RJ Reynolds filed a 16-page brief asking Florida’s Supreme Court to resolve whether it still owed US$100 million a year to the state, under the 1997 settlement between the state and cigarette makers.
The Fourth District Court of Appeal previously ruled that the company was required to make the payments. However, RJ Reynolds contends that it should not have to make payments related to four cigarette brands - Salem, Winston, Kool, and Maverick - that it sold to ITG Brands in 2014. In the filed brief, RJ Reynolds argued that payments under the settlement are tied to market share and that the company should not be held responsible for brands that it no longer sells. ITG Brands was not part of the 1997 settlement.
In the brief, the company argued that, “The market share calculation is not some fixed and certain sum that Reynolds agreed to pay in perpetuity. Reynolds is no longer manufacturing or shipping the acquired brands — ITG is — but the Fourth District nonetheless held that ITG’s shipments will remain included in Reynolds’ market share.”
In July, the appeals court upheld a ruling by a Palm Beach County circuit judge which pointed to a lack of changes in the 1997 settlement that would have freed Reynolds from making the payments. “FSA (Florida Settlement Agreement) requires that Reynolds make annual payments to the state of Florida in perpetuity, with no condition of termination, in exchange for the release of liability for past and future medical costs incurred by the state of Florida,” said the three-judge panel of the appeals court. “Significantly, FSA could be ‘amended only by a writing executed by all signatories hereto and any provision hereof may be waived only by an instrument in writing executed by the waiving party.’ It is undisputed that there was no written agreement by the signatories to FSA altering or waiving Reynolds’s payment obligations to Florida.”