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Thursday, June 20, 2024 | Back issues
Courthouse News Service Courthouse News Service

Ohio Can Dissolve Funds Earmarked for Smokers

(CN) - Ohio lawmakers can repurpose part of a multibillion-dollar settlement with tobacco companies meant to cover health care costs, the Ohio Supreme Court ruled.

Tobacco companies agreed to pay Ohio a total of $10.1 billion by 2025 in a master settlement agreement reached with the states in 1998.

In 2008, Ohio lawmakers liquidated the Tobacco Use Prevention and Control Foundation, one of the endowment funds where $235 million of the settlement was held, and tried to reallocate $190 million from the settlement agreement to the American Legacy Foundation as part of a statewide economic stimulus package.

The Board of Trustees of the Tobacco Use Prevention and Control Foundation sued the Ohio treasurer, arguing that the endowment fund was created to promote tobacco-use prevention and cessation.

The trial court ruled in favor of the foundation and a pair of former smokers who had participated in its smoking-cessation program. Its ruling classified the endowment fund as irrevocable and prevented the state from touching it.

The Franklin County Court of Appeals reversed the decision, ruling that the funds were not irrevocable and that the plaintiffs had no vested rights that could be violated.

Acting Chief Justice Paul Pfeifer affirmed the decision, ruling that the general assembly's decision to abolish the foundation in 2008 and redistribute the tobacco funds did not violate the retroactivity clause of the Ohio Constitution.

"No irrevocable trust was created; indeed, no trust was created," Pfeifer wrote in the court's majority opinion, joined by four other justices. "Instead, we conclude that in 2000, a state agency was created that was abolished in 2008. We conclude that the law enacted in 2000 did not create a right that was terminated by (the 2008 law) and therefore, that (it) is not an unconstitutionally retroactive law." (Parentheses in original.)

Two other justices for the court issued separate concurring opinions.

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