Tobacco suit granted class-action status

The tobacco growers lawsuit accusing cigarette manufacturers of conspiring to set prices has been granted class-action status.

Some 500,000 growers could be covered under the ruling, issued by U.S. District Court Judge William Osteen.

In published reports, tobacco companies expressed disappointment, but not surprise at the ruling. Cigarette manufacturers have denied any wrongdoing.

Tobacco growers in North Carolina, South Carolina, Georgia, Alabama, Florida and Tennessee originally filed the lawsuit in 2000.

The lawsuit accuses the cigarette companies of rigging the government-sponsored system of auctions to keep prices low. Growers point to the 52 percent decline in quota since 1997.

Lawyers for R.J. Reynolds, Philip Morris, Lorillard Tobacco Co. and Brown & Williamson Tobacco Corp. say quota holders and farmers from various states should not come under the class-action definition because the group is too diverse to be lumped into one class. The four top U.S. cigarette manufacturers make up some 96 percent of the market.

Universal Leaf Tobacco Co., J.P. Taylor Co., Southwestern Tobacco Co., Dimon Inc. and Standard Commercial Corp. are also named in the suit.

A senior counsel for R.J. Reynolds believes the class-action status will be decertified as the case proceeds. In a published report, Darryl R. Marsch, senior counsel for R.J. Reynolds, said the only thing the group has in common is the claim that tobacco companies and leaf dealers conspired to fix the prices they paid for tobacco at auction.

Last year, the cigarette manufacturers by-passed the traditional auction system, buying tobacco directly from growers. In the first year of widespread direct contracting, 80 percent of the flue-cured tobacco farmers sold their crop directly to manufacturers.

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