An Arkansas Court has denied the Arkansas Attorney General’s motion to remove General Tobacco’s cigarette brands from the directory of approved brands to sell in that state and ordered the Arkansas Attorney General to arbitrate the dispute ordered in 2006, holding that General Tobacco’s cigarette brands may continue to be sold lawfully in Arkansas.
Since the Arkansas Attorney General served as the identical voice for the other 42 attorneys general, they may now be legally bound to the Arkansas order.
General Tobacco believes that the order, issued by the Circuit Court of Pulaski County on Jan. 26, 2010, should prevent not only Arkansas, but any other state that is part of the Master Settlement Agreement (MSA) from delisting General Tobacco’s brands. Arkansas is the only state that brought a court action to determine whether the delisting of General Tobacco’s cigarette brands is proper. None of the states that have announced the delisting of the brands sought any court’s permission to do so. Now that a Court has ruled that delisting of the brands may not proceed, General Tobacco has asked all of the states in the MSA to comply with that court’s order.
While General Tobacco is hopeful that delisting issues with various States will be resolved promptly and in compliance with the Arkansas court’s order, the company has requested that its customers continue to respect the delisting dates that were previously announced by certain states until those states confirm whether or not they will follow the court’s order that General Tobacco’s brands not be delisted.
J. Ronald Denman executive vice president of General Tobacco, said he plans on exploring remedies against other states that unfairly delisted General Tobacco leading to millions of dollars in losses, as well as improperly demanding General Tobacco’s customers pay them directly rather than General Tobacco.
On Jan. 14, 2010, General Tobacco raised its challenges to the MSA in papers filed in opposition to an action brought by the State of Arkansas in Pulaski County Circuit Court in Little Rock, Ark. General Tobacco also filed a notice to appeal to the U.S. Court of Appeals for the Sixth Circuit on Jan. 13, 2010 a decision of the U.S. District Court for the Western District of Kentucky in a case challenging the MSA brought by General Tobacco against all of the 46 States, the District of Columbia, five U.S. island territories and major cigarette manufacturers that are part of the MSA.
The MSA was created in 1998 by the 46 States, the District of Columbia and five U.S. island territories, along with the mega-tobacco companies, which then controlled more than 97% of the market.
“The MSA was structured so that certain companies in the market in 1998 would receive future preferential payment terms while ‘new members’ such as General Tobacco would have to pay substantially more than the original preferred members. In both the Arkansas and Kentucky cases, General Tobacco has challenged the validity of the MSA’s unequal payment terms,” General Tobacco noted in a press release.
