Distributors Challenging Industry Settlement

Discount cigarette distributors filed a federal lawsuit challenging last year’s $206-billion settlement between big tobacco companies and attorneys general in 47 states, an attorney said. The lawsuit is the latest shot fired in a long-running battle between tobacco companies and so-called gray market distributors who buy cigarettes manufactured in the U.S. for overseas markets at cheap rates, then re-import them and sell them to U.S. smokers at huge discounts. Defendants named in the lawsuit, filed Aug. 13 in U.S. District Court in Los Angeles, include cigarette makers R.J. Reynolds, Brown & Williamson, Lorillard and Liggett Group, as well as the attorneys general of states that participated in the settlement. The suit seeks to overturn the settlement, arguing that it unfairly allowed cigarette makers to increase prices far beyond what was needed to meet their settlement obligations. Further, it contends that as part of the deal, attorneys general agreed to lobby states to restrict discount sales. “Obviously, we’re going to defend our interests and the sanctity of the settlement,” said Nathan Barankin, a spokesman for California Atty. Gen. Bill Lockyer. “We don’t believe this litigation presents a meaningful threat to the settlement agreement.”