Tobacco settlement violates Constitution, federal suit claims

SHREVEPORT, La. – When attorney generals of 46 states signed a settlement of claims against tobacco companies they violated a section of the U.S. Constitution forbidding compacts between states, according to a lawsuit in federal court in Shreveport.

The first article of the Constitution provides that, "No state shall, without the consent of Congress,…enter into any Agreement or Compact with another State…"

According to the Competitive Enterprise Institute of Washington, the "Compact Clause" fits the Master Settlement Agreement that tobacco companies and states signed in 1998.

The institute represents two cigarette makers, a distributor, a retailer and a smoker who want the Western Louisiana District Court to declare the "MSA" unconstitutional.

Louisiana Attorney General Charles Foti has moved to dismiss the suit, arguing that the Compact Clause has lost most of its meaning.

Foti told the court that actions of Congress and decisions of judges under other sections of the Constitution "have given the pressing concerns the Framers faced in 1789, in light of their then-recent experience under the Articles of Confederation, less urgency in more contemporary circumstances."

Plaintiffs and the state await a ruling on the motion to dismiss from District Judge S. Maurice Hicks Jr.

The tobacco deal has provoked many lawsuits, but according to Competitive Enterprise Institute executive director Hans Bader no other suit has relied primarily on the Compact Clause.

He wrote to the court that, "If any interstate compact falls within the Compact Clause, it must be the MSA."

The agreement established a national tax, he wrote, national regulation, national restrictions on advertising and national restrictions on political activity.

States joined the agreement after Congress refused to pass a bill that would have accomplished a similar result.

The Louisiana suit also claims that the tobacco deal violates the Commerce Clause, the Due Process Clause, the Bill of Rights and antitrust laws.

Bader wrote that he could prove these violations but added that he would not need to prove them if the court enforced the Compact Clause.

He described the tobacco deal as "one of the most effective and destructive cartels in the history of the Nation."

He wrote that state legislatures passed laws to protect big tobacco companies from price competition by imposing payment obligations on companies that did not sign the MSA.

He wrote that the MSA established a national excise tax that would be flatly unconstitutional if any state imposed it.

Attorney General Foti wrote in his motion to dismiss that plaintiffs mischaracterized the agreement.

"…[n]othing in it purports to infringe – either actually or potentially – on the sovereignty of the Federal Government," he wrote.

It may have enhanced the power of states at the expense of cigarette makers but not at the expense of the federal government, he wrote.

"…[i]f a single State can exercise a power, the fact that it does so in concert with other States in no way implicates the Compact Clause," he wrote.

He wrote that the agreement does not authorize or require anyone to violate antitrust laws.