DOJ: News Release

State to Receive More Than $354,000 from Tobacco Case Settlement

HELENA — Montana’s general fund will receive a payment of about $354,000 under the terms of a settlement reached by tobacco manufacturer Brown & Williamson in a case that alleged the company under-reported its tobacco production figures. The cash payment is part of a larger settlement worth more than $150 million nationwide.

Brown & Williamson, the nation’s third-largest tobacco manufacturer, was one of the original “participating manufacturers” in the Master Settlement Agreement (MSA) reached between cigarette makers and participating states in 1998. Under the MSA, the number of cigarettes produced in a year by a participating manufacturer determines that company’s payments to MSA states.

At the same time, a number of tobacco companies are “non-participating manufacturers” or NPMs. Such companies – Star Tobacco, Inc. is one – did not take part in the original MSA.

The office of Vermont Attorney General William H. Sorrell headed a team that sued Brown & Williamson and Star, alleging that Brown & Williamson manufactured cigarettes for distribution by Star then excluded those cigarettes from its totals.

“By shifting these products to Star for distribution, Brown & Williamson reduced its own production totals, inflated Star’s and shorted the states by millions of dollars,” said Chris Tweeten, chief civil counsel for the Montana Department of Justice. “This agreement requires them to pay for the cigarettes they produced in the past and sets clear ground rules for all cigarette makers in the future.”

The settlement also includes provisions for Brown & Williamson and all other major tobacco companies to take responsibility under the MSA for cigarettes they manufacture for other companies and eliminates claims for offsets against payments to the states for the years 1998 through 2002. Tweeten said the state should receive the payment by June 30.

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