Economy to get boost from tobacco settlement
Published 12:00 am Tuesday, May 27, 2003
The sluggish Alabama economy will be getting an unexpected boost courtesy of the settlement in a tobacco lawsuit alleging Sherman Act antitrust violations.
The class-action suit, known as DeLoach vs. Philip Morris USA Inc., alleges that a number of major tobacco companies caused tobacco quotas to be depressed by manipulating the price of flue-cured and burley leaf tobacco.
The settlement, which was approved by the U.S. District Court for the Middle District of North Carolina, is reported to be in excess of $200 million.
Selma’s J.L. Chestnut acted as one of the lead attorneys in the case.
Chestnut said the suit also alleges that tobacco manufacturers undermined federal tobacco quotas through false or deflated appraisals. &uot;The effect of that was that some tobacco growers actually sold their quotas for much less than their actual value,&uot; he added.
Tobacco quotas determine the acreage farmers may plant in tobacco each year.
Although only a few of the farmers in the case are from Alabama, Chestnut noted that the settlement stipulates plaintiffs have the option of diverting their portion of the settlement to fund land grant university extension programs, continuing support of tobacco farmer projects to improve the quality of leaf tobacco, or research to reduce harmful substances in tobacco leaf.
Of the &uot;40 to 50 odd&uot; plaintiffs in the case, Chestnut said fewer than 10 are black.
In agreeing to the settlement, the tobacco manufacturers admitted no guilt. Defendants in the case included Philip Morris USA, Lorillard Tobacco, Brown & Williamson, Dimon, Standard Commercial and Universal Leaf Tobacco.