(Updated with additional background of tobacco lawsuits and today's Altria stock movement.)



) -- Philip Morris USA, a division of


(MO) - Get Report

is suing ten New York and New Jersey retailers for the alleged sale of fake Marlboro cigarettes.

The company is demanding that the retailers handover the profits they made from selling the counterfeit products and compensate the company for damages and attorney's fees.

The US's largest tobacco company says cigarette smuggling is rife in New York, which has among the highest tobacco tax rates in the nation. A pack of Marlboros in Manhattan can cost more than $10.

The federal lawsuit comes as tobacco companies face tough years and stiffer competition down the road, a result of a new 62-cents-a-pack federal tax, smoking bans, health concerns and social stigma attached to smoking. Just yesterday a Florida court ordered Philip Morris to pay an ex-smoker almost $300 million in punitive damages.

Philip Morris International

(PM) - Get Report

said Thursday that it expects its full-year earnings to come in at the high end of its forecast, but that still falls short of Wall Street's expectations.

Susan Ivey, the CEO of



, maker of Camel, Century and Salem, recently gave a gloomy picture of the tobacco industry during its third quarter conference call. She predicted that U.S. cigarette demand would fall 8 to 9% a year in the foreseeable future.



, which owns brands such as Newport, Kent, True and Maverick watched its sales volume decline more than 6% in the third quarter. Depressing, but still perkier than the 12.6% decline it projected for the total industry. Altria saw its cigarette sales fall roughly in line with Lorillard's projection, but said cost-cutting and higher cigar sales helped bolster its profits. Reynold's profits soared only because last year's paled noticeably in comparison.

Altria shares are a ticking down 0.16% at $19.21 a share in pre-market trading.

-- Reported by Andrea Tse in New York

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