Attorney General Files Lawsuit Against Tobacco Companies

In a payment due on April 17, state received only $66.3 million of an expected $75 million annual payment.

Photo Courtesy: catchasmoker.com

(SALEM) - Attorney General Hardy Myers on Monday sued tobacco companies over the disposition of nearly $15 million in payments due to Oregon under the terms of the historic Master Settlement Agreement.

The MSA was signed by 46 states in 1998. Included in the lawsuit are the "big three" tobacco companies, Philip Morris, R.J. Reynolds Tobacco Company, and Lorillard, as well as over 25 other cigarette manufacturers.

"Oregon is holding up its end of the Master Settlement Agreement. Tobacco companies must hold up theirs," Myers said. "I have every confidence that the Oregon courts will find Oregonians are entitled to every penny of this payment."

The $9 million shortfall is the result of actions by R.J. Reynolds, Lorillard and many other manufacturers who placed a portion of the payment in a disputed account.

Philip Morris made the full payment, yet disputes approximately $5 million of the payment.

Nationwide, the tobacco companies dispute over $1 billion of the $6.6 billion payment scheduled to go to the participating states.

In addition to strict restrictions on tobacco product marketing, the MSA contains a provision addressing loss of market share by the participating companies.

The current dispute relates to payments made for the 2003 calendar year. An independent economist found the companies` market share loss was about 6.25 percent that year.

The companies are not, however, eligible for the adjustment if Oregon diligently enforced laws designed to level competition between companies that signed the MSA and those that did not.

The lawsuit filed in Multnomah County Circuit Court asserts Oregon has diligently enforced all those laws, and that the companies are not entitled under the MSA to reduce their payment to Oregon.