Tobacco growers could receive settlement money

By Kathy Helms-Hughes
   U.S. tobacco producers who owned quota or sold tobacco at auction between March 1, 1996, and Feb. 28, 2001, could be eligible to receive funds as a member of the class action lawsuit D. Lamar Deloach, et al., v. Philip Morris Companies, Inc., et al.
   According to the USDA Farm Service Agency, the proposed settlement includes, but is not limited to, a $200 million cash reimbursement that will be distributed between quota owners and growers of flue-cured and burley tobacco. The settlement is to be distributed to all eligible class action members according to tobacco poundage.
   The class action lawsuit alleges that defendants Philip Morris USA, Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Universal Leaf Tobacco Co., J.P. Taylor Co., Southwestern Tobacco Co., DIMON, Inc., and Standard Commercial Corp. unlawfully agreed and conspired to restrain competition and fix prices for and allocate domestic flue-cured and burley tobacco sold at tobacco auctions in the United States.
   It is also further alleged that the defendants engaged in other unlawful conduct to stabilize prices of tobacco at levels below those that would have existed in a competitive market. Plaintiffs also claim that defendants caused the quota under the federal tobacco program to be depressed.
   The lawsuit, which is brought under federal antitrust laws, seeks to obtain injunctive relief and triple damages. The damages claimed by the persons who sold tobacco at auctions relate to allegedly illegally depressed prices of tobacco. The damages claimed by quota owners relate to allegedly illegally depressed tobacco quotas.
   Defendants deny any wrongdoing, asserting that they compete with one another in the purchase of tobacco. Defendants also claim they did not at any time cause the quota under the federal tobacco program to be depressed, and that they have not violated antitrust laws.
   Plaintiffs in the class action suit have reached a settlement with all but one defendant -- R.J. Reynolds Tobacco Co. The settlement received preliminary approval in U.S. District Court for the Middle District of North Carolina. All claims against R.J. Reynolds remain and plaintiffs will continue litigating against that company.
   As part of the agreement, the settling manufacturer-defendants have agreed to remain in the United States market for a substantial part of their tobacco purchases.
   Among the provisions of the settlement:
   * Philip Morris USA, Brown & Williamson and Lorillard will commit to purchase a total of at least 405 million pounds of domestic flue-cured and burley tobacco annually for the next 10 years, resulting in revenues to growers and quota holders of about $7 billion, subject to various adjustments. Defendants also will purchase annually from U.S. growers specific percentages of their total flue-cured and burley requirements for cigarettes intended for sale in the United States.
   * Philip Morris USA will pay $8 million into a fund to be used for leaf tobacco research and extension programs. Up to $5 million of that fund may be used to promote quota buyout legislation. Philip Morris USA will make these payments regardless of whether the proposed settlement receives final court approval.
   * Settling defendants will pay $200 million in cash, which will be distributed to eligible class members based upon the number of pounds of tobacco they sold and/or the number of pounds of quota they owned that authorized them to grow flue-cured or burley tobacco in the United States from March 1, 1996, through Feb. 28, 2001.
   Plaintiffs submitted to the court a proposed plan for distribution of the $200 million, which received preliminary approval. A complete copy of the distribution plan is available at, or by calling 800-371-9820.
   According to the plan, $100 million will be distributed to flue-cured and burley growers and another $100 million will go to flue-cured and burley quota holders. Persons who both owned quota and sold tobacco will be eligible for payment from both categories.
   Persons believing they are eligible for payment must fill out and submit a claim form by Oct. 14 in order to receive any portion of the funds. Though not involved in this litigation, the USDA's Farm Service Agency's county offices will try to assist producers by providing the necessary data for the claim form. The Elizabethton office can be reached by calling 542-2341.