Oklahoma v. Native Wholesale Supply

The Attorney General (AG) brought suit against Native Wholesale Supply alleging violations of the Oklahoma Master Settlement Agreement Complementary Act. In 1998, four of the largest tobacco product manufacturers and forty-six states entered into a Master Settlement Agreement (MSA) to settle litigation brought by the states to recoup health care expenses resulting from cigarette smoking. In 1999, the Legislature required tobacco product manufacturers who do not join the MSA and whose cigarettes were sold in Oklahoma to make annual payments into escrow accounts to cover health care expenses resulting from cigarette smoking. In August of 2006, the AG removed both Seneca brand cigarettes and their manufacturer, Grand River Enterprises Six Nations, Ltd., from the AG's directory. In 2007 and 2008, Native Wholesale Supply (NWS) caused Seneca cigarettes to be brought into Oklahoma knowing that the tobacco product manufacturer did not comply with the Escrow Statute or the Complementary Act and that the Seneca cigarette manufacturer and Seneca cigarettes were not on the AG's directory. In May of 2008, Oklahoma Attorney General Drew Edmondson, sought disgorgement and payment to the State of all gross proceeds realized by NWS from the sale of contraband Seneca cigarettes in violation of the Complementary Act. NWS removed the case to federal court asserting complete federal preemption of this state-law suit because NWS "is chartered by the Sac and Fox Nation, is wholly owned by a member of the Seneca Nation, and conducts business on Indian land with Native Americans." The federal court concluded the case was improperly removed and remanded it to the state court. The state district court then granted NWS' motion to dismiss for lack of subject matter jurisdiction and denied NWS' motion to dismiss for lack of personal jurisdiction. The AG appealed the subject matter jurisdiction dismissal and NWS counter-appealed the personal jurisdiction ruling. The Supreme Court held that the State has personal jurisdiction over NWS based on the Company's purposeful availment of the Oklahoma cigarette marketplace and had jurisdiction over the subject matter of this suit. NWS filed for Chapter 11 bankruptcy protection and listed three states in the proceeding as having claims similar to Oklahoma's lodged against it. The three states jointly moved to lift the automatic stay. The bankruptcy court lifted the stay and directed that "information produced by [NWS] during discovery in the bankruptcy case shall be treated by the States as satisfying any request for such information in the State Litigation." The information NWS turned over to Oklahoma included documents showing the cigarette sales and shipping transactions between NWS and Muscogee Creek Nation Tobacco Wholesale and Bowen Wholesale from 2006 to 2010. The state district court case proceeded; and the AG moved for summary judgment. The district court sustained the AG's motion for summary judgment, denied NWS' cross-motion for summary judgment, and entered judgment in favor of Oklahoma. The district court denied NWS' motion for new trial. NWS appealed the summary judgment and denial of a new trial. Finding no reversible error, the Supreme Court affirmed the district court's judgment. View "Oklahoma v. Native Wholesale Supply" on Justia Law