Tobacco giants hail court ruling

US tobacco companies have welcomed an appeal court's decision to reject the government's $280bn (£155bn) claim for alleged deceit about smoking dangers.

Tobacco stocks rose sharply on Wall Street after the 2-1 decision. The court in Washington found the case - filed by the Clinton administration in 1999 - could not be brought under federal anti-racketeering laws. Anti-smoking groups urge the government to fight on, but the Justice Department has not said if it will appeal. Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. They were delighted by the decision, which sent Reynolds shares up 4.5% and Altria shares up 5.11%.

Charles A Blixt, executive vice-president of RJ Reynolds Tobacco, said the ruling "dramatically transforms" the government's lawsuit. Altria Group said, in a statement, the government now "must not only prove that the companies have engaged in fraudulent behaviour in the past, but that they are likely to do so in the future."

The government had claimed tobacco firms


 - manipulated nicotine levels to increase addiction 
 - targeted teenagers with multi-billion dollar advertising campaigns 
 - lied about the dangers of smoking and ignored research to the contrary. 
 

Prosecutors wanted the cigarette firms to "disgorge" $280bn in profits accumulated over the past 50 years and impose tougher rules on marketing their products. They brought the case under racketeering laws, which were passed to deny mafia gangs the profits of their crimes. But the tobacco companies denied that they illegally conspired to promote smoking and defraud the public. They also said they had already met many of the government's demands in a landmark $206bn settlement reached with 46 states in 1998. The three-judge panel in the District of Columbia's Court of Appeals ruled on Friday that the US government could not sue the firms under the anti-racketeering laws. Judge David Sentelle, in his ruling, said such laws were aimed at putting an end to illegal conduct going forward. "We hold that the language of (the law) and the comprehensive remedial scheme of (the law) preclude disgorgement as a possible remedy in this case," he wrote. The Justice Department refused to say if it would appeal. "All we're saying today is that we have received the ruling and are reviewing it," a spokeswoman said on Friday. But William Corr of the Campaign for Tobacco-Free Kids urged the government to continue pressing its case. "Today's ruling should not be an excuse for this administration to seek a weak settlement that lets the tobacco industry off the hook," he said.
