Landmark Settlements and Unintended Consequences
34 Pages Posted: 27 Sep 2012
Date Written: 2012
Nearly fourteen years ago forty-six states and the nation’s major tobacco manufacturers entered into the Master Settlement Agreement, the largest civil settlement in United States history. This Article examines a current controversy under the MSA that may require some or all of the states to forfeit over $7 billion in MSA payments to tobacco manufacturers. The Article focuses particularly on the liability exposure that New York faces in the dispute and how New York’s seemingly unrelated policy of not collecting excise taxes on cigarettes sold on Native American reservations may end up costing the state billions of dollars in MSA payments. The current dispute under the MSA and New York’s particular circumstances in that dispute are explored in detail to extract pertinent lessons that states should consider when entering into future landmark settlement agreements. They include lessons relating to the terms of the settlement agreement itself, but also relating to the use of litigation by state attorneys general as a means of changing public policy.
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