WEST PALM BEACH, Fla. (Legal Newsline) – R.J. Reynolds sold four of its cigarette brands but must keep paying for them, a Florida appeals court has ruled.
On July 29, the Fourth District said the sale of Reynolds’ brands to ITG Brands doesn’t absolve it of the responsibility to make annual payments it agreed to in a 1997 settlement with the State.
That agreement, which mirrors agreements made by every other state, settled health care liability for tobacco companies and allowed them to keep selling their products, provided they make yearly payments in perpetuity.
But R.J. Reynolds felt that responsibility now rests with ITG, which bought four Reynolds brands in 2014 for $7 billion.
“We find, simply put, that a contract is a contract, and that Reynolds continues to be liable under the contract it signed with the State of Florida,” Chief Judge Spencer Levine wrote.
The ruling is in line with others from Texas and Minnesota. They have all rejected Reynolds’ “market share” argument.
“In this case, by stopping annual payments, Reynolds breached the (settlement with Florida) and failed the ‘duty to keep a contract’ and thus ‘must pay damages’ by paying what is required to pay pursuant to the contract,” Levine wrote.