In a cigarette case that will be closely watched for a hint of a bigger tobacco ruling to come, Minnesota's highest court on 16 March 2006 upheld a 35-cent per pack fee on smokes made by smaller manufacturers.

The court voted 4-1 to keep the fee for cigarette makers who weren't part of the state's multi-billion-dollar tobacco settlement in 1998. The ruling applies to lesser-known brands such as USA Gold and Roger cigarettes, which have been gaining market share since the settlement.
Those manufacturers sued over the fee, saying the state was unfairly targeting them even though they were never accused of misconduct in the lawsuit against the big tobacco companies.
"Whether appellants have engaged in wrongdoing is irrelevant to the inquiry: it is the harmful nature of their products that triggers the payment, and that their products are harmful is not disputed," Justice Alan Page wrote for the majority. The current case does not involve the much-maligned 2005 health impact fee, which raised cigarette prices by 75 cents a pack. A lower court struck down that fee, and the state Supreme Court is expected to weigh in later this year. The health impact fee – worth about US$ 200 million a year to the state – helped leaders find their way out of last session's budget disagreements. The 2003 fee on off-brand cigarettes brings about US$ 6 million a year, according to the Department of Revenue. The court opinion noted that the fee is significantly lower than the settlement costs borne by the big tobacco companies – 64 cents a pack for those involved in the settlement and 48 cents for those who later joined the agreement, which includes restrictions on advertising, lobbying and merchandising. Justice Helen Meyer dissented, saying the fee is unfair treatment for the companies that weren't part of the landmark tobacco case. Chief Justice Russell Anderson and Justice Lorie Gildea didn't participate in the ruling. The ruling did not say why. (pi)