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Tobacco, State Clash

Photo by Eliza Wiley of the Helena Independent Record. From left: Chicago-based Philip Morris attorney Steve Patton returning to his seat after his argument, Missoula-based attorney for the "Subsequent Participating Manufacturers" Sean Morris, David Paoli of our firm, and John Kutzman of our firm rising to begin his argument.

As the Independent Record explains:

The district court sided with the tobacco manufacturers and determined that the matter should be left to arbitration. But the state appealed to the Montana Supreme Court, which reversed the decision and asked for further proceedings within the district court. In its opinion, the court stated that "the State filed the instant action not to challenge any calculation, determination, or course of action actually performed, made, or chosen by the Independent Auditor. Rather, the State sought a declaration that Montana had, in fact, diligently enforced the provisions of the (settlement agreement) during 2003."

The Montana court was the only one to ultimately decide that the issue should remain in the state courts instead of going on to arbitration. The other states have already worked with the tobacco companies to assemble a panel for the arbitration proceedings and start holding pre-trial hearings. So the companies have asked for a "stay" on Montana's next round in the district court, requesting that proceedings stop until arbitration is complete.

Which is why both parties showed up in Sherlock's court on Friday -- the tobacco companies, represented by a lawyer for Philip Morris Inc., came to ask for a temporary suspension; the state was there to argue against the idea.

. . . .

Missoula-based attorney John Kutzman, representing the state, countered that Montana is not planning to participate in any aspect of arbitration because it is not required to do so in this circumstance, despite what Patton was implying. He reiterated that the Master Settlement Agreement does not require arbitration unless it is related to the calculations and decisions of the independent auditor, which he contends is not the case in this situation.

He added that Patton continued to hint that the state was trying to be deceptive, when it simply wants its courts to investigate and determine whether its statute was "diligently enforced." He also disregarded Patton's point about waiting for funds.

"We didn't ask for the money. What we asked for was a declaratory ruling," he said.

Tobacco, State Clash


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