The Justice Department and the tobacco industry returned to court Wednesday to begin sorting out how to implement restrictions imposed on cigarette makers in 2006 after a U.S. judge found the companies violated federal racketeering laws.

The industry's unsuccessful challenge to the racketeering ruling ended in June when the U.S. Supreme Court refused to consider the case.

Now, the trial judge who ruled against Big Tobacco, U.S. District Court Judge Gladys Kessler in Washington, is considering how carry out the remedies she ordered.

In a 2006 opinion that logged 1,653 pages, Kessler ordered a variety of marketing, sales and advertising restrictions on the tobacco industry. Kessler also required cigarette makers to issue corrective statements about the dangers of their products, which would appear on television, newspapers, product packaging and countertop displays in retail outlets.

Questions about the content of those corrective statements and where they will appear have yet to be resolved.

Justice Department attorneys said at Wednesday's hearing that significant work remained to be done on that issue.

Another matter that must be addressed is how Kessler's restrictions are affected by the 2009 law that gave the Food and Drug Administration the authority to regulate tobacco products.

The Justice Department argued in court papers that Kessler's restrictions on the tobacco industry are important and necessary--and are unaffected by last year's law.

The industry views the issue differently, arguing that if Kessler doesn't alter or withdraw the remedies she imposed, tobacco companies will face two different regulators controlling their marketing and promotional practices.

Kessler on Wednesday gave the parties two months to discuss the issues before filing a report with her court on Nov. 24. The judge scheduled another hearing for Dec. 20.

Lawyers for the parties said they hope to resolve several issues through informal discussions and without the need for court intervention.

The long-running case dates back to 1999, when the Clinton administration alleged that nine tobacco companies and two related trade associations engaged in a 50-year conspiracy to deceive the public about the dangers of smoking. A nine-month trial took place in 2005.

Defendants in the case include Altria Group Inc.'s (MO) Philip Morris subsidiary; Reynolds American Inc.'s (RAI) R.J. Reynolds Tobacco Co.; British American Tobacco (Investments) Ltd., a subsidiary of British American Tobacco PLC (BTI); and Lorillard Tobacco Co., a unit of Lorillard Inc. (LO).

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com
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