State of Tennessee v. NV Sumatra Tobacco Trading Company - Dissent

In November of 1998, a number of American tobacco manufacturers and a majority of the states and territories of the United States, including Tennessee, reached a settlement in litigation over tobacco-related healthcare costs. The terms of the settlement permit the tobacco manufacturers that were involved in the litigation to withhold a portion of their liability under the settlement terms based upon loss of market share in a participating state, unless the state enacts a “qualifying statute” requiring manufacturers not party to the litigation to either participate in the settlement or pay an amount into a designated escrow fund based upon annual cigarette sales. The underlying purpose of requiring non-participating manufacturers to either join in the settlement or pay into the escrow fund is to assure “a level playing field” for all manufacturers selling cigarettes in the participating states and territories. In consequence, Tennessee adopted a qualifying statute, the Tennessee Tobacco Manufacturers’ Escrow Fund Act of 1999 (“Escrow Fund Act”), Tenn. Code Ann. §§ 47-31-101 to -103 (2001 & Supp. 2012), which requires “[a]ny tobacco product manufacturer selling cigarettes to consumers within the state of Tennessee” after May 26, 1999, to either become a party to the existing settlement agreement or make specified payments into a “qualified escrow fund.” Id. § 47-31-103(a).