CHARLESTON – The West Virginia Attorney General’s office has filed a lawsuit against a Kentucky tobacco company for not placing money in an escrow account related to 1998’s landmark Master Settlement Agreement.
The State of West Virginia, ex rel Attorney General Patrick Morrisey filed the complaint last month against Tantus Tobacco LLC in Kanawha Circuit Court.
Because Tantus is not a participating manufacturer under the MSA, it is required to place into a qualified escrow fund, by April 15, 2014, an amount equal to $0.0188482 adjusted for inflation per cigarettes sold in West Virginia in 2013.
“Tantus Tobacco sold at least 205,760 united of 24/7 brand cigarettes in West Virginia in 2013, as measured by wholesaler reports provided by the State of West Virginia,” the complaint states, adding that Tantus was removed from the Directory of Cigarette Brands Approved for Stamping and Sale in West Virginia for Nonparticating Manufacturers on July 26, 2013.
“Tantus Tobacco was required … to place a total of $6,168.47 into a qualified escrow account for the State of West Virginia.”
The AG’s office says Tantus was notified of its obligation on May 9, but it claims Tantus has not responded.
At the agreed rate of 15 percent per day, the civil penalty for a knowing violation of the obligation exceeds the maximum 3o0 percent. So the office asks the court to impose a penalty of 300 percent of $6,168.47, which equals $18,505.41.
At the agreed rate of 5 percent per day, the civil penalty for an unknowing violation of the obligation exceeds the maximum 1o0 percent. So the office would seek to impose a penalty of 100 percent of $6,168.47.
In addition to the escrow money and civil penalties, the state also seeks attorney fees, pre- and post-judgment interest, court costs and other relief.
The Master Settlement Agreement was entered in November 1998. The four largest American tobacco companies – Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard – settled Medicaid lawsuits with the Attorneys General of 46 states (including West Virginia) for recovery of their tobacco-related health-care costs, and also exempted the companies from private tort liability regarding tobacco use. The companies agreed to slow or end certain marketing practices and to pay, in perpetuity, various annual payments to the states to compensate them for some of the medical costs of caring for persons with smoking-related illnesses.
The case was filed on behalf of Morrisey’s office by Assistant Attorney General Cassandra L. Means.
Kanawha Circuit Court case number: 14-C-1030