Tobacco Industry Faces Renewed $300 Billion Court Battle

Lawyer Blogs

The Obama Administration requested that the U.S. Supreme Court let the government seek damages of around $300 billion from the tobacco industry through an appeal of the landmark 2006 federal racketeering case that was earlier rejected by the courts.

Last Friday, the U.S. government asked the Supreme Court to overturn parts of the racketeering case and is now seeking $280 billion in forfeited profits and $10 billion to fund campaigns to cut the level of smoking in the United States.

R.J. Reynolds, Inc. Lorillard Inc. and other major players in the industry simultaneously filed paperwork asking the court to overturn the racketeering conviction or return it to an appellate court for review.

While it could be at least nine months before the court decides where to take the case, investors don’t have to look too far back to see the consequences of the uncertainty. The 2006 case sent shares in the sector sharply lower, as investors feared steep fines.

The tobacco company may have lost the lawsuit in 2006, but it avoided crippling monetary damages. Judge Kessler’s move to consider requiring tobacco companies to give up some $280 billion in profits was overruled after the industry filed a pretrial motion with an appeals court.

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