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.]