The initial optimism over the tobacco settlement talks has faded as negotiators head for a potential showdown over the pivotal issue of industry liability for smoking-related claims, people familiar with the talks say.State attorneys general, who publicly portray themselves as a unified group, are becoming increasingly divided in their views on the liability issue.
And although some attorneys general said progress was made in the talks with the industry last week in Dallas, other people involved in the negotiations said a wide gulf existed between the states and industry over basic questions like the types of lawsuits smokers could bring and the amount of money they could collect.
"Nobody has made any concessions," said Richard Blumenthal, Connecticut's attorney general. "Liability is the key issue, and we have decided that there is no point taking on any of the other issues until we are able to resolve it."
Other complications are emerging in the talks, people familiar with them said. For example, state regulators and lawyers representing smokers in private lawsuits differ over who should be speaking for the legal rights of individuals in the negotiations. And the discussions are no longer a simple dialogue but a cacophony of views and interest groups.
"Right now, things are chaotic," said one person familiar with the talks who insisted on anonymity.
Spokesmen for Philip Morris Cos. and RJR Nabisco Corp., the two tobacco giants actively participating in the talks, declined to answer questions about the status of the negotiations. But while one person familiar with industry's stance said progress had been made in Dallas, another well-placed person said the industry was growing frustrated.
"The other parties in the negotiation don't understand that there is a certain point at which the industry is better off staying the course than making additional concessions because ultimately these companies are going to be judged by their shareholders," that person said.
Last month, tobacco companies, state attorneys general, plaintiffs' lawyers and antismoking forces began formal talks aimed at resolving a number of complex legal and regulatory issues involving the marketing of cigarettes and industry liability for health-related claims from both present and future smokers.
In the talks, cigarette makers initially proposed submitting to regulation by the FDA and creating a settlement fund that could total $300 billion.
In return, cigarette producers sought to shield themselves from both present and future liability claims from smokers, a move that would take an act of Congress.
Participants in the talks have seen them as a major step toward resolving one of the nation's most vexing public health issues. And some of those taking part believe that without a negotiated resolution, legal battles over issues like federal regulation of tobacco products and advertising will drag on for years.
But since the disclosure that the talks were taking place, the issue of how much legal protection to extend to the tobacco industry has emerged as a central concern.