RJR settles class-action lawsuit

The lead plaintiff in a lawsuit against tobacco manufacturers says a settlement with R.J. Reynolds means stability for U.S. tobacco growers and “another piece of the puzzle in order to get the tobacco industry back on track.”

Lamar DeLoach of Statesboro, Ga., a principal in the class action suit that accused companies of rigging the government-supported auction system to keep prices low, says the commitment “gives some stability to farmers.”

R.J. Reynolds settlement of a lawsuit brought by tobacco growers guarantees the purchase of at least 35 million pounds of domestic leaf over the next 10 years by the nation's second-largest tobacco company. RJR also agreed to pay $33 million in cash to farmers. Last year, Philip Morris, as well as other major tobacco companies, settled the suit. All totaled, growers in the class-action suit will receive about $254 million. Included in that number are funds for education and a push for a buyout. Philip Morris, Lorillard, and Brown & Williamson agreed to buy 405 million pounds over the next 10 years and pay out nearly $212 million.

If Congress passes a buyout, the companies could stretch their purchases out over 12 years.

U.S. District Court Judge William Osteen gave preliminary approval to the deal. The 175,000 farmers who joined the class action suit (DeLoach vs. Philip Morris) must ratify it. Ballots were to be mailed May 10.

Everyone who qualified in the first settlement approved last October is also party to the RJR settlement. Everyone who didn't participate in the first settlement will be required to qualify again under the new settlement announced in late April 2004.

In agreeing to the settlements, all of the tobacco companies denied any wrongdoing.

For DeLoach, the decision to attach his name to the lawsuit wasn't about punishing tobacco companies.

In a room, DeLoach stands out because of his height and dress. Standing over 6-foot tall and dressed in his trademark turtleneck a sports coat, DeLoach stands as an exclamation point to the situation tobacco farmers have faced over the past six years.

DeLoach recalled his decision to initiate the lawsuit some four years ago.

“Some of us started to realize in 1997 and 1998 that our tobacco quota was slipping away,” DeLoach says. “A lot of it was blamed on the Master Settlement Agreement. Foreign purchases were going sky high and our quota was continuing to drop.

“Along with that, we saw what we considered to be inadequacies in the auction market itself,” DeLoach says. “We felt pressured on two cases: One we were losing quota and watching the dismantling of the tobacco program. In 2000, contracting came along, which furthered the effect of dismantling the program.

“We felt like someone had to stand up,” DeLoach says of the decision in 2000 to file the lawsuit.

“I've said all along it wasn't fair for people to be shoved out of the business,” DeLoach says. “If they are going to leave, they need to do it with their heads held high. Otherwise, you have a situation that feeds on the frustration of not being able to make an honest living.”

Since 1997, the number of tobacco growers has declined by about 50 percent, DeLoach says.

DeLoach sees the settlement, as well as a potential buyout, as a way to provide a stable future for the tobacco industry after the current program ends.

He sees the buyout as critical to the future of the U.S. tobacco industry, but is growing weary of waiting while quota melts away year after year.

“We have a Republican president, a Republican House and a Republican Senate…If we can't get a buyout done with the Republican leadership, I'm not sure we can ever get it done,” DeLoach says.

“We hope and pray for a buyout this year,” he says. “If it doesn't happen by July, come November there could be a change in the complexion of the elected bodies.”

DeLoach thinks a buyout must include “reasonable” legislation that encompasses some form of Food and Drug Administration regulation of cigarettes and tobacco products. “Not everyone — the minor tobacco companies included — can get everything they want out of this legislation,” DeLoach says. “That's what negotiation is about — a compromise to figure out something that's going to allow tobacco farmers a future. We don't want tobacco farmers going out of business.”

In the end, the settlement and the buyout may be the only way to salvage a future for tobacco farmers.

Asked to describe himself, DeLoach doesn't talk about characteristics, he talks about economics. “I'm almost broke,” he says, matter-of-factly.

“When I say that I'm identifying with farmers large small and very large,” he says. “People just aren't making money in tobacco today.

“I don't know of anyone who could have survived this long in many industries while losing 55 to 60 percent of their ability to produce and continue to pay 35 cents to 60 cents per pound in order to produce,” DeLoach says.

“We're fooling ourselves if we think we can carry on the same way things have been going,” DeLoach says.

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