Supreme Court Rejects Tobacco Appeal

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Supreme Court Rejects Tobacco Appeal

10/21/2005
WASHINGTON -- The U.S. Supreme Court rejected the government's appeal aimed at reinstating a potential $280 billion penalty in its landmark racketeering case against cigarette makers, reported Reuters.

Without comment, the justices denied a request by the Justice Department to review a U.S. appeals court ruling that barred the government from seeking $280 billion in past tobacco profits as a legal remedy for decades of alleged fraud by the tobacco industry, according to Rueters.

Targeted in the lawsuit are Altria Group Inc. and its Philip Morris USA unit; Loews Corp.'s Lorillard Tobacco unit, which has a tracking stock, Carolina Group; Vector Group Ltd.'s Liggett Group; Reynolds American Inc.'s R.J. Reynolds Tobacco unit; and British American Tobacco unit British American Tobacco Investments Ltd.

The appeals court, by a 2-1 vote, ruled in February that the civil racketeering law only allows for forward-looking remedies designed to prevent future violations, according to the report.

The appeals court reversed a decision by the trial judge, U.S. District Judge Gladys Kessler, who had concluded that the law does allow the government to seek disgorgement of industry profits as a way to "prevent and restrain" future misconduct reported Reuters.

The appeals court's ruling took away the government's biggest weapon in the landmark case, which was filed in 1999, according to Reuters.