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Tag: settlement

  • Philip Morris Gets Wash. Tobacco Deal Fight Sent o Arbitrator

    Philip Morris Gets Wash. Tobacco Deal Fight Sent o Arbitrator

    A Washington state judge ordered R.J. Reynolds Tobacco Co. to arbitrate rival Philip Morris USA Inc.’s claims that it breached a 2017 deal delineating billions of dollars in annual payments. Ruling from the bench on September 3, King County Superior Court Judge Michael Scott granted the motion to force arbitration, contending Philip Morris’ breach-of-contract claim against R.J. Reynolds and the other tobacco producers “clearly arises” out of the 2017 agreement and therefore must be arbitrated.

    The conflict centers on longstanding disagreements over the annual Master Settlement Agreement (MSA) payments to the state. RJR and fellow plaintiffs claim PM USA aims to derail a separate 2025 settlement signed between RJR and Washington by attempting to enforce an arbitration clause dating back to the 2017 agreement. They argue PM USA is improperly interfering in a deal it is not directly part of.

    In June, PM USA submitted its motion to compel arbitration, asserting that RJR and the other defendants are bound by the 2017 arbitration clause and that the court must defer to this private resolution mechanism.

  • U.S. Judge Grants Recognition to $23B Canadian Tobacco Settlement

    U.S. Judge Grants Recognition to $23B Canadian Tobacco Settlement

    A New York bankruptcy judge yesterday (August 26) approved U.S. recognition of Imperial Tobacco Canada Ltd.’s restructuring plan, a key step in a landmark C$32.5 billion (US$23.6 billion) settlement resolving decades of Canadian tobacco litigation. Judge John P. Mastando III granted Chapter 15 approval without objection, clearing the way for the settlement, one of the largest restructurings in Canadian history, to take effect across both jurisdictions.

    The deal, approved by an Ontario court in March, involves Imperial, JTI-Macdonald Corp., and Rothmans Benson & Hedges Inc. It will be funded over 20 years, beginning with a C$12 billion (US$8.7 billion) upfront payment, followed by profit-sharing contributions.

    The agreement resolves more than a trillion Canadian dollars in claims from class actions and provincial governments over smoking-related health costs.

  • Connecticut Votes to Nearly Triple Budget in Tobacco Fight

    Connecticut Votes to Nearly Triple Budget in Tobacco Fight

    Connecticut’s Public Health Committee approved legislation to put $32 million into the Tobacco and Health Trust Fund for smoking cessation, a $20 million increase over the proposed budget from Gov. Ned Lamont. In 2023, the state invested $12 million into the program but it was suspended in 2024.

    The money to fund this program comes from the Tobacco Master Settlement agreement. Chris Collibee, budget spokesman for the Lamont administration, said the state will receive $109.6 million from the settlement in 2025, and $108.1 million in 2026. He also said each year $200,000 of the settlement money goes to the Attorney General’s office and the Department of Revenue Services to cover the costs of tobacco enforcement, with the rest going to the General Fund.

    The Connecticut Department of Public Health found that in 2023, 12.7% of high school students used a form of tobacco, down from 18.8% in 2022.

  • Judge Rules ITG Owes Reynolds Full $251 Million

    Judge Rules ITG Owes Reynolds Full $251 Million

    Yesterday, a Delaware judge ordered ITG Brands to reimburse Reynolds American the full $251.5 million it paid to the state of Florida as part of a settlement agreement that pre-dated ITG’s acquisition of four cigarette brands a decade ago. ITG was attempting to cut the bill to $130 million by claiming Reynolds saved $112 million because ITG did not join the Florida settlement.

    “The payments Reynolds made to Florida on behalf of ITG-owned brands aren’t excluded under the companies’ purchase agreement, and Reynolds is owed reimbursement of that amount to restore it to the position it held before ITG failed to assume that liability,” Vice Chancellor Lori W. Will of the Delaware Chancery Court wrote.

    In 1997, Reynolds settled with Florida to resolve claims cigarette makers misrepresented the risks associated with smoking. In 2015, RJR sold its Kool, Maverick, Salem, and Winston brands to ITG for $7.1 billion. Florida’s settlement obligations assumingly shifted to ITG, but ITG didn’t sign on, leaving Reynolds to pay the full sum in 2023.

    “ITG was not found liable for failing to join the Florida settlement agreement,” Will said. “I did not hold that it breached any such obligation in the asset purchase agreement. ITG was, instead, found liable for failing to assume the liability imposed on Reynolds by the Florida court.

    “There is a fundamental problem with ITG’s argument. It centers the wrong harm. ITG presumes that the relevant breach is its failure to join the Florida settlement agreement. But I did not find that ITG breached any such obligation. I held only that it failed to assume the Florida judgment liability under [Asset Purchase Agreement] Section 2.01(c)(iv).”

  • Illinois: Smokers Get Health Coverage Settlement

    Illinois: Smokers Get Health Coverage Settlement

    Car parts manufacturer UGN Inc. signed a $299,000 class settlement in a lawsuit saying it wrongly charged tobacco-using workers an annual $1,152 penalty for health coverage without providing a valid way to avoid the fee.

    It appears employees could have avoided the $96 monthly surcharge by completing a smoking cessation program, but the complaint alleged that the company’s health plan information documents did not mention this alternative. In fact, the filing claimed “the various benefits guides provided to participants are ‘silent’ on the topic of smoking cessation programs or the possible reimbursement of the tobacco surcharge.

    Filed in October 2024 in the U.S. District Court for the Northern District of Illinois, the lawsuit argued the extra fee violated the federal Employee Retirement Income Security Act (ERISA), whose anti-discrimination provisions preclude any insurer or medical plan from assessing an additional charge based on a “health-status related factor,” which includes tobacco use unless the surcharge is part of a bona fide “wellness program.”

    The proposed settlement would benefit 431 people who paid the tobacco surcharge in connection with UGN’s health plan between August 2018 and December 2024 and would amount to an estimated 36% of the workers’ damages.

  • Federal Judge OKs Altria, Juul Class Action

    Federal Judge OKs Altria, Juul Class Action

    Image: H_Ko

    A federal judge approved the final part of a class action settlement with the e-cigarette company Juul Labs and its parent company Altria, bringing the settlement total to just over $300 million.

    In 2018, the plaintiffs charged Juul Labs with misleading the public about the addictiveness of Juul and the risk of the e-cigarettes and its nicotine cartridges.

    The plaintiffs also said Juul had targeted teenagers with candy-flavored Juul pods and “multimillion-dollar ad campaigns and social media blitzes using alluring imagery.”

    The case survived a number of hurdles: The judge denied multiple motions to dismiss the suit and agreed to certify four different classes of plaintiffs (a nationwide class, a nationwide youth class, a California class and a California youth class).

    In January, the judge gave preliminary approval to a $255 million settlement between Juul Labs and the plaintiffs, according to Courthouse news. Friday’s ruling grants approval to Altria’s payment of $45,531,250. The sides have yet to reach an agreement on attorneys fees.

    “Court finds that this monetary recovery is fair, reasonable, and adequate given the risks of proceeding to trial and the maximum recovery potentially available to Settlement Class Members if the Class Representatives had prevailed at trial,” wrote U.S. District Judge William Orrick in his order.

    Last year, Juul agreed to pay six states $462 million to settle claims that it had marketed its vaping products to teenagers. The year before that, it agreed to pay $438.5 million to 33 different states and Puerto Rico.

    Altria Group exchanged its entire investment in Juul Labs in 2023 for a non-exclusive, irrevocable global license to certain of Juul’s heated tobacco intellectual property.

  • Updates to Tobacco Settlement with DOJ

    Updates to Tobacco Settlement with DOJ

    Image: Tobacco Reporter archive

    Altria, Philip Morris USA, ITG Brands and R.J. Reynolds Tobacco Company sent notices to their retail partners regarding an update on a Department of Justice (DOJ) requirement to supply court-ordered signs to stores that have contracts with the companies, reports NACS.

    A settlement agreement between the DOJ and Altria, Philip Morris USA and R.J. Reynolds Tobacco Co. and four cigarette brands owned by ITG Brands was formally approved by a D.C. court in December, resolving litigation over communications of tobacco-related messaging at retail locations. 

    The court order requires retail outlets that have contracts with any of these companies to post signs carrying one of 17 different preapproved health messages, distributed at random, for a total of 24 months. Each store will be required to rotate to a new message halfway through the time period. The manufacturers will be required to hire auditors to check that the signs are posted correctly.

    The notices sent by the companies include amendments to each of the company’s retail merchandising agreements, required by the consent order; additional details around placement of corrective-statement signs at retail; and a summary of implementation activities during the initial posting period.

    The court order takes effect July 1, 2023, and tobacco firms have three months to post the corrective statements in both English and Spanish in stores.

  • Juul Labs to Pay $462 Million to Six US States

    Juul Labs to Pay $462 Million to Six US States

    Image: lyudmilka_n | Adobe Stock

    Juul Labs has agreed to pay $462 million to settle claims by six U.S. states, including New York and California, that it unlawfully marketed its products to minors.

    With the deal, Juul has now settled with 45 states for more than $1 billion. The company did not admit wrongdoing in the settlement, which also included Colorado, Illinois, Massachusetts and New Mexico as well as the District of Columbia.

    Juul announced on Dec. 6 it has secured an investment to cover the cost of the settlement. The company has been in talks with two early investors to fund a bailout that would cover legal liabilities.

    The states had accused Juul of falsely marketing its e-cigarettes as less addictive than cigarettes and targeted minors with glamorous advertising campaigns, according to Reuters.

    “Juul’s lies led to a nationwide public health crisis and put addictive products in the hands of minors who thought they were doing something harmless,” New York Attorney General Letitia James said at a news conference.

    The company said that use of its products by people under age 18 had fallen by 95 percent since the fall of 2019, when it changed its marketing practices as part of a “company-wide reset.”

    In September, Juul Labs agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products.

    Juul’s e-cigarettes were briefly banned in the U.S. in late June after the Food and Drug Administration concluded that the company had failed to show that the sale of its products would be appropriate for public health. But following an appeal, the health regulator put the ban on hold and agreed to an additional review of Juul’s marketing application.

    In October, Juul published the details of its MDO appeal. In late September, Juul shareholder Altria Group exercised the option to be released from its noncompete deal with the e-cigarette maker.

    Last month, Altria Group exchanged its entire investment in Juul Labs for a nonexclusive, irrevocable global license to certain of Juul’s heated-tobacco intellectual property.