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Update: Great 1998 Tobacco Robbery

Per Jacob Sullum (Nov. 14),

Yesterday a federal judge in Louisiana rejected a motion to dismiss [the Competitive Enterprise Institute's] lawsuit challenging the Master Settlement Agreement that established a government-backed cigarette cartel for the benefit of state treasuries, trial lawyers, and the leading tobacco companies. The judge's order is here [PDF]. CEI's complaint and various other documents related to the case are here.

(see Aug. 4, 2005).

Also, Stanford economist Jeremy Bulow has published another in his series of always-excellent papers on the great tobacco robbery. As the Milken Institute's Oct. 20 press release puts it, Bulow argues that

the public was conned: the tobacco companies passed on more than 100 percent of the cost to smokers, many states were locked into terrible financial settlements and billions in fees were set aside for trial lawyers.

"Few people trust tobacco companies, trial lawyers or politicians," he writes. "But somehow when the three groups got together and spoke with one voice they were able to convince most people - particularly nonsmokers who benefit from higher cigarette tax revenue - that the settlement had achieved a noble public health goal. In reality, the settlement preserved tobacco companies' profits, while it gave the trial lawyers an incredibly large ongoing source of income gouged from the hides of smokers, and handed state politicians bragging rights as Davids to Big Tobacco's Goliath."

("The tobacco settlement: when trial lawyers meet tobacco execs", Milken Institute Review, December)(reg). For more from Bulow, see PoL, Nov. 18, 2005, and Jan. 20 and May 18, 2006.

The 1998 multistate tobacco settlements were a central theme of my 2003 book The Rule of Lawyers and have been covered in depth on this site, including Aug. 4, 2005 and links from there, Sept. 11, 2005, and Jan. 3, 2006, as well as at Point of Law: May 17, Jul. 20 and Jul. 26, 2004, Oct. 6 and Oct. 14, 2005 and Mar. 20, Mar. 29 and Apr. 12, 2006 (cross-posted from Overlawyered).



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.