Tobacco.org

$145B jury award tossed in Florida smoking case  

In fact, former Attorney General Bob Butterworth, who in 1995 led the state's effort to sue the tobacco companies, said there is a silver lining for Floridians in the court's decision.

He said there was some concern that if the record jury award were allowed to stand, it could have jeopardized the financial health of the cigarette manufacturers, meaning they may have had to default on their annual payments to the state.

"I for one am glad that a cigarette company loses every case they get involved in," said Butterworth, who is now the dean of the St. Thomas University School of Law in Miami. But Butterworth said he believed from the beginning that the trial court went too far in allowing a jury to award $145 billion in punitive damages against the tobacco companies in 2000. He said the law prohibits an award from being so excessive that it could bankrupt a company.

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• Tobacco payment to states in limbo 

As Americans kick the habit or smoke cheaper cigarettes, the reaction by major tobacco firms is proving hazardous to the financial health of 46 states, including Arizona.

For the first time since cigarette-makers agreed in 1998 to distribute billions of dollars a year to the states to compensate for the costly effects of tobacco use, Big Tobacco balked last week at paying the full amounts. The dispute puts in limbo at least $755 million the states expected to receive this year.

It also portends what could be protracted resistance by tobacco companies to paying huge compensation at a time when their sales and market share are eroding. The tobacco companies contend the states are allowing their competitors an unfair advantage.

Sixteen states have filed lawsuits in quick succession so far, seeking their full shares, and Arizona is moving toward filing its own, lawyers in the state Attorney General's Office said.

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General Tobacco Makes Annual Payment to MSA 

Notwithstanding the favorable treatment and discounts the states provide to its competitors, yesterday, General Tobacco was able to comply with its obligations under the 1998 Landmark Master Settlement Agreement (MSA) reached between the major tobacco companies and 46 states by making a payment of more than $96 million.

General Tobacco also chose to withhold more than $11 million to which it believes entitled as a reduction in its annual payment pursuant to a credit provision under the MSA due to the loss of market share it has experienced as a result of joining the MSA.

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UPDATE 2-Big Tobacco wins payment dispute, states to fight 

An arbitrator ruled that cigarette makers lost market share as a result of a settlement reached with U.S. states, boosting the chances they can reduce the $6.5 billion payment they owe next month, according to a copy of the decision obtained by Reuters on Tuesday.

U.S. states who signed the accord have said they would fight in court if they lost. New York state this month has already won one such court battle, according to The Brattle Group, the arbitrator who wrote the decision.

But the states now are trying to negotiate a settlement, according to the National Association of Attorneys General.

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UPDATE: Ruling May Lead To Lower Tobacco Co MSA Payments 

An arbiter has reaffirmed an earlier decision that could make it easier for large cigarette companies to reduce their annual multibillion-dollar payments to state governments.

The National Association of Attorneys General, or NAAG, said Tuesday in a statement that the arbiter determined that the Master Settlement Agreement between the states and tobacco companies "was a significant factor contributing to the market share loss of the participating manufacturers."

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UPDATE 1-Big Tobacco wins 1st bid to cut US state payments 

An arbitrator ruled that cigarette makers lost market share as a result of a settlement reached with U.S. states, boosting the chance of them reducing the $6.5 billion payment owed next month, according to a copy of the decision obtained by Reuters on Tuesday.

However, U.S. states involved in the settlement have said they would fight in court if they lost. The states argue another requirement under the settlement was met because they collected funds from tobacco companies that did not sign it.

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MESSENGER: McCaskill audit only touches the surface of tobacco spending ills 

We also agree it’s a bit of an unfair fight when government uses its own resources to try to influence local elections. That’s the great conundrum of the tobacco settlement. McCaskill rightly points out more money should go to anti-tobacco programs. That was part of the deal when the settlement was agreed to. But there’s a fine line between telling kids they shouldn’t smoke and promoting a local political agenda with state money.

In this case, thanks to the Sunshine Law, we know that fine line has been crossed.

Last year, in promoting its anti-secondhand-smoke agenda, the state spent more than $50,000 on radio commercials. It spent several thousand dollars more in local print advertising in Columbia. In each case, the ads sent folks interested in the message to a group staging a political campaign.

They used smokers’ money to try to take away their cigs, and the government was a full partner in the scheme.

Perhaps McCaskill should audit that.

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• Big Tobacco wins payment dispute 

An arbitrator ruled that cigarette makers lost market share as a result of a settlement reached with U.S. states, boosting the chances they can reduce the $6.5 billion payment they owe next month, according to a copy of the decision obtained by Reuters on Tuesday.

U.S. states who signed the accord have said they would fight in court if they lost. New York state this month has already won one such court battle, according to The Brattle Group, the arbitrator who wrote the decision.

But the states now are trying to negotiate a settlement, according to the National Association of Attorneys General.

The states argue they met another requirement under the pact because they collected funds from tobacco companies that did not sign it.

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• Big Tobacco wins first bid to cut state payments 

An arbitrator ruled that cigarette makers lost market share as a result of a settlement reached with U.S. states, boosting the chance of them reducing the $6.5 billion payment owed next month, according to a copy of the decision obtained by Reuters on Tuesday.

However, U.S. states involved in the settlement have said they would fight in court if they lost. The states argue another requirement under the settlement was met because they collected funds from tobacco companies that did not sign it.

Big Tobacco in 1998 agreed to pay states $206 billion to help pay for the costs of treating ailing smokers. Their next payment is due in mid-April, and several cigarette makers want to withhold about $1.2 billion because sales have dropped.

In a statement on Tuesday, Connecticut Attorney General Richard Blumenthal, vowed to force the cigarette makers to pay in full.

"I will stop Big Tobacco from shamelessly shirking its obligations under the settlement agreement," he said.

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• Big Tobacco Sees A Windfall 

Now $1.2 billion they expect from this year's tobacco payout--and possibly more in future years--may be in peril. The major tobacco companies, including Altria Group's (nyse: MO - news - people ) Philip Morris USA and Loews' Lorillard, which were the original signatories to the deal, known as the Master Settlement Agreement (MSA), complain that their collective market share has fallen from 99.6% in 1997 to 92% in 2003.

An independent arbiter is expected to agree with the companies that competition from upstarts that don't pay into the MSA is to blame. Per the MSA, this is the first step before they can get their payments trimmed.

But Big Tobacco still faces a second hurdle: It has to be shown that the states have been negligent in cracking down on the upstarts. This will be trickier to prove. Under the MSA--which most fair-minded economists regard as a state-sponsored cartel--the signatories negotiated for protection against competition . . .

"Overall, we're not convinced that the major manufacturers will succeed in getting the $1 billion ... but this battle could lead to another settlement [and] an ironclad partnership between the states and tobacco manufacturers," wrote Bonnie Herzog, a tobacco analyst for Citigroup, in a report.

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Ruling on Tobacco Settlement Payments Expected 

Billions in future tobacco settlement payments to the states are at stake in an expected ruling today. An independent economic firm, the Brattle Group, is scheduled to rule on a dispute brought by major tobacco companies.

The companies have argued that annual payments to 46 states resulting from the 1998 tobacco Â"Master Settlement AgreementÂ" should be reduced because the majors have lost market share to smaller competitors.

The feud between big tobacco companies and state attorneys general draws attention to the corrupt, inner workings of the $240 billion tobacco deal. In exchange for receiving billions of dollars in annual payments from the four major tobacco companies, states agreed to pass laws to protect the majors from competition. However, despite imposing burdensome and unwarranted escrow payments on small companies that were never part of the settlement agreement, some upstarts were nonetheless able to win consumers by offering lower-price cigarettes.

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• Arbitrator ruling may prompt tobacco payment cuts 

Tobacco companies could move a step closer to reducing their settlement payments to 46 states by billions of dollars when an arbitrator late on Monday determines what caused them to lose market share.

The next annual payment from Big Tobacco in the landmark 1998 settlement -- about $6.5 billion -- is due April 15. But several cigarette makers are seeking to reduce that payment by about $1.2 billion due to declining sales.

Much is at stake in the decision, because it could set a precedent for payment reduction demands in subsequent years by the tobacco companies, which through 2005 saw a steady decline in cigarette sales to their lowest level since 1951.

The decision, which may not be announced until Tuesday, could have negative implications for $31.5 billion in bonds backed by tobacco payments sold by states, cities and counties. . . .

The Brattle Group, the arbitrator hired by the state attorneys general and the tobacco companies, is expected to decide whether to affirm an earlier determination that the costs associated with the "Master Settlement Agreement" were a "significant factor" that caused a 2 percent market share loss in 2003 for tobacco firms that participated in it.

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• Huge Settlement Could Get Smaller ($$) 

On Monday comes a decision that could fray the relationship.

That's when an arbiter is to issue a decision that could allow cigarette companies to reduce a multibillion-dollar payment due this spring by $1.2 billion -- and potentially similar amounts in future years. A decision in favor of the industry would be a significant blow to the states, which have come to rely on the annual payments to prop up their budgets. That the issue is even being discussed highlights a new bravado exhibited by the major cigarette companies after a string of legal victories.

The money in question is part of Big Tobacco's obligation to 46 states under a landmark 1998 legal settlement that ended a raft of state-government lawsuits against the industry. The agreement requires Altria Group Inc.'s Philip Morris USA, maker of Marlboro, and other major cigarette companies such as Reynolds American Inc.'s RJR and Loews Corp.'s Lorillard to reimburse the states for their costs to care for sick smokers, in yearly installments. So far the companies have paid $41.6 billion and about $6.5 billion more is due April 17.

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Lawsuit Filed Against The National Association of Attorneys General and 39 States 

Cutting Edge Enterprises, Inc. today filed a lawsuit against National Association of Attorneys General ("NAAG") and 39 States. The suit seeks injunctive and other relief.

Cutting Edge Enterprises, Inc. ("CEEI") is a tobacco products manufacturer that has been a member of the Master Settlement Agreement ("MSA") since December 22, 2000. NAAG maintains a listing of all Participating Manufacturers, their brands, and their contact information on a website located at http://www.naag.org. . . .

The 39 Defendant States, also without authority, have refused to place CEEI's new brands on their websites and rely on the NAAG website before permitting sales of any Participating Manufacturer brand to occur in their respective State.

The suit alleges that the failure of NAAG and the States to allow CEEI to add brands to its listing on the website violates well-established antitrust law and is a breach of the MSA. Moreover, by refusing to allow CEEI to sell its products in accordance with the terms of the MSA, the actions of the NAAG and the States lessen the MSA payments to each State.

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• Lawrence Wasden: George Will is wrong about tobacco settlement agreement 

A recent column by George Will published in this newspaper (Jan. 2), ignores or misrepresents important facts about the 1998 tobacco Master Settlement Agreement (MSA). First, the MSA is primarily a public health agreement. It contains the strongest and most effective array of tobacco advertising and promotion restrictions ever implemented in this country. Second, the MSA has dramatically reduced youth smoking rates. Third, the MSA forced the tobacco companies to fund a highly successful program of counter-advertising to reduce youth smoking. Fourth, MSA payments, although substantial, do not begin to compensate the states for the costs imposed on taxpayers for treatment of tobacco-related diseases. Fifth, the MSA's constitutionality has been upheld against numerous legal challenges.

The U.S. Supreme Court has characterized the MSA as a "landmark public health agreement." Before the MSA, cigarette companies denied that nicotine was addictive. They denied that cigarettes caused death and disease. . . .

Mr. Will erroneously asserts that the states have a financial interest in maintaining cigarette smoking because they earn more from MSA payments than they spend to pay for the costs of treating tobacco-related disease. In fact, the federal Centers for Disease Control and Prevention reports that the true cost of treating tobacco-related disease far exceeds these payments. The states would be much better off financially if no one smoked. . . .

Finally, in suggesting that the MSA may be unconstitutional, Mr. Will appears to be unaware that numerous courts have already rejected constitutional challenges to the MSA, and no court has upheld any such challenge. The MSA is sound and beneficial public policy, and it is fully consistent with the Constitution of the United States.

--Lawrence Wasden is the Idaho attorney general.

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