(Updates with closing share prices in third paragraph.)
Jump to full article: Business Week/Bloomberg, 2010-06-28
Author: Greg Stohr
Intro: The rebuff all but ensures that the racketeering suit first pressed by former President Bill Clinton's administration won't result in financial penalties against Altria's Philip Morris USA and R.J. Reynolds Tobacco Co. It's the second time the high court has refused to hear government arguments in the case.
Altria climbed 64 cents, or 3.3 percent . . .
U.S. District Judge Gladys Kessler's ruling could open companies to continuing judicial oversight and impose more stringent limits on their business practices than the 2009 law that let the FDA regulate tobacco.
The government appeal, filed by U.S. Solicitor General Elena Kagan, argued that judges have authority to order the return of "ill-gotten gains" under the 1970 U.S. Racketeer Influenced and Corrupt Organizations Act, known as RICO.
"Congress vested district courts with full equitable authority to award complete relief for violations of RICO, including orders to disgorge ill-gotten gains," argued Kagan, now President Barack Obama's nominee to the high court. Her confirmation hearings began today. . . .
She also ordered the companies not to engage in future racketeering or deception. That aspect of her ruling would let the government or anti-smoking advocates return to court to seek additional sanctions on cigarette makers. . . .
Private litigants have attempted to use Kessler's 1,653- page opinion as ammunition in their own lawsuits against tobacco companies.
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