The Nebraska Supreme Court says the state of Nebraska will have to go through arbitration to settle its dispute with three tobacco companies over a USD 4.5 million reduction in settlement payments in 2006.

The Nebraska Supreme Court said in its ruling that nearly every court that has examined disputes about payments under the Master Settlement Agreement (MSA) has concluded the issue does not belong in court because the settlement language is clear. The 1998 settlement between the companies and 46 states calls for an arbiter to resolve disputes over adjustments to the payments.
Under the MSA, states are supposed to diligently enforce laws governing smaller tobacco companies that are not part of the settlement to make sure the small companies do not gain a price advantage. R.J. Reynolds Tobacco Co., Lorillard Tobacco Co. and Philip Morris USA used that provision to reduce payments to states, which subsequently sued the companies. The total reduction in 2006 to all states was about USD 775 million.
The companies reduced Nebraska's 2007 settlement payment by USD 4 million, handing the state USD 35.8 million. So far, state officials have not taken any action regarding that payment. (pi)