Tobacco battle rages on two fronts
on Jul 21, 2005 at 9:45 pm
The Bush Administration may have gone on to the Supreme Court to try to salvage much of its massive case against the tobacco industry, but the industry wasted no time in moving in a lower court to scuttle most of what is left of the case. Two days after the case was appealed to the Supreme Court, the industry’s attorneys on Wednesday asked the judge who is trying the case in U.S. District Court to bar the scaled-back version that the government is still seeking there.
Both the Justice Department’s appeal to the Justices (in U.S. v. Philip Morris USA, Inc., docket 05-92) and the new maneuver by the companies in District Court (there the case is docket 99-2496) involve the issue of remedies for alleged violations of the RICO anti-racketeering law. The industry has not yet been found to have committed any such violations, but the scope of remedies that would follow such a finding dominates the case as it runs on toward its sixth anniversary in federal court.
The government has made clear since the case began in the fall of 1999 that it wants to force the industry, as the price for violating RICO by alleged deception about smoking hazards, to forfeit some $280 billion in profits. The industry sought to have that “disgorgement” remedy ruled out, but U.S. District Judge Gladys Kessler refused to do so. She sent that issue on to the D.C. Circuit, which ruled 2-1 in February that disgorgement can never be ordered as a remedy for civil RICO violations. The Circuit Court decided that any remedy in the case had to be “forward-looking,” aimed only at future violations. That is the issue at the center of the Justice Department’s appeal to the Supreme Court, filed Monday.
The government, after losing in the Circuit Court on the disgorgement issue, put forward in District Court a fallback remedy: a $130 billion, 25-year program to persuade smokers to stop and to engage in public education to persuade youth not to start smoking. But the government reconsidered even that alternative remedy, and proposed instead a proposal to force the industry to spend $10 billion over five years on smoking cessation plus another $4 billion over ten years on public education. That scaling-down has led to an investigation at the Justice Department about possible influence over the trial team by Department officials, but the department has defended it as the only option left to it to satisfy the D.C. Circuit’s ruling.
In filings on Wednesday in District Court, the industry contended that the new $14 billion program itself is not “forward-looking” at all, but is simply another attempt to remedy the effects of any past violations of RICO. “These measures are on their face categorically barred by the D.C. Circuit’s prior opinion,” the industry’s motion for summary judgment argued. Among other facets of the Circuit Court opinion, the industry contended, was a conclusion that any remedy that seeks to deter industry conduct is backward, not forward, looking. The new remedy proposal, the motion says, seeks only to “redress alleged harms caused by [the industry’s] alleged past conduct.”
The government will have a chance to respond to the new motion, but Judge Kessler is expected to rule fairly promptly, in order to keep the long-running case moving forward. There has been no indication so far that she would interrupt the case while the government appeal remains pending in the Supreme Court, even though the outcome of that appeal might have a profound effect on what options she may have in winding up the case.
