Opinion ID: 2601911
Heading Depth: 1
Heading Rank: 8

Heading: Whether the MSA expressly excludes diligent enforcement disputes from the jurisdiction of state courts

Text: Notwithstanding the arbitration clause's plain language, the State contends that a separate provision of the MSA requires that state courts resolve issues regarding a state's enforcement of its qualifying statute. Specifically, the State argues that section VII of the MSA broadly allows the parties to submit disputes arising under the MSA to state courts. The tobacco companies contend, however, that while section VII of the MSA allows the parties to submit certain disputes to state courts, it expressly excludes from state courts disputes concerning a state's enforcement of its qualifying statute. MSA section VII(a) provides that: Each Participating Manufacturer and each Settling State acknowledge that the Court: (1) has jurisdiction over the subject matter of the action identified in Exhibit D in such Settling State and over each Participating Manufacturer; (2) shall retain exclusive jurisdiction for the purposes of implementing and enforcing this Agreement and the Consent Decree as to each Settling State; and (3) except as provided in subsections IX(d), XI(c) and XVII(d) and Exhibit O, shall be the only court to which disputes under this Agreement or the Consent Decree are presented as to such Settling State. (Emphasis added.) Contrary to the State's argument, MSA section VII's plain language precludes parties from submitting diligent enforcement disputes to state courts. Specifically, section VII broadly excludes the MSA's arbitration clause, section XI(c), from its scope. See also People v. Lorillard Tobacco Co., 310 Ill.Dec. 222, 865 N.E.2d at 552 (concluding that section VII excludes the MSA's arbitration clause from its scope, thus precluding the argument that the parties agreed to submit diligent enforcement disputes to state court.) Moreover, section VII also excludes section IX(d), which determines both the NPM adjustment and the subsidiary diligent enforcement determination from its scope. The MSA's requirement that diligent enforcement disputes be arbitrated makes sense, given the inherently national character of payment related disputes. See id. 310 Ill.Dec. 222, 865 N.E.2d at 554. Diligent enforcement is not an issue solely affecting an individual state; diligent enforcement disputes affect all of the settling states, as the amounts each state receives are dependent on the diligent enforcement of other states. Therefore, the MSA compels arbitration of diligent enforcement disputes and ensures that such disputes are not subject to state court jurisdiction under the plain language of the MSA.