Brussels, 24/04/2014 (Agence Europe) - On Thursday 24 April, the European Commission welcomed the decision on 23 April by the US Court of Appeals for the Second Circuit in New York City to allow the European Union and 26 member states to proceed with their civil claims against Reynolds American Inc. (“RJR”) in relation to the illicit trade in cigarettes. The Commission claims that the company is involved in cigarette smuggling and a spokeswoman for EU Anti-Fraud Commissioner Algirdas Semeta said the EU may take the company to court in the United States.
RJR, which makes Camel cigarettes, is the only major multinational tobacco manufacturer that has not entered into a cooperation agreement with the EU and member states. The EU and member states have already concluded cooperation agreements with Philip Morris International (2004), Japan Tobacco International (2007), British American Tobacco and Imperial Tobacco Limited (both 2010). The spokeswoman for Šemeta says that the EU has also issued proceedings against Philip Morris International and Japan Tobacco, but they have both agreed to sign a cooperation deal to counteract cigarette smuggling. A similar cooperation deal has been offered to RJR, but it has not yet accepted it, explained the spokeswoman.
Tobacco smuggling is estimated to cost public budgets around €10 billion a year in the EU alone. The Commission points out that it undermines health policies, and helps to fund even more sinister crimes. It says that the civil litigation against RJR is part of the EU's continuous efforts to fight the illicit tobacco trade.
The US Federal Appeals Court has ruled that the re-issuing of claims from more than a decade ago by the European Union against RJR is legitimate. In 2002, the European Union commenced a civil action in the United States District Court (the federal court of first instance) against RJR. The Commission says that the EU and member states explained to the US Court of Appeals for the Second Circuit: “The main objective of this action is to obtain enforceable equitable relief that will enjoin the scheme, and compel RJR to adopt the same standards of corporate conduct already embraced by other large multinational tobacco companies” through “cooperation agreements with the EU and all of its member states.”
In 2011, the US District Court dismissed the EU's and member states' claims against RJR on technical grounds without addressing the merits of the allegations. The EU and member states filed an appeal of the dismissal, and the appeal was heard by a three-judge panel of the US Court of Appeals for the Second Circuit (Hall, Sack, Leval, JJ.) in New York City, on 24 February 2012.
On Wednesday 23 April, the second circuit appeals court backed the civil claims by the EU and its member states under the Racketeer Influenced and Corrupt Organizations (RICO) statute and held that RICO provides a legal basis for the claims, which allege sufficiently important domestic activity by RJR in the United States to come within RICO's coverage. (LC)