British American Tobacco Co. asks Supreme Court to save it from RICO
Lyle Denniston reported in the SCOTUS Blog that British American Tobacco Co. (“BATCo”) asked the U.S. Supreme Court to require lower courts review whether RICO should be enforced against foreign companies. RICO was used in the federal government’s lawsuit against the tobacco industry, including BATCo. The Supreme Court has refused to hear any of the tobacco companies’ appeals. British American Tobacco notes in its petition that the Supreme Court held in Morrison v. National Australia Bank, 08-119, that U.S. securities laws could not be used against foreign defendants.
BATCo argues that the D.C. Circuit Court should be directed to “consider Morrison’s impact in the first instance.” In upholding all key parts of a District Court ruling against the industry, BATCo’s lawyers argue, the Circuit Court created a “flawed ‘exception’ to the traditional presumption against extra-territoriality” of a U.S. law based on the alleged “effects” on the U.S. of overseas conduct.
“The D.C. Circuit Court held that RICO [the anti-racketeering law] could properly be applied to BATCo’s foreign conduct based on that novel theory, and on its twin conclusions that the ‘effects’ test could be properly transplanted from securities and antitrust law to RICO and that a severely watered-down version of the ‘effects’ test is satisfied here,” according to the petition. BATCo’s lawyers that the Morrison decision rejected that test for securities law, thus undercutting the Circuit Court’s conclusion about RICO’s application to BATCo.
In the government’s RICO case against the cigarette-making companies, it charged that the firms had engaged in a scheme to defraud the American consuming public by denying and covering up the health hazards of smoking. The case was resolved mostly in favor of the government based on RICO.
