Georgia the latest to sue tobacco companies
ATLANTA - The state's top lawyer claimed Thursday that tobacco companies have shorted Georgia millions of dollars in settlement payments, making the state the latest to file a lawsuit against the companies involved in a massive national tobacco agreement.
A lawsuit filed in Fulton County Superior Court claims that 31 tobacco companies have withheld $19 million they agreed to pay the state in the 1998 settlement, said Russ Willard, a spokesman for the attorney general's office.
He said that 26 states are expected to file similar complaints by the end of the week.
The filing contends that payments from some tobacco companies, including R.J. Reynolds Tobacco Co., were siphoned to a third party.
Other companies, including Phillip Morris USA, paid the full amount they owed, but also claimed the right to offset future payments owed to the states because of market share loss, the lawsuit said. And several smaller tobacco manufacturers completely withheld the funds due last month, the filing said.
The tobacco manufacturers had argued that they shouldn't have to pay the full tab because they lost business to rival companies not saddled with the settlement.
Thurbert Baker, the state's attorney general, contended that the companies lost market share because they raised prices "beyond any price increase rationally related to the payment of damages under the 1998 settlement agreement."
The state has received $141 million of the $160 million settlement funds due last month, Willard said.
Under the eight-year-old landmark settlement, the three biggest 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.
R.J. Reynolds, the nation's second-largest cigarette maker, withheld $647 million of $2 billion it was supposed to pay this year, while No. 3 Lorillard withheld $108 million of its $666 million payment. Industry leader Philip Morris USA paid its full $3.4 billion but is trying to have that sum reduced.