Posted on 08/03/2005 4:02:36 PM PDT by DumpsterDiver
CHICAGO -- A think tank that advocates free enterprise and limited government involvment in business has filed a federal court challenge to the 1998 Master Settlement Agreement (MSA), contending that the pact between 46 states and major tobacco manufacturers is unconstitutional.
The Competitive Enterprise Institute (CEI) submitted its challenge in the U.S. District Court of the Western District of Louisiana on behalf of a wholesaler, two small tobacco manufacturers, a tobacco retailer and an individual smoker against Louisiana Attorney General Charles Foti.
The suit contends that the MSA violates the constitutional proviso in Article I forbidding states to enter into any agreement or compact with another state without the consent of Congress. Seven years ago, the attorneys general from 46 states settled lawsuits seeking reimbursement from cigarette manufacturers of Medicaid payments to smokers with an agreement that called for tobacco companies — R.J. Reynolds, Philip Morris, Lorillard and Brown & Williamson — to pay $246 billion to states over 25 years.
MSA created the American Legacy Foundation, which disseminates national anti-smoking ads crafted mainly by Havas' Arnold in Boston and MDC Partners' Crispin Porter + Bogusky in Miami.
The CEI charges the MSA essentially set up a national government/tobacco cartel that harmed consumers and small businesses by increasing cigarette prices and restricting competition. Even though small manufacturers did not participate in the settlement, they are required to make escrow settlements to states to cover potential liabilities.
"This lucrative backroom deal between state attorneys general and the trial bar has created a new model for targeting other politically incorrect industries and their customers," said Sam Kazman, CEI's general counsel.
Initially, average cigarette prices decreased as foreign manufacturers and deep-discount producers rushed in and undercut the major brands, which saw their prices increase due to a combination of Big Tobacco's MSA payments and hikes in state excise taxes.
Big brands such as Marlboro and Camel eventually narrowed the pricing gap last year as states improved their enforcement of escrow payments from small manufacturers and clamped down on Internet sales, some of which circumvent the collection of state sales taxes.
Well, ladies, what do you y'all think of this?
It would seem this provision is honored more in the breach than anywhere else.
Virtually every state has agreements (what ever the hell that might entail) and compacts with other states on any number of things, from reciprocal in-state tuition allowances for state colleges, to coop-development of common facilities (roads), joint projects, etc. Virtually none of these see a day in Congress, unless there is a federal buck to be made.
I'm sure the plaintiffs have done more research than I have, but I would have thought there was some congressional acquiescence on this issue, if by no other action than reading it into the record.
Unfortunately, there is complicity in Congress.
In New York and NJ we have the Port Authority which was originally concocted to stop harmful ferry competition between the two states. Then there's the Pallisades Interstate Parkway Authority which was started by another act of congress. Same with the bridges between NJ and PA and Delaware. There are numerous other such agreements and compacts, mostly dealing with bridges and tunnels. On the other hand, when interstate highways cross near the border of two states there is usually an agreement between those states for policing and maintenance, etc. These ageements have never obtained congressional approval, to my knowledge.
This part of the constitution to my knowledge is still alive and well. But don't be supposed if it goes the way of the Takings Clause in the 5th Amendment. It will be interesting to see what twisted logic the courts apply to uphold what is certainly an illegal ageement between the states.
I'm not sure that reciprocity in things like CCW's, college tuition, etc. necessarily consitutes a "compact", since AFAIK any state would be free to amend its rules at any time. Of course, states may refrain from changing their rules for fear of reaction by other states, but that doesn't mean that the rules form a any form of binding "compact". My interpretation of that part of the Constitution would be that the federal government shall not be bound to enforce any agreement between two states unless it has agreed to do so. Any state making an agreement with another state that does not involve the federal government should recognize that such agreement is non-enforceable.
Nothing in the definition of a compact suggests it need be immutable. Further, you conveniently forgot the word "Agreement". If the things you mention do not rise to the level of a compact, they surely constitute an agreement.
My interpretation of that part of the Constitution would be that the federal government shall not be bound to enforce any agreement between two states unless it has agreed to do so.
No, sorry, that section (the last paragraph of Article 1) does not address enforcement in any way. It sets limitations on the powers of the states (to keep them from teaming up with each other or with a foreign powers).
Its clearly written, and requires no "interpretation".
It's about danged time :)
The Delaware River and Bay Authority which maintains the the crossings between Delaware and New Jersey is a congressionally sanctioned compact. There are other congressional compacts between the 2 states regarding fishing in the Delaware Bay...not that Delaware pays much attention to those, but they do exist.
So do I.
The term "national government/tobacco cartel" has a certain ring to it, eh?
Yep. It kinda throws the notion of, "Government is just doing it for the health of Americans against evil tobacco," right down the crapper, doesn't it?
Too bad the folks in the tobacco industry didn't try this route sooner, though.
"The CEI charges the MSA essentially set up a national government/tobacco cartel that harmed consumers and small businesses by increasing cigarette prices and restricting competition. Even though small manufacturers did not participate in the settlement, they are required to make escrow settlements to states to cover potential liabilities."
I believe my new goals in life will involve becoming a "potential liability" as well as a burden to society.
Ah, it feels good to once again have some worthy goals. :^)
This thing has fraud written all over it. Think now, for years the Feds and the states collected cig. taxes NOT to discourage smoking, but get revenues. They are a big part of the "crime", not someone who should be getting "settlements". I've always wonder why the tobacco didn't pursue this angle in their defense arguments. Remember when the Gov./producers gave cigs away at Vet. hospitals, put them in C-rations in the military? This case is a slam dunk for overturning, IMO.
Of course this "agreement" is nothing but collusion and extortion. (And you can add all those "not-for-profit charities" in with the collusion, too.) Anybody else engaging in such conduct would be brought up on RICO charges.
I would love to see this action succeed, but given recent rulings by the SC, I'm afraid I don't hold out much hope.
Regards,
Many forms of reciprocity wouldn't even require an "agreement" (although they probably are a result of coordination). If state X offers college tuition discounts to any state which offers tuition discounts to residents of state X, it wouldn't have to have any "agreement" with any other state to offer discounts to that other state's residents. Rather, one or other state could simply offer an administrative finding that the other state seems to offer the discounts and its residents are thus eligible. If the other state fails to reciprocate, the first state would withdraw the discounts the following year (or maybe even semester).
But you are working on supposition here, and I'm working on facts.
I'm telling you these agreements between states are common and the largest percentage of them have never been thru congress.
There are hundreds of these things
http://www.auditor.leg.state.mn.us/ped/2003/0308sum.htm
http://heab.state.wi.us/pr051302.html
http://www.imcc.isa.us/
http://www.naic.org/compact/
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