A federal appeals panel has revived a lawsuit by 26 European nations accusing US tobacco giant RJ Reynolds and related entities of sponsoring cigarette smuggling overseas and running an international money-laundering scheme involving organized crime.
The 2nd Circuit Court of Appeals in Manhattan ruled Wednesday that the European Union and 26 of its member states had every right to right to file its 2011 suit against RJ Reynonds in the US courts.
The panel, in its 36-page opinion, found that Brooklyn federal Judge Nicholas Garaufis “erred” by determining the federal anti-racketeering law doesn’t apply to foreign groups or to misconduct outside the US.
“With respect to a number of offenses that constitute predicates for [Racketeer Influenced and Corrupt Organizations statute] RICO liability and are alleged in this case, Congress has clearly manifested an intent that they apply extraterritoriality,” Circuit Judge Pierre Leval wrote in the unanimous three-judge decision.
“As to the other alleged offenses, the complaint alleges sufficiently important domestic activity to come within RICO’s coverage.
“We believe that the district court also erred in ruling that the European Community’s participation as a plaintiff in this lawsuit destroyed complete diversity,” the judge added.
The panel has sent the case back to the lower court for further proceedings.
The lawsuit alleges that RJ Reynolds worked with organized crime groups to run the money-laundering scheme and that the company laundered the cash through New York-based financial institutions.
Lawyers for the European countries and RJ Reynolds didn’t immediately return requests for comment.