Las Vegas Sun

March 18, 2024

Tobacco firms win a round in suit with state

CARSON CITY – Four national cigarette companies have won an initial round in the fight to avoid paying anywhere from $7 million to $36 million in penalties to the state.

The Nevada Supreme Court has ruled the dispute should go to arbitration before three former federal judges to decide if the state complied with an agreement with the cigarette firms.

The state reached an agreement with four major tobacco companies in 1998 for them to make payments to the state and also agreed to stop targeting youth with their promotions, marketing or advertising.

As part of the agreement, the state was required to make sure the non-participating tobacco companies also paid into a fund. If the four companies lost part of their share of the market, they would be able to reduce their payment to the state.

There is a dispute over whether the state complied with the agreement and the tobacco companies maintain the issue should go to arbitration. The state sued and sought an order that it did comply with the agreement.

The four companies said Nevada did not follow through in enforcing its effort to get money from the other tobacco companies. Philip Morris, R.J. Reynolds Tobacco Co., Lorillard Tobacco and Anderson Tobacco Co. maintained they should pay a lesser fee for 1993.

Senior Deputy Attorney General Victoria Oldenburg said the companies are also disputing the amount of their payments for four other years. She said she was confident the state would collect.

If the state loses, the amount would depend on whether the cigarette manufacturers win in other states.

Justice Michael Cherry, who wrote the unanimous decision, said the agreement between the states and the tobacco firms clearly states that disputes over the “state’s diligent enforcement” of the agreement must go to arbitration.

“The district court’s decision to compel the parties to arbitrate the dispute in this case is not a manifest abuse of its discretion,” Cherry wrote. District Judge Brent Adams ruled in district court in favor of the tobacco firms.

The tobacco companies withheld millions of dollars from their 2006 settlement payment to Nevada on grounds the state had failed to collect money from the other companies in 2003.

The state argued that it had diligently enforced the law to require the other tobacco companies to pay money into a fund for 2003.

Cy Ryan may be reached at (775) 687-5032 or [email protected].

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