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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (98710)	2/4/2005 8:04:14 PM
From: LindyBill	Read Replies (1) \| Respond to of 793677

Hit and Run - No Tobacco Money Grab The federal government's case against the tobacco industry seems all but dead now that the U.S. Court of Appeals for the D.C. Circuit has ruled out "disgorgement" of $280 billion in allegedly ill-gotten gains as a remedy under the RICO act's civil provisions. In light of today's ruling, the most likely outcome is a settlement that includes some token concessions on marketing practices. As I've said, you needn't think cigarette manufacturers are paragons of honesty to recognize the implausibility of the Justice Department's case and welcome its well-deserved demise. Court: Tobacco Billions Beyond U.S. Reach February 04, 2005 4:57:00 PM ET By Peter Kaplan WASHINGTON (Reuters) - A U.S. appeals court on Friday rejected the government's bid to force cigarette makers to pay $280 billion in past profits, striking the toughest sanction from the racketeering case and lifting tobacco stocks. The three-judge panel of the Court of Appeals for the District of Columbia ruled 2-1 that federal law does not allow the monetary ``disgorgement'' penalty the government sought in the civil case that has been tried since September. ``We hold that the language of (the racketeering law) and the comprehensive remedial scheme of (the racketeering law) preclude disgorgement as a possible remedy in this case,'' Appeals Court Judge David Sentelle wrote in the majority opinion. Tobacco stocks rose after the ruling, with the S&P Tobacco Index closing up 4.92 percent. The decision reverses a lower court ruling from last May and strips the government of its most powerful weapon in the case. Analysts believe it could prompt the government to seek a settlement. R.J. Reynolds General Counsel Charles Blixt said in a statement the ruling ``dramatically transforms the DOJ suit.'' In addition to the monetary penalty, the government is seeking to impose tougher rules on marketing, advertising and warnings on tobacco products. Targeted in the government's lawsuit, filed in 1999, are Altria Group Inc. (MO) and its Philip Morris USA unit; Loews Corp.'s (LTR) Lorillard Tobacco unit, which has a tracking stock, Carolina Group (CG); Vector Group Ltd.'s (VGR) Liggett Group; Reynolds American Inc.'s (RAI) R.J. Reynolds Tobacco unit and British American Tobacco Plc unit British American Tobacco Investments Ltd. Shares of Altria Group closed up $3.26, or 5.11 percent, at $67.00, on the New York Stock Exchange. The stock reached as high as $68.50, its highest level in at least 10 years, after the ruling. Reynolds American shares closed up $3.69, or 4.5 percent, at $85.60, Carolina Group finished up $1.52 at $33.50. Loews shares rose $1.80 to $70.80. Vector shares were up 47 cents at $16.53. ``We believe today's ruling substantially reduces the risk associated with the DOJ lawsuit, and should alleviate investor concerns about that case,'' Rob Campagnino, an analyst at Prudential Equity Group, said in a research note. Anti-smoking groups urged the government to fight on. William Corr, executive director of the Campaign for Tobacco-Free Kids, said the judge presiding over the trial can still order changes that would further protect the public and require the industry to pay billions of dollars to fund tobacco prevention and cessation programs. ``The tobacco industry and its allies may view today's ruling as an opportunity to seek a weak settlement of the case. The White House and the Department of Justice should resist such efforts and aggressively pursue the case ... `` A spokeswoman for the Justice Department said its attorneys were reviewing the ruling and had no further comment. The government charges cigarette makers deceived the public about the dangers of smoking as part of a 50-year industry conspiracy. The tobacco companies deny they illegally conspired to promote smoking and say the government has no grounds to pursue them after they drastically overhauled marketing practices as part of the 1998 settlement with state attorneys general. Judge Sentelle, a Ronald Reagan appointee from the tobacco-producing state of North Carolina, wrote that the civil racketeering statute used to bring the case was aimed at putting an end to the illegal conduct going forward. ``Disgorgement is a very different type of remedy aimed at separating the criminal from his prior ill-gotten gains and thus may not be properly inferred from (the statute),'' Sentelle said. Sentelle was joined by another Reagan appointee Judge Stephen Williams. Dissenting was Judge David Tatel, who was appointed by former President Bill Clinton, whose administration brought the case.