Vice Squad
Tuesday, March 02, 2004
Cigarette Distributor Wins One in Pennsylvania

The Commonwealth of Pennsylvania has been taking on cigarette manufacturers who were not parties to the 1998 "Master Settlement" with Big Tobacco, and who haven't been funding escrow accounts as required by some related legislation. Just last week, Pennsylvania settled a lawsuit against one non-participating manufacturer. But yesterday came word that an appeals court sided with a tobacco distributor in another Pennsylvania suit aimed at securing escrow payments. The court ruled that the legislation specifically refers to non-participating manufacturers, not distributors of cigarettes. The Illinois-based distributor, therefore, is not liable for such payments, though perhaps the manufacturer (located in India) might be.

According to the linked Associated Press story, "The state Attorney General's office has sued six companies for allegedly failing to comply with the [settlement-related] act. It has won one, lost one and settled one; three are pending before Commonwealth Court." A short overview of the six Pennsylvania cases can be found here.

For an argument that the 1998 Master Settlement with Big Tobacco constitutes (among other debilities) a violation of antitrust laws through its price-fixing and entry-deterring effects, see this Cato Institute publication (pdf, 29 pages) from May, 2000.

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