Bennett & Fairshter File Suit on Behalf of Discount Cigarette
Distributors to Challenge and Overturn Tobacco Settlement
and Related Legislation
BENNETT & FAIRSHTER, P.A., Pasadena
Matthew J. Fairshter, 626/568-1200
626/568-8930 (fax)
LOS ANGELES--(BUSINESS WIRE)--Aug. 19, 1999--The
following statement was issued today by Bennett & Fairshter:
"A group of Discount Cigarette Distributors filed, in United
States District Court, Central District of California, Case No.
99-0835NM, a multi Billion Dollar lawsuit which challenges the
national tobacco settlement reached between the Philip Morris,
R.J. Reynolds, Brown & Williamson, Lorrilard, and Liggett Group
(Big Five Tobacco Companies) and the Attorneys General for
46 States.
"This lawsuit asserts anti-trust and constitutional
violations and seeks remedies which will overturn this settlement,
strike down two statutes which seek to implement the settlement,
seek certain injunctive relief, and mandate that any settlement
proceeds which do get paid to be deposited into a national trust
to pay for health care costs of persons who are suffering
smoking-related illnesses, instead of the pork barrel projects for
which most of the States are now proposing to use the money.
"This lawsuit will also address the fact the Attorneys General,
National Association of Attorneys General, and the tobacco
Companies have engaged in a collusive monopolistic practice
of acting like commercial thugs against the Discount Cigarette
Distributors in violation of the law and constitution.
"Plaintiffs seek to invalidate the Master Settlement Agreement
of November 23, 1998 (hereafter called the "MSA") between
the Big Five Tobacco Companies and the Attorneys General of
forty-six (46) States, and the settlement entered into by the
State of Texas and Defendants Philip Morris, R.J. Reynolds,
Brown & Williamson, Liggett Group, and others, on January 16,
1998 (the "Texas Settlement").
"The MSA and the Texas
Settlement collectively and individually constitute an
unconstitutional and coercive scheme and contract, combination
and collusion made for the purpose and having the effect of
limiting competition between existing tobacco manufacturers
and excluding new competitors, such as Plaintiffs, who engage
in domestic cigarette sales, thereby imposing artificially high
prices on the consumers in that market. The MSA and the Texas
Settlement collectively and individually are unconstitutional and
violate the Sherman Act, Clayton, Act, Civil Rights Act, and other
related statutes and the common law.
"On November 23, 1998 the Tobacco Companies and the
Attorneys General did enter into a sweetheart deal, the MSA,
which specifically crushes competition, is unfair, and perpetuates
a monopoly in favor of the Tobacco Companies. As a result, the
Attorneys General and States are now directly sharing in the
cartel's profits. It should be noted that the MSA is not simply a
twenty five year agreement. It is in fact a joint venture agreement
in which the Attorneys General and States are going to share in
the cartel's profits in perpetuity, i.e. Forever.
"The MSA is a permanent arrangement in which the Attorneys
General and States now have a financial interest directly tied to
the successful sale of cigarettes in the United States. The more
cigarettes sold, the more the Tobacco Companies will pay to the
Attorneys General and States, and the more the politicians
become dependent on Cartel Profits to fund their pet projects.
Although these payments will be made, there are no safeguards
in place which mandate that these funds be used to pay for the
costs of smoking related illnesses. In fact, in most States the
vast majority of the money is being used for programs and
projects having nothing to do with the healthcare costs of
persons who suffer from smoking related illnesses.
"There are also no safeguards in place to prevent the Tobacco
Companies from gouging the public with higher prices and
racking in huge additional profits at the expense of the
American Consumer. In 1999, it is estimated that the Tobacco
Companies will use their November 24, 1998 huge price
increase of 45 cents per pack, justified by Big Tobacco to pay
for the settlement, to increase profits more than 100%. There
are no safeguards in place which will prevent the Big Tobacco
Companies from increasing prices further to generate even
more profits.
"On June 20, 1997, a national settlement of lawsuits and claims
brought by the Attorneys General in each of their States was
agreed upon with the Big Five cigarette companies (the
"National Settlement"). The basic allegations set forth in the
Attorneys General's lawsuits and claims was that these
companies, and others, were a cigarette cartel which had
engaged in various violations of law, including state anti-trust,
state unfair competition, state fraud, and state consumer
protection laws.
"The Attorneys General were suing this cigarette
cartel for the lies and deception they had practiced upon the
public and the politicians for the last forty years, including their
testimony before Congress that nicotine was not addictive. In
suing the Tobacco Companies, the Attorneys General were
seeking reimbursement for health care costs incurred over the
last forty years which the states and territories had incurred due
to the affects of smoking on health.
"The National Settlement was presented to the United States
Congress, Senate Bill 1214 authored by Senator McCain, for
approval and the enactment of legislation necessary to
implement it. The United States Congress, after lengthy
consideration, disapproved of the National Settlement and
rejected it on June 17, 1998. Thereafter, the Tobacco
Companies and the Attorneys General did proceed to defy the
will and decision of the United States Congress by entering into
the MSA.
"The Tobacco Companies, seeing that the Attorneys General
needed a victory after the previous rejection by Congress, did
play a shell game by offering a settlement in exchange for
certain liability protections. The Tobacco Companies, as the
cigarette cartel, has had a long history of monopolizing the
cigarette market and crushing their competition.
"The Tobacco
Companies saw an opportunity to take advantage, outmaneuver,
and outwit the Attorneys General and ultimately further their
monopoly in the cigarette market in which they could continue to
sell cigarettes in the United States FOREVER, free from
competition. The perpetuation of this monopoly has been the
goal of the cigarette cartel for almost one hundred years. What
the Tobacco Companies sought was a sweetheart deal, without
letting the Attorneys General know what was going on. The
Tobacco Companies succeeded in their game and the Attorneys
General are now refusing to recognize the harm they are now
causing to both the American marketplace and consumers.
"Because the Tobacco Companies and the Attorneys General
were frustrated by the actions of the United States Congress,
and in direct confrontation to the rule of law, the Attorneys
General sold out the sovereignty of their States and their high
office to the Tobacco Companies' cigarette cartel in exchange
for a minuscule (less then 2% of the Tobacco Companies total
revenue) share of the cigarette cartel's profits.
"Although the
Attorneys General have stated that they settled with the Tobacco
Companies to gain money for health care, the MSA specifically
does not provide that the cartel profits are to be used by the
Attorneys General and/or States for health care. In point of fact,
the Attorneys General and States are largely using the cartel
profits for everything but paying for the health care costs of
smoking related illnesses.
"Plaintiffs are being represented by
Matthew J. Fairshter, Esquire, of BENNETT & FAIRSHTER, P.A.,
225 S. Lake Avenue, 9th Floor, Pasadena, Calif. 91101,
626-568-1200."