McGraw, et al. v. American Tobacco Co.

In 1998, states and participating tobacco manufacturers entered into an agreement known as the Master Settlement Agreement (MSA), which arose from states' actions against tobacco companies to recover costs spent on healthcare services provided to individuals suffering from tobacco-related illnesses, allegedly resulting from tobacco marketing, advertising and lobbying.  A dispute arose whether the state had diligently fulfilled its obligations of enforcing statutes needed for the calculation of tobacco companies' annual payments to the state under the MSA. The tobacco companies filed a motion to compel arbitration of this dispute under the terms of the MSA. The trial court declared the arbitration appropriate, and the state appealed. The Court affirmed the trial court's ruling, finding that the MSA provided for arbitration of a diligent enforcement determination in a single, unitary proceeding involving all participants.

McGraw, et al. v. American Tobacco Co., 681 S.E.2d 96, Supreme Court of Appeals of West Virginia (2009).

  • United States
  • Jun 22, 2009
  • Supreme Court of Appeals of West Virginia
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Parties

Plaintiff

  • Darrell V. McGraw
  • State of West Virginia
  • West Virginia Department of Health and Human Resources
  • West Virginia Public Employees Insurance Agency

Defendant American Tobacco Co.

Legislation Cited

Related Documents

Type of Litigation

Tobacco Control Topics

Substantive Issues

Type of Tobacco Product

None

"All courts addressing arguments identical to those posed by the State against the requirement of a single, nationwide arbitration of the diligent enforcement determination have consistently and logically rejected the same. Both the structure and plain meaning of the MSA require a uniform determination of this issue due to the impact the determination relevant to one settling state will have upon all other settling states. Efficiency, logic and the plain meaning of the terms and structure of the MSA lead to the inescapable conclusion that all challenges to a diligent enforcement determination under the MSA are subject to arbitration before a single, nationwide, panel of three former Article III judges. The reasoning and conclusions set forth in the Circuit Court of Kanawha County's order of March 20, 2007, order are both legally sound and correct. Rather than reiterate the well-reasoned analysis of this issue by the numerous authorities cited above and the Circuit Court of Kanawha County, we adopt the reasoning and logic set forth by those authorities and find that the circuit court did not err in ordering the question of the State's diligent enforcement of its qualifying statute be submitted to nationwide arbitration under the explicit terms of the MSA."