(a) Any tobacco product manufacturer selling cigarettes to consumers within the State (whether directly or through a distributor, retailer, or similar intermediary or intermediaries) after the effective date of this Article shall do one of the following:
(1) Become a participating manufacturer (as that term is defined in section II(jj) of the Master Settlement Agreement) and generally perform its financial obligations under the Master Settlement Agreement; or
(2) Place into a qualified escrow fund by April 15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation):
a. 1999: $.0094241 per unit sold after the effective date of this Article.
b. 2000: $.0104712 per unit sold.
c. For each of 2001 and 2002: $.0136125 per unit sold.
d. For each of 2003 through 2006: $.0167539 per unit sold.
e. For each of 2007 and each year thereafter: $.0188482 per unit sold.
(b) A tobacco product manufacturer that places funds into escrow pursuant to subdivision (2) of subsection (a) of this section shall receive the interest or other appreciation on such funds as earned. Such funds themselves shall be released from escrow only under the following circumstances:
(1) To pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the State or any releasing party located or residing in the State. Funds shall be released from escrow under this subdivision (i) in the order in which they were placed into escrow and (ii) only to the extent and at the time necessary to make payments required under such judgment or settlement;
(2) To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of units sold in the State in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to Section IX(i) of that agreement, including after final determination of all adjustments, that the manufacturer would have been required to make on account of the units sold had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer; or
(3) To the extent not released from escrow under subdivisions (1) or (2) of this subsection, funds shall be released from escrow and revert back to such tobacco product manufacturer 25 years after the date on which they were placed into escrow.
(c) Each tobacco product manufacturer that elects to place funds into escrow pursuant to this section shall annually certify to the Attorney General that it is in compliance with this section. The Attorney General may bring a civil action on behalf of the State against any tobacco product manufacturer or joint and severally liable importer that fails to place into escrow the funds required under this section. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this section shall:
(1) Be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a violation either of subdivision (2) of subsection (a) of this section, of subsection (b) of this section, or of this section, may impose a civil penalty (the clear proceeds of which shall be paid to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2) in an amount not to exceed five percent (5%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed one hundred percent (100%) of the original amount improperly withheld from escrow;
(2) In the case of a knowing violation, be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a knowing violation either of subdivision (2) of subsection (a) of this section, of subsection (b) of this section, or of this section, may impose a civil penalty (the clear proceeds of which shall be paid to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2) in an amount not to exceed fifteen percent (15%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent (300%) of the original amount improperly withheld from escrow; and
(3) In the case of a second knowing violation, be prohibited from selling cigarettes to consumers within the State (whether directly or through a distributor, retailer, or similar intermediary) for a period not to exceed two years.
Each failure to make an annual deposit required under this section shall constitute a separate violation. (1999-311, s. 1; 2000-140, s. 58; 2002-145, s. 2; 2005-276, s. 6.12(a); 2005-435, s. 59.1(a); 2015-241, s. 6.24(c).)
Part 2. Tobacco Escrow Compliance.
Notes of Decisions
State Ex Rel. Cooper v. Ridgeway Brands Mfg., LLC, 646 S.E.2d 790 (N.C. Ct. App. 2007).
· cites it 70× “When a plaintiff fails to amend his complaint to add a party defendant until after the expiration of the applicable statute of limitations as to that defendant, the claim cannot relate back to circumvent the statute of limitations. When the allegations in a plaintiff's…”
State v. Ridgeway Brands Mfg., LLC, 666 S.E.2d 107 (N.C. 2008).
· cites it 26× “It is not authority for the relation back of a claim against a new party. 314 N.C. at 187, 459 S.E.”
De Luca v. Stein, 820 S.E.2d 89 (N.C. Ct. App. 2018).
· cites it 20× “The General Assembly enacted a series of statutory provisions entitled the Tobacco Reserve Fund and Escrow Compliance Act (Act) in July, 1999 in order to effectuate the MSA.”
State Ex Rel. Cooper v. Ridgeway Brands, 666 S.E.2d 107 (N.C. 2008).
· cites it 26× “ecifically alleged that there was an "Agreement of Defendants" to violate their statutory duties: Defendants shared an understanding, either expressed or implied, to enter into an agreement to underprice the cigarettes made by Defendant [Ridgeway] and distributed and sold by…”
State Ex Rel. Cooper v. Seneca-Cayuga Tobacco Co., 676 S.E.2d 579 (N.C. Ct. App. 2009).
· cites it 12× “The General Assembly enacted a series of statutory provisions entitled the Tobacco Reserve Fund and Escrow Compliance Act (Act) in July, 1999 in order to effectuate the MSA.”
In Re Renegade Holdings, Inc., 429 B.R. 502 (Bankr. M.D.N.C. 2010).
· cites it 6× “The Debtors have established an escrow account at Sun-Trust Bank as required under N.C. Gen. Stat. § 66-291 and have made deposits into the account based upon their sales in the various states in which Debtors’ brands are sold.”
State v. Philip Morris USA, Inc., 666 S.E.2d 783 (N.C. Ct. App. 2008).
· cites it 2× “Contrary to the State’s assertion, the statute does not include any standards applicable to the decision of the Attorney General regarding whether to enforce the escrow statute under N.C. Gen. Stat. § 66-291 (c) (2007) (stating that the Attorney General “may bring a civil action…”
State Ex Rel. Cooper v. Ridgeway Brands Mfg., LLC, 655 S.E.2d 446 (N.C. Ct. App. 2008).
· cites it 2× “The amended complaint added a seventh claim against Trevally seeking to recover funds transferred from Ridgeway Brands Manufacturing, LLC (Ridgeway) to Trevally at a time when Ridgeway did not have sufficient assets to pay its liability to the State of North Carolina under N.C.…”
S&M Brands, Inc. v. Stein, 2020 NCBC 23 (N.C. Bus. Ct. 2020).
· cites it 118× “On July 31, 2019, Plaintiff filed Plaintiff’s Motion seeking partial summary judgment on two issues only: (1) that “the calculation of S&M Brands’ annual escrow overpayments must account for S&M Brands’ 1998 market share rather than treating such market share as non-existent…”
De Luca v. Stein (N.C. Ct. App. 2018).
· cites it 10× “The General Assembly enacted a series of statutory provisions entitled the Tobacco Reserve Fund and Escrow Compliance Act (Act) in July, 1999 in order to effectuate the MSA.”
— N.C. Gen. Stat. § 66-291(a) — 2 cases
S&M Brands, Inc. v. Stein, 2020 NCBC 23 (N.C. Bus. Ct. 2020).
“On July 31, 2019, Plaintiff filed Plaintiff’s Motion seeking partial summary judgment on two issues only: (1) that “the calculation of S&M Brands’ annual escrow overpayments must account for S&M Brands’ 1998 market share rather than treating such market share as non-existent…”
— N.C. Gen. Stat. § 66-291(a)(2) — 1 case
S&M Brands, Inc. v. Stein, 2020 NCBC 23 (N.C. Bus. Ct. 2020).
“On July 31, 2019, Plaintiff filed Plaintiff’s Motion seeking partial summary judgment on two issues only: (1) that “the calculation of S&M Brands’ annual escrow overpayments must account for S&M Brands’ 1998 market share rather than treating such market share as non-existent…”
— N.C. Gen. Stat. § 66-291(b) — 3 cases
State Ex Rel. Cooper v. Ridgeway Brands Mfg., LLC, 646 S.E.2d 790 (N.C. Ct. App. 2007).
“When a plaintiff fails to amend his complaint to add a party defendant until after the expiration of the applicable statute of limitations as to that defendant, the claim cannot relate back to circumvent the statute of limitations. When the allegations in a plaintiff's…”
In Re Renegade Holdings, Inc., 429 B.R. 502 (Bankr. M.D.N.C. 2010).
“The Debtors have established an escrow account at Sun-Trust Bank as required under N.C. Gen. Stat. § 66-291 and have made deposits into the account based upon their sales in the various states in which Debtors’ brands are sold.”
S&M Brands, Inc. v. Stein, 2020 NCBC 23 (N.C. Bus. Ct. 2020).
“On July 31, 2019, Plaintiff filed Plaintiff’s Motion seeking partial summary judgment on two issues only: (1) that “the calculation of S&M Brands’ annual escrow overpayments must account for S&M Brands’ 1998 market share rather than treating such market share as non-existent…”
— N.C. Gen. Stat. § 66-291(b)(2) — 2 cases
S&M Brands, Inc. v. Stein, 2020 NCBC 23 (N.C. Bus. Ct. 2020).
“On July 31, 2019, Plaintiff filed Plaintiff’s Motion seeking partial summary judgment on two issues only: (1) that “the calculation of S&M Brands’ annual escrow overpayments must account for S&M Brands’ 1998 market share rather than treating such market share as non-existent…”
— N.C. Gen. Stat. § 66-291(b)(3) — 1 case
In Re Renegade Holdings, Inc., 429 B.R. 502 (Bankr. M.D.N.C. 2010).
“The Debtors have established an escrow account at Sun-Trust Bank as required under N.C. Gen. Stat. § 66-291 and have made deposits into the account based upon their sales in the various states in which Debtors’ brands are sold.”
— N.C. Gen. Stat. § 66-291(c) — 3 cases
State Ex Rel. Cooper v. Ridgeway Brands Mfg., LLC, 646 S.E.2d 790 (N.C. Ct. App. 2007).
“When a plaintiff fails to amend his complaint to add a party defendant until after the expiration of the applicable statute of limitations as to that defendant, the claim cannot relate back to circumvent the statute of limitations. When the allegations in a plaintiff's…”
State Ex Rel. Cooper v. Ridgeway Brands, 666 S.E.2d 107 (N.C. 2008).
“ecifically alleged that there was an "Agreement of Defendants" to violate their statutory duties: Defendants shared an understanding, either expressed or implied, to enter into an agreement to underprice the cigarettes made by Defendant [Ridgeway] and distributed and sold by…”
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