Oklahoma Supreme Court upholds US$47.8M judgment awarded to state in 2008 civil lawsuit against Native Wholesale Supply over illegal cigarettes

OKLAHOMA CITY , June 11, 2014 () – The state Supreme Court on Tuesday upheld a $47.7 million judgment awarded to the state in a 2008 civil lawsuit over illegal cigarettes.

Last year, Oklahoma County District Judge Bryan Dixon entered a summary judgment in the case in favor of the state attorney general. Native Wholesale Supply, a corporation chartered by the Sac and Fox Tribe, was ordered to pay $47,767,795.20 to the state.

About 600 million contraband cigarettes were sold in the state before the lawsuit was filed, according to the ruling.

Native Wholesale Supply "purposefully targeted the Oklahoma cigarette market and reaped the economic benefit of selling cigarettes in Oklahoma," the ruling states.

The corporation "continued to import and distribute contraband Seneca cigarettes into Oklahoma and reap millions of dollars from the sale of the contraband cigarettes to Oklahoma consumers for more than two years after Oklahoma's chief law enforcer filed this suit," according to the ruling.

In 1998, four of the largest tobacco manufacturers and 46 states entered into an agreement to settle lawsuits by the states to recoup health care expenses resulting from smoking. The following year, Oklahoma required tobacco companies who did not enter into the agreement to make annual payments into escrow accounts to cover smoking-related health expenses.

Under the state's agreement, all tobacco product manufacturers whose cigarettes are sold in the state are required to list the brand names with the Oklahoma attorney general's office to certify that the annual payment has been made.

The list of brand names allowed to be sold in the state are published on the attorney general's website. Any cigarettes not on that list are contraband and illegal to sell.

In 2006, Seneca brand cigarettes were removed from the attorney general's list, but Native Wholesale Supply continued to sell them in violation of the state act, court papers show.

Because the issue involved business occurring on tribal land, the case was initially remanded to federal court before being sent back to the state court.

The Oklahoma Supreme Court ruled that the judgment was proper, and that Native Wholesale Supply was not entitled to a jury trial about the violation of the state act.

The attorney general requested that the award be paid into the Oklahoma Tobacco Settlement Endowment Trust.

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