“We’re pleased that the court once again dismissed challenges to the Kansas escrow statutes,” Morrison said. “This is a total victory against International Tobacco.”
International Tobacco contended that the statutes violated the Sherman Anti-Trust Act and were preempted by federal law. United State District Court Judge Kathryn Vratil rejected the claims, leaving the escrow scheme intact. In doing so, she followed Judge John Lungstrum's decision in Xcalibur that reached a similar result last year. That case is on appeal at the 10th United State Circuit Court of Appeals.
“This is a positive step for the state in tobacco litigation and we’re confident the ruling will stand,” Morrison said.
In 1999, Kansas enacted an escrow statute that requires every cigarette manufacturer whose product are sold in the state to place $3.90 per carton of cigarettes for the years 2003 through 2006 in escrow. If not used for claims, the money is returned to the company 25 years after they were placed in escrow.