A divided Sixth Circuit Court of Appeals took Tennessee’s side on Tuesday in a dispute over tobacco money.
In S&M Brands Inc. and International Tobacco Partners Ltd. v. Cooper, a boutique cigarette maker from Virginia challenged state Attorney General Bob Cooper over Tennessee’s treatment of tobacco companies that did not take part in the 1998 master settlement of liability claims involving smoking. S&M has not opted into the 1998 agreement and it is involved in a legal and public relations campaign against the settlement.
The libertarian Competitive Enterprise Institute has sued Louisiana's attorney general on behalf of S&M and other companies. On a Web site set up to promote its cause, the Washington, D.C.-based institute rails against the “corrupt” 1998 settlement for creating a “national government/tobacco cartel that harmed consumers and small businesses by increasing cigarette prices and restricting competition.”
The CEI says the deal violated the U.S. Constitution's restriction that prohibits states from entering into compacts with other states unless Congress authorizes them to do so.
In Tennessee, a state law passed in tandem with the settlement forces non-participating companies like S&M and ITP to contribute to a reserve fund that can cover damages that may be assessed against them in the future. The money can be released back to the companies under certain circumstances.
The plaintiffs, claiming that their due-process rights were being violated, sued in Nashville's federal district court over how and when those refunds can take place. Judge Thomas A. Wiseman Jr. rejected most of the legal assertions but also turned down then-Attorney General Paul Summers' assertion that ITP lacked standing to be part of the case because it is an importer, not a manufacturer, of cigarettes.
Before dealing with the issue of ITP's standing, the appeals court addressed whether the state enjoyed sovereign immunity against the remaining claims. Circuit Judge David W. McKeague, joined in his opinion by Senior Judge Cornelia Groefsema Kennedy, ruled that Tennessee is immune. The law permits lawsuits against states under certain circumstances, he said, but only when the issues at hand involved future harm to the plaintiffs.
The issues here were retrospective in nature, McKeague declared. He ordered the District Court to dismiss the case.
Judge Karen Nelson Moore dissented from this reasoning. She wrote that "both Supreme Court and our own precedent make it clear that S&M Brands and ITP seek only prospective relief," and that her colleagues were "too quick to invoke Tennessee’s sovereign immunity."
McKeague took a swipe at Moore's comments in a footnote at the end of the opinion, concluding: "Ours is a rush to judgment as Odysseus’s was a brief sally around the Ionian Islands."
John H. Sinclair Jr. argued the case on behalf of the Office of the Attorney General. New York attorney David F. Dobbins represented S&M Brands and ITP.
Other cases of note (May 8-14)
United States District Court for Middle Tennessee:
• Werner Aero Services v. Champion Laboratories Inc., Purolator Filters NA LLC, Honeywell International Inc., Wix Filtration Products, Cummins Filtration Inc.; the Donaldson Co.; Baldwin Filters Inc.; Bosch U.S.A., Mann + Hummel U.S.A., ArvinMeritor Inc. and United Components Inc. Filed May 9.
This lawsuit seeks class-action status to fight an “anti-competitive conspiracy in the aftermarket among the largest manufacturers of oil, air, fuel and transmission filters” to fix prices and rig bids in violation of antitrust law. Unspecified amount of damages sought. Plaintiff’s attorneys: Kevin Sharp of Drescher & Sharp in Nashville, along with three lawyers from the New York firm Bernstein Liebhard & Lifshitz LLP.
• Modis Inc. v. Ashley Miller. Filed May 8. Modis, which provides information-technology consulting and staffing services, accuses former sales rep Miller of misappropriating trade secrets and violating her non-compete agreement. She went to work for a competitor in Nashville, Rezult, after leaving Modis in February – and, says Modis, after downloading a good bit of client and prospect info from a Modis database.
Restraining order and unspecified amount of damages sought. Plaintiff's attorneys: T. Harold Pinkley and Camille W. Steward of Miller & Martin PLLC in Nashville, with two lawyers from a Jacksonville, Fla. firm.
Davidson County Chancery Court:
• Pam Hankins v. DSI Holding Co. Inc. Filed May 12. Hankins claims she endured sexual harassment from a supervisor while working at medical clinic owner DSI, and that the company fired her when she complained about it. $1.75 million in compensatory and punitive damages sought. Plaintiff's attorney: Debra A. Wall of Clarksville.
• Richard Agbigor v. Old Republic Insurance Co. and Travelex Inc. Filed May 13. Agbigor, of Nashville, contracted cerebral malaria and enteric fever while traveling in Nigeria last year. He says the insurers failed to pay his $9,155 in emergency medical and travel expenses. He seeks triple damages of $27,465. Plaintiff's attorneys: Daniel H. Puryear and John A. Mueller of Smythe Puryear & Robertson in Nashville.
• R. Matthew Nicks. v. C. Edwin Craft, Louis D. Morgan, Duane A. Miller and L. Gregory Stephenson. Filed May 8. Another dispute involving shareholders of Nashville consulting firm Swift Environmental Inc. Swift and the defendants here faced a debt claim earlier this month.
Now Nicks says his fellow shareholders have defaulted on a $1.36 million bank note, causing the bank to seize funds from him and foreclose on real estate he owns. Unspecified amount of damages sought. Plaintiff's attorney: Dan Puryear of Smythe Puryear & Robertson.
Davidson County Circuit Court:
• Metropolitan Hospital Authority d/b/a Nashville General Hospital v. The Cincinnati Insurance Co. Filed May 13. The hospital says the insurance company has failed to cover its defense of a malpractice case. It seeks a declaratory judgment that Cincinnati Insurance must defend and indemnify General, along with unspecified monetary damages. Plaintiff's attorneys: J. Brooks Fox and Elizabeth A. Sanders of Metro's Legal Department.
• Cheryl Laramore v. Ozburn-Hessey Logistics LLC and David Hand d/b/a Absolute Staffing. Filed May 9. Former temp worker accuses employers of both sexual and racial harassment, with the N-word allegedly thrown around. $500,000 in compensatory damages sought. Plaintiff's attorneys: Mary A. Parker and Stephen C. Crofford of Parker and Crofford, Nashville.
• Melissa A. Stewart, individually and as next of kin to Deloris Stewart and James Stewart, deceased v. A.K.M. Fakhruddin M.D. and Madison Psychiatric Associates P.C. Filed May 14. Medical malpractice claim by Nashville woman whose father killed her mother and himself in 2005. Longtime Nashville psychiatrist Fakhruddin had been treating James Stewart for bipolar disorder and other mental illnesses. The daughter blames him for failing to stop the tragedy. $4.5 million in damages sought. Plaintiff's attorneys: Malcolm L. McCune and Matthew R. Zenner of Blackburn & McCune PLLC.
• Jonathan Lyke v. P. Brocklin Parks and Road House Blues LLC d/b/a Silverados Saloon, Jason Melton and John Doe. Filed May 12. Lyke asserts that the bar is responsible for an alleged assault on him by Melton. He claims Melton “was known to have a propensity for violence and had been ‘kicked out’ of Silverados in the past for ‘shooting up the place.’ ” Plaintiff's attorney: Stanley A. Davis of Nashville.