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Company Challenges Epic Tobacco Settlement in Sixth Circuit

By Robyn Hagan Cain on October 13, 2011 | Last updated on March 21, 2019

Tobacco companies don't like Richard "Dickie" Scruggs, the Mississippi plaintiff's attorney famous for leading 46 states toward a $246 billion tobacco settlement in 1998. Scruggs cost Big Tobacco a lot of money, and the companies, no doubt, were secretly pleased when Scruggs pleaded guilty to federal bribery charges 10 years later.

Scruggs' downfall, however, was not sufficient vindication for tobacco companies driven out of business by the epic '90s settlement. A challenge to the tobacco settlement is back in the courts.

A three-judge panel of the Sixth Circuit Court of Appeals recently heard oral arguments in a challenge to the Master Settlement Agreement that governs the tobacco deal. On appeal, attorneys are arguing that the companies who were late in signing onto the settlement were penalized.

Last week, John Bush, an attorney for the now-defunct General Tobacco of Mayodan, N.C., told the court that the settlement agreement "amounted to a conspiracy and unfairly treated cigarette companies that came late to the agreement by making them pay more than the original group," reports the Richmond Times-Dispatch.

General Tobacco, which filed the suit in October 2008 alleging constitutional and anti-trust violations, claimed that the original settling manufacturers received preferential treatment under the tobacco settlement agreement. U.S. District Judge Jennifer Coffman in Louisville, Ky. tossed the claim in 2009, finding that General Tobacco could not prove its claims.

The Master Settlement Agreement insulated tobacco companies from state government lawsuits to recover health care costs for smokers, but required annual payments to the states, as well as advertising and marketing restrictions.

During arguments, the Sixth Circuit Court of Appeals panel, which the AP described as "feisty," did not seem sympathetic to General Tobacco's plight.

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