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.