Posted Apr 24, 2014 04:45 pm CDT
A trial judge should not have dismissed a racketeering lawsuit in which 26 foreign countries accuse a major U.S. tobacco company of involvement in an international money-laundering scheme linked to organized crime groups, a federal appeals court has ruled.
Also disagreeing with the trial judge’s finding of a diversity problem, the 2nd U.S. Circuit Court of Appeals said that the Racketeer Influenced and Corrupt Organizations Act does cover claimed money-laundering in foreign countries directed from within the U.S., according to the New York Law Journal (sub. req.) and Reuters.
Violation of foreign criminal laws can establish predicate “racketeering activity” required to pursue a civil RICO claim under U.S. law, a three judge appellate panel unanimously held on Wednesday. Congress “unmistakably” intended the RICO statute to apply to such conduct under the circumstances of this case, wrote Judge Pierre Leval in the 2nd Circuit’s opinion (PDF).
A spokesman for RJR Nabisco said the company is mulling what its next move will be, including the possibility of additional appeals.
“Several alternative grounds for dismissing the case exist, and we will ask the district court to dismiss the case again on those grounds,” spokesman Brian Hatchell told Reuters. “We continue to believe that the lawsuit is entirely baseless in both fact and law.”
At issue in the case is a 2002 civil RICO suit pursued against RJ Reynolds and related entities by 26 European Union countries. It claims that proceeds from the sale of illegal drugs smuggled into European countries by Colombian and Russian crime groups were laundered throught the sale of discounted Euros and cigarettes. Employees of Reynolds entities within the U.S. allegedly directed these activities through regular mail, email and regular visits to Colombia.
Although the U.S. Supreme Court held in a 2010 decision that RICO should be presumed not to apply to foreign conduct, “Surely the presumption against extraterritorial application of United States laws does not command giving foreigners carte blanche to violate the laws of the United States in the United States,” wrote Leval.
Reynolds is now part of Nabisco’s Reynolds American Inc.