Edited by Douglas Harbrecht

THE TOBACCO TALKS GO UP IN SMOKE

Talks aimed at reaching a global settlement of litigation against the tobacco industry broke down on Friday, May 30. No new talks are scheduled, and key lawyers from the plaintiffs' side are going ahead with preparations for Mississippi's lawsuit against the industry, scheduled to go to trial on July 7.

A participant close to the talks says negotiators grew frustrated on Thursday night, as no significant progress could be made on two key issues: granting the industry indemnity against civil liability and the scope of federal regulation. A split among state attorneys general over settlement issues resulted in a shouting match between Maryland's plaintiffs' lawyer, Peter Angelos, and Mississippi Attorney General Mike Moore. Other attorneys general rose in defense of Moore, says a source close to the talks. Moore has led the negotiating for the states that are suing the industry.

Face-to-face negotiations had just resumed earlier on Thursday. Before that session, participants on the plaintiffs' side had predicted that a settlement might be reached within a week to 10 days. However, Moore told Business Week Online on Thursday that he had warned tobacco company negotiators that he would quit negotiating if a final settlement couldn't be reached in two weeks (see "Big Tobacco Gets a Deadline").

Joe Rice, the key negotiator for the plaintiffs, left New York Thursday night in disgust over lack of progress in the talks, according to the source.

By David Greising in Atlanta