Posted on 09/04/2007 11:12:51 AM PDT by Diana in Wisconsin
(Suit accused smokeless tobacco maker of trying to monopolize market)
Wisconsin snuff users could each soon receive $816 in coupons that will enable them to buy the smokeless tobacco at a huge discount over the next 20 years, a move that could cost UST Inc., the manufacturer of Copenhagen and Skoal, up to $65 million.
To get the coupons, consumers must be adults and swear that they bought UST snuff between 1990 and 2004.
The largess is the result of a class-action lawsuit that also gives the lawyers who brought the suit $17 million. Milwaukee County Circuit Judge Michael Dwyer has given preliminary approval to the lawsuit. A final hearing is scheduled for Dec. 4.
UST coupons will be either $6 off for three-pack of tins or $1.50 off single tins, about half off the current price of a tin of snuff.
While those promoting the settlement say the terms are nothing to sniff at, critics call it a classic example of what's wrong with class-action lawsuits.
"The case was settled by selling out the consumer," said Gerald Thain, a University of Wisconsin-Madison Law School professor emeritus. "The effect of the settlement is that it will protect the position of UST in the smokeless tobacco market for the next 20 years."
Lawyers on both sides of the case were reluctant to discuss the issues, but both defended the use of coupons in a settlement.
"This is different than when you get a $50 coupon toward the next TV you buy because the one you just bought doesn't work," said Chris Athanasia, a UST lawyer. "These are high-value coupons for products that people buy every week."
Brian R. Smigelski, the Milwaukee lawyer who brought the lawsuit for the consumers, agreed, adding that the big payout by the company will dissuade it from engaging in such practices in the future.
"This is a significant cut into their profit margin," Smigelski said.
The roots of the Wisconsin lawsuit are in Kentucky. A UST competitor, Conwood Company LP, brought a federal antitrust action against UST, alleging that UST engaged in acts designed to monopolize the market. Among other things, according to the antitrust action, UST removed Conwood's display racks and advertising and replaced them with UST products.
The Kentucky jury sided with Conwood and awarded $350 million in damages, an amount trebled to $1.06 billion by federal antitrust law. A federal appeals court affirmed the award, and the U.S. Supreme Court refused to hear an appeal.
Soon after the decision, lawsuits were brought on behalf of consumers in several states, and most have settled for coupon deals. Wisconsin's settlement is one of the larger ones.
In 2002 a Wisconsin lawsuit was brought on behalf of Jason Feuerabend, a snuff user who runs a dry cleaner, according to his lawyer, and all others who bought UST products between January 1990 and May 7, 2004. Feuerabend's lawsuit contended that he paid too much for his snuff because of UST's monopolistic tactics.
As the case headed to trial in mid- to late 2007, the sides went to mediation and settlement discussions. UST's board of directors approved a proposed settlement in April. Feuerabend will receive $10,000 as a result of the settlement.
UST denies any wrongdoing or that smokeless tobacco causes health problems.
Consumers have until July 28, 2008, to make their claims. If fewer than 40% of the coupons are distributed to those making claims, coupons will be distributed in stores. Then, if fewer than 40% of the coupons are still not distributed by a set deadline, the United Way of Greater Milwaukee will get $200,000 for every percentage point up to a maximum of $1 million.
Smigelski defended the $17 million that the lawyers will receive, saying some of it will go to law firms in Washington, D.C., and San Francisco. He noted that lawyers "fought tooth and nail" for five years to obtain the settlement, and the work involved reviewing millions of pages of documents and taking many depositions, including that of top people at UST.
Athanasia, speaking for UST, said that while UST denies wrongdoing, the coupons are an appropriate remedy to the allegation of overcharging for the products.
Steve Meili, a lawyer who directs UW's consumer law litigation clinic, said coupon settlements have been part of the impetus for national and state legislative attempts to reform the rules for class-action lawsuits.
In 2005, Congress passed a law requiring that more class-action suits be filed in federal court, making it more difficult for such lawsuits to be heard in state courts. Congress was responding to a perceived abuse of class-action lawsuits that some said unfairly rewarded attorneys while providing little relief for class members.
"The law is new and the impact is not yet clear," Meili said.
UW's Thain cautioned that class-action lawsuits are a vital tool for consumers.
"If you cheat a whole lot of people just a little bit, it's very difficult for them to sue individually," Thain said.
Smokeless Ping!
‘Snuff said...............
If you win a ridiculously large jury award and give all the plaintiffs "just a little bit," it's very easy for the attorneys rake in millions and millions.
It's because of craziness like this that then-Gov. George W.Bush signed a law in Texas that basically says the only way a suit can be settled with coupons is if the attorneys also accept payment in coupons!
“the terms are nothing to sniff at” indeed.
Now the company will pay out the nose. Some lawyer musta blown it. What a snort though. Still 816 million ain’t nothing to sneeze about. You ain’t a real cowboy if you don’t have a skoal ring in the seat pocket of your jeans.
How does UST providing coupons for their product help Conwood? Although the coupon scheme is suppose to be punishment isn’t the use of coupons used to stimulate sales? Wouldn’t it be better if UST had to issue and redeem Conwood coupons?
UST should tell everyone that they are not going to sell the product anymore, and point to the specific lawyers involved as the reason.
The guys I know that are addicted to this stuff would not be happy campers.....
Read later
I find chew a disgusting habit, but I’ll fight to the death to defend their right to chew!
My bad habit may be next on the docket. :)
Can you send me some coupons?
Nanny state Ping..........
Unlike the “soak the smoker” master settlement agreement this one actualy does give the consumer something...........albeit nothing copared to what the blood sucking lawyers get.
"Ah horsesmurf, I thought it was a smurf settlement."
LOL! I still say, “Have a Smurfy Day!” quite often. ;)
"This is different than when you get a $50 coupon toward the next TV you buy because the one you just bought doesn't work," said Chris Athanasia, a UST lawyer. "These are high-value coupons for products that people buy every week."
As if snuff had any benefits for its consumers.
http://www.smokersonly.org/others/what_others_are_saying.html
Chewing tobacco is 98% safer than smoking, and no more dangerous than driving a car. Don’t believe it? Do a little research. The anti-tobacco Nazis are liars.
I live in Illinois, not Wisconsin and I use Levi Garret not Copenhagen. I’m trying to figure out if there’s anything in this for me......... Nope, can’t stretch it quite that far. There will be a plenty for the lawyers though.
If the BSAs (Blood Sucking Attorneys) received their $17M in coupons, you can bet the 'settlement' would have been DOA as soon as it was offered.
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