N.Y. AG announces order against major tobacco companies

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced Thursday that a panel of arbitrators threw out an $800 million claim brought by major tobacco companies against New York state.

The arbitrators ordered the tobacco companies, known collectively as Big Tobacco, to pay New York state more than $92 million in money the companies allegedly withheld from their 2003 annual payment due under the 1998 tobacco Master Settlement Agreement. The arbitration panel rejected Big Tobacco's demand for a significant reduction in its annual payment to New York.

The claim alleged that New York state was not in full compliance with agreement obligations related to the taxation of cigarettes to or on Indian reservations. Consequently, Big Tobacco alleged the state was not entitled to its complete payment. The arbitrators denied the claim, which could protect the state from billions of dollars in future claims.

"This ruling is a huge victory for all New Yorkers, and I applaud the panel for denying Big Tobacco's efforts to avoid responsibility for illnesses caused by cigarettes-and paid for by taxpayers," Schneiderman said. "Big Tobacco companies contribute to the deaths of thousands of people every year, in large part by luring more and more young people onto cigarettes. Finally, these companies will be required to reimburse the state for money spent treating New Yorkers made ill by their deadly product."

In the mid-1990s, New York and many other states sued the major U.S. tobacco manufacturers alleging a long-standing fraud and conspiracy to hide the health risks and addictive nature of their products. The 1998 MSA resolved the separate claims of 52 states and territories and resulted in significant annual payments to the states in perpetuity.

"This office will make every effort to force the tobacco companies to give New York the money they are unlawfully withholding from the state, including going to court if necessary," Schneiderman said.