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Commonwealth Brands Looks to Resolve Cigarette Dispute

RICHMOND, Va. -- A cigarette company that sued Virginia this summer for not being tough enough on the so-called "renegades" of the tobacco industry has entered into negotiations in an attempt to resolve the dispute, reported the Richmond Times Dispatch.

In June, Commonwealth Brands Inc. of Bowling Green, Ky., filed court motions against the attorneys general of Virginia, New York, Connecticut, New Mexico and Arkansas. The dispute centers on how much money Commonwealth Brands owes the states under the landmark legal agreement in which the nation's four largest cigarette companies agreed to pay $206 billion to 46 states over 25 years to cover smoking-related healthcare costs.

After the big four cigarette companies signed the settlement, Commonwealth Brands joined the settlement and agreed to make annual payments to the states. However, the company claims Virginia and the other states didn't hold up their end of the bargain, because they haven't enforced laws that were designed to control the so-called "renegade" cigarette makers that didn't join the agreement.

By not paying into the settlement, those nonparticipating manufacturers have been able to undercut the prices of the participating companies and gain market share, Commonwealth argued. Commonwealth, an employee-owned company that makes U.S.A. Gold and several other cigarette brands, claimed its payments to Virginia and the others states should have been reduced as a result.

The company wants the courts to force the states into arbitration to settle the dispute. A spokesman for Commonwealth said in June that Virginia could be forced to forfeit its entire settlement payment for 2003, about $128 million.

This month, Commonwealth Brands said it has agreed to enter negotiations with the National Association of Attorneys General in an attempt to resolve the lawsuits. A spokesman for the company declined to comment on the discussions.

The company said the co-chairmen of the NAAG tobacco committee, Attorneys General Lawrence Wasden of Idaho and Tom Miller of Iowa, asked the company not to comment to the media during the negotiations.

A spokesman for Virginia Attorney General Jerry W. Kilgore said the state is monitoring the talks. Meanwhile, the attorney general filed a response in Richmond Circuit Court saying Commonwealth Brand's claims are "wholly meritless."
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