Washington sues tobacco companies over settlement payments

OLYMPIA – Washington state sued more than a dozen tobacco companies Wednesday, joining several other states that are seeking $1.2 billion they say they are owed by cigarette makers under a landmark 1998 legal settlement.

Attorney General Rob McKenna filed suit in King County Superior Court in Seattle, seeking to collect the money from R.J. Reynolds and No. 3 cigarette maker Lorillard Tobacco Co., who both withheld money from the annual payment of tobacco settlement funds that were due to the state on Monday. The suit also names Philip Morris USA and several other companies that are seeking to have the payments reduced.

Attorneys general in California, Massachusetts, New Jersey and Ohio filed lawsuits Tuesday, and Maine and Kentucky filed lawsuits Wednesday. Officials in New York and Connecticut have said they, and other states, would probably take similar steps.

In all, 45 tobacco companies are involved in the settlement that Washington state Gov. Chris Gregoire, then the state’s attorney general, helped negotiate on behalf of 46 states. Those states settled their suit against the industry for $206 billion, payable over 25 years. By Monday, more than $5.6 billion had been paid to the states. McKenna said Washington was expecting $130 million this week, but the payment was $15.5 million short.

R.J. Reynolds paid the states about $1.4 billion but withheld $647 million in an escrow account until the dispute is resolved. Lorillard paid out just over $550 million but put another $108 million aside. Philip Morris USA made all of its $3.4 billion payment but is seeking to have that sum reduced.

The tobacco companies want to take the issue to arbitration, where a panel would weigh in on the matter, but the states want it in state court.