Constitutionality of historic tobacco settlement debated

John O'Brien Feb. 10, 2009, 8:58am


SHREVEPORT, La. (Legal Newsline) - A federal judge in Louisiana was asked Monday to rule 1998's Tobacco Master Settlement Agreement signed by 52 states and territories unconstitutional.

One of the deal's most outspoken opponents, the Competitive Enterprise Institute, is challenging it on behalf of a small cigarette company that refused to sign into it, a tobacco shop owner and an individual smoker. CEI's complaint calls the deal "one of the most effective and destructive cartels in the history of the nation."

The MSA has an estimated worth of $246 billion over its first 25 years for the participating states and territories. More than 40 companies have signed into it and are required to make annual payments to cover the alleged harm done to the states' Medicaid programs by tobacco use.

U.S. District Judge S. Maurice Hicks heard arguments from Louisiana Attorney General Buddy Caldwell's office and the CEI concerning their respective motions for summary judgment. Caldwell's motion noted that this is the second time S&M Brands has challenged the agreement, and the first time was in Tennessee.

"The tobacco settlement was an unconstitutional, corrupt power grab by state attorneys general and trial lawyers (hired by the AGs)," said Sam Kazman, CEI's General Counsel.

"It imposed a massive, permanent tax on consumers and funded countless wasteful government programs, while largely ignoring its original health objectives."

The CEI claims tobacco funds are being misspent, and that the MSA violates the Compact Clause of the U.S. Constitution because states have entered into agreements with one another without the consent of Congress.

It also claims the agreement violates the Cigarette Labeling and Advertising Act, the Commerce Clause and the Due Process Clause.

"The MSA is not a 'state regulation' subject to the dormant Commerce Clause," Caldwell's motion says.

"The Commerce Clause is traditionally applied to state legislative or regulatory actions and not agreements involving a state. In particular, an agreement that settles claims in litigation between a state and a private party is a voluntary act that does not constitute state regulation in any ordinary sense."

A lawsuit that alleged the MSA has created a noncompetitive tobacco market was tossed last month by a federal judge.

From Legal Newsline: Reach John O'Brien by e-mail at

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Louisiana Attorney General
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