August 17, 2006

Judge to rule on tobacco racketeering

By Peter Kaplan

WASHINGTON (Reuters) - A federal judge will hand down her
ruling on Thursday in a government lawsuit that accuses
cigarette makers of a decades-long conspiracy to hide the
dangers of smoking.

U.S. District Judge Gladys Kessler will issue a ruling at
4:30 p.m. EDT, on whether the tobacco companies are liable for
violating racketeering laws, a court official said.

If the judge rules against the companies, she also could
decide what remedies to impose on them.

Targeted in the 1999 lawsuit were 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 Plc unit British American
Tobacco Investments Ltd.

During an eight-month trial that ended in June 2005, the
government called scientists, economists and tobacco industry
whistle-blowers who described a decades-long campaign by
tobacco companies to deny or obscure the hazards of smoking --
even as its ill effects became increasingly clear.

Tobacco companies offered testimony from their own
scientists, economists and company executives. They denied any
conspiracy to promote smoking and said the government had no
grounds to pursue them after they drastically overhauled
marketing practices as part of a 1998 state settlement.

In February 2005, the U.S. Court of Appeals for the
District of Columbia Circuit barred the government from seeking
$280 billion in past industry profits, depriving the government
of its biggest potential weapon in the case.

The appeals court said civil racketeering remedies must
focus on the prevention of future misconduct, not punishment of
past misdeeds.

Near the end of the trial, government witnesses sketched
out possible remedies, such as forcing the tobacco companies to
pay billions of dollars for a national quit-smoking campaign,
fining them if youth smoking does not decline to preset levels,
or outside monitoring of the industry.

Tobacco company lawyers said proposals such as requiring
their clients to finance a stop-smoking program still are
beyond the bounds of the appeals court ruling.

Industry lawyers argued that it would be impossible to
justify any remedy beyond an injunction ordering the industry
not to engage in any future misconduct.