- The Washington Times - Monday, October 17, 2005

From combined dispatches

The Supreme Court rejected a government effort yesterday to force tobacco companies to give up $280 billion in profits on its claim they misled the public about the dangers of smoking.

The decision, a major victory for cigarette makers, was not unexpected because the government’s case is still pending and the federal judge who presided over the nine-month trial has not decided whether tobacco companies are guilty of wrongdoing.

The Supreme Court declined, without comment, to intervene now, but the case could return to justices next year.

The fight at the high court was over the amount of money the companies would have to pay if the judge rules they violated a federal anti-racketeering law known as RICO.

The industry has “dodged a giant financial bullet,” said Mary Aronson, a tobacco policy analyst and president of Aronson Washington Research. She said the case still could force “discomforting” changes to company business practices.

Shares of Altria Group Inc., parent of the biggest U.S. cigarette company Philip Morris USA, rose $4.30, or 6.1 percent, to close at $74.96 on the New York Stock Exchange. No. 2 cigarette maker Reynolds American Inc. shares rose $5.06, or 6.4 percent, to close at $83.80.

William Ohlemeyer, Altria vice president, said the decision was appropriate.

“We’re obviously disappointed and will obviously abide by the decision of the D.C. Circuit,” said U.S. Attorney General Alberto R. Gonzales.

Mr. Gonzales said he will meet with the lawyers working on the case and decide how to proceed. President Bush’s Justice Department inherited the 1999 lawsuit from the Clinton administration.

“We believe very strongly in this case,” Mr. Gonzales said.

William Corr, executive director of Campaign for Tobacco-Free Kids, said the Justice Department “should not use the Supreme Court’s decision as an excuse to let the tobacco companies off the hook with a weak settlement.”

A federal appeals court in Washington had ruled that the government could not pursue the $280 billion, the most ever sought in a civil racketeering trial. John G. Roberts Jr., then on the appeals court, had recused himself from the case, without giving a reason. But as the chief justice of the Supreme Court, he participated in the case.

“The government’s suit, by any measure, is the most important civil RICO action that the government has ever brought,” justices had been told by Bush administration lawyer Edwin Kneedler.

Mr. Kneedler argued that if the court did not step in now to deal with this issue, the case could drag on several more years.

The tobacco companies’ lawyer, Michael Carvin, said the court should give U.S. District Judge Gladys Kessler time to decide the case. He also argued that the government had a weak case “far removed from the heartland of RICO.”

The Supreme Court is already hearing a case involving the Racketeer Influenced and Corrupt Organizations Act (RICO) about whether the law can be used against pro-life protesters. The law, aimed primarily at fighting mobsters, has both criminal and civil provisions.

The government has said that the $280 billion is an estimate of money that companies including Philip Morris and R.J. Reynolds earned illegally through fraudulent activities.

It might still pursue a request for $10 billion for a stop-smoking program and $4 billion for education. The government had been criticized for not asking for more. An expert had recommended a $130 billion stop-smoking program.

The government has spent $140 million litigating the case since 1999, and the Justice Department is trying to force tobacco companies to pay those costs.



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