Firms File Suit Over Contribution Rule

Small tobacco companies that didn’t sign onto a massive legal settlement four years ago have filed a lawsuit challenging a requirement by California, New York and 29 other states that they contribute to a reserve fund for states to tap if they successfully sue the companies.

The suit, filed in federal court in New York, claims that identical laws in the states require the companies to comply with the 1998 settlement with major tobacco companies, or pay about $3 a carton into the fund.

The plaintiffs, including Nationwide Tobacco Inc. and Sun Tobacco Inc., say that after agreeing to settle the 1998 suit for $206 billion, the major tobacco makers feared they’d lose sales to the smaller competitors and pushed the states to pass the laws.

Representatives for the New York and California attorneys general said they hadn’t seen the suit and couldn’t comment on it.