State files motion to collect from tobacco companies
Attorney General Mike McGrath claims tobacco companies have shorted Montana millions of dollars in settlement payments, and asked a district judge on Monday for a ruling showing the state has held up its end of the national tobacco agreement.
R.J. Reynolds Tobacco Co., No. 3 cigarette maker Lorillard Tobacco Co. and several other companies are withholding part of their latest payments because they claim states have not "diligently enforced" parts of the settlement.
Industry leader Philip Morris USA made its full payment but is seeking a reduction.
The actions shorted Montana about $3 million in tobacco money, McGrath said in filing a motion to the state's 1997 lawsuit against the industry.
"Montana is owed full payment under the agreement," he said. "We've met all of our obligations under the (settlement). There is no reason for tobacco companies to withhold any part of the required payments."
The state received about $23 million from the tobacco companies last month, McGrath said.
The tobacco companies claim they're owed the disputed money - about $1.2 billion total - because of a provision in the settlement that allows them to pay less if they have lost market share to smaller companies that weren't part of the settlement.
In the motion, McGrath argued Montana has enforced laws requiring cigarette makers outside the settlement to put money into escrow accounts for future legal obligations, and that no adjustment is warranted.
He asked District Judge Thomas Honzel of Helena to define "diligent enforcement" and issue a ruling on whether the state has met that standard in regards to the settlement.
"The question itself it straightforward: Montana either diligently enforced its statutes or it did not," the motion states.
Lynn Solomon, a spokeswoman for McGrath's office, said the attorney general is looking for direction on the issue. The motion, she said, essentially reopens the case for further orders as allowed under a consent decree.
"(The state) is going back to the judge and saying we want your direction in the handling of this so the judge can come out and say, `Yeah they have diligently enforced it, pay up,'" Solomon said.
Attorneys general in other states are filing lawsuits against the tobacco companies over the disputed money.
Under the landmark 1998 settlement, tobacco companies agreed to pay more than $200 billion to 46 states over 25 years. The states, which in turn agreed not to sue the companies, use the money for purposes that include public health and education.
