RJR ordered to pay up

A Minnesota District Court has ruled that R.J. Reynolds Tobacco Co. has wrongfully failed to pay the state millions of dollars it owes under the terms of the state’s historic 1998 tobacco settlement.

In 2015, R.J. Reynolds merged with Lorillard, which also joined the settlement with the state in 1998. As part of that merger, R.J. Reynolds transferred the KOOL, Maverick, Salem and Winston brands to ITG Brands, a manufacturer that did not join the 1998 settlement.

R.J. Reynolds then stopped including the sales of those brands in its settlement payment calculations. The state sued in March 2018 to hold R.J. Reynolds and ITG Brands jointly and severally liable for continued payments on the transferred brands.

In entering summary judgment in favor of the state, the court held that R.J. Reynolds cannot shirk its obligations to make settlement payments by transferring brands to another manufacturer and that the plain language of the tobacco settlement requires it to continue to make settlement payments on the sales of brands it assigns to another entity.

The court also denied ITG Brands’ motion for summary judgment that it had no obligation to make settlement payments and directed the state’s case to continue against ITG Brands.