Judge Rejects Racketeering Charges Against Tobacco Firms

From Reuters

In a major victory for the tobacco industry, a federal judge has dismissed the first personal-injury class-action suit against cigarette companies brought under the powerful federal racketeering law.

Victor Han, a Philip Morris Cos. spokesman who announced the ruling Tuesday, said the industry considers the ruling significant because the case was the first to test the use of the statute in tobacco litigation and the judge soundly rejected the strategy.

Several other personal-injury class-action cases are pending across the country, alleging that cigarette companies have conspired to conceal that nicotine is addictive. The recent ruling could discourage plaintiffs' lawyers in those suits from adding racketeering charges.

Although the federal Racketeer Influenced and Corrupt Organizations Act is most commonly associated with criminal mobster and drug cases, the statute also allows individuals to seek treble damages against defendants in civil cases if a pattern of wrongdoing can be established.

The plaintiffs alleged that the tobacco industry violated RICO by concealing that smoking is addictive and by adding levels of nicotine to make sure the products were habit-forming.

However, U.S. District Judge Irma Gonzalez of San Diego ruled Sept. 21 that RICO cannot be used to recover expenses resulting from personal injuries. "Congress' intent in enacting RICO excluded civil RICO actions seeking recovery of expenses resulting from personal injury," she wrote.

She said that under RICO, the plaintiffs must allege injury to business or property and that the U.S. Supreme Court has made it clear that personal injuries do not fall into either category.

"Although plaintiffs characterize the injury as pecuniary and thus an injury to their property, the court is unable to ignore that the core injury alleged in the complaint is addiction to nicotine," she wrote.

The suit was brought by 15 named plaintiffs on behalf of all individuals who consider themselves addicted to nicotine.

Defendants in the suit are Liggett Group Inc.; American Tobacco Co., a unit of American Brands; R.J. Reynolds Tobacco Co.; U.S. Tobacco Co.; Brown & Williamson Tobacco Corp.; Lorillard Tobacco Co.; Hill & Knowlton Inc., a unit of WPP Group; Tobacco Institute Inc., and the Council for Tobacco Research.

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