CONFLICT MANAGEMENT

Assignment # 01
SUBMITTED TO: Mam Kishwar

SUBMITTED BY: Saba Abid BBA- 6(A)

SUBMISSION DATE: Decemeber 22nd, 2010

TOBACCO NEGOTIATIONS
INTERESTS OF THE PARTIES:
The key parties that were majorly involved in the discussion were the states being represented by attorney generals, public health advocates and the five major tobacco companies. The substantive interests of the parties are as follows

ANTI-TOBACCO PARTIES:
States: Moores Mississippi lawsuit and of the dozens of others followed was that the state taxpayers were unfairly shouldering the costs of tobacco-related illnesses through the Medicaid program. Public health advocates They had long accused cigarette companies of marketing directly to teenagers and even younger children for just this reason, using campaigns with cartoon characters. Cipollone attorneys Argued that industry engaged in massive fraud and hey subpoenaed 100,000 pages of documents from the tobacco industry, which they claimed proved that the industry suppressed, ignored, and even lied about data on the harmful effects of smoking. Food and Drug Administration (FDA): U.S. Food and Drug Administration (FDA) Commissioner wanted to regulate the production, chemical content, advertising and distribution of cigarettes. Castano: They accused tobacco companies of intentionally addicting smokers by manipulating nicotine un cigarettes, representing more than 50 million plaintiffs.

TOBACCO COMPANIES:
They wanted to defend their companies from the different legal suits by the anti tobacco companies. To maintain the value of their stocks .

OUTCOMES OF THE ROUNDS

The case although had started with distributive approach, where both the parties were eager to fight and the success of one party would have marked the loss of the other. However, the global settlement negotiations when began, they reflected more of an integrative style of bargaining. Since all the parties agreed that with a settlement they can get more than otherwise.

ROUND 1:
In the round one of the negotiations anti-tobacco parties asked for the companies to; Accept regulation by the FDA, to regulate tobacco advertising and the disclosure of cigarette ingredients. Restrict advertising by taking under consideration the elimination of billboard and all other outdoor advertising and an end to cigarette company sponsorship of sporting events, and a ban on the use of human characters in cigarette ads. To create funds of as much as $500 million to educate consumers, particularly young people, about the risks of smoking, and pay hundreds of billions of dollars to reimburse the states for Medicaid costs of tobacco-related illness. The companies however sought for; Near-total protection from the states tobacco attack. Bring an end to the state claims (as well as individual and class action suits filed by smokers and their families), the companies hoped to change the pariah status of the industry. They were also eager to ensure that the FDA would not ban the sale of tobacco products to adults. Most important, however, the companies pressed for a degree of immunity from future suits. However, at the end of the first round of the talks, no agreement on the $500 million was reached; nonetheless, the companies decreased their advertising expenditures & forms of the payment. Also anti tobacco parties were skeptical about the settlements being an easy way for the tobacco companies.

ROUND 2:
The second round begun with the unresolved issues of payment by industry, extent of FDA regulation. However, the demand for complete immunity was dropped down. AGs proposal for limited liability was not accepted by the industry and Moore & other attorney general along with plaintiff lawyers refused industrys proposition of limiting individual law suits. The second rounds of negotiations also lead to disagreement among lawyers over incentives which were resolved later by dividing the AGs into four heads. On the other side of the negotiating table, were the issues among the tobacco industry as well over the division of payments on the basis of market share. In the second round, intra party negotiations indicated a lack of trust on both sides of the table. Also there were pressures on AGs regarding pursuing of cases in their own states.

ROUND 3:
When third round of discussions began the issues on hand were the federal nicotine regulation and punitive damages, also under discussion was the issue of youth access. The issue of youth was resolved by placing penalty on the manufacturers of tobacco first time in the history by adding a look back clause according to which AGs required the companies to pay a fine each year if teen smoking reduction targets were not met Also, Federal court confirmation of FDA to regulate nicotine as drug made significant advancements in the negotiations. Although B.A.T argued to have this decision reversed but it was cleared that this decision will not be taken back. Thus, the companies accepted FDA regulations but in return demanded a ban on punitive damages for past misdeeds. At last, in this round of negotiations final deal was reached, with immunity to whistle blowers part of it. Although this wasnt the end of the issue since it faced an uncertain future in the congress. However, these three rounds of negotiations mark an optimal result for the tobacco companies, since they cant afford to completely run out of their business. Hence, they agreed on conditions best suitable to them.

BATNA:
The best alternative for tobacco industries is to try to manipulate the congressmen. Since tobacco industry has a lot of political influence on the parties and have been associated with direct contributions to parties. They can exert pressures on the parties to have the decision in their favor. Also if the anti-tobacco parties had lost the case, the companies could continue running their businesses while facing the usual law suits. The states however have weak BATNA, if the end results of the negotiations had not been achieved, the only option they have is to continue filing individual law suits o different grounds against Tobacco companies.

POSITIONS OF THE PARTY:

Anti-Tobacco Party:
National Association of Attorneys General (NAAG)s coordination to solve this multi state case, made the position of tobacco companies stronger .Also the information provided by the whistle blowers to the parties, proved critical in making position of the group stronger. Research by the FDA Dr.Kessler also

strengthened this side. However, the dependency on Congress for the regulation of interstate congress made the position weaker.

Tobacco industry:
Maintenance of federal lobbyists by the tobacco industry made their position stronger. The direct contribution to political parties also indicated the influence tobacco industries had over the Congress. This made their position stronger. On the contrary, the information possessed by the anti tobacco parties which including research showing the harmful effects of smoking and the information given to them by whistle blowers marked their weak positions.

TACTICS USED IN THE NEGOTIATION:

Following tactics have been used in the process:

Tobacco Company:
There tactics include: 1. Snow balling: This is used by the companies initially when they possessed more information than the consumers regarding tobacco hazards. 2. Fraud & Concealment: Tobacco companies lied about the damaging information they possessed. Thus engaging in fraud 3. Find a bridge solution: Towards the end, when the negotiations took an integrative style approach , the tobacco companies adopted used this to come to a solution.

Anti-tobacco parties:
Their tactics include: 1. Intimidation: The companies intimidated the industry by gathering information through the whistle blowers and also by making and army of states that would put pressure on the tobacco industry. Also the information obtained through research added to this. 2. Aggressive Behavior: The anti tobacco industry was very aggressive in their dealing by attacking the position of the other tobacco companies,