Press Release

Court rules R.J. Reynolds wrongfully failed to pay State millions in tobacco-settlement fees

Court to determine amount owed State in coming months

September 26, 2019 (SAINT PAUL) — On Tuesday, September 24, Ramsey County District Court ruled that R.J. Reynolds Tobacco Company has wrongfully failed to pay the State millions of dollars it owes under the terms the State’s historic 1998 tobacco settlement. In the coming months, the court will enter judgment for the amount R.J. Reynolds owes the State for its wrongful underpayment. The Minnesota Attorney General’s Office brought this case to enforce the terms of the settlement.

“The historic tobacco settlement two decades ago set a high standard for holding corporations accountable for harm they’ve done to Minnesota. I’m proud to be able to enforce it as Attorney General. My office will be aggressive in making sure the people of Minnesota get every dollar they’re owed from the tobacco companies,” Attorney General Ellison said.

In 2015, Reynolds merged with Lorillard, another tobacco company that joined the settlement with the State in 1998. As part of that merger, Reynolds transferred the KOOL, Maverick, Salem, and Winston brands to ITG Brands, a manufacturer that did not join the 1998 settlement. Reynolds then stopped including the sales of those brands in its settlement-payment calculations. The State sued in March 2018 to hold Reynolds and ITG jointly and severally liable for continued payments on the transferred brands. 

In entering summary judgment in favor of the State, the Court held that Reynolds cannot shirk its obligations to make settlement payments by transferring brands to another manufacturer, and that the plain language of the tobacco settlement requires it to continue to make settlement payments on the sales of brands it assigns to another entity. The Court also denied ITG Brands’ motion for summary judgment that it had no obligation to make settlement payments, and directed the State’s case to continue against ITG Brands.