Authors: Richard Kluger
With such resources readily available, tobacco lobbyists could throw lavish entertainments like the annual “legislative conference” at deluxe golf resorts in Palm Springs, California, where congressmen were offered what amounted to three- or four-day, all-expenses-paid vacations worth $3,000 to $5,000 in return for an hour or two devoted to political science. These outings regularly attracted
three or four dozen congressmen, among them House Speaker Jim Wright, Ways and Means
(i.e.
, tax-writing) Committee Chairman Dan Rostenkowski, and minority leader Robert Michel. The Congressional Black Caucus received $155,000 in tobacco money in 1993, and large gifts went as well to the Hispanic caucus and the Senate Employees Child Care Center. The industry could also pinpoint its friends and enemies in state and local legislative bodies and reward or punish them accordingly, as, for example, when it helped pay for plane and limousine travel for California Assembly Speaker and tobacco ally Willie Brown (in addition to campaign contributions that would have embarrassed some elected officials) and mounted a recall campaign against an Albuquerque councilman who had sponsored the passage of a strong smoking restriction law in New Mexico’s largest city (the councilman survived).
On top of its pursuit of favor with public officeholders, the industry stepped up its efforts to, enlist political, cultural, and ideological allies wherever it could find them, ranging from antigovernment libertarians to labor unions to abortion-rights advocates—“choice” had been their bannered slogan before the tobacco lobby seized upon it—to the American Civil Liberties Union. The ACLU claimed not to have been swayed by the $500,000 it had received from tobacco companies between 1987 and 1992, when that supposedly most principled of organizations sent its spokesmen before congressional committees to oppose a contemplated ban on cigarette advertising and, in the process, to argue that there was no evidence that advertising encouraged smoking or that its suppression would discourage it.
The Tobacco Institute, while continuing as a clearinghouse for intelligence reports on antismoking sentiment and legislative activities around the nation, served less and less as the spearhead for the industry’s defensive efforts. TI continued to host weekly skull sessions run by lawyers from Covington & Burling on how to target the industry’s lobbying, but the shape, pace, and locus of the industry’s lobbying operations were now being largely determined by its market leader.
Philip Morris and R. J. Reynolds between them held nearly three-quarters of the American cigarette market. PM, though, was selling half again as many cigarettes as RJR by the 1990s—by 1995, it was selling twice as many—and the latter was temporarily in the hands of New York financiers, preoccupied with reducing their immense debt burden before it crushed them. Third-place Brown & Williamson had quit the Tobacco Institute for a number of years, partly out of pique over the Barclay brand squabble, and so remained outside the industry’s councils. American Tobacco and the Lorillard division of Loews maintained their long-standing policies of saying virtually nothing about the controversial aspects of the cigarette business. And the Liggett Group, though it brought in the combative former RJR tobacco chief Edward Horrigan in the
early ’Nineties to try to revitalize its operations, was just too small a factor, with only a few percentage points of the market, to be influential. Increasingly, Philip Morris was running the show.
The company’s lobbying operations, almost certainly far larger than the Tobacco Institute’s, were directed out of Washington, although its New York executives were constantly involved and retained the last word. Masterminding the nationwide program was a small team of lawyers at Arnold & Porter headed by Jack Quinn and a tightly supervised satellite group at APCO Associates, a subsidiary providing business and political counsel but no legal services to clients, under Neal Cohen. The hush-hush Quinn-Cohen joint apparatus, devoted to monitoring Philip Morris’s nationwide lobbying, was believed to be costing the company several million dollars in fees a year by the early ’Nineties, exclusive of the expenses to run PM’s own Washington lobbying office, a low-visibility layout on G Street. The battle was being waged in so many places that Philip Morris pressed its own workforce, an army now numbering some 160,000, into service as its eyes and ears in the field. But the weapons were placed in the hands of outside paid lobbyists who prowled every state capital to block or blunt antismoking measures.
Details of this ongoing campaign were of course not made public, but its scope, methods, and cost could be inferred from documents anonymously delivered to Alan Blum’s DOC headquarters in Dallas and dealing with Philip Morris’s 1989 lobbying efforts in its Southwest region. That year in Missouri, for example, PM spent $134,000 on campaign gifts to legislators and state political parties and $85,000 on its two leading lobbyists. For this investment the lobbying team succeeded in killing a proposed rise in the state cigarette tax and new restrictions on smoking, but it could not pry a proposed smokers’ rights bill out of committee. PM’s chief agent in Arizona, due to receive a fee of $53,000 in 1990, was commended for “a great job with his first session as our lobbyist. He is best friends with the Speaker and use[d] personal clout to kill our cigarette tax.” The $13,000 spent on a gala reception for Arizona legislators at the opening session seemed a sound investment since they later defeated proposed new public smoking restrictions, a ban on cigarette vending machines, and an enlargement of the health warning on cigarette billboards. In Louisiana, where the company’s top lobbyist was down for a $77,000 fee the following year, the report noted approvingly, “We are members of all the groups. Particularly helpful is the Association of Business and Industry, which fronted the products [tort reform] stuff.” The PM group there was credited with keen tactical acumen for knowing when to back off after it decided not to push for designated smoking and nonsmoking areas in government buildings “because all legislation that would adversely affect smokers had been killed.” The regional report card gave high marks, too, to the Oklahoma lobbying team, because it had both blocked a tax increase and managed to have smoking
areas designated in all state buildings “and seems to be able to hold [the legislature’s] leadership to coming out in the press against a cigarette tax every time the Governor brings it up, which is often.”
These efforts were minuscule when compared with the Philip Morris program in Texas, where it spent $441,000 in 1989 on lobbyists and consultants, aside from such off-the-books outlays as $10,000 for a “legislative buck hunt” and a similar amount on a dance honoring the African-American community in Dallas. By a quaint parliamentary maneuver adopted at the beginning of every term, no more than 11 votes in the 31-member Texas Senate were needed to block the call-up of any given piece of legislation for a vote by the upper chamber of the legislature, which was more liberal than the 150-member, strongly pro-business House and dominated by the influence of the consumer-oriented, litigiously disposed Texas Trial Lawyers Association. Thus, PM’s chief lobbyist (proposed 1990 salary: $63,000) and his team “will always concentrate on the Senate,” the company field report noted, “but there are things we can do in the House that will be of major benefit to us. We will continue to cater to the Speaker and his pet projects, as well as to the five or six committee chairs that have [helped] and will help us … .”
To win political influence with lawmakers, PAC contributions to their campaigns were only the most visible ploys, according to one former APCO employee, “because there were so many other ways to approach the policymakers in a given state.” Among these were entertainment, consulting fees, honoraria for speeches, and gifts to charities designated by the targeted lawmakers and other officials. A classic example of this last device was the Philip Morris philanthropic program in Wisconsin, where during the decade following U.S. Senator Robert Kasten’s 1981 arrival in Washington, the company spread around 5,000 charitable gifts worth $6 million. The fact that Kasten, who received more in campaign gifts from PM than any other senator, came from Milwaukee, headquarters of the company’s Miller Brewing operations, was probably not a coincidence.
The key to purchasing influence at the state level was personal friendships. PM lobbyists and their Washington and New York overseers spent endless hours trying to identify the closest past and current associates of the power wielders in each capital “and how to get them on the APCO payroll,” said the former operative, a lawyer on lease to the lobbying controllers. When necessary, these key contacts would be lured away from their previous positions, but if they were already private practitioners of the law or public relations, they would typically be put on retainer for a year at a time, even when the vital contact work might involve setting up only a single meeting.
The process at its most painstaking and costly unfolded in Texas in the course of a six-year effort, from 1987 through 1993, when Philip Morris lobbyists
engineered “tort reform’,” in the nation’s second most populous state. To corral the right influence-peddlers, according to the APCO dropout who was on hand during part of this grueling effort, the company’s Washington operatives were heard to remark repeatedly, “We’ll pay whatever’s necessary.” He added, “They never balked if the bill came to $20,000 instead of $10,000 to hire a strategic friend, and some went for more than that.” During the Texas tort reform battle, as many as fifty “consultants” a year were enlisted to promote the legislation, which was simultaneously advanced by an ad hoc front group dubbed the Texas Civil Justice League (TCJL), the nation’s largest tort reform coalition, consisting at its peak of more than one hundred trade and professional organizations, chambers of commerce, and health-care providers. Their purpose was to revise the state’s allegedly permissive personal injury claim code, which sometimes allowed plaintiffs to win huge damage awards from runaway, antibusiness juries—an injustice said to have cost the state some 80,000 jobs and $8 billion in corporate revenues because companies had either left Texas for that reason or declined to come to it. The TCJL’s tort reform measure was put forward in 1987, the same year in which such bills were bustled through the California and New Jersey legislatures on the eve of their adjournments, providing in essence that products that could not be made safe ought not to be the manufacturers’ responsibility after purchase by forewarned customers. Consumer advocates assailed the “tort reform” proposal as a lobbyist-driven outrage, and the contest was joined.
According to one knowledgeable Democratic member of the Texas House of Representatives, the TCJL “employed dozens of the highest paid, most effective lobbyists in the state” to push the tort revision effort, freely spending millions over the course of the project since under Texas law, it was not a lobby but a trade group and, as such, was not required to disclose where its funds came from, only approximately how much each lobbyist spent. The system all but invited abuse, and in the case of the TCJL, according to one of its foes, “served as nothing more than a method for laundering the lobbying money paid by the pharmaceutical, insurance, and tobacco industries, among others.” Though claiming to be a broad-based coalition, the TCJL “was Philip Morris’s show,” said the ex-APCO man who witnessed its activities. The industry leader’s name was never mentioned in the press as the prime mover in the tort law drive.
The TCJL effort achieved partial success during the 1987 legislative session: claimants held to be 50 percent or more responsible could not be awarded damages, and claims were capped at $200,000 or four times actual losses like hospital costs and lost wages, whichever was higher. But those limitations fell well short of a satisfying victory, and so the drive was renewed in 1989 under chief lobbyist Jack Gullahorn, a Dan Quayle look-alike and a disarmingly
smooth member of one of the most powerful law firms in Texas—Akin, Gump, Strauss, Hauer & Feld. Gullahorn had eighteen other clients beside the TCJL that he lobbied for at that time, including Texaco, several banks, the fireworks and billboard industries, and the Gulf Coast Conservation Association, and was so well connected around Austin, the state capital, that in the days before mobile phones were commonplace, a pay telephone booth just outside the Texas House chamber was set aside largely for his personal use and decorated with flowers, family photos, and a deer head in humorous tribute to his influence.
Gullahorn’s key connection in the tort revision drive was Dallas attorney Dan Matheson, who during Republican Governor Bill Clements’s first term (1978–82) headed the state’s Washington office for federal relations. Clements, a somewhat laconic figure who some felt was more at home with his country club set than in the governor’s office, lost his first bid for reelection, but won a second term in 1986. Matheson, though considered close to Clements, did not serve in his second administration, and during the regular 1989 session Gullahorn turned to him to lead the tort law revision effort. The TCJL lobbyists had failed to win strong support from the executive branch by the time Clements agreed to place the tort issue on the agenda for a special legislative session. In an August 4, 1989, memo marked “Highly Confidential” and addressed to Arnold & Porter’s Quinn and Cohen in Washington and Philip Morris attorney David Zelkowitz at corporate headquarters in New York, Gullahorn outlined the proposed strategy, which began:
1. Educating the Governor and his staff.
A. Choose a primary peer spokesman. Ed Vetter [chairman of the Texas Commerce Department] is the preferred choice. Dan [Matheson] would outline the best strategy for educating Ed and requesting that he lead the delegation to the Governor and explain the economic importance of the issue. Should Vetter decline, we would have identified an alternate leader.
After that, the memo proposed, the primary spokesman would head a team from business groups who would further educate the governor on the shortcomings of the present law, after which a third contact group, drawn from the governor’s friends and confidants, would personally call upon Clements to press the issue.