Tobacco Agreement Illegal, Federal Class Action Alleges

12/16/1998

TULSA (AP) -- A federal lawsuit alleges that the multibillion-dollar settlement reached between tobacco companies and states is illegal, in part because it penalizes tobacco users rather than producers.

In a class action filed Tuesday on behalf of smokers, two Oklahoma attorneys argue the settlement violates antitrust laws because it guarantees tobacco producers will not be damaged economically.

The attorneys claim tobacco companies, acting together, have raised their prices to pass on the cost of the money they are paying to states to settle lawsuits over health care costs.

They also argue consumers were denied due process because they are paying the settlement costs without having had a chance to be involved in the proceedings and that attorneys general did not have the authority to sign the agreement because they don't have the legal right to regulate interstate trade.

Eight attorneys general, including Oklahoma Attorney General Drew Edmondson, helped reach the settlement that was eventually signed by 46 states. Four other states already had reached settlements with the tobacco companies before the $206 billion deal was announced.

Oklahoma's share of that was $2 billion.

Many of the original state lawsuits were to reclaim Medicaid spending on sick smokers.

"Courts don't have the authority to assess and collect damages against someone who has not been sued," said Jon D. Sellers, an Oklahoma City attorney who filed the lawsuit with his uncle Bill Sellers in federal court in Tulsa. "These consumers were not sued."

The lawsuit was filed on behalf of Leo Hise and Jack Isch of Oklahoma City, as representatives of a class that the lawsuit numbered at 40 million smokers in the United States.

The lawsuit names six tobacco companies, including Philip Morris Inc., R.J. Reynolds and Brown Williamson.

The lawsuit wants the settlement declared void and damages of as much as $400 million awarded and as much as $1.5 billion returned to people who purchase cigarettes.

Sellers alleges that prices for cigarettes went up the day after the settlement was signed and that the major tobacco companies conspired to fix prices in violation of the Sherman Anti-Trust Act.

The lawsuit describes the settlement agreement as a sham to assess damages and taxes against smokers.

The lawsuit seeks a permanent injunction with damages and other relief. It also seeks an injunction to prevent the tobacco companies from collecting any more money from the plaintiffs and $75,000 for costs and attorneys fees from each of the companies. A third count of the lawsuit seeks a judgment of more than $75,000 against each of the defendants.





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