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Cigarettes may no longer be welcome in restaurants and office buildings in Washington, but tobacco-industry money, that’s a different story. Last week the District of Columbia joined a growing number of states that have filed lawsuits against Big Tobacco for failing to meet its obligations under a landmark 1998 settlement agreement. In the suit, which was filed in D.C. Superior Court on April 26, the District accuses R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. of withholding more than $750 million in annual payments that were due to 46 states and the District. The suit claims the District is entitled to about $4.6 million of those funds and also names Philip Morris USA and nine smaller tobacco companies. Philip Morris made the payment it owed under the settlement agreement but did so under protest. The companies argue that a provision in the settlement allows for a reduction in the annual payment if the companies lose market share to cigarette makers not covered by the agreement. “We are certainly disappointed that D.C. along with other states have decided to seek legal action,” says David Howard, a spokesman for R.J. Reynolds. “We are simply following the process that all the parties agreed to in 1998.” But the states argue that they are entitled to the full payment because they have upheld their end of the bargain by “diligently enforcing” a separate payment for tobacco companies that did not take part in the settlement. The District has already dedicated a portion of the anticipated settlement money to back $521 million in bonds to stabilize its credit.
Bethany Broida can be contacted at [email protected].

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