R.J. Reynolds Responds to Canadian Lawsuit

R.J. Reynolds Tobacco Holdings Inc. said smuggling allegations leveled against it by the Canadian government relate solely to its former international affiliates. Canada on Tuesday filed suit against Winston-Salem, N.C.-based R.J. Reynolds seeking at least $1 billion, claiming the company smuggled cigarettes into the country to undercut a government plan to discourage smoking with high taxes. R.J. Reynolds said the companies at the core of Canada’s case--R.J. Reynolds International, Northern Brands International Inc. and RJR-MacDonald Inc.--have been under investigation by the Canadian and U.S. governments for several years. R.J. Reynolds Tobacco Co., its U.S. cigarette-making unit, has “never been implicated in those investigations,” the company said in a statement. R.J. Reynolds sold its international operations to Japan Tobacco Inc. in May. At the time of the sale, it agreed to pay for “certain potential liabilities” against the unit tied to an investigation of allegations of smuggling in Canada. R.J. Reynolds shares fell 88 cents to close at $17.38 on the NYSE.