June 11, 2014

Court upholds $47M tobacco suit award

June 11, 2014 Associated Press

OKLAHOMA CITY (AP)  — The Oklahoma Supreme Court upheld on Tuesday a $47.7 million judgment awarded to the state over the sale of illegal contraband cigarettes, an activity the decision described as “flagrant disrespect for Oklahoma, our laws and our citizens.”

The ruling by the state’s highest court was against Native Wholesale Supply, a company chartered by the Sac and Fox Tribe of Oklahoma. The state Attorney General’s Office had requested the judgment be deposited into the Oklahoma Tobacco Settlement Endowment Trust, a fund dedicated to preventing and reducing tobacco use and improving Oklahomans’ overall health.

An attorney for Native Wholesale Supply, Paula Williams, declined comment on the decision. A spokeswoman for Attorney General Scott Pruitt said he was pleased.

A lawsuit filed by the state in 2008 accused Native Wholesale Supply of violating the Tobacco Master Settlement Agreement, which was reached in 1998 between four of the nation’s largest tobacco product manufacturers and 46 states, including Oklahoma. The agreement settled litigation by the states to recoup health care expenses resulting from cigarette smoking.

Among other things, the agreement requires that tobacco manufacturers and their brand families be listed on the Directory of Compliant Tobacco Manufacturers maintained by the attorney general’s office. Cigarettes not on the list are illegal to sell and are not taxed by the state.

The lawsuit alleged the tribe appeared to be brokering the sale of Seneca brand cigarettes through Native Wholesale Supply, a corporation on the Cattaraugus Indian Reservation in New York. Seneca brand cigarettes are manufactured by Grand River Enterprises Six Nations Ltd., a Canadian corporation.

The Supreme Court’s ruling says that in 2006, the attorney general removed Seneca brand cigarettes and their manufacturer from the directory. But between 2007 and 2010, Native Wholesale Supply brought the cigarettes into the state knowing that their manufacturer was not on the list and did not comply, the decision says. The company filed for bankruptcy in New York in 2011.

The decision, written by Justice Steven Taylor of McAlester, says the company “purposefully targeted the Oklahoma cigarette market and reaped the economic benefit of selling cigarettes in Oklahoma.”

In a lone dissenting opinion, Justice Noma Gurich of Oklahoma City wrote that the fact cigarette sales were made did not prove Native Wholesale Supply knew wholesalers intended to distribute the cigarettes in violation of state law.

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