Bloomberg News

Altria Appeals Tobacco Sales Oversight Ruling by U.S. Judge

June 03, 2011

(Updates with notice to judge in second paragraph.)

June 3 (Bloomberg) -- Cigarette makers including Altria Group Inc.’s Philip Morris USA unit are appealing a judge’s ruling that oversight of the industry resulting from a 1999 racketeering case is necessary and will continue.

The defendants, which also include Reynolds American Inc.’s R.J. Reynolds Tobacco and Lorillard Inc.’s Lorillard Tobacco, notified U.S. District Judge Gladys Kessler in Washington today that they are challenging her authority to oversee the case in an appeal.

Kessler ruled June 1 that her involvement wasn’t ended by a 2009 law that empowered the U.S. Food and Drug Administration to monitor the industry and establish restrictions on the sale, promotion and distribution of tobacco products.

In her ruling, Kessler said the cigarette makers continue to challenge the law that created the FDA’s regulation of the industry and if they prevail, “it will be all the more necessary for them to be restrained by this court from any future violations” of the Racketeer Influenced and Corrupt Organizations Act.

In 2006, Kessler found that the companies violated the law by conspiring to hide the dangers of cigarettes. She ordered the companies to stop marketing cigarettes as “light” and “low- tar” and to make statements about the health effects of smoking in newspapers and magazines and on cigarette packages.

‘Foreign Activity’

British American Tobacco Plc, Europe’s largest cigarette maker, was dropped from the lawsuit in March after Kessler said a 2010 ruling by the U.S. Supreme Court in a securities case restricts the U.S. from finding liability in “what is essentially foreign activity.”

“We look forward to presenting our arguments to the appellate court,” said Steven Callahan, a spokesman for Altria. Greg Perry, a spokesman for Lorillard, didn’t immediately respond to an e-mail message seeking comment. Representatives at Reynolds American’s public relations department didn’t immediately reply to a phone message seeking comment.

Charles Miller, a Justice Department spokesman, declined to comment.

The case is U.S. v. Philip Morris USA Inc., 99-cv-02496, U.S. District Court, District of Columbia (Washington).

--Editors: Charles Carter, Glenn Holdcraft

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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