CHAPTER 5.4. MASTER SETTLEMENT AGREEMENT PROTECTION ACT
IC 24-3-5.4
Chapter 5.4. Master Settlement Agreement Protection Act
IC 24-3-5.4-1
"Brand family"
Sec. 1. As used in this chapter, "brand family" means cigarettesthat are:
(1) sold under the same trademark; and
(2) differentiated from one another by means of modifiers suchas menthol, lights, kings, or 100s.
The term includes the use of a brand name, trademark, logo, symbol,motto, selling message, recognizable pattern of colors, or otherindicia of product identification that is identical or similar to oridentifiable with a previously known brand of cigarettes.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-2
"Cigarette"
Sec. 2. As used in this chapter, "cigarette" has the meaning setforth in IC 24-3-3-5.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-3
"Commission"
Sec. 3. As used in this chapter, "commission" means the alcoholand tobacco commission created by IC 7.1-2-1-1.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-4
"Department"
Sec. 4. As used in this chapter, "department" means thedepartment of state revenue.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-5
"Distributor"
Sec. 5. As used in this chapter, "distributor" means a person that:
(1) purchases cigarettes on which the tax under IC 6-7-1 is notpaid; and
(2) stores, sells, or otherwise disposes of the cigarettes.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-5.5
"Importer"
Sec. 5.5. As used in this chapter, "importer" means a person thatimports, other than for personal consumption, one (1) or more brandfamilies of a nonparticipating manufacturer.
As added by P.L.24-2010, SEC.1.
IC 24-3-5.4-6 "Master settlement agreement"
Sec. 6. As used in this chapter, "master settlement agreement" hasthe meaning set forth in IC 24-3-3-6.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-6.5
"Newly qualified nonparticipating manufacturer"
Sec. 6.5. As used in this chapter, "newly qualifiednonparticipating manufacturer" means a nonparticipatingmanufacturer:
(1) that has filed a certification under section 13 of this chapter;and
(2) whose brand families are not listed in a directory undersection 14 of this chapter.
As added by P.L.24-2010, SEC.2.
IC 24-3-5.4-7
"Nonparticipating manufacturer"
Sec. 7. As used in this chapter, "nonparticipating manufacturer"means a tobacco product manufacturer that is not a participatingmanufacturer.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-8
"Participating manufacturer"
Sec. 8. As used in this chapter, "participating manufacturer" hasthe meaning set forth in IC 24-3-3-12(1).
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-9
"Qualified escrow fund"
Sec. 9. As used in this chapter, "qualified escrow fund" has themeaning set forth in IC 24-3-3-7.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-10
"Stamping agent"
Sec. 10. As used in this chapter, "stamping agent" means a personthat may affix a stamp to a package of cigarettes under IC 6-7-1-15.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-11
"Tobacco product manufacturer"
Sec. 11. As used in this chapter, "tobacco product manufacturer"has the meaning set forth in IC 24-3-3-10.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-12
"Units sold"
Sec. 12. As used in this chapter, "units sold" has the meaning set
forth in IC 24-3-3-11.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-13
Tobacco product manufacturer certification; brand family list;maintenance of sales documentation by nonparticipatingmanufacturer
Sec. 13. (a) Not later than April 30 of each year, a tobaccoproduct manufacturer whose cigarettes are sold in Indiana, whetherdirectly or through a distributor, retailer, or similar intermediary,shall certify to the department and the attorney general that, as of thedate of the certification, the tobacco product manufacturer is:
(1) a participating manufacturer; or
(2) in full compliance with IC 24-3-3.
The department shall prescribe the form of the certification.
(b) A participating manufacturer shall include in a certificationunder subsection (a) a list of the participating manufacturer's brandfamilies. The participating manufacturer shall update the list by filinga supplemental certification with the department and the attorneygeneral not less than thirty (30) days before the participatingmanufacturer adds a brand family or otherwise modifies the list ofbrand families.
(c) A nonparticipating manufacturer shall include in a certificationunder subsection (a) a list of the nonparticipating manufacturer'sbrand families, including the following:
(1) A separate listing of each brand family that was sold inIndiana during the calendar year before the year in which thecertification is filed.
(2) A separate listing of the number of units sold for each brandfamily that was sold in Indiana during the calendar year beforethe year in which the certification is filed.
(3) An indication of any brand family that was sold in Indianaduring the calendar year before the year in which thecertification is filed and that is not sold in Indiana as of the dateof the certification.
(4) The name and address of any other manufacturer of a brandfamily that was sold in Indiana during the calendar year beforethe year in which the certification is filed.
(d) A nonparticipating manufacturer shall file a supplementalcertification with the attorney general not less than thirty (30) daysbefore the nonparticipating manufacturer adds to or otherwisemodifies its list of brand families.
(e) A nonparticipating manufacturer shall certify the following ina certification under subsection (a):
(1) The nonparticipating manufacturer:
(A) is registered to do business in Indiana; or
(B) has appointed an agent for service of process andprovided notice under section 16 of this chapter.
(2) The nonparticipating manufacturer has:
(A) established and continues to maintain a qualified escrow
fund; and
(B) executed a qualified escrow agreement that:
(i) the attorney general has approved; and
(ii) governs the qualified escrow fund.
(3) The nonparticipating manufacturer is in full compliancewith:
(A) this section;
(B) section 13.5 of this chapter, if applicable;
(C) section 13.6 of this chapter, if applicable; and
(D) IC 24-3-3.
(4) The name, address, and telephone number of the financialinstitution that holds the nonparticipating manufacturer'squalified escrow fund.
(5) The account number and any subaccount numbers of thenonparticipating manufacturer's qualified escrow fund.
(6) The amounts and dates of deposits that the nonparticipatingmanufacturer placed in the qualified escrow fund for cigarettessold in Indiana during the calendar year before the year inwhich the certification is filed, including any verificationrequired by the attorney general.
(7) The amounts and dates of withdrawals or transfers of fundsthat the nonparticipating manufacturer made from a qualifiedescrow fund into which the nonparticipating manufacturer madeor makes escrow payments under IC 24-3-3.
(f) A tobacco product manufacturer shall not include a brandfamily in the tobacco product manufacturer's certification undersubsection (a) unless:
(1) in the case of a participating manufacturer, the participatingmanufacturer affirms that the brand family is considered theparticipating manufacturer's cigarettes for purposes ofcalculating the participating manufacturer's payments under themaster settlement agreement for the year in which thecertification is filed in the volume and shares determined underthe master settlement agreement; or
(2) in the case of a nonparticipating manufacturer, thenonparticipating manufacturer affirms that the brand family isconsidered to be the nonparticipating manufacturer's cigarettesfor purposes of IC 24-3-3-12(2).
(g) This section does not limit or otherwise affect the state's rightto maintain that a brand family constitutes cigarettes of a differenttobacco product manufacturer for purposes of calculating paymentsunder the master settlement agreement or for purposes of IC 24-3-3.
(h) A nonparticipating manufacturer shall maintain all invoicesand documentation of sales and any other relevant information for aperiod of five (5) years unless otherwise required by law to maintainthe invoices, documentation of sales, or other relevant informationfor more than five (5) years.
As added by P.L.252-2003, SEC.16. Amended by P.L.24-2010,SEC.3.
IC 24-3-5.4-13.5
Importers required to provide information to the attorney general
Sec. 13.5. (a) This section applies to a nonparticipatingmanufacturer whose principal place of business is located outside theUnited States.
(b) Each year, a nonparticipating manufacturer shall provide tothe attorney general a declaration from each of the nonparticipatingmanufacturer's importers that does the following:
(1) States that the importer assumes joint and several liabilitywith the nonparticipating manufacturer for the followingpayments, penalties, costs, and fees with respect to theimporter:
(A) Any escrow payments required under IC 24-3-3-12(2)for deposit in a qualified escrow fund.
(B) Any penalties assessed against the nonparticipatingmanufacturer under IC 24-3-3 or this chapter.
(C) Payment of all costs and fees recovered by the stateagainst the nonparticipating manufacturer under section 28of this chapter.
(2) Appoints a registered agent for service of process for theimporter and provides notice in accordance with section 16 ofthis chapter.
The attorney general shall prescribe the form of a declaration underthis subsection, including dates for filing the declaration.
As added by P.L.24-2010, SEC.4.
IC 24-3-5.4-13.6
Bonds required for certain newly qualified and certainnonparticipating manufacturers
Sec. 13.6. (a) The attorney general may determine that anonparticipating manufacturer, including a newly qualifiednonparticipating manufacturer, poses an elevated risk fornoncompliance with this article if any of the following apply:
(1) The nonparticipating manufacturer or an affiliate of anonparticipating manufacturer has failed to make requiredpayments into a qualified escrow fund in any state during thethree (3) calendar years immediately preceding the date of thedetermination unless:
(A) the nonparticipating manufacturer or affiliate:
(i) did not knowingly or recklessly fail to make therequired payments; and
(ii) makes the required payment not more than onehundred eighty (180) days after receiving notice of themissed or insufficient payment; or
(B) the failure to make the required payment is:
(i) the subject of a good faith dispute that is documentedto the satisfaction of the attorney general; and
(ii) cured not more than one hundred eighty (180) daysafter entry of a final order that resolves the good faithdispute and establishes the amount of the required escrow
payment.
(2) A state has removed the nonparticipating manufacturer, anaffiliate of the nonparticipating manufacturer, or a brand familyof the nonparticipating manufacturer or an affiliate of thenonparticipating manufacturer from the state's tobacco directoryfor noncompliance with state law during the three (3) calendaryears immediately preceding the date of the determination.
(3) A state has:
(A) litigation pending; or
(B) an unsatisfied judgment;
against the nonparticipating manufacturer or an affiliate of thenonparticipating manufacturer for escrow payments orpenalties, costs, or fees related to the nonparticipatingmanufacturer or affiliate's noncompliance with the state'sescrow laws.
(b) The attorney general shall require:
(1) a newly qualified nonparticipating manufacturer; or
(2) a nonparticipating manufacturer that:
(A) has filed a certification under section 13 of this chapter;and
(B) poses an elevated risk for noncompliance, as determinedby the attorney general under subsection (a);
to post a bond as described in subsection (c).
(c) A bond required under subsection (b) must be:
(1) posted by corporate surety located within the United States;
(2) in an amount equal to the greater of:
(A) fifty thousand dollars ($50,000); or
(B) the amount that the nonparticipating manufacturer isrequired to place into a qualified escrow fund underIC 24-3-3-12(2) for the calendar year in which the bond isposted;
(3) written in favor of the state of Indiana; and
(4) for a nonparticipating manufacturer, conditioned on theperformance of the nonparticipating manufacturer, or animporter that assumes joint and several liability with thenonparticipating manufacturer under section 13.5 of thischapter, of all of obligations and duties of the nonparticipatingmanufacturer under this article during the calendar year inwhich the bond is posted and the immediately succeedingcalendar year.
(d) If the attorney general determines under subsection (a) that anewly qualified nonparticipating manufacturer poses an elevated riskof noncompliance, the attorney general may require the newlyqualified nonparticipating manufacturer to post a bond undersubsection (c) for at least the first three (3) years during which thenewly qualified nonparticipating manufacturers brand families arelisted in a directory under section 14 of this chapter.
As added by P.L.24-2010, SEC.5.
IC 24-3-5.4-14 Brand family directory; refunds
Sec. 14. (a) Not later than July 1 of each year, the attorney generalshall make available to the public by publishing on accessIndiana (asoperated under IC 4-13.1-2) a directory listing all brand familieslisted in certifications filed under section 13 of this chapter.
(b) A directory described in subsection (a) shall not include thename or brand families of a nonparticipating manufacturer:
(1) that fails to comply with section 13 of this chapter;
(2) whose certification fails to comply with section 13(c) or13(e) of this chapter, unless the attorney general determines thatthe failure has been remedied; or
(3) that:
(A) has filed a certification under section 13 of this chapter;and
(B) poses an elevated risk for noncompliance, as determinedby the attorney general under section 13.6(a) of this chapter;
unless the nonparticipating manufacturer, or an importer thatassumes joint and several liability with the nonparticipatingmanufacturer under section 13.5 of this chapter, posts a bondunder section 13.6 of this chapter.
(c) The directory may not include a tobacco product manufactureror a brand family if the attorney general concludes that:
(1) in the case of a nonparticipating manufacturer, all escrowpayments required under IC 24-3-3-12 for any period for anybrand family, whether or not listed by the nonparticipatingmanufacturer, have not been fully paid into a qualified escrowfund governed by a qualified escrow agreement that has beenapproved by the attorney general; or
(2) all outstanding final judgments, including interest on thejudgments, for violations of IC 24-3-3 have not been fullysatisfied for the tobacco product manufacturer or brand family.
(d) The directory may not include a newly qualifiednonparticipating manufacturer unless the newly qualifiednonparticipating manufacturer posts a bond under section 13.6 of thischapter.
(e) The attorney general shall update the directory as necessary tocorrect mistakes or to add or remove a tobacco product manufactureror brand family to keep the directory in conformity with therequirements of this chapter.
(f) The attorney general shall post in the directory and transmit byelectronic mail or other means to each distributor or stamping agentnotice of any removal from the directory of a tobacco productmanufacturer or brand family not later than thirty (30) days beforethe attorney general removes the tobacco product manufacturer orbrand family from the directory.
(g) Unless otherwise provided in an agreement between a tobaccoproduct manufacturer and a distributor or stamping agent, adistributor or stamping agent is entitled to a refund from a tobaccoproduct manufacturer for any money paid by the distributor orstamping agent to the tobacco product manufacturer for any
cigarettes of the tobacco product manufacturer or brand family that:
(1) are in the possession of the distributor or stamping agent on;or
(2) the distributor or stamping agent receives from a retailerafter;
the date on which the tobacco product manufacturer or brand familyis removed from the directory.
(h) Unless otherwise provided in an agreement between a retailerand a distributor, stamping agent, or tobacco product manufacturer,a retailer is entitled to a refund from a distributor, stamping agent, ortobacco product manufacturer for any money paid by the retailer tothe distributor, stamping agent, or tobacco product manufacturer forany cigarettes of the tobacco product manufacturer or brand familythat are in the possession of the retailer on the date on which thetobacco product manufacturer or brand family is removed from thedirectory.
(i) The attorney general shall not restore a tobacco productmanufacturer or brand family to the directory until the tobaccoproduct manufacturer pays a distributor, stamping agent, or retailerany refund due under subsection (g) or (h).
(j) A distributor or stamping agent shall provide and update asnecessary an electronic mail address to the attorney general forpurposes of receiving a notification required by this chapter.
As added by P.L.252-2003, SEC.16. Amended by P.L.177-2005,SEC.44; P.L.24-2010, SEC.6.
IC 24-3-5.4-15
Stamping, sale, or importation of unlisted cigarettes prohibited
Sec. 15. A person may not:
(1) affix a stamp to a package or other container of cigarettes;or
(2) sell, offer or possess for sale, or import for personalconsumption in Indiana cigarettes;
of a tobacco product manufacturer or brand family that is not listedin a directory under section 14 of this chapter.
As added by P.L.252-2003, SEC.16. Amended by P.L.160-2005,SEC.13.
IC 24-3-5.4-16
Appointment of agent by foreign nonparticipating manufacturer;termination of agency
Sec. 16. (a) A foreign nonparticipating manufacturer that has notregistered to do business in Indiana shall, as a condition precedent tohaving the foreign nonparticipating manufacturer's brand familieslisted in a directory under section 14 of this chapter, appoint andengage without interruption the services of an agent in Indiana to actas the foreign nonparticipating manufacturer's agent for the serviceof process. Service on an agent under this section constitutes legaland valid service of process on the foreign nonparticipatingmanufacturer that appointed and engaged the services of the agent.
The foreign nonparticipating manufacturer shall provide thefollowing information to the department and the attorney general:
(1) The name, address, and telephone number of the agent.
(2) Proof of the appointment of the agent.
(3) The availability of the agent.
(4) Any other information required by the department or theattorney general.
(b) A foreign nonparticipating manufacturer shall provide noticeto the department and the attorney general not less than thirty (30)days before the foreign nonparticipating manufacturer terminates theauthority of an agent appointed under this section. The foreignnonparticipating manufacturer shall provide proof to the satisfactionof the attorney general of the appointment of a new agent not lessthan five (5) days before the foreign nonparticipating manufacturerterminates an existing agency appointment.
(c) If an agent terminates an agency appointment, the foreignnonparticipating manufacturer shall:
(1) notify the department and the attorney general of thetermination not more than five (5) days after the termination;and
(2) provide proof to the satisfaction of the attorney general ofthe appointment of a new agent.
(d) A foreign nonparticipating manufacturer that:
(1) sells products in Indiana; and
(2) has not appointed an agent under this section;
is considered to have appointed the secretary of state as the foreignnonparticipating manufacturer's agent. The appointment of thesecretary of state under this subsection as the foreignnonparticipating manufacturer's agent does not satisfy the conditionprecedent to having the foreign nonparticipating manufacturer'sbrand families listed in a directory under section 14 of this chapter.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-17
Distributor or stamping agent required to send information todepartment, commission, and attorney general
Sec. 17. (a) This section applies after July 31, 2003.
(b) Not later than January 20, April 20, July 20, and October 20of a calendar year, or more frequently if ordered by the department,the commission, or the attorney general, a distributor or stampingagent shall submit the following information to the department, thecommission, and the attorney general:
(1) A list by brand family of the total number of cigarettes forwhich the distributor or stamping agent affixed stamps orotherwise paid taxes during the immediately preceding three (3)months.
(2) Any other information required by the department or theattorney general.
The distributor or stamping agent shall maintain and make availableto the department, the commission, and the attorney general for a
period of five (5) years all invoices and documentation of sales of allnonparticipating manufacturer cigarettes and any other informationthat the distributor or stamping agent relied on in reporting to thedepartment, the commission, and the attorney general.
(c) The attorney general may require a distributor or a tobaccoproduct manufacturer to submit additional information to determinewhether a tobacco product manufacturer is in compliance with thischapter. The additional information may include samples of thepackaging or labeling of each of the tobacco product manufacturer'sbrand families.
As added by P.L.252-2003, SEC.16. Amended by P.L.160-2005,SEC.14.
IC 24-3-5.4-18
Disclosure and sharing of information among department,commission, and attorney general
Sec. 18. The department and the commission shall disclose to theattorney general any information received under this chapter andrequested by the attorney general for purposes of determiningcompliance with and enforcing this chapter. The department, thecommission, and the attorney general:
(1) shall share with each other the information received underthis chapter; and
(2) may share the information received under this chapter withother federal, state, or local agencies only for purposes ofenforcing this chapter or a corresponding law in another state.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-19
Proof of qualified escrow fund by nonparticipating manufacturer
Sec. 19. The attorney general may require a nonparticipatingmanufacturer to provide from the financial institution that holds thenonparticipating manufacturer's qualified escrow fund for purposesof complying with this chapter proof of:
(1) the amount of money in the qualified escrow fund beingheld on behalf of the state;
(2) the dates of any deposits into the qualified escrow fund; and
(3) the dates and amounts of any withdrawals from the qualifiedescrow fund.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-20
Rules
Sec. 20. The department or the attorney general may adopt rulesunder IC 4-22-2 to implement this chapter, including rules to:
(1) require a tobacco product manufacturer subject to section13(c) of this chapter to make required escrow deposits ininstallments during the calendar year in which the sales coveredby the deposits are made; or
(2) produce information sufficient to enable the attorney general
to determine the adequacy of the amount of an installmentdeposit described in subdivision (1).
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-21
Revocation of suspension of distributor's license; penalty
Sec. 21. (a) This section applies in addition to or instead of anyother civil or criminal penalty.
(b) The department may revoke or suspend the license of adistributor, a stamping agent, or any other person that violatessection 15 of this chapter.
(c) Each:
(1) stamp affixed;
(2) sale of cigarettes; or
(3) offer or possession of cigarettes for sale;
in violation of section 15 of this chapter constitutes a separateviolation.
(d) The department or the commission may impose a civil penaltythat does not exceed the greater of:
(1) five hundred percent (500%) of the retail value of thecigarettes sold; or
(2) five thousand dollars ($5,000);
for each violation of section 15 of this chapter.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-22
Seizure and forfeiture of unlisted cigarettes
Sec. 22. Whenever the department or the commission discoversany cigarettes that have been sold, offered for sale, or possessed forsale in Indiana in violation of section 15 of this chapter, thedepartment or the commission may seize and take possession of thecigarettes. The seized cigarettes shall be forfeited to the state. Thedepartment or the commission shall destroy the seized cigarettes.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-23
Injunction
Sec. 23. The attorney general may seek an injunction to:
(1) restrain a threatened or an actual violation of section 15 ofthis chapter by a stamping agent; and
(2) compel the stamping agent to comply with sections 15,17(b), and 17(c) of this chapter.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-24
Violation; Class C misdemeanor
Sec. 24. (a) A person shall not:
(1) sell or distribute; or
(2) acquire, hold, own, possess, transport, import, or cause to beimported;cigarettes that the person knows or should know are intended fordistribution or sale in Indiana in violation of section 15 of thischapter.
(b) A person who violates this section commits a Class Cmisdemeanor.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-25
Unfair and deceptive business practice
Sec. 25. A person who violates section 15 of this chapter engagesin an unfair and deceptive business practice.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-26
Judicial review
Sec. 26. A determination by the attorney general to not list in orto remove from a directory under section 14 of this chapter a brandfamily or a tobacco product manufacturer is subject to review onlyby the Marion County circuit court.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-27
Issuance of registration certificate
Sec. 27. The department shall not issue a registration certificateunder IC 6-7-1-16(a) to a distributor unless the distributor certifiesin writing that the distributor will comply with this chapter.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-28
Recovery of costs
Sec. 28. In an action brought by the state to enforce this chapter,the state may recover:
(1) the costs of investigation;
(2) expert witness fees;
(3) the costs of the action; and
(4) attorney's fees.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-29
Disgorged profits
Sec. 29. If a court determines that a person has violated thischapter, the court shall order any profits, gain, gross receipts, orother benefit from the violation to be disgorged and paid to thetreasurer of state for deposit in the Indiana tobacco master settlementagreement fund under IC 4-12-1-14.3.
As added by P.L.252-2003, SEC.16.
IC 24-3-5.4-30
Penalties deposited in enforcement and administration fund
Sec. 30. All: (1) civil penalties imposed under; and
(2) judgments for violations of;
this chapter shall be deposited in the enforcement and administrationfund established under IC 7.1-4-10-1.
As added by P.L.252-2003, SEC.16.