AG Paxton: Settlement Agreement Against Tobacco Companies Must Be Enforced

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Texas Border Business

AUSTIN –  Attorney General Ken Paxton  applauded a ruling from the U.S District Court for the Eastern District of Texas, holding that a 1998 comprehensive settlement agreement with R.J. Reynolds Tobacco Company and other tobacco companies stands and the agreed payments to the state for smoking-related healthcare costs must be enforced. The court rejected Reynolds’s argument that selling acquired brands included in the settlement nullified its obligation to Texas taxpayers, declaring that “Reynolds remains as liable today as it was when it entered into the Texas Settlement in 1998.”  

In 2015, ITG Brands LLC acquired three cigarette brands from Reynolds and one cigarette brand from Lorillard Tobacco Company—Kool, Maverick, Salem, and Winston. Both Reynolds and Lorillard signed the comprehensive settlement agreement with Texas over smoking-related healthcare costs. Since this sale, the required payments to Texas under the settlement agreement for those brands have not been made. This ruling prevents the tobacco companies from depriving Texas of hundreds of millions of dollars in past and future amounts owed under the settlement. Reynolds is obligated to pay Texas for sales of these cigarettes in perpetuity and for significant amounts that are already past due. 

“I applaud the court for holding tobacco companies accountable to the terms of the settlement to which they agreed. Texas taxpayers are owed substantial back payments and we will not allow any company to shirk their obligations to the people of this state,” said Attorney General Paxton. “No matter how large the company or how long the fight, my office will continue to fight for the compensation that taxpayers are owed.” 

Read a copy of the ruling here below. 

Enforcement Action Mem. Op. And Order
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