On March 7th, the United States Supreme Court denied a challenge by a tobacco manufacturer and smoker to the 1998 tobacco Master Settlement Agreement. The challenge asserted that the MSA violates the Compact Clause of the U.S. Constitution, which ordinarily prohibits states from entering into agreements without Congress’ consent. The plaintiffs in that case also argued that the MSA violates federal antitrust law.
The Supreme Court’s refusal to hear the case represents the dismissal of one of the last significant challenges to the MSA and related escrow statutes passed by the states. The only remaining significant challenge is a case filed by Freedom Holdings and International Tobacco Partners. In that case, the plaintiffs allege that the MSA and escrow statutes create an illegal output cartel by insulating MSA-signatories from competition by non-signatories. The plaintiffs’ claims in that case were dismissed by the lower courts, and earlier this year, the plaintiffs asked the Supreme Court to hear the case.
Stay tuned for an update when the Supreme Court decides whether it will consider this case.