NEW YORK (AP) — A federal appeals court has revived a lawsuit by the European Union alleging that U.S. tobacco company R.J. Reynolds sponsored cigarette smuggling in Europe.

The 2nd U.S. Circuit Court of Appeals in New York City ruled Wednesday that the European Union and 26 of its member states were within rights to sue in U.S. courts.

The lawsuit alleges RJR directed, managed and controlled a global money-laundering scheme with organized crime groups. It said the company laundered money through New York-based financial institutions.

A Brooklyn judge had dismissed the lawsuit. But the appeals court says a racketeering law can apply to a foreign enterprise or conduct outside the U.S.

Reynolds American Inc., based in Winston-Salem, N.C., said through a spokesman that it is considering additional appeals of the "entirely baseless" lawsuit.