Attorney General Bondi Sues Tobacco Companies for Violating Settlement Obligations

Posted at 4:01 PM, Jan 18, 2017
and last updated 2017-01-18 16:01:25-05

Attorney General Pam Bondi today filed an enforcement motion against ITG Brands, LLC f/k/a Lignum-2 LLC (ITG) and R.J. Reynolds Tobacco Company (RJR) to enforce the explicit terms of the tobacco settlement agreement dated Aug. 25, 1997. That agreement resolved Florida’s landmark 1995 lawsuit against RJR and the other major tobacco companies seeking relief from decades of past unlawful actions relating to the marketing and sale of cigarettes.

Pursuant to that agreement, RJR and the other major tobacco companies agreed to make annual payments to Florida of several hundred million dollars, in perpetuity. The annual payments compensate Florida for the past and future public health care expenses from its citizens’ consumption of the settling defendants’ cigarettes.

RJR recently sold three of its most iconic cigarette brands, Winston, Kool and Salem, along with a legacy Lorillard Tobacco Company brand, Maverick, to ITG for $7 billion. These four brands accounted for approximately 17 billion cigarettes sold in 2016, eight percent of the domestic tobacco market.

RJR has refused to include the sales of these cigarette brands when making annual payments to Florida, despite not having been released from its payment obligations. ITG has similarly refused to make any payment to Florida even after agreeing with RJR to assume the payment obligations for these iconic brands. The exact same cigarette brands continue to be sold to Floridians, thus imposing the very public health care expenditures that the settlement payments are intended to compensate.

“The sale of major, pre-existing tobacco brands to another company for billions of dollars does not cause the payment obligations to vanish like a puff of smoke,” said Attorney General Bondi. “I look forward to the state obtaining prompt relief.”

According to the enforcement motion, both RJR and ITG are liable for millions of dollars of missed payments to Florida on these brands. The motion seeks the entry of an order requiring payment to Florida for the past and future sales of these cigarettes and directing RJR and ITG to provide the necessary information to accurately calculate the amounts owed pursuant to reporting requirements under the settlement agreement. 

To view a copy of the enforcement motion, click here.