Law Suits: CA Smoker loses appeal in cigarette price fix

Smoker loses appeal in cigarette price fix case

Sept. 26, 2007
Gina Keating
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LOS ANGELES (Reuters) – A smoker who accused tobacco companies of jacking up cigarette prices to recoup billions of dollars they pay each year to U.S. states lost a federal court appeal on Wednesday.

Steve Sanders also sued the California Attorney General, contending that state laws stemming from a 1998 multi-state tobacco settlement known as the Master Settlement Agreement have artificially driven up prices and violate antitrust laws.

Sanders claims that settlement spawned a “cartel” that allowed the four largest U.S cigarette makers to hike prices by $12.20 per carton — more than twice what they needed to cover costs — without fear of losing sales or market share.

The Ninth U.S. Circuit Court of Appeal noted that the case joins several unsuccessful actions in alleging price fixing as tied to the multi-state settlement, which was designed to force tobacco makers to shoulder costs associated with smoking.

The court rejected claims that the MSA implicitly or explicitly created an anti-competitive atmosphere for cigarette sales.

However, two other federal appellate courts have allowed similar cases to proceed to the discovery stage.

California Attorney General Jerry Brown called the decision “a resounding victory.”

“It reaffirms the legal framework of the national tobacco settlement,” he told Reuters. Continued…

Brown dismissed the lawsuit’s contention that the state was complicit in allowing cigarette makers to raise prices.

“The fact is that taxes are making cigarette prices go up along with the tobacco addition, since people find it hard to resist,” he said.

The defendants, Philip Morris USA Inc, RJ Reynolds Tobacco Co and Brown & Williamson Tobacco Corp, and Lorillard Tobacco Co, accounted for 90 percent of cigarette sales for the past decade, the opinion said.

Philip Morris spokesman Bill Phelps said his company was pleased by the ruling.

“The decision affirms that the MSA and the related state statutes do not violate the antitrust laws and are not preempted by the Sherman antitrust statute, and that the state of California, as well as the tobacco manufacturers, are immune from lawsuits under the antitrust laws for entering into the MSA,” he said.

An attorney for the tobacco companies had no comment. Attorneys for Stevens could not immediately be reached for comment.

Philip Morris is a unit of Altria Group Inc. RJ Reynolds Tobacco Co and Brown & Williamson Tobacco Corp are units of Reynolds American Inc. Loews Corp owns Lorillard Tobacco Co.