Judge Warns Tobacco Companies
GREENSBORO, N.C. (AP) - A federal judge has told tobacco farmers to notify him if cigarette companies threaten sales contracts because of a lawsuit alleging a price-fixing conspiracy.
U.S. District Court Judge William Osteen said Tuesday that tobacco company lawyers told him there would be no further threats.
Farmers have filed a lawsuit against cigarette companies claiming the auction system is rigged to keep prices low. More than 100 farmers came to Osteen's court for a scheduling hearing to show support for their lawsuit.
The attorney for the farmers, Alan Wiseman, said Philip Morris sent a letter in September warning farmers that if they joined the suit, they would not be offered contracts.
R.J. Reynolds Tobacco Co.'s contracts with farmers also forbid legal action against the company, Wiseman said.
``The growers are caught between a rock and a hard place,'' he said.
Tobacco companies have said they will expand the use of contracts this year to buy tobacco directly from farmers and cut their reliance on the traditional tobacco auctions.
The lawsuit asserts that nine cigarette companies conspired to dismantle the federal tobacco program by artificially cutting production quotas, rigging auction prices and bypassing the auctions through direct contracts.
The lead attorney for the farmers is Washington-based Alexander Pires, who settled a $1.2 billion civil rights suit against the U.S. Department of Agriculture on behalf of 19,000 black farmers.
Lawyers for the farmers are trying to get the lawsuit certified as a class action, which could include tens of thousands of burley- and flue-cured-tobacco farmers and quota holders.
Lawyers for four major tobacco companies - Reynolds, Philip Morris, Lorillard Tobacco Co. and Brown & Williamson Tobacco Corp. - contend that quota holders and farmers from various states are so diverse that they can't be considered one class.
``They're different markets, different auctions and different parties involved,'' said Daniel Donahue, representing Reynolds. ``It's a silly situation when six individuals can claim they can represent the claims of 5,000 individuals.''
Other companies named in the suit are Universal Leaf Tobacco Co., J.P. Taylor Co., Southwestern Tobacco Co., Dimon Inc. and Standard Commercial Corp.
Osteen said he could rule on whether to certify the lawsuit as a class action by summer at the earliest.