U.S. not allowed to take penalty against tobacco companies

The Supreme Court refused Monday to allow the Bush administration to pursue a $280 billion (Ђ232.9 billion) penalty against tobacco companies on claims they misled the public about the dangers of smoking. The fight at the high court was over the amount of money the companies would have to pay, if the judge rules that they violated a federal anti-racketeering law known as RICO.

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 yet decided whether tobacco companies are guilty of wrongdoing. The Supreme Court declined, without comment, to intervene.

Shares of Altria Group Inc., parent of the biggest U.S. cigarette company Philip Morris USA, climbed $4.34, or 6.1 percent, to $75 in early trading on the New York Stock Exchange.

Among the defendants is London-based British American Tobacco Ltd.

William Corr, executive director of Campaign for Tobacco-Free Kids, said Monday that 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."

"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, the AP says.

The lawsuit was filed by the Clinton administration, and Kneedler argued that if the court did not step in now to deal with this issue, the case may drag on several more years.

The tobacco companies' lawyer, Michael Carvin of Washington, said that 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, and whether the law can be used against anti-abortion protesters. The law, aimed primarily at fighting mobsters, has both criminal and civil provisions.

The $280 billion (Ђ232.91 billion) is the most ever sought in a civil racketeering trial. The government has described that as an estimate of money that companies including Philip Morris and R.J. Reynolds earned illegally through fraudulent activities.


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