RICO Part Four
Big Tobacco won’t have to pay $280 billion
DAVID RESS AND JOHN REID BLACKWELL
June 29, 2010
Richmond, Va. – The U.S. Supreme Court yesterday put an end to Washington’s bid to fine Big Tobacco more than a quarter of a trillion dollars for violating federal racketeering law.
But the high court also rejected cigarette-makers’ request to review a lower court’s ruling that the companies had violated federal anti-gang laws over several decades by denying the health risks of smoking, marketing to young people and making defective products.
The ruling yesterday means a lower court can order Big Tobacco to take steps – such as not labeling cigarettes as light or low tar – already required by last year’s law that gives the U.S. Food and Drug Administration regulatory authority over tobacco products.
Brushing aside appeals from the Justice Department and the tobacco industry, the court left both Big Tobacco and public-health advocates saying they had won some key points and lost some in the decade-old legal battle.
Washington lost its argument that the tobacco companies should pay $280 billion in penalties for violating racketeering law — basically, their profits since the 1970s.
Tobacco companies, including Henrico County-based Altria Group and its Philip Morris USA cigarette unit, lost their argument that a law meant to crack down on mobsters was applied wrongly to their actions over the decades.
“The takeaway point is that there will be no monetary judgment. A possible disgorgement has now been completely put to bed,” said Murray Garnick, Altria Client Services senior vice president and associate general counsel.
Tobacco-control advocates said the key point was that U.S. District Court Judge Gladys Kessler’s 2006 racketeering finding stands.
“It is now established, and will not be overturned, that the major tobacco companies have been adjudicated to be racketeers,” said Edward L. Sweda, a tobacco-control activist and senior attorney for the Tobacco Control Resource Center at Northeastern University.
The Campaign for Tobacco Free Kids said it was disappointed that the Supreme Court won’t consider whether to reinstate the $280 billion in penalties, along with demands that tobacco companies pay for programs to teach people about the risks of tobacco and to help them quit smoking.
But, it added, “Today’s decision upholds the trial court’s historic verdict that the cigarette manufacturers are racketeers and have engaged in a decades-long conspiracy to deceive the American public and target children with their deadly and addictive products.”
On Wall Street, shares of Altria rose 3 percent to close at $20.34, while Reynolds American ended 4 percent higher at $53.45 and Lorillard Inc. gained 2.5 percent to $73.54.
“While the 2006 ruling stands, the government will not be able to seek any monetary damages from the cigarette makers. This is favorable news,” said Craig Hutson, senior analyst at Gimme Credit, an independent corporate bond research firm.
The Supreme Court did not explain why it decided against considering appeals on the lawsuit.
“My best guess is the majority of the [Supreme] Court was relatively satisfied with what the D.C. Circuit Court found,” said Carl Tobias, a law professor at the University of Richmond.
The Department of Justice wanted the high court to overturn a lower-court ruling that the section of the racketeering act it used to prosecute the tobacco companies did not provide for the surrender of profits from past actions.
That particular section, which governs the issue of court orders for future behavior, was what allowed the government to prosecute its case before a single judge, instead of before a jury.
Tobacco companies argued that it was wrong to apply racketeering law to a group of companies that compete with one another, and that many of the actions called racketeering were expressions of opinion about what was for many years a matter of heated public debate — the degree of harm from smoking and second-hand smoke.
Garnick said he believes Kessler’s racketeering finding is unlikely to affect individuals’ lawsuits against tobacco companies.
He said juries and judges in several states had rejected many of the arguments the Justice Department made in its case.
The case now returns to the U.S. District Court in Washington, which is considering how to mesh its ordered remedies with last year’s FDA tobacco law.
Also on the table may be its requirements about signs in stores, which some retailers feel unfairly punish them for the actions of the tobacco companies.
High court turns down both sides in tobacco fight
by The Associated Press, Washington
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The court’s action, issued without comment Monday, leaves in place court rulings that the tobacco industry illegally concealed the dangers of smoking for decades. But it also prevents the administration from trying to extract billions of dollars from the industry either in past profits or to fund a national campaign to curb smoking.
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In asking the court to hear its appeal, the administration said the industry’s half-century of deception “has cost the lives and damaged the health of untold millions of Americans.”
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The appeal was signed by Elena Kagan, the solicitor general, a couple of months before President Barack Obama nominated her to the Supreme Court.
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Philip Morris USA, the nation’s largest tobacco maker, its parent company Altria Group Inc., R.J. Reynolds Tobacco Co., British American Tobacco Investments Ltd. and Lorillard Tobacco Co. filed separate but related appeals that took issue with a federal judge’s 1,600-page opinion and an appeals court ruling that found the industry engaged in racketeering and fraud over several decades.
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In 2006, U.S. District Judge Gladys Kessler ruled that the companies engaged in a scheme to defraud the public by falsely denying the adverse health effects of smoking, concealing evidence that nicotine is addictive and lying about their manipulation of nicotine in cigarettes to create addiction. A federal appeals court in Washington upheld the findings.
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At the same time, however, the courts have said the government is not entitled to collect $280 billion in past profits or $14 billion for a national campaign to curb smoking. The high court previously denied the government’s appeal on that issue.
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The companies argue that the government improperly used the Racketeer Influenced and Corrupt Organizations, or RICO law, against them. The racketeering law often is employed against the Mafia and other criminal organizations.
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The companies also say the courts’ decision to brand their statements about smoking as fraudulent unfairly denied them their First Amendment rights to engage in the public-health debate about smoking.
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The administration said the money it seeks from the industry is commensurate with the harm it has caused.
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The public health groups in the case are: American Cancer Society; American Heart Association; American Lung Association; Americans for Nonsmokers’ Rights; National African American Tobacco Prevention Network and Tobacco-Free Kids Action Fund.
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The groups are most interested in forcing the tobacco companies to pay for a wide-ranging education campaign to discourage people from taking up smoking and helping others quit.
National tobacco case to be heard in Bangor
By Judy Harrison
Appeals Court Says Cigarette Makers Are Racketeers
Jacob Sullum
http://www.reason.com/blog/show/133679.html
August 17 2006
USA v. Philip Morris USA, INC.
Final Opinion issued by Judge Kessler
http://coop.dcd.uscourts.gov/99-2496-082006a.pdf
Final Judgment and Remedial Order issued by Judge Kessler
http://coop.dcd.uscourts.gov/99-2496-082006b.pdf
Bench Memos on National Review Online
This blog starts on March 22nd about Eubanks claim that the president under minded the DOJ’s case against the tobacco companies. What Eubanks never talks about is the appeals court ruling that, what the DOJ and the antis tried to do was prosecute past actions, was not allowed, so the prosecution along with the antis couldn’t ask for the 150 billion dollars! Eubanks leaves all of this out,? the appeals court took those damages off the table as far as penalties, Eubank claims the higher ups interfered with “her” case, when in fact it was the appeals court ruling. In this blog one of the entries has a letter from 6-15-05 from a senior lawyer with the doj explaining why the justice dept could NOT ask for the remedies it had intended and why Eubanks and her team were advised to change their tactics or lose the case totally. Eubanks in my opinion, is lying through her teeth right now.
There are about 3 or 4 entries. Even Glantz is tooting his horn for Eubanks, apparently no courts can or should rule against what the antis demand!
– A Newsletter Reader
Read:? http://bench.nationalreview.com/
On August 17, 2006, after 6 years of litigation, 9 months of trial, hundreds of depositions and thousands of exhibits, U.S. District Court Judge Gladys Kessler ruled that the Government had proven its case and found that the tobacco company defendants have violated the Racketeer Influenced Corrupt Organizations Act (RICO). Specific remedies were ordered.
The Verdict Is In: Findings from United States v. Philip Morris is a compilation of select quotes from 1,259 pages of Findings in a legal document over 1,700 pages long. Our goal in preparing this compilation has been to extract highlights of the Court’s Findings that help tell the story in a direct and easily understandable way.
March 23, 2007
Can a Federal Court Tell A Tobacco Company Not to Spin Off Its Subsidiary, In Order to Protect Smokers’ Ability to Successfully Sue the Company for Damages?
Dec. 05, 2006
By ANTHONY J. SEBOK
Tobacco litigation has produced some of the most difficult problems in tort law that the nation has seen in the past twenty years. This may be partly a result of the incredible amounts of money at stake in the litigation: When enough money is at stake, lawyers tend to pursue every possible avenue in an effort to gain an advantage.
Altria, Reynolds Can Appeal U.S. `Lights’ Case Ruling
Oct 31, 2006 By MATT APUZZO, The Associated Press
WASHINGTON – A federal appeals court blocked a landmark judgment against the tobacco industry Tuesday, clearing the way for the companies to continue selling “light” and “low tar” cigarettes until their appeals can be reviewed.
The decision by the U.S. Circuit Court of Appeals for the District of Columbia Circuit also allows the companies to continue for now the advertising campaigns that a federal judge in August ruled were misleading.
Without comment, the appeals court granted the tobacco companies’ request to put Judge Gladys Kessler’s order on hold. The companies have argued that her far-reaching ruling could cost them millions of dollars and lead to a loss of customers.
In mid-August, Kessler ruled that the companies, including Richmond, Va.-based Philip Morris USA, had violated racketeering laws and conspired for decades to mislead the public about the health hazards of smoking.
The judge ordered the companies to publish in newspapers and on their Web sites “corrective statements” on the adverse health effects and addictiveness of smoking and nicotine.
She also ordered tobacco companies to stop labeling cigarettes as “low tar,” “light,” “ultra light” or “mild,” since such cigarettes have been found to be no safer than others because of how people smoke them.
William V. Corr, executive director of the Campaign for Tobacco-Free Kids, said the appeals court stay was not surprising.
“Judge Kessler’s finding was that these companies have lied to the American people for 50 years,” Corr said. “We’re confident that, if it means going all the way to the Supreme Court, the government’s case will be vindicated and the industry will be held accountable.”
The Justice Department declined comment.
U.S. appeals court postpones ‘light’ cigarette case
Oct 24, 2006
A federal appeals court granted a temporary stay on Tuesday while it hears arguments about whether a $200 billion tobacco trial can proceed as a class-action lawsuit.
11 Oct 2006
NEW YORK – Altria Group Inc. and other major tobacco companies have asked a U.S. federal appeals court to throw out a lower court’s ruling that would allow smokers to sue en masse over claims that they were duped into believing light cigarettes were safer than regular ones, court papers showed on Tuesday.
By Christina Cheddar Berk
Oct 10, 2006
NEW YORK (MarketWatch) — Philip Morris USA and several other cigarette makers filed a motion late Friday with a federal appellate court, challenging a ruling that created one of the largest class-action lawsuits ever and requesting a stay of all proceedings.
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