LANGUAGE

Tennessee v. NV Sumatra Tobacco Trading Co.

The State of Tennessee sought to recoup money owed to it under legislation related to the 1998 Master Settlement Agreement (MSA) for cigarettes sold in the state.  Under the MSA and Tennessee law, tobacco manufacturers who did not agree to settle were required to establish escrow accounts in states where they continued to sell cigarettes.  In this case, an Indonesian tobacco manufacturer sold cigarettes through a series of intermediaries that eventually were sold to consumers in Tennessee.  Neither the distributor in the U.S. nor the manufacturer paid any money into the escrow accounts as required by the MSA.  The manufacturer challenged the case by claiming that Tennessee courts did not have personal jurisdiction over the company under the due process clause of the 14th amendment.  After conflicting conclusions in the lower courts, the Tennessee Supreme Court found the company did not have the necessary minimum contacts necessary to establish personal jurisdiction.  The court said the company did not purposely avail itself of the state's laws and the contacts with the state were attributable to uncontrolled third parties.  The court upheld the trial court's ruling and dismissed the case.