The Infamous Master Settlement Agreement, cont'd - Pg2
Faced with the prospect of defending multiple actions nationwide, the four largest United States tobacco companies (Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard) sought a congressional remedy, primarily in the form of a national legislative settlement. In June 1997, the National Association of Attorneys General and those largest US tobacco companies jointly petitioned Congress for a global resolution. On June 20, 1997, Mississippi Attorney General Michael Moore and a group of other Attorneys General announced the details of the proposed settlement.
This proposed congressional remedy (1997 National Settlement Proposal (NSP), a/k/a. the "June 20, 1997 Proposal") for the cigarette tobacco "problem" resembled the eventual Master Settlement Agreement (MSA), but with important differences. For example, although the congressional proposal would have earmarked one-third of all funds to combat underage smoking, no such restrictions appear in the MSA, as it was originally written, though some specifications along those lines were finally tacked on; generally, the participating manufacturers agreed not to "take any action, directly or indirectly, to target Youth within any Settling State in the advertising, promotion or marketing of Tobacco Products, or take any action the primary purpose of which is to initiate, maintain or increase the incidence of Youth smoking within any Settling State."
In addition, the congressional proposal would have mandated FDA oversight and imposed federal advertising restrictions -- in the MSA, this advertising consideration was another piece tacked-on; the restrictions specified included bans on outdoor billboards, advertising on transit vehicles, as well as restrictions on sports marketing, event sponsorships and promotional products. The congressional proposal would also have granted the tobacco companies immunity from state prosecutions, eliminated punitive damages in individual tort suits, and prohibited the use of class actions, or other joinder/aggregation devices without the defendant's consent, assuring that only individual actions could be brought. The congressional proposal called for payments to the states of $368.5 billion over 25 years. By contrast, assuming that the major tobacco companies would maintain their market share, the MSA provides baseline payments of about $200 billion over 25 years.
The Attorneys General did not have the authority to grant all this by themselves: the "Global Settlement Agreement" would require an act of Congress. Senator John McCain of Arizona carried the bill, which was much more aggressive than even the Master Settlement Agreement. However, in the spring of 1998, Congress rejected both the proposed settlement and an alternative proposal submitted by McCain.
While the proposed legislation was being discussed in Congress, some individual states began settling their litigation against the tobacco industry. On July 2, 1997, Mississippi became the first. Over the next year, Florida, Texas, and Minnesota followed, with the four states recovering a total of over $35 billion.
In November 1998, the Attorneys General of the remaining 46 states, as well as of the District of Columbia, Puerto Rico, and the Virgin Islands, entered into the Master Settlement Agreement with the four largest manufacturers of cigarettes in the United States, which are referred to in the MSA as the Original Participating Manufacturers (OPMs).
Furthering the blackmail of the tobacco companies, this settlement process yielded two other national agreements:
1) the Smokeless Tobacco Master Settlement Agreement, in which the leading manufacturer in the smokeless tobacco market (United States Tobacco Company, now known as U.S. Smokeless Tobacco Company) settled with the jurisdictions who signed the MSA, plus Minnesota and Mississippi; and
2) the Phase II settlement, in which the major cigarette manufacturers settled with the tobacco-growing states to compensate tobacco growers for losses they were expected to suffer due to the higher cigarette prices resulting from the earlier settlements. This agreement created the National Tobacco Growers' Settlement Trust Fund. Tobacco growers and quota holders in the fourteen states that grow flue-cured and burley tobacco used to manufacture cigarettes are eligible to receive payments from the trust fund. The states are Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.
When the Master Settlement Agreement became effective, the OPMs collectively controlled approximately 97% of the domestic market for cigarettes. In addition to these OPMs, the Master Settlement Agreement permits other tobacco companies to join the settlement; a list of these subsequently settling parties is maintained by the National Association of Attorneys General. Since 1998, approximately 41 additional tobacco companies have joined the Master Settlement Agreement. These companies, referred to as the Subsequent Participating Manufacturers (SPMs), are bound by the Master Settlement Agreement's restrictions and must make payments to the settling states as set forth in the Master Settlement Agreement. Collectively, the OPMs and the SPMs are referred to as the Participating Manufacturers (PMs). Any tobacco company choosing not to participate in the Master Settlement Agreement is referred to as a Nonparticipating Manufacturer (NPM).
As an incentive to join the Master Settlement Agreement, the agreement provides that, if an SPM joined within ninety days following the Master Settlement Agreement's Execution Date, that SPM is exempt from making annual payments to the settling states unless the SPM increases its share of the national cigarette market beyond its 1998 market share, or beyond 125% of that SPM's 1997 market share. SPMs joining the Master Settlement Agreement after this ninety-day exempt period must, instead, make annual payments based upon all of the SPM's national cigarette sales for a given year. In addition to its annual payment obligations, in order to join the Master Settlement Agreement now, a non-exempt SPM must, "within a reasonable time after signing" the Master Settlement Agreement, pay the amount it would have been obligated to pay under the Master Settlement Agreement during the time between the Master Settlement Agreement's effective date and the date on which the SPM joined the agreement.
The addition of the Subsequent Participating Manufacturers meant that nearly all of the cigarette producers in the United States had signed the Master Settlement Agreement. There are a great many details, legal, financial, and otherwise -- and other tobacco companies created later were coerced into also joining the MSA -- but in essence, the MSA had now officially legalized extortion for the purpose of bleeding the tobacco companies for as much as they could possibly get, and had done it in such a way that all the states now had an enormous vested interest in supporting the tobacco industry, and suppressing anything that could actually reduce smoking rates.
Robert Levy states:
For 40 years, tobacco companies had not been held liable for cigarette-related illnesses. Then, beginning in 1994, led by Florida, states across the country sued big tobacco to recover "public outlays for medical expenses due to smoking." By changing the law to guarantee they would win in court, the states extorted a quarter-trillion-dollar settlement, which was passed along in higher cigarette prices. Basically, the tobacco companies had money; the states and their hired-gun attorneys wanted money; so the companies paid and the states collected. Then sick smokers got stuck with the bill.
As if this egregious corruption of law wasn't sufficient...
This proposed congressional remedy (1997 National Settlement Proposal (NSP), a/k/a. the "June 20, 1997 Proposal") for the cigarette tobacco "problem" resembled the eventual Master Settlement Agreement (MSA), but with important differences. For example, although the congressional proposal would have earmarked one-third of all funds to combat underage smoking, no such restrictions appear in the MSA, as it was originally written, though some specifications along those lines were finally tacked on; generally, the participating manufacturers agreed not to "take any action, directly or indirectly, to target Youth within any Settling State in the advertising, promotion or marketing of Tobacco Products, or take any action the primary purpose of which is to initiate, maintain or increase the incidence of Youth smoking within any Settling State."
In addition, the congressional proposal would have mandated FDA oversight and imposed federal advertising restrictions -- in the MSA, this advertising consideration was another piece tacked-on; the restrictions specified included bans on outdoor billboards, advertising on transit vehicles, as well as restrictions on sports marketing, event sponsorships and promotional products. The congressional proposal would also have granted the tobacco companies immunity from state prosecutions, eliminated punitive damages in individual tort suits, and prohibited the use of class actions, or other joinder/aggregation devices without the defendant's consent, assuring that only individual actions could be brought. The congressional proposal called for payments to the states of $368.5 billion over 25 years. By contrast, assuming that the major tobacco companies would maintain their market share, the MSA provides baseline payments of about $200 billion over 25 years.
The Attorneys General did not have the authority to grant all this by themselves: the "Global Settlement Agreement" would require an act of Congress. Senator John McCain of Arizona carried the bill, which was much more aggressive than even the Master Settlement Agreement. However, in the spring of 1998, Congress rejected both the proposed settlement and an alternative proposal submitted by McCain.
While the proposed legislation was being discussed in Congress, some individual states began settling their litigation against the tobacco industry. On July 2, 1997, Mississippi became the first. Over the next year, Florida, Texas, and Minnesota followed, with the four states recovering a total of over $35 billion.
In November 1998, the Attorneys General of the remaining 46 states, as well as of the District of Columbia, Puerto Rico, and the Virgin Islands, entered into the Master Settlement Agreement with the four largest manufacturers of cigarettes in the United States, which are referred to in the MSA as the Original Participating Manufacturers (OPMs).
Furthering the blackmail of the tobacco companies, this settlement process yielded two other national agreements:
1) the Smokeless Tobacco Master Settlement Agreement, in which the leading manufacturer in the smokeless tobacco market (United States Tobacco Company, now known as U.S. Smokeless Tobacco Company) settled with the jurisdictions who signed the MSA, plus Minnesota and Mississippi; and
2) the Phase II settlement, in which the major cigarette manufacturers settled with the tobacco-growing states to compensate tobacco growers for losses they were expected to suffer due to the higher cigarette prices resulting from the earlier settlements. This agreement created the National Tobacco Growers' Settlement Trust Fund. Tobacco growers and quota holders in the fourteen states that grow flue-cured and burley tobacco used to manufacture cigarettes are eligible to receive payments from the trust fund. The states are Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.
When the Master Settlement Agreement became effective, the OPMs collectively controlled approximately 97% of the domestic market for cigarettes. In addition to these OPMs, the Master Settlement Agreement permits other tobacco companies to join the settlement; a list of these subsequently settling parties is maintained by the National Association of Attorneys General. Since 1998, approximately 41 additional tobacco companies have joined the Master Settlement Agreement. These companies, referred to as the Subsequent Participating Manufacturers (SPMs), are bound by the Master Settlement Agreement's restrictions and must make payments to the settling states as set forth in the Master Settlement Agreement. Collectively, the OPMs and the SPMs are referred to as the Participating Manufacturers (PMs). Any tobacco company choosing not to participate in the Master Settlement Agreement is referred to as a Nonparticipating Manufacturer (NPM).
As an incentive to join the Master Settlement Agreement, the agreement provides that, if an SPM joined within ninety days following the Master Settlement Agreement's Execution Date, that SPM is exempt from making annual payments to the settling states unless the SPM increases its share of the national cigarette market beyond its 1998 market share, or beyond 125% of that SPM's 1997 market share. SPMs joining the Master Settlement Agreement after this ninety-day exempt period must, instead, make annual payments based upon all of the SPM's national cigarette sales for a given year. In addition to its annual payment obligations, in order to join the Master Settlement Agreement now, a non-exempt SPM must, "within a reasonable time after signing" the Master Settlement Agreement, pay the amount it would have been obligated to pay under the Master Settlement Agreement during the time between the Master Settlement Agreement's effective date and the date on which the SPM joined the agreement.
The addition of the Subsequent Participating Manufacturers meant that nearly all of the cigarette producers in the United States had signed the Master Settlement Agreement. There are a great many details, legal, financial, and otherwise -- and other tobacco companies created later were coerced into also joining the MSA -- but in essence, the MSA had now officially legalized extortion for the purpose of bleeding the tobacco companies for as much as they could possibly get, and had done it in such a way that all the states now had an enormous vested interest in supporting the tobacco industry, and suppressing anything that could actually reduce smoking rates.
Robert Levy states:
For 40 years, tobacco companies had not been held liable for cigarette-related illnesses. Then, beginning in 1994, led by Florida, states across the country sued big tobacco to recover "public outlays for medical expenses due to smoking." By changing the law to guarantee they would win in court, the states extorted a quarter-trillion-dollar settlement, which was passed along in higher cigarette prices. Basically, the tobacco companies had money; the states and their hired-gun attorneys wanted money; so the companies paid and the states collected. Then sick smokers got stuck with the bill.
As if this egregious corruption of law wasn't sufficient...