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Press Release

Henry Brewster Steve Baughman
Stein & Brewster Baron & Budd, P.C.
103 Dauphin Street, Ste. 405 3102 Oak Lawn Ave., Ste. 1100
Mobile, AL 36602 Dallas, TX 75219-4281
(334) 433-2002

Leslie Brueckner
Arthur H. Bryant
Trial Lawyers for Public Justice
1717 Massachusetts Avenue, NW
Suite 800
Washington, D.C. 20036
(202) 797-8600

Attorneys for Kenneth Rowe
March 1, 1999

INTRODUCTION

Objector Kenneth Rowe files this opposition to the settling parties' proposed settlement, which seeks to resolve the present and future personal injury claims of a class consisting of nearly every man, woman, and child in America. Mr. Rowe is a former smoker of Chesterfield cigarettes, which are manufactured by Liggett. Although Mr. Rowe does not currently suffer any known health effects as a result of smoking, he knows he is at increased risk for developing smoking-related injuries in the future, including lung cancer. Because Mr. Rowe wishes to retain his right to sue Liggett if and when he develops any such future injuries, he objects to the proposed settlement now before the Court.

This is the third attempt by Liggett to revamp the same settlement in order to allow the company to avoid liability for injuries caused by its tobacco products. Just as it failed in its first two attempts to foist this massive, no-opt-out class action upon the unsuspecting members of the American public -- virtually all of whom are members of this class -- so too should it fail in this third effort.

The class settlement proposed here provides a defendant with complete immunity from suit in return for essentially nothing. That settlement provides class members almost no monetary or injunctive relief to which they were not already entitled, but it benefits Liggett extensively. Under the settlement, Liggett is given an unprecedented release from claims for past and future personal injuries arising from its misconduct. Moreover, none of the class members here are entitled to exclude themselves from this privately negotiated, quasi-legislative effort to eliminate their substantive rights.

The settling parties attempt to justify the unprecedented scope of the class, the failure to provide class members the right to opt out, the inclusion of future claims, and the insignificance of the settlement's relief by asserting that Liggett may not have enough money to pay for the defense and payment of claims that the members of this class could bring against it. Assuming this assertion is true, it nonetheless fails to provide this Court any authority to use a rule of procedure to alter the present and future substantive rights of virtually every American. Congress has provided a means to address insolvency in the Bankruptcy Code, which includes significant procedural and substantive protections for present and future tort creditors and provides a substantive basis for adjusting creditors' entitlements under state laws. By contrast, Alabama Rule of Civil Procedure 23(b)(1)(B) does not give Alabama state courts similar authority to alter the substantive rights and obligations arising under the laws of every state in the country, particularly when most of those rights have not even yet accrued.

The legal infirmities plaguing the proposed class settlement are legion and insurmountable:
Due process and principles of federalism prohibit use of Rule 23(b)(1)(B) in this situation. The "limited fund" provision of Rule 23 was never intended to encompass claims for in personam damages based on the potential insolvency of a tort defendant. For better or worse, substantive tort law establishes a "first-come, first-served" system for reaching a tort defendant's assets, and this Court cannot use a state rule of procedure to alter that substantive regime -- which was created by the policymaking bodies in each of the 50 states. But even if 23(b)(1)(B) could permissibly be used as a substitute for bankruptcy, it would not be applicable to the Settlement Class defined here. While this class is massively over-inclusive for purposes of assessing the criteria of Rule 23(a), it is under-inclusive for purposes of equitably distributing Liggett's limited funds. Attorneys general from nearly every state have pursued separate claims against Liggett that are not encompassed by this class, and none of Liggett's commercial creditors fall within the class definition. Thus, it is only the present and future personal injury victims (and the non-state entities who have subrogation claims related to those victim's injuries) who are confined to the results of this proceeding, while Liggett's assets remain open for depletion by states and trade creditors. Finally, due process requires that all class members with claims for in personam damages be entitled to exclude themselves from the class.

Because claims for monetary relief predominate, this class cannot be certified under Rule 23(b)(2). As an alternative to the "limited fund" approach, the settling parties seek to certify this class under subdivision (b)(2), which is ordinarily reserved for claims seeking declaratory or injunctive relief. Here, however, the vast majority of the claims released by the class settlement are claims for money damages that should not be encompassed within a mandatory class. The mere fact that Liggett has agreed to a few elements of injunctive relief as part of the proposed class settlement (almost all of which they had previously agreed upon in other settlements) does not miraculously transform claims for damages into claims for injunctive relief.

This class cannot meet the certification criteria of Rule 23(a). The "Settlement Class" here encompasses such a large and diverse group of claims that the class could not possibly satisfy the requirements of Rule 23(a) if the case were litigated to judgment. Thus, the sole conceivable basis for meeting the commonality, typicality, and adequacy criteria of 23(a) is the settlement itself. Whatever the proper role of accounting for a settlement in assessing class certification criteria, a settlement cannot, in and of itself, be sufficient to establish a class. Additionally, gross conflicts of interest among groups within the class preclude any finding of adequate representation.

Neither due process nor Rule 23 permit resolution of future claims for damages. This settlement purports to extinguish not only class members' claims for existing injuries based on Liggett's past misconduct, but also any claims for future injuries related to smoking Liggett cigarettes or second-hand exposure to Liggett tobacco smoke, including injuries caused by future Liggett conduct. A release of such future claims cannot satisfy either due process or the adequacy of representation requirement of Rule 23.

A class settlement that releases claims for virtually no consideration cannot be fair. The supposed injunctive and monetary "relief" provided under the class settlement here requires Liggett to give up very little that it had not already given up under its separate settlement with 17 state attorneys general. Thus, this settlement serves solely to benefit Liggett (and class counsel) while providing basically no relief to the plaintiff class -- it is therefore blatantly unfair and cannot survive this Court's scrutiny under Rule 23(e).

For all these reasons, which are discussed in detail below, class member Kenneth Rowe objects to the approval of the proposed class certification and settlement.

STATEMENT OF FACTS
A. Background

This case is the latest of a series of efforts by Liggett to cap its liability for damages based on personal injuries and economic loss related to its marketing of tobacco products. First, in March 1996, Liggett made headlines by settling a number of Medicaid reimbursement lawsuits brought on behalf of five states. Then, on March 20, 1997, Liggett announced that it had reached a settlement with 17 additional states (the "Attorneys General Settlement Agreement" or "AGSA"). On the same day, Liggett announced that it had entered into a class action settlement agreement (the "Fletcher I settlement") in this case, Fletcher v. Liggett Group, Inc., CV 97-913 (Ala. Cir. Ct., Mobile Cty.). That initial Fletcher settlement class included both Liggett's present and future personal injury victims and all entities, including 28 states, who had pending or potential economic injury claims against Liggett. The Fletcher I settlement received preliminary approval from this Court, and a final fairness hearing was set for July 1997.

Meanwhile, another group of plaintiffs' attorneys filed a class complaint in federal court in West Virginia on February 7, 1997. In that complaint, the class representatives asserted claims on behalf of a comparatively narrow class of people who have already suffered personal injuries as a result of smoking Liggett cigarettes. See Walker v. Liggett Group, Inc. ("Walker"), No.2:97-0102 (S.D. W.Va. 1997) Complaint at ¶13. Then, on May 15, Liggett and the Walker class counsel filed their proposed class settlement in Walker, which they characterized as a "renegotiation" of the Fletcher I class settlement. In fact, the settlement agreement in Walker tracked the Fletcher I settlement almost word-for-word and provided essentially identical "relief" to the class.

Although Walker received preliminary approval on May 19, 1997, the settlement was quickly scuttled as a result of the intervening U.S. Supreme Court decision in Amchem Products, Inc., et al., v. Windsor, 117 S. Ct. 2231 (1997), which was handed down on June 25, 1997. There, the Supreme Court rejected a enormous class settlement of millions of present and "exposure-only" asbestos victims on the ground that the "sprawling class" could not possibly meet the various certification criteria of Federal Rule of Civil Procedure 23. In the wake of Amchem, TLPJ moved to vacate the preliminary certification of the Walker settlement on the ground that Liggett's deal was unapprovable on its face. The district court agreed, and Liggett's settlement – once again – was dead in the water. See 175 F.R.D. 226. Although Liggett filed an appeal of that decision, it has repeatedly staying briefing of the appeal on the ground that it was attempting to work out a new deal with the plaintiffs.

Liggett has now abandoned the federal courts of West Virginia and renewed its request to this Court to approve yet a third version of its unprecedented, nationwide, no-opt-out, present-and-future-victim settlement class. Having made only minor improvements in the substance of the settlement and a cosmetic restructuring of the class through nominal subclassing, Liggett asks this Court to bless essentially the same agreement it first filed in this Court in March 1997. Critically, like the prior versions of this settlement, the new agreement does not provide any details regarding how settlement proceeds will be distributed among the various conflicting subclasses that have supposedly received separate representation here. See Agreement at § 7.10. Thus, rather than actually addressing the conflicts within this class, Liggett's efforts at subclassing reflect no more than the appointment of new representatives to bless the same settlement that had previously been reached by a single set of counsel purporting to represent the entire class.

Although the proposed settlement is essentially the same deal that was rejected in Walker, Liggett's financial position appears to have markedly changed since the renewed settlement agreement was filed with the Court. According to recent news reports, Liggett has agreed to sell three of its cigarette brands to tobacco giant Philip Morris, Inc, for "a whopping $300 million." See "Liggett to Sell 3 Brands of Cigarettes to Philip Morris," The Washington Post at A6 (November 21, 1998) (attached as Exhibit 2). In addition, it has been reported that Liggett stands to "collect an annual subsidy of about $100 million" due to the recent, $206 billion settlement between the "Big Four" tobacco companies and 46 states. See "The Ifs and Buts of the Tobacco Settlement," The New York Times (November 29, 1998) (attached as Exhibit 3). Despite these apparently dramatic improvements to its financial position, Liggett is still attempting to obtain approval of essentially the same deal that it has been shopping from court to court since March of 1997.

B. The Class Definition and the Terms of Liggett's Settlement

If this Court certifies this class as defined in the Amended Class Settlement Agreement ("ACSA"), that class will by far constitute the most expansive use of class actions ever, by any court, state or federal. In addition to the presently injured Liggett smokers who have asserted claims in the complaint, the "Settlement Class" includes the following groups who have made no claim in this case:

a) past and present smokers of Liggett cigarettes who suffer present or future injuries ACSA at Part 1 (Definitions -- defining "Settlement Class");

b) past, present, and future victims of second-hand smoke from Liggett cigarettes (Id. -- defining "Currently Injured Smoker Subclass" part (d), and "Future Injured Smoker Subclass" part (d));

c) past, present, and future victims of tobacco products manufactured by other tobacco companies and people who have been exposed to second-hand smoke from such products (Id.-- defining "Non-Liggett Smoker Subclass" and "Future Injured Smoker Subclass" part (d)); and

d) all persons or entities, including all counties, cities and insurance companies, which have incurred or will incur losses by reason of paying for or providing treatment for medical conditions caused by cigarettes manufactured by any tobacco company (Id.-- defining "Recoupment Subclass")

Given that probably every American (and every non-American resident of the United States) has been exposed to second-hand smoke, this Settlement Class encompasses more than 250 million people, including every lawyer to participate in this proceeding. Indeed, recognizing the potential for recusal occasioned by the fact that the class definition encompasses all Americans, the settling parties have chosen to expressly exclude "all members of the judiciary of the State of Alabama and the families of such members." See, e.g., ACSA Pt.1 (defining "Future Injured Smoker Subclass").

The ACSA releases all class members' claims for personal injury and economic loss against Liggett relating to smoking or cigarettes. See ACSA § 11. This release not only encompasses claims that have already arisen, but also extinguishes claims for any future injuries that occur during the 25-year period of the settlement. Unlike prior "future claims, settlement-only" class actions involving asbestos, the ACSA not only extinguishes future claims for latent injuries based on Liggett's past misconduct, but also immunizes Liggett from liability for any future, tobacco-related misconduct that causes injury while the settlement is in effect.

In exchange for the mandatory release of present and future claims, the ACSA purports to provide two basic types of relief: monetary and injunctive. First, the ACSA requires Liggett to contribute 7.5% of its annual pretax income for 25 years to a fund that will supposedly benefit class members. Second, the ACSA ostensibly obligates Liggett to do a number of things that allegedly benefit the class, including to: (1) add a warning to its cigarette packages that "smoking is addictive"; (2) submit to FDA jurisdiction and regulations; (3) stop marketing its cigarettes to children and adolescents; and (4) actively assist class counsel in the prosecution of fraud, conspiracy, and other claims against other tobacco manufacturers. But the ACSA actually guarantees only $25 million for the class -- payable over 25 years -- and provides almost no injunctive relief that was not already promised in the AGSA. ACSA § 7.3.2.

As for the supposed injunctive relief in this settlement, almost all of the conduct required of Liggett under the ACSA was already independently mandated by the AGSA. The injunctive language of the ACSA (Section Five) tracks the injunctive language of the AGSA (Section 4) almost verbatim. The only arguable difference is that, under the class settlement, Liggett's cooperation (and documents) are expressly promised to be shared with class counsel and class members' attorneys, as opposed to being shared with the settling states. However, even though the AGSA provides that Liggett will cooperate only with the settling states in suits against other tobacco defendants, there is no doubt that, even without the class settlement, such cooperation with the states would have trickled down to benefit each individual class member who also sued those other defendants. The private attorneys working with the state attorneys general on the Medicaid lawsuits comprise a significant -- and highly influential -- portion of the plaintiffs' tobacco litigation bar. Through their involvement with the attorneys general, those private attorneys would have access to all the information and cooperation provided by Liggett under the AGSA, and they would be able to share that information with other private attorneys pursuing individual lawsuits. Once the cat of cooperation sprang forth from Liggett's bag under the AGSA, it would by no means have been contained to the Medicaid litigation -- and thus the cooperation provisions of the class settlement add little or nothing for the benefit of the class.

In exchange for nominal monetary and injunctive relief, the Settlement Class not only gives up the right to sue Liggett for tobacco-related injuries or losses, but it also potentially gives up valuable rights against other tobacco defendants. This comes from Liggett's efforts to make itself an attractive takeover target for larger tobacco companies in Section 10 of the ACSA. Basically, Section 10 provides that, if a member of this class obtains a judgment against another tobacco defendant, and that tobacco defendant has become affiliated or later becomes affiliated with Liggett by purchase or merger, then the class member will not be able to enforce that judgment against any affiliate of the tobacco defendant that is not "engaged in Domestic Tobacco Operations." CSA § 10.2. This provision invites other tobacco companies to spin-off their non-tobacco holdings, purchase Liggett, and thereby immunize their non-tobacco assets from liability.

I. THERE IS NO LEGAL BASIS FOR CERTIFICATION OF A MANDATORY, NO-OPT-OUT CLASS

The settling parties seek certification of a mandatory class, which would force all present and future victims to accept the minimal relief accorded under the settlement. This violates both the U.S. Constitution and Ala. R. Civ. P. 23. The Constitution guarantees the right to opt out of any class action, such as this one, that seeks to bind the members of the class with respect to their in personam claims for money damages. Moreover, neither Rule 23(b)(1)(B) nor (b)(2) were intended to encompass such in personam damages claims -- the "limited fund" provision of Rule 23(b)(1)(B) was intended to resolve groups of claims against a naturally limited fund, or "res", while subdivision (b)(2) was meant solely for claims predominately seeking injunctive or declaratory relief. Thus, certification under either prong of the rule is illegal and improper.

A. There is No Basis for Certifying a Mandatory Class Under Rule 23(b)(1)(B).

1) Due process, Rule 23, and central principles of federalism all forbid mandatory class treatment of the individualized claims for damages alleged here.

Ignoring the allegations of the complaint, the settling parties defend the no-opt-out class action certified here with the same excuse allegedly justifying each of this action's other irregularities—the supposed need for equitable distribution of Liggett's limited assets. But class members here do not assert claims against any type of specific property or common fund. Class members' claims are not against a bond, a ship involved in a maritime accident, a trust fund, an insurance policy, or any other specific piece of property. Nor are class members' claims alleged against a defendant in receivership or bankruptcy. In this case, class members' claims are in personam claims against a solvent defendant that merely faces a risk of insolvency. If class members individually prosecuted the claims alleged in the complaint against Liggett and secured individual judgments, state law provides that those judgments would be enforceable in full immediately upon becoming final, unless and until Liggett declares bankruptcy or a receiver is appointed to distribute its assets. Moreover, unlike the situation in bankruptcy, here Liggett has not placed all of its assets before the court to be divided among its creditors. In these circumstances, due process demands that class members be given the opportunity to litigate their individual claims on an individual basis.

a. Under Shutts, Rule 23(b)(1)(B) may not constitutionally be applied to individualized claims for in personam damages.

In Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), the Supreme Court confirmed that the Constitution requires exactly what Rule 23(b)(3) provides: that class members with substantial, individualized claims for money damages must have the opportunity to opt out. In Shutts, the Supreme Court held that due process requires "at a minimum" that, in order for a court to exercise jurisdiction over absent class members in a case seeking predominately money damages, those class members must be afforded the opportunity to exclude themselves from the class. 472 U.S. at 812.

Confirming that Shutts requires an opt-out option for tort claimants of individualized monetary damages, the Ninth Circuit reversed a district court's judgment against absent class members not allowed to opt out. Brown v. Ticor Title Ins. Co., 982 F.2d 386, 392 (9th Cir. 1992), cert. dismissed as improvidently granted, 114 S. Ct. 1359 (1994). In Ticor, the district court had certified the class under Fed. R. Civ. P. 23(b)(1)(A) and 23(b)(2), neither of which provide for a right of exclusion. The Ninth Circuit concluded that "[b]ecause Brown had no opportunity to opt out of the MDL 633 litigation, we hold there would be a violation of minimal due process if Brown's damage claims were held barred by res judicata." Id.

Because tort claims for personal injury or property damages are inherently particularized and will differ for each member of the class, the requirement of adequacy of representation in Alabama Rule of Civil Procedure 23 is insufficient to protect the due process rights of absent class members with respect to such claims. See Shutts, 472 U.S. at 812. Group representation is not a substitute for due process rights because certification of monetary damages claims on a no-opt-out basis deprives plaintiffs of their right to present the unique circumstances of their individual injuries. Unliquidated claims for tort damages cannot be calculated by applying a strict mathematical formula to each class member. The risk that absent class members will be deprived of all or part of their claims is extremely high because individual interests are necessarily different from those of the class representatives. While there are types of non-tort damages claims, such as back pay in employment discrimination suits, that may require no more than mechanical application of a classwide formula to determine each plaintiff's recovery, tort damages are unique to each plaintiff even when the underlying cause is the same. Without the right to opt out, class members have no opportunity to present the unique circumstances of their individual injuries, as required by the underlying substantive law:

Commonality among class members on issues of causation and damages can be achieved only by lifting the description of their claims to a level of generality that tears them from their substantively required moorings to actual causation and discrete injury. Procedures can be devised to implement such generalizations, but not without alteration of substantive principle.

In re Fibreboard Corp., 893 F.2d 708, 712 (5th Cir. 1990). A court can guarantee claimants a fair and full opportunity to be heard only by providing each individual the choice of hiring her own lawyer, opting out of a class action, and presenting her own claim in a forum of her own choosing. The proposed certification and settlement here deny that right to class members such as Kenneth Rowe by resolving their claims in the aggregate through a settlement negotiated without their knowledge or input by lawyers they did not choose and have never met. Such a result is not consistent with due process.

b. Federalism and due process prohibit the use of Ala. R. Civ. P. 23(b)(1)(B) as a substitute for bankruptcy.

In addition to violating due process rights of absent class members by denying them the right to opt out, certification of this class under Rule 23(b)(1)(B) also violates central principles of federalism and due process by permitting an Alabama state court to use a state rule of civil procedure to modify class members' substantive rights arising under the laws of other states. Just as a federal court is prohibited from using a rule of procedure to modify substantive rights under the Rules Enabling Act, 28 U.S.C. § 2072, fundamental constitutional principles of due process and federalism forbid a state court from altering the substantive rights of litigants that are created by another state. Cf. Shutts, 472 U.S. at 820-23 (holding that due process prohibited a state court in Kansas from using its class action rule to apply Kansas law to the claims of class members from other jurisdictions).

If Objector Kenneth Rowe was to obtain a final judgment against Liggett for damages, Texas law would entitle him to execute that judgment against Liggett's assets, and no other member of the Fletcher class could interfere with his collection of that judgment. "The first and most obvious consequence of a judgment is that it establishes an indisputable obligation and confers upon the successful party the right to issue execution or other process of the court for its enforcement." Clarke v. Brown, 244 A.2d 514, 518 (N.J. Super. 1968). As Justice Scalia recently commented during the oral argument in Ortiz v. Fibreboard, which is now pending in the Supreme Court, "I thought the fundamental principle of fairness [the class certification] violated was first come, first served. Why do you accept that that's not fair? That's the general rule we've always applied in the common law." Ortiz Tr. at 9 (emphasis added) (attached as Exh. 4). Although Liggett's bankruptcy or creation of an equitable receivership could transform Mr. Rowe's in personam damages claims into equitable claims for allocation of limited assets, an Alabama state court cannot use its own rule of procedure to enact a similar transformation of claims arising under the substantive law of other states. As one scholar recently wrote:

the equitable allocation of a limited fund requires a policy decision about the way in which the substantive rights of litigants will be altered. This policy decision cannot properly be made by the class action rule. This principle applies with even greater force in the context of settlement. . . . Rather, as the Second Circuit has suggested, the proper approach to the equitable allocation of insufficient assets is a resort to bankruptcy proceedings.

Patrick Woolley, Rethinking the Adequacy of Adequate Representation, 75 Tex. L. Rev. 571, 624-25 (1997).

This Court is likely to receive considerable guidance on this issue when the Supreme Court issues its opinion in the Ortiz v. Fibreboard case within the next few weeks. That case involves the appeal from the Fifth Circuit and district court decisions approving a nationwide, mandatory class settlement under Fed. R. Civ. P. 23(b)(1)(B) in In re Asbestos Litig. ("Ahearn v. Fibreboard"), 162 F.R.D. 505 (E.D. Tex. 1995), aff'd, 90 F.3d 963 (5th Cir. 1996), vacated sub nom. Flanagan v. Ahearn, 117 S. Ct. 2503 (1997), judgment reinstated on remand, 134 F.3d 668, 670 (5th Cir. 1998), cert. granted sub nom. Ortiz v. Fibreboard, No. 97-1704 (argued Dec. 8, 1998). The settling parties rely extensively on the district court and Fifth Circuit decisions in the Ortiz case. See Jt. Memo. of Law in Support of Motion for Reaffirmance of Preliminary Certification of a Mandatory Settlement Class and Preliminary Approval of Amended Class Action Settlement. During oral argument in Ortiz, the Supreme Court expressed grave doubts as to whether Rule 23 can be used as a substitute for bankruptcy. As Justice Ginsburg noted:

Suppose I'm an asbestos person who [is a class member] and I say: "Well, I have a claim for tort damages against Fibreboard. I thought that the common law, the State tort law, gave me this claim. Why don't I have it?"
* * *
[A]ll these claims are in their essential nature personal injury damage claims. They get -- they become something else in the course of this global settlement. So I am trying to understand how what is an ordinary garden variety tort claim in an individual's hand becomes this fair, equitable--and I'll accept that all this was a wonderful settlement. How does that happen under the heading of a Federal rule, not even an act of Congress?

Exh. 4, Ortiz Oral Arg. Tr. at 13.

The existence of the Bankruptcy Code further illustrates the impermissibility of using Rule 23(b)(1)(B) to adjust the rights of tort creditors with claims against a potentially insolvent defendant. When Congress has articulated the law governing the resolution of a particular question, a court must apply the federal statute that controls the issue and may not fashion some other law to resolve the controversy. Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 27 (1988); Northwest Airlines, Inc. v. Transport Workers Union of Am., 451 U.S. 77, 95-96 n.34 (1981). If a party's debts exceed its assets, then creditors' substantive rights may be altered under the provisions of the Bankruptcy Code. State courts have no authority to undertake the same alteration of substantive rights. "[A] 23(b)(1)(B) class should not serve as a substitute for bankruptcy proceedings." Alba Conte, 3 Newberg on Class Actions §17.15A at 3S-16 (3d ed. Supp. 1994).

In a decision reversing a similar limited fund class certification based on the potential insolvency of an asbestos defendant, the Second Circuit emphasized that making pro rata adjustments of creditors' rights is not the appropriate role of the judiciary, whether or not the class action procedure might be "more efficient" than bankruptcy: "[T]he function of the federal courts is not to conduct trials over whether a statutory scheme should be ignored because a more efficient mechanism can be fashioned by judges." In re Keene Corp., 14 F.3d 726, 733 (2d Cir. 1993). The Keene court explained why the attempted "evasion of the Bankruptcy Code" is impermissible:

[C]lass members in cases such as this would have no say in the conduct of the court-appointed class representatives, and unlike creditors in bankruptcy, are not able to vote on a settlement. See 11 U.S.C. § 1126. For them, it would be "cram-down" from start to finish. Finally, unlike a lawyer for a creditors' committee, the class representatives in matters like the present one may not be compensated unless a settlement is reached, a situation fraught with danger to the rights of plaintiffs.

Keene, 14 F.3d at 732; see also In re Joint Eastern & Southern District Asbestos Litig., 982 F.2d 721, 736 (2d Cir. 1992) (the differences between protections afforded under Rule 23 and the Bankruptcy Code "raise a substantial question whether a class action may be used to adjust claims against an insolvent entity"), modified on other grounds, 993 F.2d 7 (2d Cir. 1993).

A recent commentator has further explained the Keene court's legal conclusion that class action settlements cannot be used as a substitute for bankruptcy. Professor Coffee points out that "[b]oth substantively and procedurally, bankruptcy reorganization has comparative advantages over a mass tort class action as a means of achieving an equitable resolution of mass tort liabilities that is fair to tort creditors." Coffee, Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L. Rev. 1343,1458 (1995). Substantively this is so because, in bankruptcy, tort claimants would have to receive full payment of their provable claims before stockholders could share in the firm's value. But in class action settlements such as this one, "tort creditors are either scaled back or forced to rely on thinly funded or unspecified settlement funds. Although both class actions and Chapter 11 are costly, the bottom line difference between them is that a corporation filing for a Chapter 11 reorganization can anticipate having to surrender the majority of its equity to a settlement trust...." Id. at 1459.

Coffee concludes that bankruptcy courts provide greater procedural protection to tort claimants than mandatory class settlements because bankruptcies "are governed by well-known and largely settled legal rules that give creditors specific voting rights and that recognize distinct subclasses. In contrast, a principal attraction of the mass tort class action is that it permits an end run around this known legal regime. Instead, the settling parties can ask the court to serve as a mediation forum where virtually anything goes and formal legal constraints are lacking." Id. at 1459-60. He thus concludes that, as a matter of policy, "the rationale that the corporation's funds are limited should not justify the certification of a non-opt out class action because such a class action appears at present to be an inferior substitute for a bankruptcy reorganization." Id. at 1461.

The fact that the settlement here places only 7.5% of Liggett's pretax income in the Settlement Fund underscores the inappropriateness of using Rule 23(b)(1)(B) as a surrogate for bankruptcy. A bankruptcy court would establish an orderly procedure to ensure that all Liggett's creditors are given a fair chance to recover against Liggett's available assets. In this settlement, by contrast, every class member will be forced to share in a fund that represents, at most, a mere fraction of Liggett's assets. The remaining 92.5% will be available to satisfy the claims of all other Liggett creditors who are not locked into the mandatory class -- and, of course, to permit Liggett to continue to pursue its business of selling cigarettes. Here, too, the settling parties have offered no justification for why the settlement fund is limited to a mere 7.5% of Liggett's assets. This is not surprising, since no conceivable justification exists for this arbitrary limitation of the settlement fund.

The arbitrary nature of the "limited fund" in this case is also underscored by the apparent change in Liggett's financial position since the settlement was filed. As explained above, in recent months Liggett sold three of its major brands to Philip Morris, yielding an additional $300 million in assets for Liggett. Exhibit 2. In addition, it appears that Liggett will collect an annual subsidy of about $100 million due to the recent settlement between the "Big Four" tobacco companies and 46 states. Exhibit 3. Despite this remarkable change of fortune, the settling parties have not proposed any changes in this settlement, forcing this class consisting of every person in America to share a paltry 7.5 percent of Liggett's pretax income. Liggett's other creditors, meanwhile, will have full and unfettered access to Liggett's remaining assets – assets that appear to have increased dramatically as a result of recent events. Plainly, this use of Rule 23(b)(1)(B) to create a "limited fund" out of thin air in a manner entirely unrelated to a defendant's actual assets violates the letter and spirit of law. Liggett should not be permitted to manipulate the system in this manner in order to strip class members – like Kenneth Rowe – of their substantive rights to pursue tort remedies under state law.

For purposes of protecting Liggett's assets, the Settlement Class is also fatally underinclusive. Even if Rule 23(b)(1)(B) could be used as an alternative to bankruptcy, the class would have to include all relevant creditors that might deplete the defendant's assets, including trade creditors and other tort creditors who have non-tobacco claims. In order for the Rule to serve the purpose of ensuring equitable distribution of the limited fund, the class must include all persons whose separate actions create the risk of "substantial impairment" to other class members. Otherwise, certification fails to protect the class members from the risk Rule 23(b)(1)(B) was intended to address. It leaves those outside the class free to pursue their claims, but limits the ability of class members to proceed in the meantime. Here, that essential requirement of limited fund certification has not been met.

2. Ex Parte Holland also precludes this Court from certifying a "limited fund" class on the basis of Liggett's possible insolvency.

In Ex parte Holland, 692 So.2d 811 (Ala. 1997), the Alabama Supreme Court issued a writ of mandamus directing this Court to vacate an order certifying a mandatory punitive damages class in a group of cases involving fraud in the sales and financing of automobiles. Holland held that this Court did not have sufficient evidence from which to conclude that the defendant's assets would be exhausted by punitive damages claims against it. 692 So.2d at 820. More significantly, however, Holland added that any inquiry into whether contingent tort liabilities will ever deplete a defendant's resources is "cumbersome" and involves "inherent speculation." Thus, the Court concluded that Rule 23(b)(1)(B) is "inappropriate as a basis on which to certify a mandatory class action" due to the possibility that tort liabilities will render a defendant insolvent. Id. at 822.

Liggett now asks this Court to ignore the directive of the Alabama Supreme Court in Holland by certifying this class under Ala. R. Civ. P. 23(b)(1)(B) on the basis that Liggett's future tort liabilities may someday render it insolvent. Whatever the nature of the evidence proffered by Liggett here to support their allegation of the existence of a "limited fund," under Holland this Court cannot certify a class pursuant to Rule 23(b)(1)(B) under these circumstances. For that reason alone, this Court should refuse Liggett's request for certification of the class and approval of the settlement.

B. There is No Basis for Certifying a Mandatory Class under Rule 23(b)(2).

The settling parties' alternative request for mandatory certification of the Settlement Class under Rule 23(b)(2) is even less colorable than their request for "limited fund" certification. Rule 23's drafters intended to limit certification under subdivision (b)(2) to those cases in which the relief sought by the plaintiff class was "primarily" injunctive, such as civil rights and employment discrimination suits. See, e.g., Adams v. Robertson, 696 So.2d 1265, 1271 (1995), cert. dism'd as improv. granted, 1997 U.S. LEXIS 1490. Here, however, neither the tort claims for damages alleged in the class complaint nor the relief provided under the settlement support certification under Rule 23(b)(2).

As an initial matter, certification under (b)(2) is facially improper given that the alleged injunctive relief provided under the ACSA obligates Liggett to do very little it was not already required to do under the AGSA. The class here gets almost no injunctive relief, and denying them the right to opt out of the class on the basis of such de minimis injunctive relief is plainly wrong.

But even if the ACSA provided the class extensive injunctive relief, certification under subdivision (b)(2) would nonetheless be inappropriate because the claims alleged in the class complaint are inherently individualized claims for damages. The extremely heterogenous interests of class members in this case with respect to their claims for damages precludes certification of a no-opt-out class under 23(b)(2), despite the presence of injunctive relief in the proposed settlement. Because class members' claims for personal injury damages and economic losses vindicate the unique interests of each plaintiff and necessarily require individualized assessment of damages and causation issues, such claims are not among the limited types of monetary relief that may be properly included within a class certified under Rule 23(b)(2).

Federal class action law provides that when a class seeks both injunctive relief and damages, (b)(2) certification is permissible only to the extent that the claims for injunctive relief "predominate." See Rules Advisory Committee's Notes to 1966 Amendments to Rule 23, 39 F.R.D. 69, 102 (1966) (subdivision (b)(2) "does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages"); Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir. 1998) (holding that claims for money damages cannot be certified within a (b)(2) class if those claims are "dependent in any significant way on the intangible, subjective differences of each class member's circumstances"); Arnold v. United Artists Theatre Circuit, Inc., 158 F.R.D. 439, 461 (N.D.Cal. 1991) ("money damage claims may be certified under (b)(2) so long as the monetary claims do not ‘predominate' over the claims for declaratory or injunctive relief"). In determining whether injunctive relief "predominates," courts have returned to the principles underlying the creation of (b)(2), and looked to whether the damages claims involved seek essentially unitary or non-unitary relief. See Arnold, 158 F.R.D. at 451-52. Thus, where the class pursues "damage claims in which the quantum of damages suffered involve[s] a complicated, individual-specific calculus," (b)(2) certification is impermissible. Id. at 452; Buycks-Roberson v. Citibank Federal Savings Bank, 162 F.R.D. 322, 335 (N.D. Ill.,1995) (refusing (b)(2) certification because monetary damages were not "subject to ready calculation on a basis uniformly applicable to the class"); Fischer v. Dallas Federal Savings and Loan Ass'n, 106 F.R.D. 465, 471 (N.D. Tex. 1985) (certifying a (b)(2) class for injunctive relief, but refusing to include claims for damages because "the calculation of the amount of damages depend[ed] upon the individual facts of each claimant's case"); Rice v. City of Philadelphia, 66 F.R.D. 17, 20-21 (E.D. Pa. 1974) (refusing to certify (b)(2) class which included claims for damages that required individual assessment).

In this case, the tort damages claims for personal injury and economic loss reflect the extremely heterogenous nature of the proposed class and the lack of the cohesiveness of interests among class members who are competing for limited settlement dollars. Although claims for back pay, a medical monitoring fund, or damages reducible to a mathematical formula all at least arguably involve "unitary" remedies that can be applied on a classwide basis, the tort personal injury and subrogation claims at issue here are inherently individual. The presence of these inherently individual claims precludes mandatory class certification under Rule 23(b)(2).

II. THE REQUIREMENTS FOR CLASS CERTIFICATION UNDER ALABAMA RULE OF CIVIL PROCEDURE 23(a) COULD NOT BE SATISFIED IN THIS CASE.

Putting aside the question of whether this class properly falls within subdivision (b)(1)(B) or (b)(2) of Alabama Rule 23, the class cannot be certified because it cannot possibly meet the threshold requirements of subdivision 23(a). Rule 23(a) permits the vicarious representation of absent class members only where the claims and interests of all class members are so closely aligned that the representative plaintiffs can litigate the class claims, or at least limited common class issues, on behalf of absent class members. Thus, the rule requires that each of the claims by class members share common issues of law and fact ("commonality"), and that the claims by the class representatives be typical of claims by absent class members ("typicality"). Here, however, because of the overwhelming size of the class and the vast number of individual issues encompassed by the claims alleged, a class trial would clearly not be possible. As a result, the class representatives had no intention of litigating the class claims and instead chose to use a proposed settlement to justify aggregating the individual claims of class members. The boundaries of Rule 23 cannot be stretched to allow class representatives to impose a "settlement" of untriable class claims upon unconsenting, absent class members. Because this action could never be certified for purposes of trial, it cannot be settled as a class. The failure of this class to satisfy the requirements of Rule 23(a) provides an independent reason for this Court to deny the settling parties' request for a preliminary injunction that is premised on the viability of their proposed certification and settlement.

A. Amchem Demonstrates that this Class Could Never Meet the Typicality Requirement of Rule 23(a)(3).

Because this class encompasses a huge number of people who possess (or someday in the future will possess) an astonishing variety of claims raising inherently individual issues, Rule 23(a)'s requirement of "typicality" could never be satisfied. Liggett basically acknowledges that the only "typicality" among the class members' claims is supplied by their joint interest in obtaining a fair settlement. See Joint Memo. of Law at Pt(A)(1)(c) ("all class members' claims are typical because . . . they create a common interest in the benefits of the Amended Class Action Settlement Agreement"). But such bootstrapping of the certification inquiry to a court's review of the fairness of a proposed settlement is exactly the approach that was repudiated in Amchem, which established that "it is not the mission of [a] Rule 23(e) [fairness inquiry] to assure the class cohesion that legitimizes representative action in the first place." 117 S. Ct. at 2249.

In Amchem, the Supreme Court held that the common interest of the asbestos-exposed individuals who were members of that nationwide class in securing a "fair" settlement could not constitute a "common question" for purposes of Rule 23(b)(3)'s predominance requirement; instead, the predominance "inquiry trains on the legal or factual questions that qualify each class member's case as a genuine controversy, questions that preexist any settlement." 117 S. Ct. at 2249 (emphasis added). In an accompanying footnote, the Supreme Court added that, "[i]n this respect, the predominance requirement of Rule 23(b)(3) is similar to the requirement of Rule 23(a)(3) that ‘claims or defenses' of the named representative must be ‘typical of the claims or defenses of the class.' The words ‘claims or defenses' in this context . . . ‘manifestly refer to the kinds of claims or defenses that can be raised in courts of law as part of an actual or pending lawsuit.'" Id. at 2249 n.18 (quoting Diamond v. Charles, 476 U.S. 54, 76-77 (1986)) (emphasis added). Thus, Amchem makes clear that Rule 23(a)(3)'s typicality requirement -- which applies to all class actions under Rule 23, including this one -- cannot be met by class members' allegedly common interest in maximizing their recoveries under a settlement; instead, it must be measured according to the actual claims asserted in the complaint as part of an actual lawsuit.

Under this analysis, this class could never satisfy the typicality requirement of Rule 23(a). To begin with, the class includes everyone in the country who has ever been exposed to smoke from any cigarette, whether manufactured by Liggett or not – either by smoking or via second-hand exposure. Some of these individuals already suffer from tobacco-related disease, but some have not yet even manifested any injury from cigarette smoke. Not only do these claims vary widely in character, in terms of exposure, smoking history, types of injuries, and differences in state law, but the "future" claims of the exposure-only class members have not yet even accrued. Moreover, the class includes any entity (except the states) that has (or will have) a tobacco-related economic-loss claim against Liggett. Given this unique and varied mix, the only "typical" interest conceivably shared by the class members is in maximizing their respective recoveries via a settlement. Yet Amchem teaches that typicality must be measured according to the "claims or defenses that can be raised in courts of law as part of an actual or impending lawsuit" (117 S. Ct at 2249 n.18) – a test that cannot possibly be met in a case where, as here, many of the claims have not even accrued and, in any event, are riddled by factual and legal differences.

This result is supported by the lower court proceedings in Amchem. In its decision decertifying the class, the Third Circuit held that the class of asbestos victims, which included a "hodgepodge of factually as well as legally different plaintiffs," could not satisfy the typicality requirement of Rule 23(a)(3). Georgine v. Amchem Products, Inc., 83 F.3d 610, 632 (3d Cir. 1996). The Court of Appeals wrote that, "[e]ven though the named plaintiffs include a fairly representative mix of futures and injured plaintiffs, the underlying lack of commonality necessarily destroys the possibility of typicality." Id. Although the Supreme Court did not ultimately reach the question of typicality when it affirmed the Third Circuit's decision in Amchem, it wholeheartedly endorsed the Court of Appeals' approach of restricting the typicality inquiry to the claims and defenses raised in the class complaint. See 117 S. Ct. at 2249 n.18. That approach, applied here, yields the inevitable conclusion that this class could never meet the typicality requirement of Rule 23(a)(3).

B. Amchem Precludes Any Finding of Adequate Representation.

As one federal court has already concluded, the Amchem decision also precludes any finding that the class in this case has been adequately represented. See Walker v. Liggett Group, Inc., 175 F.R.D. 226 (S.D.W.Va. 1997). Like Amchem, this class encompasses both present and future personal injury victims who have conflicting claims to the settlement proceeds. As in Amchem, the presently-injured class members have a strong interest in maximizing current payouts under the fund, whereas the future victims – as the name implies – want to insure that there will be an adequate, inflation-protected fund to pay their damages in the future. Thus the interests of these class members are flatly in conflict, rendering the settlement unapprovable under Amchem. Indeed, this case is even more problematic than Amchem, given that Liggett's proposed class "dwarfs that considered by the Supreme Court." Walker, 175 F.R.D. at 232. As the Walker court put it:

The class is so uniquely expansive as to hold within its confines persons ranging in age from infants in utero to individuals such as All Mohammed Hussein, who currently smokes sixty (60) cigarettes everyday. The various combinations of subclasses within this gargantuan assembly of plaintiffs would appear to defy definition, much less division.
175 F.R.D. at 232 (internal footnote omitted).

Liggett's post-hoc effort to remedy the representational inadequacies inherent in this proposed class by appointing subclass representatives at this point is "equivalent to closing the barn door after the horses have escaped." Walker, 175 F.R.D. at 233 n.12. The newly-proposed subclass representatives and subclass counsel in this case have proposed essentially the same settlement that was initially reached more than a year ago by other counsel that purported to represent the entire class as a whole. Tellingly, the changes that have been incorporated in the new settlement do not include any details that address the conflicting interests of the subclasses, either with respect to distribution of the settlement funds or any other point. Such formalistic substitution of additional counsel and additional representatives does not constitute the "structural assurance of fair and adequate representation" required by Amchem. 117 S. Ct. at 2251.

C. The Settlement's Release of Future Claims Precludes a Finding of Adequate Representation.

Another defect in the class that renders it uncertifiable is the settlement's release of future claims. The complaint does not and cannot plead the unaccrued future personal injury claims of class members who currently have no tobacco-related disease, yet these future claims are released in the settlement. Class representatives cannot adequately represent absent, unknown, and unknowable class members with respect to future claims that those individuals do not now possess.

The release of absent class members' future claims violates the "most fundamental principles underlying class actions, [which] limit the powers of the class representatives to the claims they possess in common with other members of the class." Howard M. Downs, Federal Class Actions: Diminished Protection for the Class and the Case for Reform, 73 Neb. L. Rev. 646, 694 (1994). The class representatives do not possess actionable "future" claims for personal injury or wrongful death, and cannot settle claims that they do not possess on behalf of this enormous class:

Anytime a mass tort gives rise to injuries that occur over a period of time, in contrast to those arising from a mass accident or other disaster, inevitably there will be claims that arise in the future after an action for this mass tort has been permitted to be maintained and adjudicated as a class action. Those future claims will not and cannot be bound by the class action litigation. Toxic torts giving rise to latent illnesses and defective products with latent risks are two examples.

Alba Conte, Newberg on Class Actions § 17.39 at 17-119 (3d ed. 1992) (emphasis added).

A class action settlement, moreover, cannot release claims that did not arise out of the facts pled. See National Super Spuds v. New York Mercantile Exchange, 660 F.2d 9 (2d Cir. 1981). In Super Spuds, the district court had certified a class of potato futures contract purchasers who liquidated the contracts between April 13, 1976 and May 7, 1976. The district court approved a settlement that released both the claims alleged in the complaint and any claims regarding futures contracts that were liquidated after May 7, 1976. 660 F.2d at 15. The Second Circuit, per Judge Friendly, reversed, holding that the representative plaintiffs were empowered to represent the class "solely with respect to the contracts in which all members of the class had a common interest: contracts liquidated between April 13 and May 7." 660 F.2d at 17. Judge Friendly added that, "if a judgment after trial cannot extinguish claims not asserted in the class action complaint, a judgment approving a settlement in such an action ordinarily should not be able to do so either." Id. at 18. The authority of the representative plaintiffs under Rule 23 to release claims on behalf of the class is limited by the scope of the class complaint, which describes the claims all class members have in common. Id. at 18-19.

As in Super Spuds, the proposed settlement in this case impermissibly releases claims that arise from facts not alleged in the underlying lawsuit. Super Spuds acknowledged that a settlement could release unpled claims "depending upon the very same set of facts," but clarified that no release of claims depending on proof of "further facts" is permissible. 660 F.2d at 18 n.7. There, although the underlying facts regarding the defendant's conduct were identical with respect to both the alleged and unalleged claims released by the settlement, the unalleged claims required proof of additional facts that were unnecessary to the claims alleged in the complaint. Id. The future personal injury actions released here also require proof of "further facts" that were not, and could not have been, pled in the Fletcher complaint -- that is, the development of a future physical injury proximately caused by a particular plaintiff's exposure to Liggett tobacco smoke. A plaintiff's prima facie case in a personal injury action requires that: 1) the defendant owed some duty to the plaintiff; 2) the defendant breached that duty; 3) the plaintiff has suffered damages; and 4) the defendant's breach was a proximate cause of those damages. W. Page Keeton, et al., Prosser and Keeton on Torts, § 30, at 164-65 (5th ed. 1984). Unless and until class members develop an injury, they cannot plead the requisite third and fourth elements. Thus, any release of future claims is beyond the scope of the class representatives' authority.

III. THE SETTLEMENT CANNOT BE APPROVED BECAUSE THE CLASS NOTICE WAS FATALLY INADEQUATE.

Class certification issues aside, the settlement cannot be approved because the class notice was fatally inadequate. As a threshold matter, we note that the timing of the notice was so flawed as to render the settlement violative of due process. This Court's Order Reaffirming Provisional Class Certification and Preliminary Settlement Approval (dated December 8, 1998), directed that the parties "use their reasonable best efforts to commence with dissemination of notice January 7, 1999." Yet notice of the settlement was not published in Parade magazine (the most likely source for most class members) until February 13 – barely two weeks before the deadline for objections. This short time period is inexcusable in a class of this magnitude and importance. In essence, every person in America is being given only two weeks from the date they first learned of this settlement to object to its terms -- a ludicrously short period given the breadth and complexity of this deal. There is simply no excuse for attempting to cram this settlement down the throat of the American public in this manner.

Aside from the obvious timing problems, the notice is also fatally defective because notice to currently uninjured, exposure-only "future" claimants cannot, under any circumstances, satisfy the requirements of due process. No form of notice directed at absent class members regarding a settlement of their unaccrued claims for future injury can satisfy the dictates of due process or Rule 23. First, the breadth of the class definition here is such that many people who are encompassed by it may not be aware that they are class members. Second, even if notice is actually received and understood by exposure-only claimants, no such notice can meaningfully inform them of their rights and options regarding potentially fatal injuries with which they are not yet stricken.

Due process requires that, even in class actions maintained under the mandatory, no-opt-out subdivisions of Rule 23, class members must receive adequate notice before their claims for money damages can be resolved. See Johnson v. General Motors Corp., 598 F.2d 432, 437 (5th Cir. 1979) (applying notice requirement in a case certified under Rule 23(b)(2)). Such notice serves to inform each class member of the effect of the class action on their rights, and thus serves to protect the central due process concern of absent plaintiffs: that they have a "full and meaningful" opportunity to be heard regarding their claims being subject to class disposition. See 7B Charles A. Wright, Arthur Miller & Mary Kay Kane, Federal Practice and Procedure § 1787, at 197 (1986). See also Amchem, 117 S.Ct. at 2251 ("we recognize the gravity of the question whether class action notice sufficient under the Constitution and Rule 23 could ever be given to legions so unselfconscious and amorphous").

This due process interest of exposure-only class members was not, and could not be, adequately protected by the notice provided here. Only after class members have developed tobacco-related injuries will they be able to analyze the facts that give value to legal claims arising from those injuries. Without knowing the facts, class members have no basis of comparison by which to judge the class settlement's benefits. Further, because this settlement does not allocate the monetary relief among the class members, until class members actually suffer from an tobacco disease and receive an offer under the settlement, they cannot predict what the class settlement would provide to them, much less compare that benefit to the value of a tort lawsuit.

The Manual for Complex Litigation acknowledges the due process difficulties associated with attempts to issue notice to future claimants. In describing the numerous issues raised by settlement class actions, the authors of the Manual advised courts to look warily on settlements which purport to include future claimants:

Protection of future claimants. The court should consider the impact of the settlement on persons who may not currently be aware that they have a claim or whose claim may not yet have come into existence. Since they cannot be given meaningful notice, they may be particularly prejudiced by the settlement.

Federal Judicial Center, Manual for Complex Litigation 3d, § 30.45 at 244 (1995) (bold in original, italics added); cf. Ivy, 996 F.2d at 1435 ("providing individual notice . . . to persons who are unaware of an injury would probably do little good").

IV. THIS COURT SHOULD NOT APPROVE A CLASS SETTLEMENT THAT PROVIDES VIRTUALLY NO RELIEF TO THE CLASS WHILE GIVING THE DEFENDANT COMPLETE IMMUNITY FROM PRESENT AND FUTURE LIABILITIES

The class settlement upon which the proposed injunction is premised cannot meet any meaningful standard for fairness or adequate representation by counsel. This settlement gives Liggett what it desperately wants -- complete protection from present and future tobacco-related lawsuits -- and in return Liggett is required to do almost nothing that it did not have to do anyway under the terms of its settlement with 17 state attorneys general.

The only guaranteed benefit to the class under the ACSA is $20 million payable over 20 years. For a class numbering in the hundreds of millions, such relief amounts to pennies per person. Moreover, as discussed above, the the injunctive mandates of the class settlement scarcely require Liggett to make any efforts that it was not already committed to by the AGSA. In the final analysis, the class gets almost nothing, Liggett gets everything it wants, and the lawyers for the class get paid for giving away class members' rights. This Court cannot approve such a settlement.

Making matters worse, not only does the settlement provide paltry relief at best, but it could also strip class members of the right to recover from the non-tobacco operations of the company whose products they smoke, if that company merges with Liggett in the future. Under Section 10.2(a) of the Agreement, Settlement Class members are barred from seeking to stop any "Future Affiliate" of Liggett's from "spinning off" the assets of any of its affiliates that are not engaged any domestic tobacco operations. Then, Section 10.2(c) bars class members from bringing any tobacco-related claims against the new, "spinoff affiliate." In this way, another tobacco company could utilize a merger with Liggett as a means to completely immunize its non-tobacco operations from any tobacco-related liability. Thus, class members could actually lose more from this settlement than they stand to gain.

CONCLUSION

For all the foregoing reasons, Objector Kenneth Rowe respectfully prays this Court deny the settling parties' request to certify the class and approve the proposed settlement.

Respectfully submitted,

____________________________
Steve Baughman
Baron & Budd, P.C.
3102 Oak Lawn Ave., Ste. 1100
Dallas, TX 75219-4281
(214) 521-3605

Leslie Brueckner
Arthur H. Bryant
Trial Lawyers for Public Justice
1717 Massachusetts Avenue, NW
Suite 800
Washington, D.C. 20036
(202) 797-8600

Henry Brewster
Stein & Brewster
103 Dauphin Street, Ste. 405
Mobile, AL 36602
(334) 433-2002

Attorneys for Objector Kenneth Rowe
March 2, 1999

CERTIFICATE OF SERVICE

I certify that a true and correct copy of the foregoing Objections was served upon counsel of record for the settling parties by U.S. mail this 1st day of March, 1999.

_______________________
STEVE BAUGHMAN