Litigation

U.S. High Court Won't Review RICO Fraud Remedies In Tobacco Cases

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court declined June 28 to review an appellate decision upholding most of the remedies imposed on the tobacco industry by the federal judge who found it liable for a decades-long pattern of fraud and deception (Philip Morris USA, Inc. v. United States, et al., No. 09-976, U.S. Sup.; R.J. Reynolds Tobacco Co., et al. v. United States, et al., No. 09-977, U.S. Sup.; United States v. Philip Morris USA, Inc., et al., No. 09-978, U.S. Sup.; Altria Group, Inc. v. United States, et al., No. 09-979, U.S. Sup.; British American Tobacco Ltd. v. United States, et al., No. 09-980, U.S. Sup.; Tobacco-Free Kids Action, et al. v. United States, et al., No. 09-994, U.S. Sup.; Lorillard Tobacco Co. v. United States, et al., No. 09-1012, U.S. Sup.).

In 2008, following a nine-month bench trial, U.S. Judge Gladys Kessler of the District Court for the District of Columbia found in favor of the U.S. government that the tobacco industry violated the Racketeer Influenced and Corrupt Organizations Act by concealing the health risks of cigarette smoking and the addictiveness of nicotine through decades of conduct designed to deceive the American public regarding the health hazards of smoking.  Among other things, the judge enjoined the defendants from using health descriptors such as "low tar" and "light" or any other words that could imply that smoking such cigarettes may be less injurious than smoking other brands and ordered the defendants to make public "corrective statements" regarding the health effects of smoking and their manipulation of cigarette design to increase nicotine delivery.

The defendants appealed to the District of Columbia Circuit U.S. Court of Appeals, which affirmed the majority of Judge Kessler's liability findings and most of the remedial order, including the corrective statements and the injunctions against the commission of "any act of racketeering, as defined in 18 U.S. Code Section 1961(1), relating in any way to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States."

The panel remanded certain other issues for further consideration and denied the cross-appeal of the government and intervenors, which challenged Judge Kessler's denial of additional remedies such as a proposed countermarketing campaign, a national smoking cessation program and a youth smoking-reduction plan; the court had already ruled in a prior appeal that the government may not seek disgorgement of $280 million in what it said were ill-gotten profits.

The decision spawned seven separate petitions for review from the U.S. Supreme Court:  one each from defendants Philip Morris USA Inc., Altria Group Inc., R.J. Reynolds Tobacco Co. (RJR), Lorillard Tobacco Co. and British American Tobacco Ltd., one from the federal government and one from a coalition of public health groups that includes Tobacco-Free Kids Action Fund, American Cancer Society, American Heart Association, American Lung Association, Americans for Nonsmokers' Rights and National African American Tobacco Prevention Network, all of which intervened in the original suit.

The Supreme Court considered the petitions at its June 24 conference but denied review without comment June 28.

[Editor's Note:  Full coverage will be in the July issue of Mealey's Litigation Report: Tobacco. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

For more information, call editor Gerald C. Matics at 610-205-1131, or e-mail him at gerald.matics@lexisnexis.com.