Successor Denies Liability As R.J. Reynolds Tries To Sever Payments Over Tobacco Lawsuit

One of the cigarette makers who agreed to pay millions of dollars a year to Florida in a landmark tobacco lawsuit now wants to stop making payments. R.J. Reynolds claims since they’ve sold the four cigarette brands listed in the 1995 lawsuit, they should no longer be required to make the payments. The company that bought the brands says they never agreed to accept that liability.

ITG Brands bought Salem, Winston, Kool and Maverick, four cigarette brands in 2015 from R.J. Reynolds Tobacco Company. Those four brands are linked to the 1995 lawsuit that resulted in R.J. Reynolds paying out hundreds of millions to the state of Florida. R.J Reynolds believes now that they’ve sold the brands they aren’t responsible for making the payments.

In an appeals court hearing Tuesday morning, Elizabeth McCallum the attorney representing ITG Brands says in no way did the company agree to pay the liability.

“If you buy an asset you do not take obligations unless you expressly or impliedly agree to take those obligations,” McCallum said.

McCallum points to the purchase agreement signed between the two companies.

“It says ITG shall use its reasonable best efforts to attempt to reach [an] agreement with Florida to assume obligations of a settling deduction,” McCallum said. “That’s what Reynolds and ITG negotiated and agreed upon. In terms of ITG assuming liabilities.”

ITG claims it tried to reach Florida regarding the lawsuit but the state never responded.

“ITG sent a letter with Reynolds to Florida the day the asset purchase agreement was announced in July 2014, saying we want to come talk to you and join your agreement,” McCallum said. “We met with Florida in December of 2014, we provided with it a draft joiner agreement. Florida said we’ll reach back out to you, it never did.”

A circuit court in 2017 found that R.J. Reynolds was responsible for the payments because ITG had not assumed responsibility outright. So far R.J. Reynolds claims to have paid the state over 4 billion dollars to the state. The appeals court is now waiting to rule.

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