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Los Angeles Times
July 15, 2002
Tobacco Lawsuit Fee: $1.25 Billion
Settlement: Four law firms in state are among dozens that will share the
California award. Dissenter says decision 'shocks the conscience.'
Nearly 60 law firms that helped California garner $25.4 billion as part of a
national cigarette litigation settlement will split $1.25 billion in fees,
according to a national arbitration panel decision obtained by The Times.
The award, expected to be released today, was characterized as "a full,
reasonable fee" by the arbitration panel majority.
Arbitrators John Calhoun Wells and Harry Huge, who formed the majority, said
that in reaching their decision, they had considered the risks the lawyers
assumed, the complexity of the case, the amount of work performed and the
attorneys' achievements. In sum, the majority said, the lawyers' efforts on a
major lawsuit were "an important contributor to a resolution of the tobacco war
in the most populous state in the nation."
The suit was known as the "Davis/Ellis" case because the plaintiffs were then
Lt. Gov. Gray Davis and James Ellis, an Orange County resident who contracted
cancer after years of smoking.
Many of the lawyers involved started working on tobacco litigation in 1994,
two years before the Davis/Ellis case was filed.
A majority of the panel said that if not for the efforts of these lawyers,
the $206-billion national tobacco settlement in November 1998 would never have
been reached. The majority quoted a tobacco-industry lawyer who likened industry
worries about the Davis/Ellis case and others set to go to trial in 1999 as a
looming "D-Day" and a key factor in the cigarette companies' decision to settle.
Charles Renfrew, a former federal judge whom the tobacco industry nominated
for the panel, issued a harsh dissent, saying the fee "truly shocks the
conscience." Renfrew also has issued dissents in several other fee cases heard
by the panel.
Renfrew said that the lawyers were improperly awarded for work they had done
before the Davis/Ellis case. But the majority said that the bulk of the work the
attorneys had done was, in reality, "in connection with" the Davis/Ellis case
and that the award was certainly reasonable "under the totality of the
circumstances."
The $1.25 billion amounts to about 10% of the state's $12.7 billion share
from the national settlement.
Cities and counties representing about 85% of California residents received
the other half of the $25.4 billion stemming from suits they filed against the
cigarette companies.
Those suits, the Davis/Ellis case, and one filed later by then-California
Atty. Gen. Dan Lungren were jointly settled in December 1998 in San Diego, where
the cases had been consolidated for trial.
In addition to making the huge monetary award, the settlement restricted
tobacco marketing through a ban on billboards. The cigarette companies also
agreed to give up the use of cartoon characters, such as Joe Camel, in
advertising campaigns.
New York University law professor Stephen Gillers said the award, though
huge, was "a whole lot less" than the 33% that plaintiffs' lawyers generally
obtain in contingency-fee lawsuits.
The Davis/Ellis award comes nearly a year after a lengthy New York
arbitration hearing in which the plaintiffs' lawyers mounted a sophisticated
campaign with broad, bipartisan support on why they were entitled to a lot of
money.
Among those who weighed in on behalf of the plaintiffs' lawyers were Gov.
Davis; his onetime gubernatorial rival Lungren; Sen. Orrin Hatch (R-Utah);
former President Clinton; former Surgeon General C. Everett Koop; UC San Diego
tobacco expert David Burns; Mississippi Atty. Gen. Mike Moore, who filed the
first case by a state against the cigarette industry; and Harvard law professor
Arthur Miller.
Four California law firms will share the award--Casey, Gerry, Reed & Schenk
of San Diego; Daughert, Hildre, Dudek & Haklard of San Diego; Howarth & Smith of
Los Angeles; and Robinson, Calcagnie & Robinson of Newport Beach.
The suit alleged that the major cigarette companies fraudulently failed to
inform consumers that nicotine is addictive and that they manipulated the level
of nicotine in cigarettes to sustain their addictive nature.
The litigation team came to be known as the Castano group because the lung
cancer death of lawyer Peter Castano precipitated the suit.
The group agreed to pay $100,000 apiece to set up a central office with
support staff, something that had never been done against the tobacco industry.
At that point, the industry had never paid a dime in damages in 40 years of
defending lawsuits.
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