WASHINGTON -- On a rainy day in January of this year, a group of high-profile academics and lawyers with experience in the tobacco wars trooped into a conference room filled with dour Justice Department officials to make a case for filing a federal lawsuit against the tobacco industry.
The prosecutors were dubious. "The meeting was tense," says G. Robert Blakey, a Notre Dame law professor and member of the group, which some called the Tiger Team. "You could palpably feel the hostility in the room."
But this week the Justice Department made a startling turnabout. On Wednesday it filed a massive civil lawsuit in federal court here charging that major tobacco companies carried on a 45-year campaign of deception that obfuscated the risks of smoking and drove up government health-care costs. The suit is potentially the biggest threat yet against the already beleaguered industry. It is also a major test of Attorney General Janet Reno's Justice Department.
The story of how the department overcame its doubts is a tangled one, involving pressure on the department from several directions at once -- from the White House, Congress and plaintiffs' lawyers involved in state suits against the industry.
Inside the department, an institutional reluctance to take on a case involving untested legal theories and an industry sure to wage a bruising fight slowly fell away as key officials realized that they had the makings of a case, albeit a difficult one.
The effort to persuade the department to change its mind began over a year ago, following the collapse of efforts to pass sweeping federal legislation that would have broadened regulatory oversight of tobacco companies and settled the state cases. Mississippi plaintiffs' attorney Richard Scruggs called top Clinton domestic-policy aide Bruce Reed at the White House and volunteered to represent the federal government free in an antitobacco case.
"They were excited about it," Mr. Scruggs says, and were looking for ways to bring the industry back to the negotiating table before the eventual settlements with all the states. He had several meetings with Mr. Reed and others at the White House. But the White House was having trouble sparking interest at Justice, according to administration officials.
The biggest obstacle was Frank Hunger, another Mississippian, who headed the department's civil division, which would have handled the case. Mr. Hunger had been married to Vice President Al Gore's sister, a smoker who died of lung cancer. Advocates of a lawsuit considered him a natural ally, but it turned out that Mr. Hunger and his top aides were dubious that the federal government had a strong statutory basis to sue the industry.
No Response
In a meeting with Mr. Scruggs, Mr. Hunger was cordial, but said: "My lawyers are telling me we can't do it," according to Mr. Scruggs. Mr. Scruggs wrote a memo, to address their concerns, but says he got no response. Mr. Hunger declined to comment.
Mr. Scruggs and his allies had a strong motivation to get the federal government involved. Some of the lawyers had represented states in suits against the industry and were hoping to see those settled, in part so they could collect legal fees. They thought the industry would be more likely to settle if it faced the combined weight of the state suits and the federal government.
During the summer and fall of 1998, they worked other angles in hopes of persuading the Justice Department. They met with Mr. Reed and assistant White House counsel Bruce Lindsey to brainstorm.
Then, later in the autumn, Mr. Scruggs says, he got a call from Sen. Kent Conrad (D., N.D.) informing him that Senators Conrad, Edward Kennedy (D., Mass.) and Bob Graham (D., Fla.) were interested in getting him to do a federal case. To persuade Ms. Reno that her staff was wrong, Mr. Scruggs assembled what he called the Tiger Team of Mr. Blakey; professors Laurence Tribe and Einer Elhauge of Harvard Law School; Jonathan Massey, a Washington lawyer; and Kim Tucker, a lawyer then on leave from the Florida attorney general's office. He estimates that he paid them a total of about $250,000 for their efforts.
Inside Justice, interest in tobacco was building anyway. Mr. Hunger announced his intention to leave at the end of 1998. In December, Ms. Reno made the decision, which was kept confidential, to move forward with the lawsuit, aides said. She designated David Ogden, who succeeded Mr. Hunger, to put together the team. It included William Schultz, a former Food and Drug Administration official and onetime aide to tobacco critic Henry Waxman, a Democratic congressman from California.
Many career lawyers in the department remained skeptical, but President Clinton surprised them by announcing in his State of the Union address to Congress in late January that a suit was in the works.
Working in strict secrecy, 15 Justice Department lawyers reviewed thousands of pages of internal industry documents unearthed in state lawsuits. Roberta Walburn, an outside lawyer who represented Minnesota, was hired to help sift through the evidence and discuss legal theories. One shift of Justice Department lawyers worked by day, another by night.
Other outsiders were rebuffed. Ms. Tucker, who worked with the Scruggs team, said she had trouble getting her calls returned. She says a Justice Department attorney even told her: "At some point, outside assistance becomes a hindrance. We at Justice will decide what, if anything, is in the interest of the United States."
Ultimately, the Justice Department decided on a bold use of the Racketeer Influenced and Corrupt Organizations statute, which permits the government to go after profits derived from fraud.
Ms. Reno made the final call to go forward on Tuesday, the day before the suit was filed, a Justice official said. She then telephoned the White House and informed John Podesta, Mr. Clinton's chief of staff.
Looking for a Legacy
For President Clinton, the suit holds out the possibility of winning far-reaching restrictions in the marketing and advertising of cigarettes, a legacy he has sought since early in his first term.
But that is by no means assured. Tobacco lawyers plan to make a concerted push to have the suit dismissed, on the grounds that the government has no statutory authority to combine millions of individual smokers' claims into a single cost-recovery suit. Also, the industry says the RICO claims seeking ill-gotten profits are unwarranted against a legal industry.
The Justice Department's increasing interest in a civil case coincided with the collapse of its massive five-year criminal investigation of the industry. The case had once seemed promising. But last year, the federal appeals court in Richmond, Va., ruled that the Food and Drug Administration didn't have the authority to regulate tobacco companies. Prosecutors became worried they couldn't charge companies with making false statements about alleged nicotine manipulation to an agency that had no authority over them.
There were other setbacks, too. Brown & Williamson, a unit of British American Tobacco PLC, succeeded in convincing the judge overseeing grand-jury matters to deny the government access to documents the company said were privileged. And several Philip Morris Cos. scientists who were granted immunity in exchange for their testimony revealed little to the grand jury, say people with knowledge of their testimony.
The tobacco industry's jubilation didn't last long. Philip Morris Senior Vice President Steven C. Parrish says an industry lawyer had received assurances from a senior White House official several months ago that a lawsuit wouldn't be filed without the industry getting a chance to make a final presentation. But on Tuesday night, Mr. Parrish says, he learned of the impending lawsuit from reporters.
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