The U.S. Supreme Court rejected a government effort to force tobacco companies to give up $280 billion, leaving the Bush administration with a scaled-back version of its lawsuit. Shares of cigarette makers rose.
The high court, without comment, let stand a decision that bars the government from recouping decades of profits it says tobacco companies made by marketing to children and hiding the risks of smoking. The justices rejected the administration’s appeal as part of a list of orders released in Washington today.
The rejection bolsters Altria Group Inc.’s Philip Morris unit, Reynolds American Inc.’s R.J. Reynolds and other cigarette makers in a case that at one point loomed as the industry’s biggest legal threat. Altria shares rose $4.54, or 6.4 percent, to $75.20 as of 12:22 p.m. in trading on the New York Stock Exchange. Reynolds shares rose $4.19, or 5.3 percent, to $82.93.
The industry has “dodged a giant financial bullet,” said Mary Aronson, a tobacco policy analyst and president of Aronson Washington Research. She said the case still could force “discomforting” changes to company business practices.