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Attorney General's News Release

May 2, 2014

AG Koster announces Missouri wins return of nearly $50 million in tobacco settlement case

Jefferson City, Mo. –  Attorney General Chris Koster announced today that Judge Jimmie Edwards of the City of St. Louis Circuit Court has partially vacated a 2013 arbitration panel ruling that cost Missouri approximately $70 million from its annual tobacco settlement payment.  Koster sent a copy of the ruling to PricewaterhouseCoopers, the independent auditor that calculates the states' tobacco payments, along with a letter demanding that Missouri's payment be revised to comply with the court's ruling.

"As a result of today's decision, Missouri should be paid nearly $50 million that the tobacco companies sought to withhold from our State," Koster said.  "This money will provide needed support for state priorities like public education. I thank our dedicated team of attorneys, who have litigated this case for years to ensure that Missouri receives its fair share of the settlement money."

The current dispute arose when the tobacco companies who participated in the 1998 Master Settlement Agreement (MSA) alleged that many states, including Missouri, failed to diligently enforce state tobacco laws in 2003. As a result, the tobacco companies argued, they were entitled to withhold a large portion of their payment for that year under the terms of the MSA.  

During the arbitration, 22 states settled their cases. Last September, a three judge arbitration panel ruled in favor of the tobacco companies in their claims against six states that did not settle:  Missouri, Indiana, Kentucky, Maryland, New Mexico, and Pennsylvania. 

The arbitration panel ordered that the six losing states were responsible not only for their own share of the loss, but also for the shares of the states that had settled their cases.

Koster's office filed suit in Missouri court last fall, arguing that reallocating the liability of the settling states onto the six losing states violated the terms of the MSA. Today, Judge Edwards agreed, finding that the share of the loss that would otherwise be assigned to the settling states should not be shifted to Missouri.  

Judge Edwards' Order and Judgment.

Koster's letter to PricewaterhouseCoopers.

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