WASHINGTON (Legal Newsline) - New York City may not use federal racketeering laws to sue out-of-state tobacco vendors, the U.S. Supreme Court ruled 5-3 Monday.

Hemi Group, of New Mexico, appealed a decision by the U.S. Court of Appeals for the 2nd Circuit that said it could be sued under federal racketeering statutes. The City says the online seller of cigarettes has intentionally defrauded it of tax revenues, and that constituted wire and mail fraud.

Chief Justice John Roberts wrote the opinion. He wrote Hemi had no obligation to collect, remit or pay the lost taxes.

"This Court has interpreted (the Racketeer Influenced Corrupt Organizations Act) broadly, consistent with its terms, but we have also held that its reach is limited by the 'requirement of a direct causal connection' between the predicate wrong and the harm," Roberts wrote.

"The City's injuries here were not caused directly by the alleged fraud, and thus were not caused 'by reason of' it. The City, therefore, has no RICO claim."

Justice Sonia Sotomayor did not take part in the case.

Joining Roberts in the majority were justices Ruth Bader Ginsburg, Antonin Scalia, Clarence Thomas and Samuel Alito.

Dissenting were John Paul Stevens, Anthony Kennedy and Stephen Breyer.

Breyer wrote that Hemi's failure to provide New York State with the names and addresses of its New York City customers caused the City to lose tax revenue.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.