Metropolitan News-Enterprise


Monday, January 6, 2003


Page 3


Union Health Fund Loses Bid for Portion of State’s Tobacco Settlement


By a MetNews Staff Writer


A trial court ruling shutting out a major health care fund from taking a share of California’s tobacco settlement was upheld Friday by this district’s Court of Appeal.

Procedural missteps by the International Union of Operating Engineers Local 12 Health and Welfare Trust Fund prevent the fund from recovering the costs of treating union members’ tobacco-related illnesses, Justice Patti Kitching wrote in an unpublished opinion for Div. Three.

The IUOE fund was trying to capture a portion of the $25 billion that tobacco companies must pay the State of California over the next 25 years under a landmark November 1998 agreement.

Kitching said the fund’s claim accrued then, rather than the date the fund filed with the state Board of Control, a California agency since renamed the Victim Compensation and Government Claims Board.

“To the extent that plaintiff suffered any injury because it was excluded from sharing in the [master settlement agreement] settlement proceeds, that alleged injury accrued on the day the MSA was executed in November 1998,” Kitching wrote. “It was then that plaintiff was barred from any recovery pursuant to the MSA.  It was then that plaintiff should have known that to share in the money received by the State of California pursuant to the MSA, it would have to seek relief against the State of California.  It was then that plaintiff’s alleged injury became actual and appreciable.”

The fund filed suit in September 1997, more than a year before the agreement was reached under Business & Professions Code prohibitions against false advertising and unfair competition. The action was assigned to the trial court presiding over the state’s suit.

A year and a half after the 1998 settlement between the tobacco firms and the state, a Los Angeles Superior Court judge determined that Business & Professions Code Secs. 17200 et seq. and 17500 et seq. could not form the basis of a suit against the tobacco companies. The fund voluntarily dismissed its claims with prejudice and in August 2000 filed a claim with the state Board of Control, The board denied the claims as untimely, having arisen more than a year after the incident that formed the basis of the claim.

The fund then sued the state to get a share of the settlement, but the state demurred, saying the claim accrued in November 1998 when the settlement agreement was executed.

Kitching said Judge Coleman Swart was right to reject the fund’s assertion that it suffered no actual or appreciable injury in its right to share in the MSA settlement proceeds until the trial court in the tobacco litigation limited its theories of recovery against the tobacco companies.

“Whatever right plaintiff had against the State to share in the MSA settlement funds accrued when the MSA was executed, and plaintiff was excluded from any recovery,” Kitching wrote. “That right was not affected by the trial court’s order limiting the remedies available to plaintiff to proceed directly against the tobacco companies themselves.  Moreover, the trial court expressly ruled that plaintiff could still proceed directly against the tobacco companies, just not pursuant to Business and Professions Code sections 17200 and 17500.”

The case is International Union of Operational Engineers Local 12 health and Welfare Trust Fund v. State of California, B156739.


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