Supreme Court Rejects EU Lawsuit Against Reynolds American

By Brent Kendall 

WASHINGTON -- The Supreme Court on Monday threw out a European Union lawsuit filed in U.S. courts that alleged Reynolds American Inc. directed a money-laundering scheme involving cigarette sales through organized crime groups.

The court, in a divided opinion by Justice Samuel Alito, said a New York-based appeals court was incorrect when it allowed the lawsuit to go forward.

The EU had been attempting to pursue Reynolds and its subsidiaries in U.S. courts for more than a decade. It and 26 member states allege the cigarette maker engaged in "grave misconduct" by participating in a money laundering cycle in which criminal groups smuggled illegal narcotics into Europe and laundered the resulting proceeds through illegal cigarette purchases with Reynolds.

The EU argued the U.S. lawsuit was allowed because some of Reynolds' alleged conduct took place in the U.S. and involved domestic enterprises. It also argued that Congress meant for U.S. racketeering law to apply to overseas conduct in some circumstances.

Reynolds, which has denied the allegations, argued the EU was improperly attempting to use the U.S. legal system to address European matters.

Write to Brent Kendall at [e-mail]

(END) Dow Jones Newswires

June 20, 2016 10:58 ET (14:58 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.