$1.25 Billion Tobacco Lawsuit Fee

By HENRY WEINSTEIN

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.

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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.

The latest fee award, though large, is considerably smaller on a percentage basis than the fees awarded to lawyers who represented Mississippi, Florida and Texas, three of the first states to sue the industry.

Those attorneys garnered fees ranging from 19% to 34% of the settlements won by those states.

On the other hand, it is twice as large as the $637 million awarded by the same panel to nine law firms that represented the cities and counties in California.

"The award is well-deserved," said San Diego attorney Don Hildre, who said he had done nothing but tobacco work from 1994 to 2001. He said that the attorneys had collectively put in 400,000 hours.

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