BROOKLYN (CN) – Calling it “a structureless morass of allegations, devoid of any sequential description of events,” a federal judge snuffed racketeering claims in a decade-old lawsuit the European Community filed against U.S. cigarette maker R.J. Reynolds. The 25 European nations alleged Reynolds conspired with narcotics traffickers on two continents.
The European Community has unsuccessfully pursued action three times: on its own on Nov. 3, 2000; with 10 European countries as co-plaintiffs on Aug. 6, 2001; and with 25 countries and the European Community on April 30, 2010.
Each case was dismissed, for reasons including lack of standing and on summary judgment.
After the second action was dismissed in 2002, the European Community appealed to The 2nd Circuit, which affirmed the order to throw out claims against every defendant, except Japan Tobacco.
The European countries engaged in settlement discussions with Japan Tobacco in 2006 and 2007. U.S. District Judge Nicholas Garaufis’ March 8 order does not state whether a settlement was reached, or under what terms.
The European countries filed a second amended complaint on April 30, 2010 – Judge Garaufis dismissed the RICO charges in that complaint on Tuesday.
The plaintiffs included The European Community, Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.
Garaufis’ 15-page Memorandum and Order gives poor reviews to the European countries’ second amended complaint. Garaufis called it “a structureless morass of allegations, devoid of any sequential description of events – generally assert[ing] that defendants engaged in a global money-laundering scheme.”
The European countries claimed that R.J. Reynolds aka RJR Nabisco and its many affiliates sought business with “criminal organizations,” including Columbian and Russian drug traffickers, to help launder narcotics money.
Garaufis’ March 8 order describes the “variations” on the money-laundering scheme that the European countries allege:
“In some instances, the illicit cigarette importers are the same Colombian and Russian criminal organizations engaged in drug trafficking. … In others, the money brokers themselves purchase cigarettes from wholesalers. … In another, Defendants initially ship their cigarettes into Panama to ‘use the secrecy laws of the Republic of Panama’ to shield the transactions. … Plaintiffs also allege that Defendants purchased former British tobacco manufacturer, Brown & Williamson, for the purpose of expanding these schemes in Europe.
“In one scheme, Defendants’ employees allegedly traveled to Venezuela, snuck across the border to Colombia, sold cigarettes to Colombian criminal organizations for cash, snuck back across the Venezuelan border, and wired the cash proceeds to Defendants from Venezuela. … Sometimes these employees would receive payments in Brady Bonds, rather than cash, which they would sell for U.S. dollars back in Venezuela.
“In another scheme – completely devoid of any connection to Europe – a non-party corporation with the same address as one of the Defendants sold cigarettes in Iraq, via territories controlled by the Kurdistan Workers’ Party, a designated terrorist organization. … Plaintiffs argue that this somehow harmed the European Community’s interests.”
The European countries cite 7 “interests” which they say the United States and the Brooklyn Federal Court have in the defendants’ conduct, 36 “injuries” the European countries suffered, 29 requests for relief, and 14 legal claims against the cigarette companies.
Judge Garaufis was not impressed by the wide-ranging allegations of international intrigue.
“Nothing in plaintiffs’ complaint even remotely suggests that defendants had any hand in the planning, orders, or ‘overall corporate policy’ of the drug smuggling, currency swap, or currency purchase steps. In fact, the complaint very clearly and repeatedly articulates that the ‘overall corporate policy’ regarding these steps originates with organized criminal organizations in Europe and South America,” the order states.
Garaufis wrote that the European countries’ amended complaint appears to support the cigarette companies’ innocence of the RICO allegations.
“Indeed, the complaint, when read as a whole, strongly suggests the money laundering cycle was directed by South American and European criminal organizations. … Defendants appear to be nothing more than sellers of fungible goods in a complex series of transactions directed by South American and Russian gangs.”
Garaufis threw out all RICO charges on the basis of extraterritoriality; he is waiting to hear back from the European Community before ruling on the rest of the lawsuit.
The remaining claims are predicated on state law causes of action.
Judge Garaufis wrote that if the European Community voluntarily withdraws from the case, he will rule on the remaining actions related to the member-state plaintiffs.
Attorneys for the European nations and R.J. Reynolds did not immediately respond to emailed inquiries for comment.