Departing attorney general claims tobacco companies bilked N.M. of $84 million

Nov. 30—In one of his last actions as New Mexico attorney general, Hector Balderas is going after Big Tobacco.

Balderas filed a lawsuit Tuesday against Marlboro-maker Philip Morris USA and other tobacco companies for allegedly bilking the state more than $84 million under a 24-year-old settlement agreement.

The complaint, which lists breach of contract, conspiracy and coordinated deception among the claims, alleges the tobacco companies are shortchanging the state in annual payments they had agreed to make in perpetuity.

In addition, the complaint alleges the tobacco companies are exploiting a provision in the agreement to "coerce" New Mexico and other states and jurisdictions that were part of the original settlement to renegotiate more favorable terms.

Their tactics have worked, according to the complaint, which claims the tobacco companies have succeeded in forcing 36 states or jurisdictions involved in the original settlement to sign new agreements.

"Under such agreements, [the tobacco companies] stipulate not to dispute a state's compliance with the [original settlement], in exchange for significant reductions in [their] payment obligations for the years covered," the complaint states.

New Mexico has refused to enter into a new settlement structure, according to the complaint.

Every year since at least 2008, the tobacco companies have banded together to "abuse" the provision in the agreement "by baselessly asserting that New Mexico failed to diligently enforce" its laws, requiring the state to go into costly and time-consuming arbitration proceedings to try to recover the annual payments.

"There is no end to these baseless delay tactics, and it is time to force the tobacco companies to pay New Mexico what they owe," Balderas, whose term in office ends this year, said in a statement.

Balderas, who was prohibited from seeking reelection due to term limits, has been selected to serve as the next president of Northern New Mexico College in Española.

During his time as attorney general, he has been adamant about enforcing the 1998 settlement agreement with various tobacco companies.

New Mexico was among 52 states and jurisdictions that inked a settlement with tobacco companies to resolve claims "for marketing their products to children in order to addict them as 'replacement smokers,' distorting the science of nicotine addiction and smoking, and deceiving the public about the health effects of smoking, thereby driving up public healthcare costs," the complaint states.

The complaint asks a court to hold the tobacco companies "accountable for their purposeful and fraudulent misuse" of the settlement agreement and related consent decree "to evade their obligations to New Mexico and its citizens."

Follow Daniel J. Chacón on Twitter @danieljchacon.