UNITED STATES: RJ Reynolds Settles Case with Tobacco Growers

Source from:  tobaccojournal.com 04/26/2004

RJ Reynolds Tobacco Co. on 22 April 2004 reached an agreement to resolve a class-action lawsuit over tobacco leaf purchases with growers and quota holders just as the case went to trial. RJ Reynolds, the number two US cigarette maker, was the lone major cigarette company to sit out of a settlement of the price-fixing suit in May 2003. The lawsuit, DeLoach et al v. Philip Morris USA et al, was filed in February 2000 and alleged cigarette makers and tobacco brokers violated antitrust laws by rigging bids at tobacco auctions. The trial against RJ Reynolds, the main unit of RJ Reynolds Tobacco Holdings Inc. started on 22 April in federal district court in Greensboro, North Carolina, before the deal was reached. US District Judge William Osteen gave the pact preliminary approval, the law firm that represented the class said. Under the settlement, RJ Reynolds will pay the class US$ 33 million and buy annually a minimum of 35 million green leaf pounds of US flue-cured and burley tobacco combined for 10 years, starting in the 2004 crop year. "For the first time, farmers have a commitment, under judicial supervision, that a total of 440 million pounds of domestic tobacco will be purchased annually," said Alan Wiseman, a partner at Howrey Simon Arnold & White, counsel for the class, referring to purchase settlements with all defendants. According to the suit, the companies conspired to undermine the tobacco quota and price support program administered by the federal government. The lawsuit was filed on behalf of hundreds of thousands of growers and quota holders. Last May Philip Morris USA, Lorillard Tobacco Co, Brown & Williamson Tobacco Corp, Standard Commercial Corp, Dimon Inc., and Universal Leaf Tobacco Co and two of its units arrived at a settlement with the growers. That settlement called for those defendants to make US$ 200 million in payments to plaintiffs. Enditem