Court Sides With R.J. Reynolds

A federal appeals court Tuesday rejected a lawsuit by 22 cigarette wholesalers claiming that R.J. Reynolds Company's discount pricing program is discriminatory.

The Sixth U.S. Circuit Court of Appeals in Cincinnati affirmed a summary judgment in favor of the North Carolina-based tobacco giant issued in 2005.

The appeals court says the program may be unfair, but it's not illegal.

The wholesalers claimed they lost millions of dollars in profits. They say that happened when Reynolds instituted a discount program in 2000 to boost sales of its so-called second-tier non-premium "savings" brands of cigarettes.

Reynolds offered discounts and rebates to wholesalers selling the highest volume of Reynolds products. The plaintiffs are mostly smaller distributors in the Southeast.

They said this put them at a disadvantage because they had to cater to consumers demanding even cheaper cigarettes sold by other manufacturers.