R.J. Reynolds wins Delaware Supreme Court decision affirming Chancery Court award of over $400 million in contract dispute
Client(s) Reynolds American Inc.
On behalf of Reynolds American Inc. and R.J. Reynolds Tobacco Company (collectively, "Reynolds"), Jones Day secured a Delaware Supreme Court decision affirming an award of over $400 million to Reynolds in a long-running contract dispute with another tobacco company, ITG Brands ("ITG").
The dispute arose out of an Asset Purchase Agreement that Reynolds and ITG executed in 2014, through which Reynolds sold several cigarette brands—as well as associated liabilities—to ITG. Among other things, that contract required ITG to try to join the settlement agreements Reynolds and other tobacco companies had entered into with several states, which require those companies to make substantial annual payments based on their cigarette sales—in perpetuity. ITG failed to join one such settlement, with Florida, and also did not make annual payments to Florida based on its sales of cigarettes under the brands it acquired. In litigation in Florida, Florida secured a ruling holding Reynolds liable to make annual payments to Florida based on ITG's sales, on the order of $27 million each year, in perpetuity, plus interest back to 2015.
Meanwhile, Reynolds and ITG litigated in Delaware Chancery Court their respective obligations under the contract, including whether ITG had to indemnify Reynolds for the annual payments based on ITG's sales. Jones Day represented Reynolds throughout this litigation, from its commencement in early 2017. Across eight years, Reynolds prevailed on virtually every substantive issue, on the pleadings and summary judgment, culminating in decisions holding that ITG had assumed the at-issue liability and must indemnify Reynolds, with interest, for the full amount it has paid (and will pay) under the judgment entered in Florida, in perpetuity. Through 2025, this amounts to over $400 million.
ITG appealed to the Delaware Supreme Court. Just 12 days after Jones Day argued for Reynolds in December 2025, that court issued a one-page decision summarily affirming the Chancery Court's rulings.
ITG Brands, LLC v. Reynolds Am. Inc., et al., No. 204, 2025 (Del.)
