- Associated Press - Thursday, October 1, 2015

WASHINGTON (AP) - The Supreme Court will decide whether the European Union can pursue its lawsuit claiming that tobacco company R.J. Reynolds sponsored cigarette smuggling in Europe as part of a global money-laundering scheme with organized crime groups.

The justices agreed Thursday to review an appeals court ruling that said the EU and 26 of its member states were within their rights to sue in U.S. courts under federal racketeering laws.

The suit alleges that RJR directed, managed and controlled the scheme that involved laundering money through New York-based financial institutions.

A federal judge threw out the claims, but a three-judge panel of the 2nd U.S. Circuit Court of Appeals ruled last year that racketeering laws can apply to crimes committed in foreign countries.

The EU alleges that RJR orchestrated the scheme with the help of Colombian and Russian criminal groups and that the company laundered money through New York-based financial institutions. The EU claims the company’s actions hurt the economies of EU member nations by depriving governments of tax revenues.

The suit alleges several violations of racketeering laws, including mail fraud, wire fraud, money laundering, violations of the Travel Act and laws banning material support to foreign terrorist organizations.

The company calls the claims baseless. R.J. Reynolds Tobacco Co. is a subsidiary of Winston-Salem, North Carolina-based Reynolds American Inc.

Earlier this year, the full 2nd Circuit declined to reconsider the case by an 8-5 vote, prompting four separate dissenting opinions. Four of the dissenting judges warned that the court had reached a new and far-reaching interpretation of the racketeering law “that finds little support in the history of the statute, its implementation, or the precedents of the Supreme Court.”

Justice Sonia Sotomayor did not take part in the court’s consideration of the case. She previously served on the appeals court and wrote an opinion in the case in 2004 at an earlier stage of the litigation.

The Supreme Court will hear arguments this winter in RJR Nabisco, Inc. v. European Community, 15-138.

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