October 1, 2015 / 1:47 PM / in 3 years

U.S. top court to decide if EU countries can sue R.J. Reynolds over money-laundering

An R.J. Reynolds sign is seen outside the 1-million-square-foot cigarette manufacturing facility in Tobaccoville, North Carolina May 23, 2014. REUTERS/Chris Keane

WASHINGTON (Reuters) - The U.S. Supreme Court on Thursday agreed to decide whether a lawsuit filed by European Union countries accusing cigarette maker R.J. Reynolds of running a global money-laundering scheme involving narcotics smuggling into Europe can move forward.

The case could have broad implications because the court will decide whether plaintiffs can sue under U.S. federal civil racketeering laws for conduct that takes place overseas and, if so, under what circumstances.

The high court will review an April 2014 ruling by the 2nd U.S. Circuit Court of Appeals in New York in favor of the European Union and 26 member states. That ruling permitted the case to proceed in a U.S. court.

R.J. Reynolds is part of Reynolds American Inc, the second-largest U.S. tobacco company with brands including Camel and Pall Mall. The Winston-Salem, North Carolina-based company is awaiting regulatory approval to buy rival Lorillard Inc.

The European countries accused R.J. Reynolds of directing a decade-long scheme from the United States that involved the smuggling of illegal narcotics into Europe by Colombian and Russian crime groups, the laundering of proceeds from the sale of these drugs, and the use of the proceeds by importers to buy R.J. Reynolds cigarettes.

The European Union said this hurt its economies and legitimate markets, deprived member nations of tax revenue and violated the Racketeer Influenced and Corrupt Organizations Act, a U.S. anti-racketeering law. The lawsuit began in 2002.

The 2nd Circuit has been a leader in limiting the use of U.S. law to police foreign conduct in the wake of a 2010 U.S. Supreme Court decision finding a presumption against doing so.

The Supreme Court will hear oral arguments and decide the case in its new term, which starts on Monday and ends in June 2016.

The case is RJR Nabisco v. European Community, U.S. Supreme Court, No. 15-138.

Reporting by Lawrence Hurley; Editing by Will Dunham

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