Skip to main content

Lawsuit Challenges Constitutionality of MSA

A nonprofit public policy organization filed a federal lawsuit challenging the constitutionality of the landmark 1998 agreement between 46 states and the country's largest tobacco companies, according to published reports.

Under the agreement, the tobacco companies agreed to restrictions on their advertising and marketing practices and also agreed to pay an estimated $200 billion over 25 years to the states. The lawsuit, filed last week in the U.S. District Court for the Western District of Louisiana, contends the agreement by 46 state attorneys general amounts to an unconstitutional regulation of interstate commerce by states.

"We got a huge nationwide increase in the price of cigarettes," said Sam Kazman, general counsel for the Competitive Enterprise Institute in Washington, D.C., according to the Austin Business Journal.. "Yet not a single elected politician voted for that tax."

Many state attorneys general are elected, and state legislatures still had to pass laws to carry out the provisions of the settlement. Although the agreement was negotiated originally with a handful of the country's biggest cigarette makers, most states have passed laws requiring other smaller cigarette companies, including some that didn't exist when the settlement was signed, to pay into an escrow fund similar to the fund established by the agreement, or else be added to the agreement and make payments.

Without those payments, those smaller cigarette makers might be able to underprice the major tobacco companies, which have increased cigarette prices to make settlement payments.

However, the Competitive Enterprise Institute's suit is based primarily on the legal argument that only the federal government, not states, has the ability to regulate interstate commerce.

David Howard, a spokesman for tobacco manufacturer Reynolds American Inc., didn't comment on the lawsuit itself, but he says the company supports state laws requiring cigarette makers that don't sign the agreement to make escrow payments.

The plaintiffs in the suit are A.B. Coker Co. Inc., a Kansas cigarette distributor; S&M Brands Inc., a Virginia cigarette maker; CLP Inc., a North Carolina tobacco company; and Tobacco Discount House #1 Inc., a Louisiana cigarette retailer. Mark Heacock, a smoker in Shreveport, La., also is a plaintiff.

The suit was filed against Louisiana Attorney General Charles Foti Jr., whose job includes enforcing the agreement in Louisiana. A spokeswoman for Foti's office says the attorney general hadn't yet been served with suit and declined to comment.
This ad will auto-close in 10 seconds