European Community v. RJR Nabisco, Inc.

355 F.3d 123, 2004 WL 60976
CourtCourt of Appeals for the Second Circuit
DecidedJanuary 14, 2004
DocketNo. 02-7325(L), 02-7330(CON), 02-7323
StatusPublished
Cited by3 cases

This text of 355 F.3d 123 (European Community v. RJR Nabisco, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
European Community v. RJR Nabisco, Inc., 355 F.3d 123, 2004 WL 60976 (2d Cir. 2004).

Opinion

SOTOMAYOR, Circuit Judge.

Plaintiffs-appellants are the European Community (“EC”) and various of its member states (collectively, the “EC plaintiffs”), as well as certain Departments of the nation of Colombia (the “Departments of Colombia,” and collectively with the EC plaintiffs, “plaintiffs”).1 They appeal from the judgment of the United States District Court for the Eastern District of New York (Garaufís, J.), dismissing their complaints in three related suits against the defendants, tobacco product manufacturers Philip Morris, RJR Nabisco, Brown & Williamson Tobacco Corp., British American Tobacco, Japan Tobacco, Inc., and each one’s affiliated entities. Plaintiffs allege that the defendants have violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., by masterminding several ongoing schemes to smuggle contraband cigarettes into the plaintiffs’ territories. In the process, the defendants allegedly have entered into conspiracies to commit mail and wire fraud, money laundering, misrepresentations to customs authorities, and various common law torts. Plaintiffs claim that the defendants’ conduct has caused them economic harm in the form of lost tax revenues and law enforcement costs. The district court dismissed the complaints in their entirety, finding that because plaintiffs’ claims were premised on purported violations of their tax laws, they would require the court to interpret and enforce foreign revenue laws, in violation of the revenue rule and this Court’s holding in Attorney General of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103 (2d Cir.2001) (“Canada ”), cert. denied, 537 U.S. 1000, 123 S.Ct. 513, 154 L.Ed.2d 394 (2002).

On appeal, plaintiffs primarily contend that Canada does not bar their suit because, subsequent to that decision, Congress passed the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub.L. No. 107-56, 115 Stat. 272 (the “Patriot Act”), which amended RICO to include terrorism-related offenses as predicate acts, and has legislative history that plaintiffs maintain reflects congressional intent to allow foreign sovereigns to use RICO to impose liability on domestic tobacco companies that attempt to evade their revenue laws. We hold that the Patriot Act and its legislative history do not constitute the clear evidence of congressional intent necessary to And that Congress has abrogated the revenue rule.

Plaintiffs also challenge the district court’s dismissal of their RICO claims predicated on money laundering activities without leave to replead. We hold that the district court did not abuse its discretion in denying leave to replead because doing so rendered the judgment final and thus ap-pealable. Moreover, plaintiffs have not demonstrated any prejudice arising from having to replead them claims in a new action.

Finally, the EC and its member states challenge the district court’s dismissal of their action against Japan Tobacco, Inc., [128]*128and its affiliated entities, as barred by the revenue rule, on the ground that the plaintiffs had not yet had a chance to serve the defendants with the complaint when the district court rendered its decision. We hold that the dismissal was premature because absent proper service upon the defendants, the court did not yet have jurisdiction over the action. We therefore vacate and remand for further proceedings.

BACKGROUND

This appeal arises from three actions filed by the plaintiffs that were treated as related and decided together by the district court. Because the plaintiffs make substantially similar allegations, seek the same damages, and rely on the same legal theories in the three complaints, the cases are identical in all relevant respects, and we will not differentiate among the actions, except where necessary.

The EC plaintiffs allege that the tobacco companies directed and facilitated contraband cigarette smuggling by studying smuggling routes, soliciting smugglers, and supplying them with cigarettes encased in packages that allowed the defendants to monitor and control the smuggling. The smugglers would then forge shipping documents and route the cigarettes so as to avoid paying the customs duties and excise taxes of the countries into which the cigarettes were smuggled. The profits from the smuggling were partially funneled into bonuses and kickbacks for defendants’ executives. Facilitating the smuggling trade also enabled the tobacco companies to argue to the public and the EC that the high import taxes maintained by the EC’s member states were fostering a black market in cigarettes. Moreover, the defendants allegedly knew or should have known that the funds used by the smugglers to purchase the cigarettes were generated through the sale of illegal narcotics in the United States and then laundered through a black market money exchange before being paid to the defendants.

The Departments of Colombia make similar allegations, claiming that the defendants have established and maintained small volumes of legal cigarette sales in Colombia in order to conceal and facilitate the many illegal shipping routes into the country. Some of the defendants collectively engaged in a number of meetings to coordinate their use of smuggling and to fix the prices of smuggled cigarettes. They have also labeled their products so as to exercise control over the smuggling, have secreted the proceeds in Swiss banks, and have lobbied for lower import taxes on the ground that high taxes promote smuggling. Finally, the defendants allegedly were aware that Colombian smugglers were funding their smuggling activities with the laundered proceeds of narcotics sales made in the United States.

The plaintiffs assert that the defendants and others participated in a smuggling enterprise within the meaning of RICO, see 18 U.S.C. § 1961(4), and that they committed a number of predicate acts of racketeering, including wire and mail fraud, money laundering arising from both the defendants’ acceptance of the proceeds from narcotics trafficking as payment for cigarettes and them attempts to conceal their smuggling profits, and violations of the Travel Act, 18 U.S.C. §§ 1952, 1961(1)(B). They also assert a number of state common law claims against the defendants, including negligent misrepresentation, public nuisance, unjust enrichment, and common law fraud.

All of the complaints allege the same damages and seek the same monetary and injunctive relief. The plaintiffs seek treble damages pursuant to RICO, claiming that [129]*129as a result of the smuggling, “the proper duties and taxes have not been paid on the aforesaid cigarettes,” including customs duties, value-added taxes, and excise taxes amounting to hundreds of millions of dollars per year.

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Related

Carl West v. United States
853 F.3d 520 (Ninth Circuit, 2017)
European Community v. RJR Nabisco, Inc.
424 F.3d 175 (Second Circuit, 2005)
The European Community, Acting on Its Own Behalf and on Behalf of the Member States It Has Power to Represent, and the Kingdom of Belgium, Republic of Finland, French Republic, Hellenic Republic, Federal Republic of Germany, Italian Republic, Grand Duchy of Luxembourg, Kingdom of the Netherlands, Portuguese Republic, and Kingdom of Spain, Individually v. Rjr Nabisco, Inc., R.J. Reynolds Tobacco Co., R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International, Inc., Rjr Acquisition Corp., F/k/a Nabisco Group Holdings Corp. And R.J. Reynolds Tobacco Holdings, Inc., Philip Morris International, Inc., Philip Morris Companies, Inc., Philip Morris Incorporated, D/B/A Philip Morris Products, Inc., and Philip Morris Duty Free, Inc., Department of Amazonas, Department of Antioquia, Department of Atlantico, Department of Bolivar, Department of Caqueta, Department of Casanare, Department of Cesar, Department of Choco, Department of Cordoba, Department of Cundinamarca, Department of Huila, Department of La Guajira, Department of Magdalena, Department of Meta, Department of Narino, Department of Norte De Santander, Department of Putumayo, Department of Quindio, Department of Risaralda, Department of Santader, Department of Sucre, Department of Tolima, Department of Valle Del Cauca, Department of Vaupes and Santa Fe De Bogota, Capital District v. Philip Morris Companies, Inc., Philip Morris Incorporated, D/B/A Philip Morris Products, Inc., Philip Morris Latin America Sales Corporation, Philip Morris Duty Free, Inc., British American Tobacco (Investments) Ltd., B.A.T. Industries, P.L.C., Brown & Williamson Tobacco Corporation, USA Batus Tobacco Services, Inc. And British American Tobacco (South America) Ltd., the European Community, Acting on Its Own Behalf and on Behalf of the Member States It Has Power to Represent, and the Kingdom of Belgium, Republic of Finland, French Republic, Hellenic Republic, Federal Republic of Germany, Italian Republic, Grand Duchy of Luxembourg, Kingdom of the Netherlands, Portuguese Republic, and Kingdom of Spain, Individually v. Japan Tobacco, Inc., Jt International Manufacturing America, Inc., Jti Duty-Free Usa, Inc., Jt International S.A., Japan Tobacco International U.S.A., Inc. And Premier Brands, Ltd.
355 F.3d 123 (Second Circuit, 2004)

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355 F.3d 123, 2004 WL 60976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/european-community-v-rjr-nabisco-inc-ca2-2004.