updated 5/7/2004 3:16:34 PM ET 2004-05-07T19:16:34

A federal judge has denied the tobacco industry's bid to toss out the Justice Department's $280 billion lawsuit against the nation's top cigarette makers.

The tobacco industry argued in a motion that the case should not be brought to trial this fall, because the Justice Department has so far failed to show that the companies were likely to commit fraud in the future.

"To answer that question, the court must hear and weigh the evidence, which is properly done at trial," U.S. District Court Judge Gladys Kessler said in a written ruling issued late Thursday.

Anti-smoking groups applauded that decision and said it significantly moved the case forward. "I do think it makes it clear that there is going to be a trial," said Matthew Myers, president of the Campaign for Tobacco-free Kids.

The Justice Department filed the civil racketeering case against the industry for allegedly conspiring to deceive the public about the dangers of tobacco and the addictive nature of nicotine. The government also claims the companies targeted children through advertising and then lied about it.

The suit was filed under the Clinton administration. The Justice Department, under the Bush administration, initially sought to settle the case but has pursued it since those talks failed.

In her ruling, Kessler rejected an argument by the tobacco companies that the case should be tossed out because a 1998 legal settlement with 46 states restricted the industry's ability to commit future wrongdoing. The companies cited the numerous restrictions the settlement imposes on them, such as a ban on cartoon characters and ads on public transportation or billboards.

"There is no question that Philip Morris USA and other tobacco companies have dramatically changed the way their products are marketed," said William Ohlemeyer, a lawyer for Philip Morris USA, the nation's largest cigarette manufacturer.

Kessler said the companies were asking her to assume that the industry has complied with the settlement and will continue to comply with it, assumptions she said she would not make at this stage in the case.

Kessler also noted that the government is seeking remedies not provided under the settlement with the states. That includes new marketing restrictions, funding of nicotine replacement therapy for smokers and the $280 billion allegedly earned through fraud.

Kessler still must respond to a motion filed by the tobacco industry in which the cigarette makers argue the government should not be allowed to recoup the billions sought.

Kessler did say in the latest round of rulings that all of the tobacco companies could be on the hook for the entire amount of damages if the government proves its case and payments are ordered. That means if one company can't pay, the others would be responsible for its share.

The defendants are Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A.; and The Tobacco Institute.

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