The US Supreme Court on 10 October 2006 refused to hear an appeal by 30 state governments in a battle over payments by three small tobacco companies into escrow funds set up to help cover future damages in tobacco-related lawsuits.

The top court decision allows the tobacco companies to continue to fight state laws requiring payments to accounts set up under the 1998 Master Settlement Agreement.
The companies have challenged that state escrow laws that require tobacco companies to join the settlement or put funds into escrow accounts were based on the number of cigarettes they sell within the state. Also, they challenged the state laws that require the companies that didn't participate to pay money into escrow funds to certify periodically that they are in compliance with the state escrow laws.
The companies argued that each state's escrow statute violated federal antitrust law and the US Constitution's commerce clause, which protects interstate commerce from interference. Originally, a federal district judge in New York dismissed the companies' challenge for lack of jurisdiction. But a federal appears court reversed that judge, allowing the small companies to pursue the antitrust claims. The attorneys general, however, argued that state sovereignty does not allow jurisdiction in New York over a lawsuit that seeks to invalidate and stop enforcement of laws enacted and enforced entirely within another state. They told the Supreme Court that "the appropriate course is to end the wrongful exercise of jurisdiction as soon as possible, not to subject 30 attorneys general to the indignity of defending this case through trial in a New York district court." The Supreme Court appeal involved the states of Alabama, Alaska, Arizona, California, Colorado, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, North Carolina, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Washington, Wisconsin and Wyoming. The firms that sued are Grand River Enterprises Six Nations Ltd., a Canadian cigarette maker owned by the Iroquois tribes; Nationwide Tobacco, a Washington state company that distributes cigarettes made in the Philippines; and 3B Holdings., a Washington state manufacturer of loose tobacco. (pi)