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· Business (Tobacco)
· Lawsuits
· Settlements
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· New Hampshire
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(Updates with previous court decisions in 7th graph, more ruling rationale, market reaction and source comments.)
Jump to full article: The Wall Street Journal Interactive Edition, 2006-06-08
Author: Stan Rosenberg, Dow Jones Newswires
Intro: A New Hampshire court ruled this week that a dispute between the state and major cigarette manufacturers over payments due under a 1998 Master Settlement Agreement should be resolved by arbitration instead of by the court.
The ruling Monday by Merrimack Superior Court Judge Edward Fitzgerald III effectively backs the position of the tobacco firms that are withholding about $800 million of annual payments to states and that have said they will reduce their payments again next year.
The tobacco firms say they are allowed to reduce their payments under a provision of the national agreement because they have lost market share to manufacturers who aren't bound by the agreement. . . .
"The dispute over application of the NPM (non-participating manufacturer) adjustment, as this matter appears to be, ought to be submitted to arbitration in accordance with the MSA," Fitzgerald's ruling said. The NPM adjustment is the reduction in money a state would receive if it failed to diligently enforce the MSA qualifying statute.
"It is abundantly clear that the court does not have jurisdiction to hear disputes over the applicability of the NPM adjustment," the ruling said.
Richard Larkin, a municipal bond analyst at J.B. Hanauer & Co., Parsippany, N.J., said "the court, in effect, said that the tobacco companies had a right to withhold or pay into an escrow for the disputed amounts."
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