Chester-based tobacco company Star Scientific Inc. may appeal its legal challenge of the 1998 multistate tobacco settlement to the U.S. Supreme Court.

The company said yesterday it will "pursue all rights of appeal that are available" after the 4th U.S. Circuit Court of Appeals on Tuesday upheld a lower court's dismissal of the company's suit. Star has two options, its lawyers said yesterday. It can seek an appeal to the U.S. Supreme Court, and/or it can petition the 4th Circuit for another hearing. Star, a maker of discount cigarettes and smokeless tobacco products, sued in late 2000 to challenge the constitutionality of the settlement, in which the nation's top cigarette makers agreed to pay $206 billion over 25 years to 46 states for smoking-related health costs. Virginia will get about $4 billion from the settlement. The suit also challenges a related state law requiring companies such as Star that did not participate in the settlement to pay a portion of their cigarette revenue into escrow for 25 years. Star says it has paid $28 million in the past two years. The company argues that the settlement, by forcing smaller manufacturers to make escrow payments, unfairly impedes its business. Star was never sued by the states in the national tobacco case. U.S. District Judge James R. Spencer ruled against Star in March and granted the state's motion to dismiss the suit. Star appealed, and a two-member panel of judges affirmed Spencer's decision Tuesday. "While we are clearly disappointed with the 4th Circuit's opinion, it in no way diminishes our conviction that both the tobacco master settlement agreement, and the qualifying state statutes that it mandated, are hobbled with significant constitutional infirmities," the company said in a release.

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