Academic journal article Journal of Corporation Law

Sanders V. Brown: State-Action Immunity and Judicial Protection of the Master Settlement Agreement

Academic journal article Journal of Corporation Law

Sanders V. Brown: State-Action Immunity and Judicial Protection of the Master Settlement Agreement

Article excerpt

  I. INTRODUCTION
 II. BACKGROUND
      A. A Brief History of Tobacco Litigation
      B. The MSA
         1. The Purpose and Provisions of the Agreement
         2. Litigation Spawned by the MSA
         3. Sanders v. Brown
III. ANALYSIS
     A. Deconstruction of Sanders v. Brown
         1. Federal Preemption
         2. First Prong of the Analysis
            i. 'Mandates or Authorizes Conduct"
            ii. 'Irresistible Pressure"
         3. Second Prong of the Analysis
            i. Noerr-Pennington Immunity
            ii. Parker Immunity
 IV. CONCLUSION
  V. RECOMMENDATIONS

I. INTRODUCTION

The Master Settlement Agreement (MSA) has been subject to critique, criticism, and judicial challenge since its signing in 1998. (1) While critics list a litany of problems with the MSA, the most prevalent charge is that it permits the settling tobacco companies to act as a "state-sanctioned cartel, passing on to consumers the costs of their estimated $206 billion damage payment and using the settlement structure to raise cigarette prices even higher." (2) Other criticisms have gone further, calling the MSA "a cartel in the most pristine sense." (3) This critique results from the fact that the MSA's provisions insulate the market shares of the participating tobacco manufacturers from usurpation by subsequent market entrants and ensure that consumers are the almost exclusive recipients of the costs of the agreement. (4)

In essence, critics argue that the settling tobacco companies used smoking consumers' money to purchase state permission to collusively increase cigarette prices, while at the same time suppressing competition. (5) Indeed, the MSA has been described as "law made in the course of an end-run around state and federal legislatures." (6) Given the voluminous scholarly criticism of the MSA--from its inception to its economic effects--the fact that the MSA has continually withstood judicial challenge is unsettling. As a last line of defense, state-action immunity defenses, which courts normally abjure, have routinely saved the MSA and its implementing statutes from being struck down. 7 While the courts upholding the MSA and its legislation are able to craft careful responses that withstand cursory review of the repeated challenges, a more critical analysis reveals major problems with the logic that courts employ.

This Note evaluates Sanders v. Brown, (8) the most recent judicial decision borne from the MSA, and deconstructs the court's analysis. This Note demonstrates the flaws in the judicial reasoning and unveils the ends-driven judicial logic that has perpetuated the MSA for over a decade. In Part II, this Note details a brief history of tobacco litigation, a necessary predicate to understanding what facilitated the signing of the MSA. Part III describes the functions of the provisions of the MSA and the practical effects of those provisions on tobacco producers and consumers. Part IV also briefly describes the litigation spawned subsequent to the signing of the MSA; more specifically, it describes the relevant factual background to the Sanders case. In Part V, this Note deconstructs the Sanders court's analysis en route to its dismissal of the complaint. This Note concludes that only ends-driven judicial reasoning perpetuates the MSA and protects it from federal preemption.

II. BACKGROUND

A. A Brief History of Tobacco Litigation

Prior to the 1950s, the tobacco industry's reputation was largely undamaged by unpropitious media coverage or litigation. (9) Eva Cooper, a Massachusetts woman whose husband died of lung cancer, brought the first lawsuit against the tobacco industry in 1954; the suit charged R.J. Reynolds--one of the four major tobacco producers and a parry to the MSA (10)--with negligence and breach of warranty. (11) The court eventually dismissed Cooper's complaint, ruling "that there was no evidence [showing] that smoking caused cancer. …

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