About 3,500 current and former employees of R.J. Reynolds Tobacco Co. can participate in a class-action lawsuit against R.J. Reynolds Tobacco Co., a federal District Court judge has ruled.
The lawsuit was filed in May 2002 by Richard Tatum of Winston-Salem in federal court in Greensboro. Judge Carlton Tilley Jr. granted the request to certify the lawsuit on Sept. 29.
The lawsuit alleges that Reynolds failed to live up to its duty as trustee of its 401(k) retirement plan by selling Nabisco stocks at a loss in January 2000.
Robert Elliot of Elliot Pishko Morgan in Winston-Salem, an attorney for Tatum, said yesterday that the lawsuit could go to trial as early as March.
Elliot said that although determining potential damages is complicated, he believes that they could reach into "the multimillions of dollars."
"This is a big ruling and very momentous for this case, considering that Reynolds has tried to block the class-action certification for more than six years," Elliot said.
David Howard, a spokesman for Reynolds, said yesterday that the company has filed an appeal of the judge's certification decision with the Fourth Circuit Court of Appeals. It also has filed a summary judgment for dismissal of the lawsuit with the federal court.
"We certainly don't agree with the certification decision," Howard said. "We believe this lawsuit is without merit."
The background for the lawsuit began in 1999 when RJR Tobacco was spun off from RJR Nabisco.
After the spinoff, RJR Nabisco was renamed Nabisco Group Holdings and traded under the ticker symbol "NGH." Its main asset was its 80.5 percent ownership stake in Nabisco.
The remaining 19.5 percent of ownership in Nabisco was sold in a public offering of stock in 1995. Those shares traded under the ticker symbol "NA."
Before the spinoff, RJR Nabisco employees were able to invest in single-stock funds for RJR Nabisco and Nabisco.
After the spinoff, the RJR Nabisco fund became a Nabisco Group Holdings fund. RJR Tobacco employees could not invest in these Nabisco funds, and eventually Nabisco stock funds that RJR Tobacco employees had invested in were divested by RJR Tobacco.
Tatum's lawsuit claims that he asked that retirement-plan participants be able to keep their investments in Nabisco.
The lawsuit said that Nabisco stocks endured a rough time after the spinoff and by Jan. 31, 2000, they were trading at very depressed levels.
The lawsuit points out that the Nabisco stocks eventually rebounded from their lower levels.
"It has been our contention all along that no prudent person would've sold the Nabisco stocks at that point in time," Elliot said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
Email
Facebook
Google
Twitter
Favorites
More
Advertisement