Cigarette makers lose appeal of landmark 2006 ruling

Philip Morris USA and other U.S. cigarette makers lost an appeal yesterday to a 2006 landmark ruling that found the nation's top tobacco companies guilty of racketeering and fraud for deceiving the public about the dangers of smoking.

A three-judge panel of the U.S. Court of Appeals in Washington unanimously upheld conditions that manufacturers change the way they market cigarettes.

The requirements, which have been on hold pending appeal, would ban labels such as low tar, light, ultra light or mild, since such cigarettes have been found to be no safer than others.

Throughout the 10 years the case has been litigated, tobacco companies have denied committing fraud. The companies argued the ban on labels such as light would cost them hundreds of millions of dollars.

"This is a pretty important decision," said Carl Tobias, a law professor at the University of Richmond.

The significance, he said, is that the panel upheld nearly all of the lower court's decisions.

"They are substantially affirming [the judge's] judgment," Tobias said. "If they believe the judge got it right, I would be somewhat surprised to see the Supreme Court grant an appeal."

But Philip Morris USA and its parent company, Henrico County-based Altria Group Inc., said they will appeal to the Supreme Court.

"The court's conclusions are not supported by the law or the evidence presented at trial, and we believe the exceptional importance of these issues justifies further review," Altria attorney Murray Garnick said in a statement.

But the appeals court wrote, in a 92-page opinion: "The government presented evidence from the 1950s and continuing through the following decades demonstrating that the defendant manufacturers were aware -- increasingly so as they conducted more research -- that smoking causes disease, including lung cancer."

Edward L. Sweda Jr., a senior attorney for the Tobacco Products Liability Project at Northeastern University, said he was surprised at the unanimous opinion, which included Chief U.S. Circuit Judge David Sentelle, a North Carolina native appointed to the appeals court by President Ronald Reagan in 1987. Sentelle had ruled against the government in an earlier appeal in the case.

"This ruling reinforces the validity of [the lower court judge's] ruling in 2006 that the tobacco company defendants are racketeers and their racketeering conduct isn't just a matter of ancient history," Sweda said.

Yesterday's ruling, Sweda said, not only is bad public relations for tobacco companies but it also will be used as ammunition by plaintiff attorneys in smoking-death cases across the country.

"This gives further strong support to those claims," he said.

Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, one of six health-advocacy groups that participated in the lawsuit, said the appeals decision "represents a dramatic victory for public health and an emphatic condemnation of the tobacco industry and its behavior."

Besides Philip Morris and Altria, other manufacturers who were defendants in the lawsuit were: R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp.; British American Tobacco Ltd.; Lorillard Tobacco Co. and Liggett Group Inc.

Deputy Business Editor Gregory J. Gilligan, The Associated Press and Bloomberg News Service contributed to this report.