TALLAHASSEE — A three-way dispute between two tobacco companies
and the state of Florida attorney general's office has lead to a haze
In February, according to a report
by the Winston-Salem Journal, ITG Brands filed a lawsuit against
tobacco giant RJ Reynolds in the Court of Chancery in Delaware to
resolve a dispute over which company is responsible for making
payments owed under the Master Settlement Agreement to the state of
Florida. The dispute stems from an acquisition made by ITG's parent
company, Imperial Brands PLC, of cigarette brands Kool, Maverick,
Salem and Winston and the blu eCigs brand from RJ Reynolds.
In the dispute, ITG is arguing that because it did not reach an
agreement with the state of Florida before the acquisition of the
four brands, it is not liable for any payments owed to the state for
the cigarettes sold under those brands.
The MSA is an accord
reached in November 1998 between the attorneys general of 46 states
concerning the advertising, marketing and promotion of tobacco
“According to the agreement under the MSA, the signing tobacco
companies, including RJ Reynolds, agreed to make certain payments to
46 states and restrict certain kind of advertising in exchange for
the states agreeing to drop parts of their lawsuits against the
industry,” Mark Meaney, lead senior staff attorney for technical
assistance for the Tobacco Control Legal Consortium at the Public
Health Law Center, told the Florida Record.
Florida Attorney General Pam Bondi filed an enforcement action
against Reynolds and ITG on Jan. 18, asking for a court order
requiring payments to the state for the past and future sales of
cigarettes for the four brands. She is requesting $48 million in MSA
payments from one or both manufacturers for the period of June 2015
to the time her motion was filed, and an additional $30 million in
payments annually, according to the Winston-Salem
“The cost of these payments are based on the market share and
number of cigarettes sold in the state each year,” Meaney said.
“The payments are also then recalculated each year.”
Both companies have declined to make the agreed-upon MSA payments
to the state, as each contends that the other is the party that is
responsible for them.
“The way the MSA is written if a company acquires another than
typically the new company should also acquire their MSA obligations,”
However, according to the Winston-Salem Journal report,
Bondi disagreed, saying that RJ Reynolds is still responsible for the
cost of the MSA payments. Meanwhile, RJ Reynolds stated in the ITG
complaint that it wants to be indemnified if the company makes a
payment on ITG's behalf.
Meanwhile, ITG has responded by stating that if the state of
Florida requires the company to make the MSA payments, then RJ
Reynolds should be required to indemnify the company for the cost of