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Minnesota Court Rules Cigarette Fee is Violation of Tobacco Settlement Agreement


(Please note this press release was issued on Tuesday evening.)
Richmond, Va. (December 20, 2005) A Minnesota state court today struck down the state’s recently enacted “health impact fee” as a violation of the state’s settlement agreement with the settling cigarette manufacturers, including Philip Morris USA. The court ruled that the state’s efforts to seek additional “reimbursement of tobacco-related health care costs clearly violates the Settlement Agreement.”
The court found that the “state is bound, like any other party is bound, to the contracts to which it freely and knowingly enters, and from which it benefits.” Accordingly, the court ruled that the legislation violates the Constitutional provision that prohibits any law impairing the obligation of contracts.
Philip Morris USA and other tobacco companies have already paid Minnesota more than a billion dollars under the settlement agreement.
“We are pleased the court recognized that this law was a prohibited attempt to impose additional healthcare costs related to smoking in violation of our settlement agreement and the Constitution,” said Denise Keane, Philip Morris USA executive vice president and general counsel.


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