By Diane Bartz
WASHINGTON (Reuters) - Cigarette companies systematically lied for years in order to sell tobacco products they knew were dangerous, a U.S. appeals court said on Friday as it largely upheld a trial judge's racketeering verdict.
The U.S. Court of Appeals for the District of Columbia ruled the companies, including Altria Group Inc and its Philip Morris USA unit, violated federal racketeering laws by conspiring to lie about the dangers of smoking.
"Defendants knew of their falsity at the time and made the statements with the intent to deceive," the court said in its 92-page ruling. "Thus, we are not dealing with accidental falsehoods, or sincere attempts to persuade; Defendants' liability rests on deceits perpetrated with knowledge of their falsity."
The tobacco companies had appealed a decision from U.S. District Judge Gladys Kessler in August 2006 that the companies could no longer use expressions such as "low tar" or "light" in their cigarette marketing.
The three-judge panel of the appeals court unanimously rejected tobacco companies' arguments that they had never advertised "light" cigarettes as less dangerous.
"Even leaving aside the fact that literally true statements may nevertheless constitute fraud, this claim founders on the district court's finding that 'there are lights of certain brands with higher tar levels than regulars of other brands from the same company,'" the appeals court said.
Other companies and trade groups appealing Kessler's ruling were the R.J. Reynolds Tobacco unit of Reynolds American Inc, Lorillard Inc, Vector Group Ltd's Liggett Group, British American Tobacco Plc and its Brown & Williamson unit, the Council for Tobacco Research and the Tobacco Institute.
The appeals court also pointed to evidence that the companies knew that second-hand smoke was dangerous, dismissing their assertions that there was no "scientific consensus."
"Again defendants miss the point," the ruling said. "The question is not whether other individuals knew that defendants' claims were false or misleading; the question is whether defendants did. Regardless of whether a scientific consensus existed at any point, defendants may be liable for fraud if they made statements knowing they were false or misleading."
The case is U.S. v Philip Morris USA et al, U.S. Court of Appeals for the District of Columbia, No. 06-5267.
The ruling was posted at: http://pacer.cadc.uscourts.gov/common/opinions/200905/06-5267-1181914.pdf
(Additional reporting by James Vicini; editing by Gerald E. McCormick and Tim Dobbyn)
