RALEIGH, N.C. — More than 290,000 flue-cured tobacco farmers in the Southeast could finally be seeing the end of a class action lawsuit that has stretched out for more than a decade.

 

At stake are $340 million in reserve funds that growers allege the Flue-Cured Tobacco Cooperative Stabilization Corp. – now named the United States Tobacco Cooperative, Inc. – withheld from members in a series of “schemes” aimed at ensuring the organization’s future in a post-tobacco quota buyout world.

The cooperative, which was organized in 1946, initially held responsibility for overseeing the price component of the Federal Tobacco Program, requiring growers to maintain a membership in the organization to participate in the program.

Beginning in the late 1970s, however, plaintiffs in the suit allege that the cooperative began withholding funds in reserve rather than returning them to members, racking up hundreds of millions of dollars just prior to the Tobacco Buyout Program in 2004.

Just after the buyout, the suit alleges that the cooperative further misled growers by engaging in a “foregoing scheme” aimed at slashing its membership numbers by hundreds of thousands, creating a “last man standing scenario” that would increase profits of the few members left remaining.

Since 2005, the Cooperative has existed as a purchaser and manufacturer or tobacco products, operating out of a facility in Timberlake, N.C. Now, according to Alan Runyan, a partner at South Carolina firm Speights & Runyan and an attorney for the class, growers could finally be looking at the end of an issue that has lingered since 2005 – with checks potentially heading their way.

“It is our intent to recover the entirety of the amount owed to the entire class,” he said. Runyan is hopeful that the case – which was approved by the North Carolina State Supreme Court and will take place in the state court in Wake County – will see resolution in 2018. For now, fluecured tobacco growers in North Carolina, South Carolina, Florida, Georgia and Virginia are still waiting patiently, asked recently to “opt out” of the class action if they so choose.

In the meantime, Executive Vice-President of the Tobacco Growers Assoc. Graham Boyd is looking forward to the end of the lawsuit so producers can concentrate on growing a plant that he says is “critically important as a major cash crop” for his state.

“(The lawsuit has) functioned as a bit of a distraction,” Boyd said. “It’s probably made some problems for the Cooperative to buy and sell tobacco, with the huge unknown variable.”

Boyd believes the two types of growers who are watching this case most closely are past co-op members who stand to benefit from a return in the reserve funds, and those who are presently selling tobacco to the cooperative. “I think all farmers, however, would find relief in knowing that something has finally been resolved and the issue is behind us.” 

 

North Carolina ranks first in the U.S. in flue-cured tobacco production, raising nearly 77 percent of the nation’s total production in 2015, according to statistics  provided by North Carolina State University. According to professor and extension economist Blake Brown, growth of the crop has risen in his state since the Federal Tobacco Buyout Program.

“Farms that grow flue-cured tobacco are generally highly diversified farms, many are very large farms and tobacco is one of many crops, but it’s a very important profitable crop for them,” he said, adding it is not unusual in his state for growers to produce 500-600 acres a year.

Boyd believes production of the crop in his state has major implications for its future. “It is woven into the farm network here as a major part of our diversification, and we are the third-most diversified agricultural state in the country.

“Tobacco is still an important component in farm success economically. It is critical to our diversity and our profitability going forward,” he noted. For additional information about the class action lawsuit, and to find out how you can opt out of the suit yourself, visit www.fluecuredclassaction.com