March 20, 1997, Thursday




  • WOODS: Good afternoon. Thank you everybody forbeing here this afternoon. My name is Grant Woods. I'm the attorney generalof the state of Arizona.

    We're going to have three or four people speak brieflyto you, and then we'll be glad to answer questions for a while. And thenwe can break up and answer privately if anyone has any further questions.

    Twenty-two states across this union have sued the majortobacco companies in this country. We have alleged some very serious thingsagainst them. We have alleged, in particular, that they produce a product,which when used as intended by them, causes lung cancer, heart diseaseand emphysema.

    We've alleged that their product contains nicotine, andthat nicotine is addictive. We've alleged that they have actively marketed,illegally, to teenagers across this country for decades.

    Up until this time, in courts throughout the country,in the halls of Congress, on television shows and in newspapers, everyplace they've gone, throughout the history of this industry, they havedenied those allegations.

    Today, for the first time, one of the five major tobaccocompanies in the United States is prepared to break this conspiracy. Today,these 22 attorneys general, all of the states that have sued the tobaccocompanies, have settled with Liggett. And Liggett has made the followingadmissions publicly.

    Cigarettes and cigarette smoking cause lung cancer, heartdisease and emphysema. Liggett admits and acknowledges that nicotine isaddictive. Liggett admits and acknowledges that the tobacco industry marketsactively towards young people.

    In particular, Liggett admits and acknowledges that inthe internal documents of the tobacco companies, when they use the word"youth," youth means children ages 14 through 18.

    Further, Liggett then says publicly and for the firsttime, for any tobacco company, that for any tobacco executive, for anytobacco company, for any person in this country to say contrary is a lie.They know it, and they will help us prove it.

    The terms of the deal -- in general terms, without goinginto all the specifics -- are in addition to that admission as follows.

    This tobacco company, Liggett, will now fully cooperatein every sense with these 22 attorneys general as we fight the other fourtobacco companies in courts across this country. What does that mean?

    It means at least the following. They have waived theirattorney-client privilege, now and in the past, for all employees, forall lawyers that have represented Liggett today, yesterday or anytime inthe past.

    WOODS: They have turned over to this group of attorneysgeneral all of their privileged documents that they had in their possession.Those fall into a number of categories.

    They fall into the category, first, of Liggett-only, privilegeddocuments. We have reviewed those documents. There's no question that theprivilege only attaches to Liggett. The documents are extremely damaging.The documents support completely the admissions that Liggett has made today.

    In addition, there are ultimately hundreds of thousandsof potential documents that are in question. Liggett has represented tous -- and more importantly, in the coming weeks and months, will representto judges across the United States -- that those documents should be givento us and to the public to finally know the truth about these tobacco companies,and that these judges should find, as Liggett represents, that they areevidence of crime and fraud on behalf of the participants for the tobaccoindustry that is reflected in those documents.

    We have not seen those documents. We haven't seen thembecause we are forbidden by ethical rules to see them. We do not want tosee them. We accept the representation. They are being filed as we speakin courts throughout the country, and we will let judges make that determination.

    But we want the public to know what's in those documents,and most importantly, we want juries to know what's in those documents.Liggett will provide us with all of the witnesses that we ask for as faras employees and former employees. They are hereby waiving any confidentialityagreements with any employees, past or present. They will attend depositionswith us, and if any past or present employee decides to invoke the privilege,it will be waived on their behalf.

    They have agreed to a substantial compliance with theFDA regulations. They have agreed to put a warning label on their cigarettesfrom this day forward that says the truth for the first time. Smoking isaddictive. They've agreed to pay 25 percent of their pre-tax profits forthe next 25 years in order to settle this action.

    What does this mean, ultimately, to us?

    I believe this is the beginning of the end for this conspiracyof lies and deception that has been perpetrated on the American publicby the tobacco companies. Someone is finally telling the truth. And

    most importantly for us -- starting in Mississippi, andthen in Florida and Texas and Minnesota, and ultimately, next year, inmy state of Arizona -- we're going to stand in front of a jury of our peers,and they are going to know the truth.

    We're going to tell them the truth. And from the inside,using their own documents, interpreted by their own people, their colleaguesover the last several decades, they will learn the truth about the tobaccoindustry. And we will prevail in these lawsuits.

    I want to thank a few people. I want to thank Liggettfor doing the right thing here in coming forward and for telling the truth.I want to thank their lawyers for persevering. It was very, very difficultover a long period of time.

    I want to thank in particular on our side, Steve Berman(ph) and Joe Rice (ph) and Ron Motley (ph) for working so hard.

    WOODS: And I want to thank the person I'm goingto bring up now, and that's the first attorney general of the United Statesto sue the tobacco companies.

    It was much lonelier when he took the podium to announcethat than it is here in this crowded room. And Mike Moore showed greatcourage, and he worked very, very hard on this agreement that could wellbreak the backs of this conspiracy of deceit by the tobacco companies.So I'll turn it over to him now. The attorney general of Mississippi, MikeMoore.

    MOORE: Thanks Grant. Appreciate it. Thank you verymuch, Grant. And thank you, fellow attorneys general. Senator, how areyou?

    It was about a year ago -- matter of fact, almost a yearago, when we announced the first deal with Liggett where there were fivestates. And you'll remember just a year ago, Massachusetts and Louisiana,West Virginia, Mississippi and Florida were involved in that deal. At thattime, it was called a breakthrough deal, a crack in the wall.

    Well, I have to tell you today, through the leadershipof Grant and the other attorneys general that are here today, we have knockedthat wall down.

    I feel so much better today after three years of litigationthat we are finally going to have insiders, witnesses, testify and bringto life these documents that we have known about for some time. Matterof fact, what you will be finding out over the next few day as these documents-- and I have to tell you they are on their way, and at this time, I wouldsay that they have been filed in court in Mississippi. They're probablyon their way to other states now and will soon be filed.

    You will find that there have been certain documents thathave been segregated. I want you to be vigilant and find out as much asyou can about those, because those particular documents -- probably 25to 30 documents -- will be the most incriminating documents ever in thehistory of tobacco litigation.

    These are documents, you see, that we were never to supposedto find out about. And these are documents that were discussed and talkedabout in the rooms -- smoke-filled rooms -- with lawyers and chief executiveofficers talking about the kind of things that have caused 420,000 deaths-a-yearand caused our children to die from a terrible, terrible addiction.

    And just today, those great heroes, the tobacco companies,have tried to stop us once more by going into -- guess which state -- aNorth Carolina court and to get a TRO. Well, I have to tell you, we havea saying down in Mississippi. That dog won't hunt.


    I don't believe our judge in Mississippi's going to caretoo much about what a judge in North Carolina had to say about documents.And I doubt if a judge in other state in this country's going to care toomuch about what a judge in North Carolina said to try to hide those documentscontinuously from us.

    Watch those 25 documents, because they will documentsthat will prove once and for all the crime and the fraud that has beeninvolved in the tobacco industry, both involving lawyers and the officersof the company. This is the most historic thing that has happened in thethree years of this tobacco litigation.

    MOORE: And I think this will bring the tobacco companiesto their knees. I'm exactly 70 days away from my trial. We begin openingarguments on June 2 in Mississippi. And we will have those documents, andwe will have those witnesses, and we will bring the other four tobaccocompanies to their knees.

    Thanks, Mike. I want to introduce Matt Myers next, whomost of you know is a...

    (UNKNOWN): There's one guy that didn't know yourname -- your name.

    MOORE: Oh, my name is Mike Moore from Mississippi.

    (UNKNOWN): The first gentleman.

    (UNKNOWN): Pardon.

    MOORE: Grant Woods. Grant Woods from Arizona. MattMyers is in my estimation one of the true American heroes in this countryand has been involved in tobacco -- has been a tobacco activist, and frankly,is a public health advocate, in my estimation. And he has put timelesshours into this particular piece of litigation, and he's also helped ustremendously with the public health concerns that we have.

    And primarily, you folks talk about money all the time.What we're primarily concerned about is kids in this litigation. And frankly,Matt Myers is the person who has more concern than anybody I've ever met.

    Matt, would you come up and make a few comments aboutthis deal.

    MYERS: Thank you. My name is Matt Myers. I'm withthe National Center for Tobacco Free Kids. Make no mistake. This agreementis about kids and is about protecting kids.

    It's for that reason, on behalf of our organization andorganizations like the American Cancer Society, the American Heart Association,the American Medical Association, the American Academy of Pediatrics andthe American Lung Association that we're here today to thank you for puttingthe health of our kids first.

    For 30 years, the tobacco industry has reached out toour kids, trying to sow seeds of doubt about whether it's really been proventhat these products cause cancer in order to get them to start. That claimis dead today.

    For 30 years, the tobacco industry has gone into courtsall around the country claiming that smokers -- smokers who started as11- , 12-year-old children -- should be held responsible for a lifelongaddiction, because their products weren't addictive. That claim is deadtoday.

    And for 30 years, the tobacco industry has said to anyonewho will listen, we don't market our products to children, despite thefact that virtually all new smokers start as children and are addictedbefore they're old enough to purchase the product legally. That myth toois dead today.

    We have turned a very important corner in the battle toreduce the number of children in our country who become addicted and eventuallywill die from tobacco. And for that, we in the public health communitycan't thank each and every one of you for the work you've done.

    We will be at your side as you continue this battle, becauseit's the most important public health battle that has ever been foughtin this nation. And for the first time, victory is within our sight.

    Thank you.

    WOODS: OK, now, we'd -- we're going to have a fewwords from the attorney general of Minnesota, Skip Humphrey. He has beenone of the premier leaders in this fight. He's one of the first statesto sue.

    And Skip and his staff from the state of Minnesota haveworked very, very hard on this agreement.

    WOODS: And I can't tell you the countless hoursthat everybody put into it. So we thank him for that. And I'll give younow the attorney general from Minnesota, Skip Humphrey.

    HUMPHREY: Thanks. Thank you very much, Grant.

    This is a historic time and a historic action that's beingtaken today. Minnesota is very pleased to join with our colleagues in thiseffort. I think that it is very, very important to understand that in factwe have been able to get one of the conspirators in a sense to turn state'sevidence.

    But I think we need to put this in perspective. This isa little bit like busting a street drug dealer to get at the Colombia drugcartel. And I think it's very important that we make no mistake in understandingthat this is a one-time deal.

    The terms offered to Liggett today to come clean are notgoing to be offered to others. We're very serious about going ahead andmaking sure that the entire industry is transformed. And the informationgained today, the representations made today, I think are a very strongstatement that we're on the right road, and we're going to see this throughto the end.

    WOODS: We have a lot of people who would like tosay a few words.and hopefully, you'll be patient, and we'll run throughthat. Senator Lautenberg, would you like to come forward?

    LAUTENBERG: Thanks very much. I stand here withthese attorneys general, proud of the moment that we're witnessing. Andthe fact is that for the first time, we're going to see a break in thelobby that exists around here. I think Mike Moore used the term "conspiracy,"if not, apparently, it's loosely -- it's regularly used, because the documentationsays so.

    Since I wrote the law to ban smoking in airplanes in 1986,to ban smoking in public buildings, to ban smoking in -- where childrenreside or visit, clinics, et cetera, every step along the way has beena battle with the tobacco companies, even as they get a tax deduction foradvertising their product that eventually is going to kill 400,000 peoplea year and shamelessly -- shamelessly -- advertising to children. Morekids in the teenage -- in their teenage years know Joe Camel than they-- they know Joe Camel better than they know Mickey Mouse.

    And so this is a historic moment, and I congratulate eachone of you, attorneys general, because you are fulfilling your public responsibility-- protecting the children and the families of this country. I'm proudof you.

    And I'm delighted that I'm going to be able to find outwhether or not the witness who sat in front of my committee one day --and when I asked him what happened, what they found out in their lab workon humans, he said: Oh, we've never done any. We've never done any experiments.

    So I said: Well, how do you know what the effects are?There are -- there have been long time accusations of addiction being created.

    LAUTENBERG: Well, we studied animals.

    Well, I want to hear that guy when we have the documentsthat each of you is going to present so boldly, so quickly. And I standhere proud of you and delighted to be able to congratulate you on thismoment, and pledge that I'm there, my office is there to help you in anyway that we can.

    I thank you all very much.

    WOODS: Thank you very much, Senator, and thankyou for your leadership over a long period of time in this very importantissue.

    OK, Christine Gregoire is the attorney general, the Stateof Washington.

    GREGOIRE: I want to be very brief. But I wouldask you, please, to remind the American public of the image that the senatorjust brought forth to us again. It wasn't all that long ago, with theirhands up, that they swore to tell the truth, nothing but the truth, sohelp me God, to the Congress of this country.

    And then, they proceeded to tell lie after lie after lie.And today, we have solid evidence that they, in fact, lied to Congressand they have lied to the American public for all these many years.

    The second thing I'd like you to think about by way ofimage is they've killed our children for far too many years. And today,we put Joe Camel in its coffin where it belongs on behalf of the childrenand those Americans who care about our children. It's a new day for theirhealth in this country.

    Thank you for your leadership, General Woods and GeneralMoore, and thank you, Matt Myers and Steve Berman (ph) and Joe Rice (ph)and Motley (ph). Thank you all for just a tremendous effort. It is a breakthrough,watershed day. I am very appreciative of all the work of my colleagues.

    WOODS: OK, Bob.

    BUTTERWORTH: Bob Butterworth, attorney generalof Florida. I also am very proud to be here. Florida was one of the firststates involved in the litigation, as well as -- as a very unique statute,which we passed just a few short years ago.

    As General Moore stated last year to the day, the fiveof us stood before you with what at that time was a crack in the wall.And now, we have 23 states standing before you.

    The more and more we get involved in this case, the moreI reflect and say, I just wonder how many lives would have been saved,how many people would have lived longer to enjoy life with their grandchildren,with their children, if the industry had told the truth about their productand had not lied to them when they initially started smoking, usually whenthey were in their teens?

    And that is really one of the saddest things -- that whenyou sit back and think how many of us in this room, how many of your viewers,how many of your readers, how many of your listeners have lost a lovedone early due to tobacco. And I would say it is each and every one of usin this room. Today is very historic.

    WOODS: Why don't we go to questions here, if wecan.


    WOODS: Well, I'll let Mike answer that one. Whowants this one?

    QUESTION: What was the question?

    WOODS: The question? The question is, is thereabsolutely no effect from the North Carolina TRO?

    MOORE: We are in the business of enforcing thelaw. That's what attorneys general do. We take an oath to follow the law.

    It upsets me a little bit that the tobacco industry goesinto a court and wants to get an injunction against a company and allegebasically that we're going to violate the law. We're the good guys. They'rethe bad guys. They're the ones that are breaking the law.

    I don't think that they need worry about whether the attorneysgeneral of this country are going to break the law. We've been having toworry about them breaking the law for 50 years.

    So that North Carolina order, all it does is says thatLiggett can't do anything illegal. But we're not going to give them a chanceto do anything illegal. What we're going to do is take those documents,put them in a court, segregate the most incriminating 25 of them and say,judge, here they are.

    And you want to hear some bickering and screaming andwailing and gnashing of teeth, you come to Mississippi or Florida or Texaswhere this hearing is the first time, and you listen to who's screamingthe loudest. And I promise you it won't be attorneys general. It'll bePhilip Morris and R.J. Reynolds: "Please don't let those documentsout! Please, they're going to kill us!"

    I guarantee you that's what they'll say.


    WOODS: Let me also say that we don't know whatwent on in that North Carolina courtroom. Interestingly enough, we wereall here. They didn't invite us to make arguments in front of the judge.

    But if you think that the tobacco companies went intoNorth Carolina and asked them for a TRO that simply said don't break thelaw, I can't imagine that they were that meek. They've never been thatmeek before.

    What I would guess is they asked to stop this deal. Theyasked to stop everything in its tracks. And even in the venue they picked,they were turned down. I don't know, but I can't imagine they would haveasked for something as ultimately meaningless as this.

    QUESTION: General, (OFF-MIKE) in response to (OFF-MIKE),do you -- does Liggett, in your opinion, intend to divulge informationthat's encompassed (OFF-MIKE)? (OFF-MIKE), Liggett, the North Carolinacompany, (OFF-MIKE) and bound by the orders of the court, (OFF-MIKE).

    WOODS: OK. Could you identify yourself?


    WOODS: OK. What their understanding is -- we'renot enjoined from anything. Their understanding is they're enjoined fromdoing anything unlawfully. And it was never anyone's intention to do anythingunlawfully. We have not changed our plans for these -- the delivery ofthese documents for the past month.

    And the plan is that the most conservative read of thedocuments, the Liggett-only documents we can take possession of. Anythingthat we have -- that anybody could possibly have any question on, we'renot looking at, we're not having anything to do with. Those are being depositedright now. Some of them have been deposited.

    They will be all over this country here by the time suncomes up tomorrow. And we'll let a judge decide that.

    QUESTION: General Moore, could you characterizethese 25 to 30 documents you're talking about? What's in them that makesthem such a smoking gun?

    MOORE: Identify yourself for me.


    MOORE: OK. I just want to make sure you weren'tone of the lawyers representing the company up there today. You wouldn'ttrick me like that, would you? No, of course not.

    We asked Liggett to segregate the most incriminating documentsin their possession -- those documents that would help us prove, throughtheir testimony and their support, that there's a violation of the crime-fraudprovisions of our rules of procedure, so that the attorney-client privilegecould be pierced if it was claimed by Philip Morris and R.J. Reynolds.

    MOORE: For those of you that don't know much aboutthat rule, if there's evidence of a crime being committed or evidence offraud involved in a conspiracy, which we have all alleged in our cases,if those documents have evidence of that, then they certainly can't behidden. And that's what we're talking about. What we think, in these attorney-clientprivilege exceptions that they're taking, is they're trying to hide thesedocuments.

    A judge will hear evidence from both sides. Our side,fortunate for us at this point, is going to be supported by one of theparticipants.

    Think of it like this. Five men in a room deciding tocommit a crime -- none of you would ever find out about it unless one ofthem decided they were going to talk about it.

    We're going to have the document that's evidence of itand the witness to testify about it. Then, Philip Morris can try to explainit away any way they want to.

    QUESTION: Can you be more specific?

    QUESTION: What did Liggett represent to you isin these documents that makes them so incriminating?

    MOORE: I don't think I should be more explicit.

    QUESTION: General, Alan Franken with CNN. Can youtell us if we can assume for a minute, for the sake of discussion, thatyou have -- you will ultimately gain access to all these documents andbe able to use them in court. What would it now take for you all to settlewith the other four companies, particularly Philip Morris, since it representshalf the market?

    MOORE: Tremendous amounts of money.


    They would have to follow the FDA guidelines. They wouldhave to do something in this country to undo the mess that they've caused,health-wise. It would take generations to undo that.

    As you know, there has been much -- many, many, many,many news articles and stories, and many of the attorneys general havetalked about what would it take.

    We have a group of principles that guide us in that. Thisis the day, really, frankly, Al, for us to talk about the Liggett settlement.There will be plenty of time for us to talk about global resolutions. Today,we're knocking down Liggett. Tomorrow, we're going to knock down the nextfour. I really wouldn't want to comment on where we're going on any ofthe other.

    QUESTION: General?

    WOODS: They need to do one thing before we'd evenconsider it. They have to tell the truth.

    MOORE: Yes.

    WOODS: So they haven't even come close to tellingthe truth.

    QUESTION: General?

    QUESTION: Did you try to initiate any discussions?

    (UNKNOWN): Let me just follow that up. I saw onCNN, on your TV show, that they had hired law firms to attempt to settlethis matter, so you knew it first.

    QUESTION: General, the Justice Department is investigatingwhether these executives lied in Congress. Have you been contacted by acriminal division about the smoking gun documents?

    MOORE: Well, I'm sure they'll be very interestedin them.

    QUESTION: How (OFF-MIKE)? I mean, are they reallysmoking guns, or are we talking about...

    MOORE: Yes. They've been represented -- it's beenrepresented to us that they are evidence of crime and fraud. If that'sthe case, then there will be ramifications for that beyond simply the releaseof the documents to us, and hopefully, to the public.

    Now, what those ramifications will be, I don't know. Ican speak for Arizona. If there were crimes committed upon the people ofArizona, then I will take, as the top law enforcement officer, I'll takethe appropriate action.

    QUESTION: (OFF-MIKE) Did you all discuss the financialpart, the percentage per tax (OFF-MIKE)?

    MOORE: Well, there is lots of -- there is a wholegroup of them.

    WOODS: But the committee of counsel documents --in particular, we're going let a judge decide those issues. We don't wantto look at them. We can't look at them. We haven't looked at them.

    On the financial side, again, all we would take possessionof and all we would look at would be Liggett-only and things that are withoutquestion Liggett-only. We don't want to have any question whatsoever thatwe've looked at anything that we shouldn't have looked at. So we haven't.And we won't. A judge will direct us, what we can and can't have in ourpossession or even view.

    As far as the financial terms, it's basically what I toldyou. It has been reported that there was a $25 million up-front payment,and that is not correct. There is a $25 million payment if Liggett acquiresanother tobacco affiliate or if they are acquired by another tobacco affiliate.They would have to make an immediate $25 million up-front payment. Butthat's the only relevance of that figure.

    Basically, what we're talking about, then, is 25 percentof their pre-tax profit for 25 years, whatever that is. It could be verylittle, if their financial state remains where it is; or it could be alot, if they prosper in years to come.

    QUESTION: General, but then on that point, then,that there really is actually, in terms of the monetary, that's reallya rather insignificant amount, because it's possible you could get nothingout if they had no pre-tax profits, is that not correct?

    WOODS: If they have none, we wouldn't get any.And it's not -- this is not a monetary deal. The significance of this dealreally has absolutely nothing to do with the money.

    Now, it may be a significant amount to them. I'm sureif you owned stock there, you would think that giving up a quarter of anypossible profit you had would be important. But to us, the money's notsignificant. And I'll have to say, I think I can speak for all the attorneysgeneral, money is way down the list of priorities of what our goals arein this litigation.

    So, back to the question of any settlement with anyoneelse, our goals are to change the way this industry does business, period,in this country. So, that means they're going to have to get out of thelives of children across the United States.

    First and foremost, they can have nothing to do with thelives of children. Secondly, they're going to have to come clean, completely,with the American public. And then ultimately, they're going to have todo other things to undo the damage.

    They're going to have to do countermarketing. Some ofthe money that we receive will go right toward countermarketing.

    The tobacco companies are scared to death of countermarketing,of the ads you see across the country. Why are they scared of them? Becausethey work. Because teenagers listen to them. Because they stop teenagersfrom smoking.

    Some of their money is going to go to that. If we everworked out anything with anybody else, money would have to go to that.So -- and then ultimately, they're going to have to pay, rather than thetaxpayer, they're going to have to pay for the damage that they've done.

    QUESTION: General, if I could follow up on that.You say this is not a monetary deal. But what do you estimate your monetarylosses are due to the tobacco industry, as states?

    MOORE: There's a -- $6 billion-a-year is an estimateof the Medicaid losses attributed to tobacco-related disease. There areother numbers that people bounce around as high as $100 billion-a-yeartotal health care costs. A lot of folks attribute tobacco to 25 percentof the entire budget of health care in this country.

    MOORE: Liggett is a very, very, very small company.From someone who settled with them a year ago and had a deal with themfor pre-tax profit, I can tell you that my check for pre-tax profit thisyear is not going to be very much. They didn't make any pre-tax profitthis year. They are very, very small. They were punished by Philip Morrisand R.J. Reynolds after the last deal, and many of the brands that theysold were knocked out.

    So we didn't do this deal with Liggett because of whatthey're doing now. What we did this deal with Liggett for is what theyknow from 30 years ago forward.

    Liggett was not always a small company. Liggett and Myersused to be an extremely large tobacco company in this country, and theywere right there in the leadership position with Philip Morris and R.J.Reynolds before they got to be such big guys.

    So what they knew then and what they can tell us now aboutthat is what's going to bring the rest of them to their knees. So that'sthe value of this deal.

    WOODS: Let me put it this way. We got the wheel man. Now,we're going to go after the bank robbers. It's really that simple.

    QUESTION: One of the speakers today described Liggett'sagreement as an offer. Is there a signed piece of paper? Was it signedtoday?

    WOODS: Yes. Can you have it? Well, that's a goodsegue. I think the easiest way to get it is on our Webpage.


    I feel so great saying that because I'm semi-illiterateon there but check our Web page. I think it's going to be there withintwo hours and it's supposed to be on the press release, I believe. Is iton there. Pardon me.

    QUESTION: Will this require any congressional approval.

    WOODS: Requires nothing. We're done.

    QUESTION: There is no liability provisions.

    WOODS: No we're done here.

    QUESTION: What effect does this have on the other28 states.

    WOODS: Well the other 28 states -- it really, ithas nothing but a positive effect, but that's up to them. One of the thingswe were clear about is we did not want to bind the other states. They can,they have the ability to opt into this agreement or opt out. It's totallyup to them. They have six months to decide that. So if they want the benefitsof this deal, then they can do it. But if they don't want to, they don'thave to. That's up to them.

    QUESTION: (OFF-MIKE) RJR would come in the backdoor and (OFF- MIKE)

    WOODS: No, no. There were discussions of that earlyon, of whether RJR could get the benefits of this deal through the backdoor. And there are -- there are some possible benefits to a future affiliate.But they're -- they're really, in my view, pretty minor.

    For example, they go with -- if Liggett was acquired andthere was a verdict against the future affiliate, then they would not haveto post an appeal bond in order to appeal. That's about it.

    HARSHBARGER: Let me -- can I just make one statement.There's a lot of details here -- and I'm Scott Harshbarger, the attorneygeneral of Massachusetts and also happen to be president of the NationalAssociation of Attorneys General.

    But it's worth keeping some perspective in response tothese questions that have been asked. Last year, five states were here.And the question was, what was going to be the impact?

    Well, thanks to the work of heroes like Bob Butterworthand Mike Moore, Grant Woods and Skip Humphrey -- and I was proud to beone of the first states to do this -- one year later 17 additional statesare in full-fledged litigation. One year later.

    And I submit to you, if any of you had told -- if you'dhave asked us last year whether one year from that date -- a deal withthe smallest tobacco company in this country -- whether we would have 22states representing half the population of the United States, Republicansand Democrats from all over this country, engaged in a war that is bigtime against tobacco, you would have been very, very skeptical.

    HARSHBARGER: This is a tremendous victory. I wouldhope, as I said a year ago, that the other companies, instead of engaging,and continuing to engage, and going and trying to stop this in court, wouldfor once in their lifetime see whether the corporate self- interest couldsomehow also include the public interest. And we could engage in a wholesaleprocess of figuring out how we really do protect the public health, protectchildren.

    But until they do, we now have documents that are goingto make it possible for every prosecutor in this country to prove theircase. In one year, imagine where we'll be one year from today.

    QUESTION: (OFF-MIKE) sort of draw the line. Andalso, the other question on this is criminal (OFF-MIKE).

    MOORE: The most important piece in this -- andthat's why I used my fingers and said watch for those 25 documents. Weare going to get documents, and we are going to get witnesses. We are goingto get full cooperation.

    Liggett has brought peace, so to speak, with the states.But they've given up a tremendous price. They're going to have to appearin everyone of our cases; they're going to have to provide the expert witnesses.Their lawyers are actually going to -- I mean, think of this. Their lawyersare going to be on our team fighting the other side.

    I mean, that is -- if I was Philip Morris today, I'd be-- I'd be very, very scared. I don't know what the stock market did today.But I don't -- I don't know what it'll do tomorrow, because I don't knowanything about that. But if I was them, I'd be worried, because if theyknow that we know what they knew 30 years forward, I mean, it's bad.

    So the difference in the two deals is, is in the firstdeal. We did a deal that probably had a little money in it. It was a groundbreakingdeal that had a cooperation piece in it.

    But this deal is a deal that has witnesses in it, andit has documents in it. So it's something that we're going to be able touse and not think about a year from now. We're fixing to use it in about70 days. So I mean, that's where we are.

    HARSHBARGER: I think for timing, with all due respect,we have to cut the timing. There are plenty of people that can be interviewedhere individually. But with the response to this, I think the full- fledgedpress conference is over.

    Thank you very much.



    ???? - Indicates Speaker Unkown

    - Could not make out what was being mike - IndicatesCould not make out what was being said.

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