updated 3/22/2005 9:10:26 AM ET 2005-03-22T14:10:26

The nation’s largest cigarette makers and prosecutors have met secretly at least once with a court-appointed mediator in an effort to reach a settlement of the government’s civil fraud and racketeering case against the companies, The Wall Street Journal reported Tuesday.

The case is in its sixth month of trial in Washington, D.C., but the newspaper said U.S. District Judge Gladys Kessler had privately encouraged both sides to reach a settlement. The Journal cited unidentified people close to the case.

The talks follow a ruling last month by a federal appeals court narrowed the remedies available to the government in the case.

The government had been seeking an order that the cigarette makers disgorge $280 billion in profit allegedly earned from smokers who took up the habit before age 21. The appeals court ruled that disgorgement of profits should be off the table.

The Journal said the two sides have met at least once, since the appeals-court ruling, with the mediator, Eric Green, a Boston University professor, but it couldn’t be determined whether progress was made. It said the parties are expected to meet again.

The Journal said the Justice Department and the mediator declined comment as did the tobacco makers. The companies include Altria Group Inc.’s Philip Morris USA, the nation’s largest cigarette maker; R.J. Reynolds Tobacco Holdings Inc., which recently merged with Brown & Williamson to form Reynolds American Inc.; Vector Group Ltd.’s Liggett Group Inc.; and Loews Corp.’s Lorillard Inc.

The government’s case against the cigarette makers was announced in 1999 and the trial has been going on for six months.

The federal suit is separate from the $206 billion settlement struck in 1998 between the tobacco industry and 46 states and Washington, D.C. The four other states settled earlier for a total of about $40 million.

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