A Rhode Island Superior Court judge dismissed a challenge by OppenheimerFunds Inc. to the state's plan to sell nearly $600 million in new-money Series 2014 bonds backed by tobacco-company payments under the landmark 1998 settlement.
Judge Michael Silverstein, ruling Thursday, granted summary judgment to the Tobacco Settlement Financing Corp. of Rhode Island.
Oppenheimer, in its capacity as a holder of Series 2007 B and C bonds, had argued that the transaction in question wrongfully created an amendment of the 2007 indenture, and that the transaction would have constituted a fraudulent transfer intended to circumvent a subordination structure.
"This court well recognizes that summary judgment is to be cautiously granted because it constitutes what has been termed draconian relief' in that it permits judgment with respect to a case or portions of a case without benefit of trial," Silverstein wrote. "However, where there are no genuine issues of material fact in dispute."
The corporation sold bonds to investors in 2002 and in 2007.
Legal points in the ruling even focused on rules of grammar, with Oppenheimer at one point invoking the "last antecedent rule," according to Silverstein.
Under the 1998 agreement, tobacco companies agreed to pay 46 states for expenses related to smoking illnesses. In its aftermath, state officials formed the corporation in to raise money, selling bonds backed by future settlement revenue in exchange for the upfront money.