Minnesota Cigarette Tax Challenged

Here’s something new — a suit *for* the smokers. TwinCities.com reports that three smokers have filed a suit over Minnesota’s 75-cent-per-pack fee:

Three smokers who pay the state’s 75-cent-per-pack “health impact fee” that a judge has declared illegal want their money back.

Two Minneapolis law firms filed the lawsuit Monday on behalf of the three individuals and are seeking class-action status on behalf of all the state’s smokers.

Ramsey County District Judge Michael Fetsch ruled Dec. 20 that the fee violated a multibillion-dollar 1998 settlement between the state and the tobacco industry. His ruling means the state may have to repay about $100 million that the state collected between August and December. The state is appealing that ruling.

The new lawsuit, filed in Hennepin County, says ordinary smokers “ultimately bore the economic burden” of the fee because tobacco distributors passed on the extra cost on to consumers, so they should get any refund. It says the 14 defendants, including tobacco manufacturers and wholesalers, aren’t entitled to keep the potential windfall.

The plaintiffs so far are a Stillwater woman and men from Maple Grove and St. Paul.

Attorney Marshall Tanick said they have precedent on their side. There are cases in which government-imposed revenue sources have been ruled invalid or illegal, he said. In those cases, such as utility rates, courts have ordered the relief be given to those who paid the unlawful fee or tax, he said. His firm, Mansfield, Tanick & Cohen, joined with the firm of Heins Mills & Olson in filing the lawsuit.

The Minnesota Supreme Court has agreed to hear the state’s appeal of Fetsch’s ruling in April. In the meantime, the state is still collecting about $20 million a month but is required to bank the money while the appeal is pending.