Tobacco Company Appeals Settlement
RICHMOND, Va. â€“â€“ A small Virginia tobacco company says it should not be forced to join a $206 billion multistate settlement with cigarette makers because it produces a safer cigarette.
An attorney for Star Scientific told a federal appeals court Thursday that the terms of the 1998 settlement are unconstitutional.
"It is not a legitimate state purpose to force us to join a lawsuit in which we have never been sued," Charles Fried said.
U.S. District Judge James R. Spencer ruled in March that the Virginia company could not challenge the settlement because it chose not to join the pact between the major tobacco manufacturers and 46 states. Under the settlement, nonparticipating tobacco companies are required to place money in escrow for 25 years to cover potential liability in future lawsuits.
"Big tobacco is paying for 50 years of liability," Fried said. "We've only been selling for five years and we deny that we're involved in any misconduct. We have no past sins so there is no equivalent."
Star has patented a tobacco curing process that eliminates a class of chemicals called nitrosamines, considered by some scientists to be the worst cancer-causing compounds in tobacco.
Fried argued that the settlement violated both the Constitution's compact and supremacy clauses. The former prohibits states from entering agreements with each other without congressional approval, and the latter says state laws cannot supersede laws passed by Congress.
Gregory E. Lucyk, senior assistant attorney general, argued that Virginia and other states were encouraged to work together to create uniformity. He said the attorneys general looked for potential health benefits and marketing restrictions before accepting the settlement.
Star claims the deal to reimburse states for smoking-related health care costs enabled the largest U.S. tobacco companies to increase their prices and protect their marketing dominance by stubbing out competition from smaller companies.
Lucyk argued that the large tobacco companies have paid billions of dollars while the companies that didn't agree to the settlement have paid next to nothing.
"Star claims it's suffering because it has to pay," Lucyk said. "But Star has flourished."