Tobacco companies asked to make repayments to states

RJ Reynolds must compensate states for brands sold.

Minnesota attorney general Keith Ellison announced that the state has settled its lawsuit against RJ Reynolds Tobacco and ITG Brands for payments in an original 1998 case that should have given the state at least $ 81 million. In 2019, a state court ruled in Minnesota’s favor on a case where it argued that a trademark transfer issue prevented the company from paying a million dollars in the original settlement. Reynolds merged with Lorrilard Tabak in 2015 and transferred the KOOL, Maverick, Salem and Winston brands to ITG Brands, which was not part of the 1998 settlement.

The new contract with the state requires RJ Reynolds to make repayments due from 2015 to 2020, and ITG Brands will continue to make payments for the transferred brands. “Annual payments to the state are expected to be at least $ 10 million for the foreseeable future,” Ellison said, adding that payments to the Minnesota general fund will be suspended and the state will receive a full repayment as part of the settlement for the unpaid period.

Photo by Anton Vorobiev on Unsplash

Similar cases have been tried against RJ Reynolds in other states. A state appeals court previously ruled the company was responsible for paying more than $ 100 million to Florida and upheld a ruling by a Palm Beach County judge. The 11-page ruling, written by Judge Spencer Levine, Judge Dorian Damoorgian, and Judge Alan Forst, stated, “We simply state that a contract is a contract and Reynolds is still liable under the contract he is with signed by the state of Florida. “

Florida filed a lawsuit against RJ Reynolds and four other tobacco companies in 1995 alleging the state incurred high healthcare costs related to the dangers of smoking. Settlement in the case required the defendants to make an initial payment of $ 750 million and agree to pay $ 440 million a year. The Court of Appeal’s decision required RJ Reynolds to pay $ 92.6 million to the state and $ 9.8 million to Philip Morris USA.

“The ramifications of the court’s intolerable build-up of the (Settlement Agreement) are severe: Reynolds faces a judgment requiring $ 102 million plus $ million per annum perpetual payments, including the brands owned by Reynolds no longer manufactures, sells and or ships when calculating their annual settlement liability – contrary to the express provisions of the (settlement), ”argued the company’s lawyers shortly after the appeal court’s decision.

“The Florida Settlement Agreement (FSA) required Reynolds to make annual payments to the state of Florida on a permanent and unconditional basis to release liability for past and future Florida medical expenses,” Levine wrote. Significantly, the FSA ‘could only be changed by writing hereby made by all the signatories, and any provision thereof can only be waived by a written instrument made by the renouncing party. It is undisputed that the signatories of the FSA did not give written consent to the amendment or waiver of Reynolds’ payment obligations to Florida. In the absence of such a written change, Reynolds’ payment obligations under the FSA would remain in full force and effect. The lack of such a written agreement to amend or waive the terms of the contract alone therefore compels the confirmation (the decision of the judge). “


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