound by settlement when they were created after the settlement has been agreed to. How do you feel about that?
TRIBE: Well, first of all, as to the new company, it seems to me that there is no way they can be bound. What this settlement proposes to do is offer them a deal -- that is, they can get certain immunities of the kind that existing companies have if they kick in the relevant amount. And if they don't, then there is a kind of tax in order to set up an escrow fund for future liability.
SESSIONS: But how can they come in today and follow the law today and be subject to liability?
TRIBE: Well, it seems to -- that's standard -- I mean, liability -- it's a standard feature of our lives, isn't it, that when Congress passes laws, people in the future, people who weren't born when you took the final vote, may find that those laws impose liability on them? The federal income tax is a rather nice example. We're not talking about condemning these people to death row. We're only talking about conforming behavior to certain norms and contributing a fair share of certain expenses. As to the...
SESSIONS: Well, if they did not lie about the addictive nature of the tobacco, they did not do misleading advertising, they had full warnings on it, and people chose to use the substance, and they followed all regulations and laws, would they not then -- what liability would they be subject to?
TRIBE: Well, certainly not punitive, which is one reason that this cuts off the punitive liability for past acts. But I think the same problem exists whether you set up an administrative fund, as in black lung or anything else. I mean, new companies can come along that are affected by the distribution of benefits and burdens.
I think that an administrative fund, for its virtues -- and I'm not saying it shouldn't be perhaps part of this legislative resolution -- can't solve what I think is the heart of the problem, and that is, to reduce marketing to minors. To, with all respect to those who think that Joe Camel never sold a single cigarette, I frankly think he did -- plenty of them.
TRIBE: I think there are a lot of kids who died because of Joe Camel, and I'm glad to see that he rode off into the sunset. But you can't do that by legislation. That can be done only by consent decrees or by a contractual instrument given the First Amendment.
SESSIONS: But that's dangerous, too, to civil liberties, isn't it, a little bit? I mean, let's say you pass a law that says, we're going to tax you out of business unless you agree to a consent decree.
TRIBE: Oh, sure. No, I...
SESSIONS: But anyway, I know we've got to go. We're due for another hearing at 2 o'clock. This has been fascinating. I apologize for indulging myself in the opportunity to address these issues with you.
TRIBE: I enjoyed it. Thank you.
SESSIONS: Senator Hatch has some questions that I hope that we will submit to you, and you would be prepared to respond to them for the record.
And we thank you for this discussion. It's a very important issue. And it's something we're not able to dodge, and we're going to have to deal with in this body. Thank you.
LEVY: Thank you.
TRIBE: Thank you
