01 Mar 1998 Maryland’s Stack-the-Deck Legal Approach is Not in Taxpayers’ Best Interest

Legislators in Maryland will soon vote on a controversial new law that will essentially overturn a judge’s decision dismissing 9 of 13 counts in the state’s lawsuit against tobacco companies.

Critics say it’s a case of the plaintiff in a lawsuit changing the law during the trial.

Background: Maryland State Attorney General J. Joseph Curran signed a deal with trial attorney and Baltimore Orioles owner Peter Angelos to sue tobacco companies for $13 billion. $3 billion is to recover funds spent by Maryland’s Medicaid program to treat tobacco-related health problems; $10 billion is punitive damages. If Angelos wins, the agreement says he gets to keep 25% of the take, plus expenses.

In early court action in the case last May, Baltimore Circuit Court Judge Roger W. Brown dismissed 9 of Angelos’s and the state’s 13 counts in the lawsuit. This left four counts to be decided at trial.

But Attorney General Curran now wants the state legislature to re-write state laws to essentially nullify Judge Brown’s decision before the case comes to trial, so Maryland and Angelos will be more likely to win in court. He’s urging the public to support these laws, Senate Bill 652 and House Bill 972, even going so far as to write and circulate on his official web site a sample letter to the editor in support of the legislation for Marylanders to copy, sign, and mail to newspapers as their own.

But to support this bill is to believe defendants (at least unpopular ones) don’t have a right to a fair hearing under neutral laws. It’s simply not right for the state to change the laws under which a trial is being held after the legal proceedings have already begun — especially since the state has a financial interest in the case.

The Attorney General and supporters of this bill should rethink this bill and their legal strategy against the tobacco companies. Here’s why:

• Private citizens should not benefit from public laws. If the Maryland legislature passes Senate Bill 652 and House Bill 972 Attorney Peter Angelos stands to make as much as $3,250,000,000.00, not counting expenses. The state government should not be passing laws intended to increase the likelihood that any private citizen will have a billion-plus dollar payday.
• The state doesn’t need to pay Angelos or any other private attorney up to $3.25 billion to win a tobacco case. The state had revenues over $13 billion in 1997, and can easily afford to pay the best attorneys around the highest going hourly rate. This would allow the state to keep a billion or more extra dollars from the proceeds of a winning tobacco lawsuit — proceeds that could go directly into state services or tax refunds.
• The state doesn’t need to sue tobacco companies at all if it wants money from them: All it has to do is raise tobacco taxes. By suing tobacco companies instead of raising taxes, Maryland is engaging in a risky strategy when no risk needs to be taken. Maryland can lose the lawsuit, but no judge or jury will stop the legislature from raising tobacco taxes.
• The state’s contention that it is owed reimbursement for expenses it has incurred because of tobacco may not prevail in court because tobacco is actually profitable for the state. An analysis in the summer 1997 issue of Regulation magazine by W. Kip Viscusi, Cogan Professor of Law and Economics and Director of the Program on Empirical Legal Studies at the Harvard Law School, shows that the state of Maryland profits 43.8¢ for every pack of cigarettes sold in the state. Ghoulish as it may seem, this is true because smokers’ shorter life spans decrease their total lifetime medical costs and old-age costs such as nursing home expenditures. Due to this fact and the revenue Maryland receives from tobacco taxes, tobacco is a profit-maker for Maryland.

Politicians supporting the state’s lawsuit against tobacco companies have a variety of motivations. Some want to see the state make money without having to raise taxes because raising taxes can be unpopular. Other public officials want good publicity by railing against politically-incorrect tobacco companies. And some politicians are truly motivated by a desire to stop people from tobacco-related health problems. Officials so motivated should stop equivocating and be true leaders. Either smoking is a choice or it isn’t. If it is, then individuals should be responsible for the consequences of their own decisions. If it isn’t, then the legislature should simply ban tobacco.

Amy Ridenour is president of The National Center for Public Policy Research in Washington, D.C. Comments may be sent to [email protected].