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June 26, 2002
AG's Office Sues Company Again for Failure to Make Tobacco Payments

OLYMPIA - For a second time, Attorney General Christine Gregoire has sued a Blaine tobacco company for failing to create escrow accounts to cover future litigation arising from use of its tobacco products.

Washington law requires cigarette manufacturers to either sign the Master Settlement Agreement reached with other major tobacco companies in 1998, or pay into an escrow account approximately one penny per cigarette sold within Washington.
The state sued 3B Holdings, which manufactures and sells a roll-your-own tobacco product called "Sixty 1," contending it has not signed the settlement agreement or made payments.

The Attorney General's Office originally sued 3B Holdings in February 2001. Last August, 3B Holdings settled that lawsuit in Thurston County Superior Court, and agreed to make escrow payments totaling $71,000 for cigarette sales in 1999 and 2000. The agreement also included a $49,000 penalty for failure to make the 1999 payment. The penalty was suspended for one year to ensure future compliance with state law.

"This law is intended to ensure that cigarette companies that do not sign the MSA are held accountable for the dangerous product that they sell," Gregoire said.

The state is asking for civil penalties of more than $155,000, or three times the amount improperly withheld from escrow, reinstatement of the original civil penalty of $49,000 and state costs and attorneys fees.



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