Altria Group Inc
) subsidiary, Philip Morris USA (PM USA) received a favorable
ruling in a case filed by the plaintiffs, way back in Jun 1997 in
the California Superior Court. The plaintiffs claimed that PM USA
has violated California's Unfair Competition Law and False
Advertising Law by using terms like "Lights" and "Lowered Tar and
Nicotine" on its Marlboro cigarette packages and therefore claims
that the company should pay the clients who bought Marlboro
Lights between 1998 and 2001.
However, the judge ruled that the plaintiffs were ineligible
to receive any money as they could not prove having
suffered any loss by smoking the cigarettes.
The judges' ruling, if upheld, will help the tobacco company
gain reputation and boost its sales amid several anti-tobacco
campaigns and restrictions imposed by governments around the
In a separate development in August, PM USA won a case in the
Non-Participating Manufacturer Adjustment (NPM Adjustment)
dispute related to the NPM adjustment provisions of the Master
Settlement Agreement (MSA). The agreement was inked between 46
states and major tobacco players, including Altria,
Reynolds American Inc.
Philip Morris International Inc.
The dispute arose over the amount that these tobacco companies
had to pay to the state governments. The tobacco manufacturers
argued that they lost market share in these states to other local
cigarette makers who did not enter the agreement. Also, at least
15 states had failed to diligently collect escrow payments from
manufacturers that did not sign the 1998 agreement. This failure
entitled participating manufacturers to lower payments.
The cigarette makers won against six of the 15 states. The
panel ruled that those states who failed to enforce escrow
payments laws would not be entitled to collect the payments from
tobacco manufacturers either. Altria, which currently carries a
Zacks Rank #4 (Sell), revised its guidance upward to reflect the
financial benefit from the lower MSA payment.
LORILLARD CO (LO): Free Stock Analysis Report
ALTRIA GROUP (MO): Free Stock Analysis Report
PHILIP MORRIS (PM): Free Stock Analysis
REYNOLDS AMER (RAI): Free Stock Analysis
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