A Six Nations tobacco company is taking on the United States in a legal action that challenges big tobacco and the North American Free Trade Agreement.
Grand River Enterprises -Six Nations' largest manufacturer, making millions of cigarettes a day -has sunk almost $4 million into fighting the case, which is being decided by a free trade tribunal.
"It's very much a David and Goliath situation," says New York State lawyer Leonard Violi, who represents GRE. "Except, in this case, Goliath not only has his private constituency, he has the government forces behind him as well. So, it's not one Goliath, it's two."
GRE may be the David but it's got the money for the fight. Business has skyrocketed over the last decade, making the company millions in profits every year.
Some estimate GRE has sold $1 billion in tobacco over the last 10 years.
Unlike some of the small illegal manufacturers for which native reserves are known, GRE pays excise tax to the federal government -an estimated $400 million.
The argument in the U.S. goes back to a 1998 master settlement agreement or MSA where 46 states and six U.S. territories signed a master settlement agreement with the four tobacco giants --Philip Morris, R.J. Reynolds, Brown and Williamson Tobacco and Lorillard Tobacco Company.
As part of that agreement, the "majors" agreed to pay $206 billion over 25 years and $9 billion thereafter to a fund to cover what the U.S. government had to pay in Medicaid for smoking-related illnesses.
But the big companies wouldn't sign unless the monetary obligation was extended, by legislation, to all other competitors selling cigarettes in the U.S., even though the smaller businesses hadn't been --and might never be --sued for wrongdoing.
That was a bit of tricky business designed to rid the marketplace of the little competitors, said lawyer Violi. Any company that didn't sign didn't get a legal market share and was in danger of being considered contraband.
"(The agreement) is supposed to be for the benefit of the consumers, but not one dollar of MSA payments is earmarked for health care," Violi says.
"Instead the consumers have been gouged because cigarette prices have gone up 300% since the MSA was implemented."
Violi says the system was set up to protect big tobacco. While other companies were notified of the agreement and given 90 days to sign on, GRE didn't get the same privilege.
At first GRE's statement of claim asked for $310 million to $664 million in damages for harm and lost income but that number was adjusted to $100 million to $260 million.
In return, the U.S. government argues that it should win the decision and have GRE pay $2.8 million in court costs. GRE's costs to launch and fight the action are almost $4 million US.
Merlyn Fernandes, a lawyer with Heydary Samuel Professional Corp. in Mississauga, has no connection with the case but has a background in national and international tax law.
She says the case is intriguing because, if GRE wins, it will be a ruling that will be studied for years.
"Very few NAFTA cases get to this stage," Fernandes said. "It costs a lot to take things to arbitration and it takes a lot of patience. There's years of waiting on both sides and a lot of pressure."
With state and federal governments involved, the case has a lot of layers, adds Fernandes.
"They're arguing that certain tobacco companies in the U.S. receive special favour under the settlement agreements which has not been extended to them. And NAFTA is about everyone being treated equally."
That means, she adds, that if GRE is able to win at arbitration, the U.S. and state governments may have to go back and revise the escrow statues and the overall settlement agreement as well.
"Big tobacco will be rooting for the U.S. to win. They don't want to go back to the table."
At the two-week hearing in February, representatives of Mexico's NAFTA office were present along with officials from Canada's department of Foreign Affairs.
To help make their case, GRE flew Six Nations' Chief Coun. Bill Montour to the hearing in Washington, D.C.
"The court wanted to hear what GRE means to Six Nations," explained Montour last week.
"I told them there are 400 direct jobs but 4,500 other jobs generated by the cigarette industry."
Montour said tobacco has created a business on the reserve that supports multiple families who would otherwise be on welfare.
"When they first started, people came to work in old cars and not very well dressed. Now you see people with a new outlook, with lots of money in their pockets and walking out in new clothes with their heads held high."
GRE was just the beginning, said Montour. Other businesses have been attracted to the reserve, like Mohawk Rock, which ships stone for houses across North America.
"We've now got a race track here that's the Thunderdome of Ohsweken and you see 10,000 people here for special weekends, a state-of-the-art music studio and the Pro-Fit Athletic Club, which is second to none.
"We've got 15 to 20 restaurants that have got a start through investment in the cigarette industry and they employ a lot of people. I think there's a bright future for Six Nations."
Now things rest in the hands of the three-member tribunal.
It's taken more than six years to bring the case to this point with speed bumps of jurisdictional challenges and criminal prosecutions when GRE founder Jerry Montour's dad and GRE's co-founder Ken Hill were charged with trafficking cigarettes.
They argued that the tribunal should be delayed so that a co-accused, Arthur Montour, wouldn't have to incriminate himself but the tribunal refused to grant the request. Instead, chunks of the trial transcripts have been censored.
GRE's lawyer Violi says he has no idea when a verdict will be returned.
"I anticipate it will be within the year but I'm just not certain."
He believes his clients should win --based on the law and the facts --but he says the case has such far-reaching implications it may be a case of the system being "too big to fail."
"We have an Italian saying that when you see a pile of dung in the street, everyone knows it stinks but the worst thing you can do is pick at it because then the real stink comes out," said Violi.
"We've been picking at this situation and it shows what the real deal is.
"The deeper you dig, the smellier it gets. We want to see it exposed."