Big Tobacco Loses Another One, for $50M

     ST. LOUIS (CN) – A city judge partially vacated a 2013 arbitration ruling that cost Missouri $70 million from its annual tobacco settlement payment.
     Twenty-Second Judicial Circuit Judge Jimmie Edwards’ ruling is expected to return nearly $50 million to the state’s coffers, Attorney General Chris Koster said.
     “Missouri should be paid nearly $50 million that the tobacco companies sought to withhold from our state,” Koster said in a statement. “This money will provide needed support for state priorities like public education. I thank our dedicated team of attorneys, who have litigated this case for years to ensure that Missouri receives its fair share of the settlement money.”
     The issue stems from the Master Settlement Agreement (MSA) between the tobacco companies and 52 states and territories in 1998.
     The tobacco companies then sued several states, including Missouri, claiming the states failed to properly enforce state tobacco laws in 2003. The tobacco companies claimed they were entitled to withhold a large portion of their payment for that year under the settlement agreement.
     Twenty-two states settled during arbitration.
     Last September, a three-judge arbitration panel ruled in favor of the tobacco companies against six states – Missouri, Indiana, Kentucky, Maryland, New Mexico and Pennsylvania. The panel ordered that the six losing states were responsible for their share of the losses as well as the shares of the states that had settled their cases.
     Koster’s office sued, claiming that reallocating the liability of the settling states onto the six losing states violated the terms of the settlement agreement.
     In finding for Missouri last week, Edwards cited an April decision by a Pennsylvania court in favor of Pennsylvania regarding the same matter.
     “Although the panel had the authority to determine the reallocation method, its pro rata reallocation method is clearly erroneous as it violates the MSA’s procedure for amending the MSA,” Edwards wrote in a 15-page order. “The MSA prohibits amendment unless it is ‘by a written instrument executed by all … Settling States affected by the amendment.'”

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