Tobacco growers could receive
settlement money
By Kathy Helms-Hughes
STAR STAFF
khelms@starhq.com
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 www.deloachclassaction.org, 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.