Philip Morris, RJR Score Legal Victory

A Brooklyn judge has thrown out a federal lawsuit by the European Union alleging U.S. tobacco giants Philip Morris Cos. Inc. and R.J. Reynolds Tobacco sponsored cigarette smuggling in Europe.

In an order issued Tuesday, U.S. District Judge Nicholas Garaufis rejected claims that cigarette makers intentionally oversupplied countries in Eastern Europe and elsewhere so the surplus would be smuggled into the 15-nation EU, resulting in billions of dollars in lost taxes. The same decision dismissed a similar suit filed in 2000 by the governors of 22 states in Colombia.

Garaufis ruled that the plaintiffs in both civil cases failed to show that recent legislation and court decisions had nullified the "revenue rule" - a long-standing legal standard barring one country from enforcing tax claims by other countries. The suits "clearly implicate the revenue rule in that they would necessarily cause this court to pass on foreign tax laws," the judge wrote. The EU sued last year in U.S. District Court in Brooklyn.
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