AG's Office Sues Company for Failure to Make Tobacco Payments.

City Desk, Legal Writers

OLYMPIA, Wash.--(BUSINESS WIRE)--Feb. 21, 2001

Attorney General Christine Gregoire has sued a Blaine tobacco company for failing to make state-mandated payments that are set aside to cover possible judgments against the company in future state lawsuits.

The lawsuit, filed Tuesday in Thurston County Superior Court, was brought against 3B Holdings, Inc., which manufactures and sells a roll-your-own tobacco product called "Sixty 1". Between May and December of 1999, the company sold more than 844,000 cigarettes in the state.

A provision of Washington state law requires cigarette manufacturers to either sign the Master Settlement Agreement reached with major tobacco companies in 1998, or pay into an escrow account approximately a penny per cigarette sold within the state. The money remains the property of the company but may be used to pay judgments in the event of lawsuits filed over future violations of state law.

Under the settlement agreement, companies that signed agreed to significant marketing and advertising restrictions and must make annual payments to the states based partly on the number of cigarettes they sell.

"Cigarettes are dangerous products and the goal of the Master Settlement Agreement was to reduce smoking -- especially among young people," said Gregoire. "It would be contrary to the purposes of the MSA if some companies do not abide by marketing and advertising restrictions and seek to make a huge profit by aggressively marketing cigarettes now, and later leaving the market with no potential financial recourse for violating the state law."

In the lawsuit filed today, the state claims 3B Holdings failed to pay approximately $8,000 into the escrow account.

The state is asking for civil penalties of nearly $24,000, or three times the amount improperly withheld from escrow, and state costs and attorneys fees.