Significant Cases

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On July 21, 2014, Judge Richard Leon of the United States District Court for the District of Columbia ruled that the Food and Drug Administration (“FDA”) was barred from considering a 2011 report that recommended the removal of menthol cigarettes from the marketplace (the “Menthol Report”), because the advisory committee that prepared the report was tainted by conflicts of interest. 

On June 18, 2014, the United States District Court for the Southern District of New York upheld a New York City ordinance that effectively prohibits all promotional marketing and discounts for cigarettes and tobacco products.  The District Court found that there was no First Amendment violation and that the newly enacted city code, which bans any sale of cigarettes or tobacco products below the “listed” or “advertised” price, was not preempted by federal or state law.

In a case that has been ongoing since May 2008, on June 10, 2014, the Oklahoma Supreme Court upheld the trial court’s award of $47.7 million in favor of the State of Oklahoma for alleged violations of the Oklahoma Master Settlement Agreement Complementary Act.  The sole question on appeal was whether the State was entitled to summary judgment as a matter of law.  That means, the Oklahoma high court decided whether the trial court erred in finding for the State by not sending the case to a jury for a trial.

In an earlier blog post, we discussed a case pending before the United States Court of Appeals for the Fourth Circuit in which the United States District Court for the Eastern District of Virginia evaluated the methodology used by the United States Department of Agriculture (the “USDA”) to determine the amount of assessments levied against tobacco product manufacturers and importers under the Fair and Equitable Tobacco Reform Act (“FETRA”). Philip Morris sued the USDA, claiming that the USDA had improperly calculated the FETRA assessments.

On April 4, 2013, the Supreme Court of Mississippi declared unconstitutional the imposition of a nonsettling-manufacturer (“NSM”) fee on cigarettes that are distributed through Mississippi for sale to a retailer outside of the state.  In 2009, the Mississippi Legislature enacted a law imposing a fee for nonparticipating manufacturers on the sale, purchase, and distribution in Mississippi of cigarettes “including cigarettes sold, purchased or otherwise distributed in [Mississippi] for sale outside of this state.”  Miss. Code Ann. § 27-70-5 (Rev. 2010) (emphasis added).

In a blog post on January 26, 2013, we discussed a decision from the United States District Court for the District of Rhode Island where several tobacco companies challenged the constitutionality of two local ordinances.  The lawsuit sought to overturn two Providence, Rhode Island ordinances, which ban certain promotional discounts and severely restrict the sale of flavored tobacco products.

As a result of the Master Settlement Agreement (“MSA”), each year every participating manufacturer (“PM”) is required to make an annual payment that is based on the number of cigarettes it sells nationwide.  This payment obligation does not apply to non-signatories to the MSA, known as non-participating manufacturers (“NPMs”).  In an effort to equalize the impact on the PMs, the MSA contains a provision requiring each Settling State to enact a statute to collect escrow from the NPMs, thereby imposing similar financial obligations on NPMs.