U.S. Supreme Court denies AGs' petition on tobacco

By Steve Korris | Oct 11, 2006

WASHINGTON, D.C. - The U.S. Supreme Court has delivered a monumental blow to the biggest tobacco deal in the land.

On Tuesday Justices denied the petition of attorneys general in 31 states to block a Sherman Act antitrust trial in federal court in New York.

The attorneys general have 25 days to file a petition for rehearing.

The high court's decision leaves the door open for District Judge John Keenan to conduct a trial about laws the states passed to carry out the national tobacco settlement of 1998.

Grand River Enterprises Six Nations Limited, Nationwide Tobacco and 3B Holdings brought the suit against the states.

Grand River, a Canadian tribal company, makes cigarettes.

Nationwide Tobacco, a company in the state of Washington, distributes cigarettes made in the Philippines.

3B Holdings, also of Washington, makes loose tobacco.

They alleged that states force them to establish escrow accounts because they did not sign the master settlement agreement.

They sued in New York because states and tobacco companies negotiated for five months in New York.

If Justices send the case back to Keenan, he will not hold the trial he expected to hold.

Keenan dismissed all states but New York, ruling that the location of negotiations was coincidental and fortuitous.

Grand River appealed, and in September 2005 judges of the Second Circuit ruled that Keenan could not dismiss the other 30 states.

Chief Judge John Walker Jr. wrote, "We note that New York would not ordinarily be the proper forum to challenge another state's legislative and executive action."

"It is a rare event for the representatives of various sovereign states to assemble purposefully in New York to attempt to jointly settle related lawsuits and to agree to then pass individual state statutes," he wrote.

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