Debate and Issues Archive

draft settlement

U.S. Discount Importers File Suit To Rescind Master Settlement Agreement

  by Dan Whitcomb
   August 19, 1999

LOS ANGELES (Reuters) - A group of 55 discount cigarette importers have sued to overturn the national tobacco settlement, claiming that it unfairly burdens them.

The distributors named 147 defendants in the lawsuit, filed late last week in U.S. District Court in Los Angeles and made public Thursday, including the attorneys general of 47 states, governors and other state officials and 22 tobacco companies.

The lawsuit, which claims anti-trust and Constitutional violations, seeks to invalidate the settlement, strike down two laws which implement it and mandate that any proceeds go into a national trust to pay the health-care costs of people suffering from smoking-related illness.

Fred Olson, a spokesman for Washington state attorney general Christine Gregoire, said that while he had not yet seen the lawsuit, he believed the claims were groundless.

"During the negotiations we spent an awful lot of time looking at the constitutionality of it and the anti-trust laws; we brought in some of the best specialists in the country to look at those issues," he said.

"I think we've written something that will withstand those challenges," he added. Olson said most attorneys general involved in the settlement were already urging their states to make sure the money goes toward public health.

Matthew Fairshter, a lawyer representing the plaintiffs, said the settlement does not require money go to health issues, and some states were using the money for other purposes.

"Some states passed statutes or resolutions indicating that as much as 70 percent of the money go elsewhere," Fairshter said. "We are asking to set up a national trust fund to pay for health care expenses of people suffering from smoking-related illnesses, not pork-barrel projects."

He said that by allowing states to use the money for whatever purposes they wanted was in effect "setting up a joint venture where states have an interest in making sure there are significant cigarette sales."

In fact, he said, "states will actually over time become dependent on money from cigarette sales to fund government programs."

Fairshter said his clients, who were not part of the settlement, were also now mandated by law to pay into a fund for a "theoretical'' second settlement, which cost them 18 cents per pack and forced them to increase their prices.

And by forcing them to increase prices, he said, the settlement would promote an unconstitutional monopoly by the major cigarette manufacturers.