Judge again postpones start of Texas lawsuit against tobacco firms

By CLAY ROBISON
Copyright 1997 Houston Chronicle Austin Bureau

AUSTIN A federal judge in Texarkana again delayed the start of Texas'
antitobacco trial Wednesday, partly because cigarette companies challenged
the way he plans to conduct it.

Announcing that jury selection will resume Oct. 27, rather than next week,
U.S. District Judge David Folsom also said he needed more time to rule on a
stack of pretrial motions.

Folsom's third delay in the trial in less than a month fueled speculation
that the multibilliondollar case may be headed for a settlement. But both
sides insisted they were still preparing for trial.

"We've had no settlement discussions so far," said Ron Dusek, a spokesman
for Attorney General Dan Morales.

Morales is seeking as much as $14 billion in damages for Medicaid costs
associated with smoking.

On Tuesday, the tobacco defendants asked the 5th U.S. Circuit Court of
Appeals in New Orleans to overturn a key order by Folsom that would divide
the trial into three phases. The cigarette companies said Folsom was trying
to force them to settle because his trial plan would "severely tilt the
playing field" against them.

Under Folsom's order, the trial would begin with the state's charges that
tobacco companies violated federal anti racketeering laws by conspiring to
mislead the public about the health risks of smoking.

Folsom told lawyers for both sides Wednesday that he hoped to get "some
direction" from the 5th Circuit on the defendants' challenge before
proceeding.

Both sides announced on Sept. 8 that the Texas suit wouldn't be settled
without a national settlement of all state suits pending against the
industry. The national settlement proposal remains hung up in Congress.

"We're prepared to go to trial," Dan Webb, the tobacco company's lead
lawyer in the Texas case, said earlier this week.

But some antitobacco activists said the cigarette makers may be more
willing to settle the Texas case if the 5th Circuit upholds Folsom's trial
order.

They said Folsom's trial plan could make the industry more vulnerable to
Texas' antiracketeering attack. A loss on that key issue in Texas could
weaken the industry's chances in other states and further reduce the
prospects of a national settlement, they said.

Richard Daynard, a law professor at Northeastern University in Boston and
an antitobacco activist, said tobacco companies would be in
"extraordinarily bad shape" if the trial is conducted in three phases, as
Folsom has ordered.

"The price of settling for them is high, and the price of not settling is
high," Daynard said. "If I were they, I'd be thinking real strongly of
settling it now."