Court rejects $280bn tobacco suit
From CNN Justice Producer Terry Frieden
WASHINGTON (CNN) -- In a 2-to-1 ruling, a U.S. federal appeals court panel in Washington Friday rejected the federal government's lawsuit seeking as much as $280 billion in past earnings from tobacco companies that allegedly engaged in a criminal enterprise to cover up smoking dangers.
The ruling represents a major blow to the Justice Department, which first brought the case in 1999 when Janet Reno was attorney general and was continued by John Ashcroft's legal team.
The government claimed a federal racketeering law allowed disgorgement of the billions in proceeds from the tobacco industry's allegedly unlawful activities.
But in a huge win for the embattled tobacco industry, the court disagreed.
"The relevant section provides the district court's jurisdiction for forward-looking remedies that prevent and restrain violations of the act. Because disgorgement, a remedy aimed at past violations, does not so prevent or restrain, we reverse the decision below," wrote Circuit Judge David Sentelle.
The ruling was hailed by tobacco companies.
R.J. Reynolds Tobacco Company said the ruling "dramatically transforms" the government's ongoing lawsuit against the tobacco industry.
"While we continue to believe that no remedies are warranted under the facts of this case, with the threat of disgorgement removed the principal remedies still available to the government are forward-looking measures," said Reynolds Executive Vice President and General Counsel Charles Blixt.
"These would include marketing and sales restrictions already put in place by our company and others."
A statement by Altria Group, parent of Philip Morris USA, said the government now "must not only prove that the companies have engaged in fraudulent behavior in the past, but that they are likely to do so in the future."
The Justice Department said only that its lawyers are "reviewing the case," and that it would have no further comment.
The appeals court took up the specific issue of forcing payment of past revenues and profits, even as the civil tobacco trial continues in U.S. District Court on whether the government can force the tobacco industry to limit advertising and marketing of tobacco products and force the industry to fund programs to help smokers kick the habit.
