The Scene of the Cigarette Conspiracy


Thirty state attorneys general are asking the U.S. Supreme Court to stop a federal lawsuit by three small tobacco companies that have challenged the cigarette cartel created by the 1998 agreement settling state litigation against the leading cigarette makers. The plaintiffs argue that state laws implementing the so-called Master Settlement Agreement, which require nonparticipating companies to either join the agreement or make escrow payments designed to erase their competitive advantage as nonsignatories, impinge on the federal government's power to regulate interstate commerce and violate federal antitrust law.

The cigarette companies filed their lawsuit in New York because that's where the MSA was negotiated. The U.S. Court of Appeals for the 2nd Circuit approved the venue and agreed that it was appropriate to name all the attorneys general personally, even though most of the challenged legislative action occurred outside of New York. The attorneys general want the Supreme Court, which apparently has never addressed an issue like this, to overrule the 2nd Circuit. If it does, that would be the end of this lawsuit. The Competitive Enterprise Institute's lawsuit challenging the MSA, which was filed in Louisiana and names that state's attorney general, presumably would be unaffected.

[Thanks to CEI's Christine Hall-Reis for the tip.]

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  1. Scene of the Cigarette Conspiracy?

    I though the Institute for Tobacco Research’s offices were in Washington.

  2. Hate to quibble, but this is not about naming the AG’s personally. It is about personal jurisdiction over them, which means the power of the court to hear the case against them. Naming them personally would mean they are liable in their individual capacities. Of course, they are not liable personally, but only in their official capacities as AGs.

  3. Sorry for piling on, but . . .

    If SCOTUS reverses the 2d Circuit, it would not mean “the end of this lawsuit” (unless the plaintiffs decide to throw in the towel). It would just mean that certain defendants would have to be dismissed if the suit is to be maintained in the federal district court for the Southern District of New York.

    A money quote from the 2d Circuit’s opinion: “We note that New York would not ordinarily be the proper forum to challenge another state’s legislative and executive actions. 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. But because that is what took place, New York is the proper forum for this lawsuit.”

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