Tobacco.org

• Big Tobacco Beats Back RICO Claims 

Lawyers for five U.S. tobacco companies have persuaded the 11th U.S. Circuit Court of Appeals to adopt a 225-year-old common law principle that bars three Latin American countries from suing them in U.S. courts.

That principle, called the revenue rule, prohibits one country from trying to enforce its own revenue laws in another country's courts.

In the defense's brief, Goodwin Proctor's Kenneth J. Parsigian, who represented the tobacco companies, cited cases from 225 years of Anglo-American jurisprudence

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• Tobacco Companies Win Smuggling Appeal 

Tobacco manufacturers have won an appeal challenging lawsuits by the governments of Belize, Ecuador and Honduras that claim the companies conspired to smuggle cigarettes into their countries to boost profits and evade taxes.

The racketeering suits against Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard and Liggett boil down to attempts to enforce foreign tax claims in U.S. courts, the 11th U.S. Circuit Court of Appeals decided, upholding an earlier ruling by a Miami federal judge throwing out the lawsuit.

The court ruled that the strategy violates 18th century English common law and cannot be pursued. The ruling Friday did not address whether the companies smuggled cigarettes.

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• Latin American Nations Claim Tobacco Cos. Violated RICO 

A centuries-old common-law rule may bar three Latin American nations from suing American tobacco companies under RICO in U.S. courts.

According to Kenneth J. Parsigian, who argued for the tobacco companies Tuesday before a panel of the 11th U.S. Circuit Court of Appeals, the nations of Belize, Ecuador and Honduras don't have the right to sue his clients.

"No court anywhere in history, anywhere in the world, has ever allowed a claim like this to go forward," said Parsigian, of Boston's Goodwin Proctor.

The three countries have accused five tobacco companies, including R.J. Reynolds Tobacco Co., Phillip Morris Cos. Inc. and Brown & Williamson Tobacco Corp., of setting up "elaborate criminal schemes to move their tobacco products into the hands of smokers, well below the radar screen of [the countries'] regulatory infrastructure." According to the plaintiffs, the companies sold tobacco in the Latin American nations tax-free by moving it through shadow companies and smugglers.

They filed a complaint in a Florida state court, alleging money laundering and mail and wire fraud, among other things. . .

Perwin said his clients' right to recourse in the U.S. courts is established under the plain language of RICO.

"[The revenue rule] is obviously superseded by the plain meaning of the federal statute," he said. "The plain meaning of the statute covers our claim. No doubt about it."

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No court anywhere in history, anywhere in the world, has ever allowed a claim like this to go forward.
Kenneth J. Parsigian, who argued for the tobacco companies before a panel of the 11th U.S. Circuit Court of Appeals against the suit by Belize, Ecuador and Honduras.

[The revenue rule] is obviously superseded by the plain meaning of the [RICO] federal statute. . . No doubt about it.
Joel S. Perwin, lawyer for the Latin American nations.

• Honduras, Belize claim tobacco firms evading taxes 

Honduras and Belize, already trying to force U.S. cigarette makers to pay the healthcare costs of sick smokers, on Tuesday claimed in lawsuits that the companies systematically smuggled tobacco to avoid duties and taxes.

The U.S. lawsuits seek unspecified billions of dollars in damages and allege that Philip Morris Cos. Inc., the maker of Marlboros, and the No. 2 U.S. cigarette group, R.J. Reynolds Tobacco Holdings Inc., participated in rings organized to avoid taxes. The suits also ask that the practices stop.

The suits allege the defendants violated laws by participating in a smuggling ring that shipped tobacco products from the two Central American nations as tax-free exports and then re-imported them as a way of beating taxes and duties. . .

In addition to the new tax claims by Honduras and Belize, which have health-costs suits against tobacco companies pending in Florida courts, 14 Brazilian state and city governments also filed suits that seek damages from the cigarette makers for treating sick smokers.

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