British American Tobacco dropped from U.S. case

Reuters News
Posted: Mar 28, 2011 6:15 PM
British American Tobacco dropped from U.S. case

WASHINGTON (Reuters) - British American Tobacco Plc has won its fight to be dropped from a U.S. Justice Department lawsuit in which cigarette companies were found to have conspired to lie about the dangers of tobacco.

U.S. District Judge Gladys Kessler, citing a U.S. Supreme Court ruling issued since her 2006 judgment against British American Tobacco and other companies, said she would grant the request by the company to be severed from the case.

Kessler ruled in August 2006 that the companies broke racketeering laws and could no longer use expressions such as "low tar" or "light" in their cigarette marketing. An appeals court upheld her decision.

"BAT is pleased at the result," said Philip Pfeffer, a partner at Chadbourne & Parke LLP who was part of the team who argued the case. "BATCo as a foreign company was always of the view that it should never have been a defendant in a lawsuit brought by the U.S. government concerning the U.S. public."

Kessler also ruled on Monday that BAT must still pay a portion of the government's costs of bringing the lawsuit.

"In light of the court's ruling that invalidated BATCo's liability, BATCo will be exploring its potential options in connection with the issue of costs," said Pfeffer, estimating those at about $395,000.

Defendants named in the original suit included Altria Group Inc, which owns Philip Morris USA Inc; Reynolds American's R.J. Reynolds Tobacco Co, Lorillard Tobacco Co and British American Tobacco.

BAT had owned Brown & Williamson, which R.J. Reynolds Tobacco bought in 2004. BAT, however, does own 42 per cent of Reynolds American.

The case was filed in 1999 by the Clinton administration, which sought $289 billion in damages. During the original trial, which began in 2004, the Justice Department under the Bush administration scaled back its demands to $14 billion for anti-smoking campaigns.

But Kessler concluded she could not even force the companies to fund a smoking-cessation program under an appeals court ruling.

The case in U.S. District Court for the District of Columbia is no. 99-2496.

(Reporting by Diane Bartz; Editing by Tim Dobbyn)