Tobacco firms win a round in suit with state

Thursday, Jan. 29, 2009 | 4:58 p.m.

Jan. 9, 2009 -- Tobacco settlement ends illegal distribution
June 3, 2008 -- Gibbons weighs selling tobacco payments to plug budget gaps

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 cy@lasvegassun.com.

Discussion: 3 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy.

By renomuse

Jan. 29, 2009

7:49 p.m.

Suggest removal

Ummm, is this the money good old Brian Krolicki wants to invest like he did the college fund money?
By getalife

Jan. 29, 2009

9:48 p.m.

Suggest removal

This whole tobacco lawsuit is for idiots, tell me, honestly, who has no clue that sucking on something burning might be bad for you.

The lawyers get richer and the idiots do too in this case.
By KillerB

Jan. 30, 2009

9:25 a.m.

Suggest removal

getalife -- I'm with you on this one.

The rest of us all need to get a clue how dangerous these "settlements" are -- a person ignores all those health warnings that have been on every pack of cancer sticks for the past forty years, willingly takes on the risks to get addicted, then sues as a "victim" when those health risks come to collect their due.

Every one of us should be concerned about how much greed, in the form of legal plunder, has replaced justice as the main business of the courts.

"The question arises ... whether all lawyers are the same. This is like asking whether everything that gets into a sewer is garbage." (Florynce R. Kennedy. U.S. lawyer, activist, speaker, and author, from her essay entitled "The Whorehouse Theory of Law"