Bloomberg News

Delaware Says Tobacco Firms Drop Case Related to 1998 Pact

November 17, 2011

(Updates with company comment starting in fifth paragraph.)

Nov. 16 (Bloomberg) -- Tobacco companies that reached a health-care settlement with Delaware in 1998 dropped a lawsuit over the state’s enforcement of the agreement, state Attorney General Beau Biden said.

The companies had claimed Delaware didn’t meet its obligation to regulate smaller tobacco firms that aren’t part of the settlement, according to Biden.

“I’m pleased that we have succeeded in protecting Delaware’s payments, which are used to improve public health and fund anti-tobacco education,” Biden said in a statement today. Biden didn’t identify the companies that brought the dispute.

Under the 1998 agreement, major tobacco companies make annual payments to the states. If the tobacco companies had been successful in their claims, Biden said, the state might have lost as much as $24 million.

Steve Callahan, a spokesman for cigarette maker Philip Morris USA, said his company and 20 other tobacco makers agreed to end the dispute over Delaware’s enforcement of the settlement’s provisions.

“It was resolved as part of an arbitration process,” Callahan said in a telephone interview. Philip Morris, the world’s largest publicly traded tobacco company, is a unit of Richmond, Virginia-based Altria Group Inc.

The Delaware attorney general said the tobacco industry’s challenges to enforcement of the accord are continuing in 35 states. Tobacco companies agreed to pay the $246 billion over 25 years to settle lawsuits by state attorneys general seeking to recoup the costs of treating sick smokers.

The case is State of Delaware v. Philip Morris, CA No. 2088-VCL, Delaware Chancery Court (Wilmington).

--With assistance from Jef Feeley in Wilmington, Delaware. Editors: Fred Strasser, Peter Blumberg

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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