… dispute with the tobacco industry over $60 million the companies have withheld from Massachusetts’ yearly settlement payments.
State ordered into arbitration in dispute with tobacco industry
April 23, 2007
The Supreme Judicial Court dealt the state a temporary setback on Monday in its dispute with the tobacco industry over $60 million the companies have withheld from Massachusetts’ yearly settlement payments.
The dispute centers on the complex formula used to decide the annual payments the tobacco companies make to Massachusetts as part of a landmark 1998 settlement between dozens of states and the industry.
Part of the master settlement allows the companies to reduce those annual payments if Massachusetts fails to aggressively enforce the same restrictions it imposes on the larger companies that signed onto the settlement as it does against smaller tobacco companies that didn’t. Those restrictions include limits on advertising, particularly ads aimed at children.
During each of the past two years, the industry withheld $30 million from the annual payments of between $260 and $300 million it makes to the state, arguing the restrictions weren’t universally enforced. The $60 million is sitting in an escrow account.
The state believes the money shouldn’t have been withheld and wanted the courts to settle the issue, but the industry objected saying it was a matter for arbitration. A Superior Court judge sided with the industry and on Monday, the state Supreme Judicial Court agreed, declining to rule on the merits of the case and instead shipping the question off to arbitration.
Lawyers from the state attorney general’s office say they are confident they can recoup the $60 million by proving Massachusetts was aggressive about going after the smaller tobacco companies.
They said because of the state’s efforts chasing down the smaller, nonparticipating tobacco companies, sales of those cigarettes have plummeted in the past six years and now account for less than one half of one percent of all cigarettes sold in Massachusetts.
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Where Has the MSA Money Gone? Find out what is being done with MSA funds in your state. Contact the attorney general’s office in your state and your state’s elected officials to find out where the money is going.?
USA: MSA being challenged by Competitive Enterprise Institute.
Where Has the MSA Money Gone? Find out what is being done with MSA funds in your state. Contact the attorney general’s office in your state and your state’s elected officials to find out where the money is going.?
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