UPDATE - R.J. Reynolds Settles Case with Tobacco Growers

Source from:  Reuters NEW YORK 04/26/2004

R.J. Reynolds Tobacco Co. on Thursday 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. R.J. Reynolds, the No. 2 U.S. 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 R.J. Reynolds, the main unit of R.J. Reynolds Tobacco Holdings Inc. (NYSE:RJR - News), started on Thursday in federal district court in Greensboro, North Carolina, before the deal was reached. U.S. District Judge William Osteen gave the pact preliminary approval, the law firm that represented the class said. Under the settlement, R.J. Reynolds will pay the class $33 million and buy annually a minimum of 35 million green leaf pounds of U.S. 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. "We couldn't have asked for a better outcome for the class." 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. "Although Reynolds Tobacco did not engage in any wrongdoing, we felt that avoiding a lengthy and expensive trial with the growing community was in the company's best interests," said Darryl Marsch, RJR's senior counsel. Last May, Altria Group Inc.'s (NYSE:MO - News) Philip Morris USA; Lorillard Tobacco Co., a unit of Loews Corp. (NYSE:LTR - News) that is tracked by the Carolina Group (NYSE:CG - News) stock; Brown & Williamson Tobacco Corp., a unit of British American Tobacco Plc (London:BATS.L - News; AMEX:BTI - News); Standard Commercial Corp. (NYSE:STW - News); Dimon Inc. (NYSE:DMN - News); 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 $200 million in payments to plaintiffs. The shares of Winston-Salem, North Carolina-based R.J. Reynolds ended the day up 11 cents at $58.70 on the New York Stock Exchange (News - Websites) after hitting $59.42 earlier in the session. Other tobacco-related shares were also higher. Enditem