In July 2017, California Attorney General Xavier Becerra filed a lawsuit against a Canadian cigarette manufacturer, Grand River Enterprises Six Nations (“Grand River”), for failing to comply with California laws governing nonparticipating tobacco product manufacturers (“NPMs”). The lawsuit alleges that Grand River, an NPM, sold hundreds of millions of cigarettes in California in 2014, 2015, and 2016, and failed to make escrow payments of over $13 million. In addition to demanding that Grand River pay the outstanding escrow, the California Attorney General’s office is asking that civil penalties be imposed upon Grand River. Finally, the lawsuit requests that the court to prohibit Grand River from selling any brand of cigarettes, directly or indirectly, to consumers in California until the manufacturer has remedied its violations by paying the sum it owes, including civil penalties and the legal fees and costs of the Attorney General’s office, and has submitted the necessary annual certifications of compliance with the Health and Safety Code.

The Attorney General’s lawsuit against Grant River is currently pending in the California Superior Court in Sacramento. Grand River has asked that the court quash service of the summons based on its argument that the California courts do not have jurisdiction over the company, given its location in Canada. A hearing has been set on Grand River’s Motion to Quash for March 1, 2018.

We will continue to monitor this case and others filed by state attorneys general against NPMs.