TOBACCO FIRMS ORDERED TO PAY OREGON $9M IN ARBITRATION DISPUTE

     (The following press release from the Oregon Attorney General's Office was 
received by e-mail and was reformatted. The sender verified the statement.) 
DEPARTMENT OF JUSTICE
OFFICE OF THE ATTORNEY GENERAL 
FOR IMMEDIATE RELEASE
Sept. 11, 2013 
BIG TOBACCO ORDERED TO PAY OREGON $9 MILLION IN NATIONAL ARBITRATION DISPUTE     
Today a panel of arbitrators ordered Big Tobacco to pay Oregon the more than $9 
million that they had failed to pay.  These tobacco companies -- which include 
Philip Morris USA Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco 
Company, among others -- argued that they should not have to make their full 
payments under the Tobacco Master Settlement Agreement (MSA) because Oregon had 
failed to diligently enforce certain terms of the agreement.  The panel found 
that Oregon "diligently enforced" its MSA obligations and is entitled to the 
remaining $9 million due on the 2003 payment. 
"This is a big victory for the citizens of Oregon," said Attorney General Ellen 
F. Rosenblum.  "The Oregon Department of Justice has taken very seriously its 
obligation to diligently enforce the terms of the Tobacco Master Settlement 
Agreement.  We took the position that we were entitled to our full payment from 
Big Tobacco and we were vindicated by the panel's ruling." 
This decision is a significant legal victory for Oregon.  Oregon has been 
litigating with Big Tobacco since 2006 regarding whether Oregon fulfilled its 
obligations under the MSA, a 25-year-old agreement between tobacco companies 
and 46 states, including Oregon.   The tobacco manufacturers pay billions 
annually to participating states in exchange for the states' agreement not to 
sue for health-related damages to citizens. 
In 1998, Oregon and a number of other states entered into the MSA as a method 
of settling the numerous claims the states were pursing against Big Tobacco as 
a result of their fraudulent advertising practices and the resultant health 
care costs borne by the states.  As a result of the MSA, Oregon currently 
receives payments of approximately $80 million per year from Big Tobacco.  
Since 1999, Oregon has received over $690 million in MSA payments. 
The protracted dispute that resulted in today's decision began in 2006.  Under 
the MSA the states are required to collect escrow payments on cigarette sales 
from tobacco companies that did not join the MSA.  Big Tobacco may withhold all 
or part of a state's annual payment if that state failed to "diligently 
enforce" its tobacco laws against those companies that did not join the MSA.  
To resolve the Big Tobacco claim that many states had failed to diligently 
enforce, Oregon and other states entered into a nationwide arbitration, 
conducted by a panel of three retired federal judges. All states who had signed 
on to the MSA were originally parties to the arbitration.  Late in the 
arbitration process, 17 states, Washington, D.C., and Puerto Rico settled with 
Big Tobacco. 
The case was handled by a team of lawyers from the Department of Justice's 
Civil Enforcement Division, along with Special Assistant Attorneys General 
David Markowitz and Lisa Kaner and their team. 
"We were honored to work with the Attorney General on such an important issue 
for this state and we could not be more pleased with the result," said Special 
Assistant Attorney General Lisa Kaner, of the Markowitz, Herbold, Glad, & 
Mehlhaf P.C. law firm.                                                           
Rosenblum thanked the Markowitz law firm, Fred Boss, Chief Counsel of the Civil 
Enforcement Division, and Lisa Udland, Deputy Chief Counsel of the Civil 
Enforcement Division, saying "the panel was obviously impressed with our team's 
preparation, going out of its way to commend our Deputy Chief Counsel Lisa 
Udlund, who was been the lead lawyer on these matters at DOJ for 10 years." 
Contact:
Lisa.Udland@doj.state.or.us
503-934-4400 
(kgt)NY