N.C. judge: Tobacco cos. must pay farmers
RALEIGH, N.C. -- Tobacco companies must pay farmers and quota holders $106 million in payments and interest that were due for the fourth quarter of 2004, a judge ordered Wednesday.
The companies - including Winston-Salem-based Reynolds Tobacco Co. and Richmond, Va.-based Philip Morris USA Inc. - had sought further court proceedings and legal costs related to the payment.
The tobacco companies had argued that compensation due to farmers was overridden by last year's passage of a $10 billion federal buyout of tobacco quotas. The quota system, which allowed farmers to grow a specific amount of tobacco, ended with the buyout.
The North Carolina Supreme Court ruled last month that the companies must make payments of $318 million for 2004 because during that time they had not started paying for the quota buyout.
The companies argued that the ruling wasn't clear about whether they are required to make the final payment for the fourth quarter of 2004 because it wasn't due until 2005.
North Carolina Business Court Judge Ben Tennille issued a ruling Wednesday denying their request for more hearings and legal costs.
"Defendants' reliance on certain words or phrases in the opinion is misplaced considering the opinion as a whole," Tennille wrote. "The court finds the defendants' position that they do not owe the fourth quarter 2004 payment to be inconsistent with and contrary to the express language of the Supreme Court."
A spokesman for Reynolds Tobacco Co. said the company was considering its options regarding any appeals.
"Certainly we're disappointed in the ruling ... but we are grateful for being given the opportunity to present our side and hoped for a different outcome," said David Howard, a spokesman for Reynolds Tobacco Co.
The ruling affects tobacco growers and quota holders in North Carolina, Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.
"I've said all along that withholding the 2004 Phase II payments wasn't right, and I urge the tobacco companies to follow Judge Tennille's decision and pay our growers the money they deserve," said Steve Troxler, commissioner of the North Carolina Department of Agriculture and Consumer Affairs.