TOPEKA, Kan. (Legal Newsline)-The 10th U.S. Circuit Court of Appeals has upheld a Kansas state law requiring tobacco companies to pay money into escrow to pay future claims, state Attorney General Steve Six said Wednesday.

In 1999, the Sunflower State was the first to adopt its tobacco escrow statutes to implement the Master Settlement Agreement that resulted from states' lawsuits against U.S. tobacco companies.

The Kansas statute requires cigarette manufacturers whose products are sold in the state to place a certain amount of money for cigarette sales in escrow. If not used for legal claims, the money is returned to the company 25 years after it was placed in holding.

Cigarette manufacturer Xcaliber International challenged certain sections of the statutes claiming they violated federal anti-trust laws.

In its decision, the appeals court rejected claims by the Pryor, Okla.-based company and instead sided with the attorney general.

"We're pleased with today's opinion." Six said in a statement. "Decisions such as these emphasize the importance - and lawfulness - of state unity and cooperation."

The Master Settlement Agreement, reached in 1998 between tobacco companies and 46 states and six U.S. territories, was intended to settle lawsuits that states had filed to recover government costs associated with people who became ill from smoking or tobacco-related illnesses.

The settlement agreement was reached originally by the nation's four largest tobacco companies: Philip Morris USA, R. J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corp., and Lorillard Tobacco Company. More than 40 other tobacco companies later joined the agreement.

From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.