COURT SIDES WITH TOBACCO,
REJECTS GOVERNMENT'S $280 BILLION CLAIM
A federal appeals court today rejected the government's attempt
to force tobacco companies to forfeit $280 billion in profits.
The ruling came in response to a request by the tobacco industry
to eliminate the past-profit claim from the ongoing Department of
Justice case against the industry, which is currently being heard
before Judge Gladys Kessler of the U.S. Court of Appeals for the
District of Columbia.
The lawsuit had sought the $280 billion penalty under the civil
Racketeer Influenced and Corrupt Organizations Act (RICO) for what
the government termed a past conspiracy by the major tobacco manufacturers
to cover up the health risks associated with cigarette smoking.
The district court case will still proceed, but the major premises
have been undermined. RICO statutes require that the government
prove companies engaged in fraudulent behavior in the past and that
such behavior is likely to continue in the future.
We, along with most observers, had expected this appeal to succeed.
We consider the remainder of the Department of Justice case to also
be at risk since, with the signing of the Master Settlement Agreement
in 1998, the tobacco industry had agreed to strong restrictions
on marketing cigarettes and has taken other actions to educate the
public on the harmful effects of smoking. The Department of Justice
case has been underway since September 2004 and is expected to continue
through the spring.
ANALYST CERTIFICATION
SEC Regulation AC
I, Jay H. Abrams, hereby certify that the views expressed in this
research report accurately reflect my personal views about the subject
securities and issuers. I also certify that no part of my compensation
was, is, or will be, directly or indirectly, related to the specific
recommendations or view expressed in this report.
02/04/2005
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