Two tobacco companies drop out of state negotiations

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The tobacco industry's mostly united front in dealing with state tobacco lawsuits appeared to fall apart Aug. 26.

With talks with nine attorneys general set to resume Aug. 27 in New York, a spokesman for Washington state attorney general Christine Gregoire, said tonight that RJR Nabisco Holdings Corp. and Brown & Williamson Tobacco Co., had decided not to further participate. Instead the attorneys general who had hoped to get a settlement that all state attorneys general could agree to will just negotiate with representatives of Philip Morris Cos. and of Lorillard Tobacco Co.

RJR and Brown & Williamson officials were not immediately available for comment.

Fred Olson, communications director for Ms. Gregoire, said attorney generals spelled out the public health and financial recovery terms they needed to settle state cases and only Philip Morris and Lorillard were willing to continue discussions. Attorneys general are asking as part of any agreement that tobacco makers give up all outdoor signage and give-aways of merchandise, according to an industry analyst.

"In the last week we spelled out the terms that we feel are very beneficial to recovery and we said it wouldn't be fruitful to meet if they were not prepared to talk about these," he said. "We spelled out what the states need and apparently only Philip Morris and Lorillard will return to discuss those terms.

"We are guardedly optimistic and will continue to discuss with those two. If there is a good settlement we would hope to do it with all four, but we are prepared to litigate with the other two," he said.

Up to now only tiny Liggett Group has chosen to go a different course from its tobacco company rivals.

The talks precede the mid-September start of Washington State's tobacco case, a case that analysts say is one of the weaker of the state tobacco cases due to a combination of state laws and rulings already made by the judge in the case.

Copyright August 1998, Crain Communications Inc.

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