Six Na­tions cig­a­rette maker sued in Cal­i­for­nia

The Hamilton Spectator - - LOCAL - TERI PECOSKIE tpecoskie@thes­ 905-526-3368 | @Te­ri­atTheSpec

The State of Cal­i­for­nia is su­ing a Six Na­tions cig­a­rette man­u­fac­turer.

In a civil suit filed July 7 in Sacra­mento, At­tor­ney Gen­eral Xavier Be­cerra al­leges Grand River En­ter­prises — or GRE, for short — failed to com­ply with to­bacco sales laws and il­le­gally sold cig­a­rettes.

More specif­i­cally, the com­pany is accused of fail­ing to make roughly $13 mil­lion in es­crow pay­ments be­tween 2014 and 2016 and of vi­o­lat­ing Cal­i­for­nia’s rev­enue and tax­a­tion code and health and safety code.

Ac­cord­ing to those, all cig­a­rette mak­ers that do not par­tic­i­pate in the so-called Mas­ter Set­tle­ment Agree­ment are re­quired to make annual pay­ments into an es­crow fund for their sales in Cal­i­for­nia. The state has al­leged GRE, which does not par­tic­i­pate in the agree­ment, sold more than 400 mil­lion cig­a­rettes over a three-year span and didn’t pay.

None of the al­le­ga­tions has been proven in court.

Be­cerra is seek­ing the un­paid es­crow, civil penal­ties, le­gal costs and a court or­der to stop GRE from sell­ing cig­a­rettes, ei­ther di­rectly or through an in­ter­me­di­ary, to con­sumers in Cal­i­for­nia un­til it has paid what it al­legedly owes and proves it is in com­pli­ance with the health and safety code. He has also called for a two-year ban on GRE sell­ing or sup­ply­ing cig­a­rettes in the state, among other re­lief.

Ac­cord­ing to the Cal­i­for­nia Depart­ment of Jus­tice, GRE has not filed a re­sponse to the fil­ing be­cause the com­pany has not yet been served with the com­plaint and sum­mons. As a gen­eral rule, a plain­tiff must serve a com­plaint within 60 days of fil­ing the com­plaint, al­though the dead­line may be ex­tended by court or­der.

Once GRE has been served, it has 30 days to re­spond, ac­cord­ing to state rules.

GRE lawyer John F.C. Ham­mond de­clined to com­ment, say­ing it is pre­ma­ture speak about the fil­ing at this stage.

When a law­suit is filed in Cal­i­for­nia against a Canadian com­pany, the plain­tiff — in this case, the state — must com­ply with a pro­ce­dure out­lined in the Hague Ser­vice Con­ven­tion, a treaty that gov­erns the ser­vice of le­gal fil­ings abroad, in­clud­ing on First Na­tions. GRE is head­quar­tered in Oh­sweken, which is Six Na­tions ter­ri­tory.

The law­suit is the lat­est in a list launched by U.S. states against the com­pany, which, in the past, has also been sued by Ohio — a law­suit that ended in 2011, when GRE paid close to $1 mil­lion in es­crow — New York and Cal­i­for­nia. GRE and four of its share­hold­ers, mean­while, are pur­su­ing their own $3-bil­lion law­suit against Ot­tawa for al­legedly forc­ing them to in­cor­po­rate and lose their tax-ex­empt sta­tus while fail­ing to stamp out con­tra­band com­peti­tors.

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