Appeals Court Won't Rehear Tobacco Ruling

A federal appeals court on Wednesday refused to reconsider a recent ruling that barred the government from seeking $280 billion in past profits from cigarette makers as part of its civil racketeering case against the industry.

The U.S. Court of Appeals for the D.C. Circuit dealt another setback to the racketeering case against the industry, rejecting the government's request that the full court review a ruling by a three-judge panel in February that concluded it cannot pursue past industry profits.

In a tied, 3-3 vote, the appeals court judges left standing a Feb. 4 ruling that stripped the government of its strongest penalty in the racketeering case, which charges tobacco companies lied for decades about the dangers of smoking.

The decision leaves reversed a previous ruling by U.S. District Judge Gladys Kessler, the judge presiding over the case that went to trial in September.

In a legal brief seeking a rehearing, the Justice Department said the appeals court had left Kessler "virtually powerless" to impose remedies and contradicted past decisions from other appeals courts and the U.S. Supreme Court.

Targeted in the lawsuit, filed in 1999, are Altria Group Inc. (MO) and its Philip Morris USA (search) 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.

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 a 1998 settlement with state attorneys general.