Missouri judge partially vacates arbitration ruling in tobacco settlement case

By Bryan Cohen | May 6, 2014

JEFFERSON CITY, Mo. (Legal Newsline) - Missouri Attorney General Chris Koster announced on Friday that St. Louis Circuit Court Judge Jimmie Edwards partially vacated a 2013 arbitration panel ruling that cost the state approximately $70 million.

The ruling was related to Missouri's annual tobacco settlement payment. Koster sent a copy of the ruling to PricewaterhouseCoopers, the auditor that calculates the states' tobacco payments, along with a letter demanding that the state's payment be revised to comply with the recent ruling.

"As a result of today's decision, Missouri should be paid nearly $50 million that the tobacco companies sought to withhold from our state," Koster said. "This money will provide needed support for state priorities like public education. I thank our dedicated team of attorneys, who have litigated this case for years to ensure that Missouri receives its fair share of the settlement money."

The dispute arose when the tobacco companies participating in the 1998 Master Settlement Agreement alleged that Missouri and other states failed to diligently enforce state tobacco laws in 2003. The companies argued they were entitled to withhold a large portion of their payment for that year under the terms of the agreement.

After 22 states settled their cases, a three-judge arbitration panel ruled in favor of the tobacco companies in their claims against the six states that did not settle: Pennsylvania, New Mexico, Maryland, Kentucky, Indiana and Missouri. The panel ordered that the six losing states were responsible for their own share of the loss and for the shares of the states that settled their cases.

Koster's office filed suit in the fall, alleging that reallocating the liability of the settling states onto the six losing states violated the terms of the agreement. Judge Edwards found the share of the loss that would otherwise be assigned to the settling states should not be shifted to Missouri.

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