Bush’s tobacco appeal denied

WASHINGTON – The Supreme Court refused Monday to let the government sue tobacco companies for $280 billion, a major victory for cigarette makers.

A federal judge presided over a nine-month trial and has not yet decided whether tobacco companies are guilty of wrongdoing.

The fight at the high court was over the amount of money the companies would have to pay if the judge rules that they violated a federal anti-racketeering law known as RICO by misleading the public about the dangers of smoking.

A lower court said that the government could not pursue Philip Morris, R.J. Reynolds and other companies for profits that the government claims they earned illegally.

The Supreme Court declined, without comment, to hear the Bush administration’s appeal. The case could return to justices later.

The court’s decision sent shares of tobacco companies surging, with Philip Morris USA parent Altria Group Inc. rising by $4.30 to $74.96 and rival Reynolds American Inc. by $5.06 to $83.80.

Attorney General Alberto Gonzales said that while the administration was disappointed, “we continue to believe very strongly in this case.”

Several groups urged the Justice Department not to rush into a settlement with the cigarette makers.

“More than ever, the government should push for remedies that count, and not opt for a weak, watered-down settlement,” said M. Cass Wheeler, CEO for the American Heart Association.

William Corr, executive director of Campaign for Tobacco-Free Kids, said the Justice Department “should not use the Supreme Court’s decision as an excuse to let the tobacco companies off the hook with a weak settlement.”

The judge in the case had urged the sides to try to reach a settlement. Without the threat of a $280 billion judgment, the government has a weaker bargaining position.

“The settlement value of the case dropped,” said Mark Gottlieb, director of the Tobacco Products Liability Project at Northeastern University.

A lawyer for the tobacco companies declined to discuss the next step in the case. William Ohlemeyer, Altria vice president, said Monday’s decision was appropriate.