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Attorney General Bill Lockyer Announces Successful Conclusion to California's Lawsuit Against the Tobacco Industry

state specific finality guarantees california will receive billions of dollars from tobacco settlement
Wednesday, September 22, 1999
Contact: (415) 703-5837

(Sacramento) – Attorney General Bill Lockyer today announced that the state has successfully met requirements to ensure that California will receive its multi-billion dollar share of the national tobacco settlement beginning next year.

"California's lawsuit against the tobacco industry has reached a successful conclusion that provides a major victory in the fight against smoking," Lockyer said. "The settlement holds the tobacco industry accountable for decades of deceitful and illegal marketing of their product to kids. The settlement guarantees that California will begin receiving an estimated $1 billion per year."

The state's lawsuit against the tobacco industry resulted in a national settlement, known as the Master Settlement Agreement (MSA), between 46 states and major tobacco manufacturers in November of 1998. As a condition of approving the MSA, the parties required that each state's trial judge ratify the agreement and that all legal challenges to the MSA be concluded prior to receiving any compensation. While California's trial judge approved the MSA in January of this year, a single challenge to the validity of the agreement was filed by a pro-tobacco group, "Smokers for Fairness". The group's challenge was rejected by a state appellate court, and no appeal was filed by the state Supreme Court deadline. As a result, the last threat to the settlement has been dispensed with, and California has reached "State Specific Finality" (SSF).

California is the 38th state to reach SSF. Beginning no later than June of 2000, California will receive an average of $1 billion per year in perpetuity. Pursuant to an agreement between the state and local governments, the annual payments will be split 50-50 between the parties. California's share will be placed in the state's General Fund with the Legislature and Governor determining how the money will be used.

Under the terms of the MSA, states that have reached SSF may receive settlement payments earlier if at least 80% of the 46 states representing 80% of the total settlement allocations reach SSF. Now that California has reached finality, more than 80% of the states have reached SSF representing approximately 79.5% of the total settlement allocations. Should any one of the remaining eight states that have yet to reach SSF do so prior to June of 2000, California would be eligible to receive settlement payments immediately. The eight states that have yet to clear legal challenges to the MSA are: Alabama, Arizona, Arkansas, Missouri, New Jersey, Pennsylvania, Tennessee and Virginia.

In addition to the financial terms of the tobacco settlement, the MSA prohibits tobacco companies from engaging in a number of activities, including:

* Direct or indirect targeting of youth in advertising, marketing and promotions.

* Brand name sponsorship of: (1) concerts, (2) sports events, (3) events with an intended audience having a significant percentage of youth, and (4) events with paid participants who are youth.

* Access by youth to free samples of tobacco products.

* Payments for placement of tobacco products in the media.

* Outdoor advertising of tobacco products.

* Transit ads on or in public or private vehicles.

* Using cartoons to advertise tobacco products.

* Tobacco brand-name merchandise.

Attorney General Lockyer secured funding in this year's State Budget to ensure the enforcement of the terms of the MSA in California.

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