Judge's Jurisdiction Over Tobacco Racketeering Case Affirmed By D.C. Circuit

Judge's Jurisdiction Over Tobacco Racketeering Case Affirmed By D.C. Circuit

WASHINGTON, D.C. - A District of Columbia federal judge's continued jurisdiction over a 13-year-old racketeering case against Big Tobacco stemming from the companies' concealment of the risks of tobacco use was affirmed July 27 by the District of Columbia Circuit U.S. Court of Appeals (United States of America v. Philip Morris USA, Inc., et al., No. 11-5145, D.C. App. [enhanced version available to lexis.com subscribers]).

(Opinion available 04-120815-007Z.)

Arguing that the Family Smoking Prevention and Tobacco Control Act of 2009 supersedes the jurisdiction of U.S. Judge Gladys Kessler of the District of Columbia and will act as a deterrent to future wrongdoing, the nation's largest tobacco companies sought to avoid the corrective remedies Judge Kessler is currently considering pursuant to a 2008 bench trial conviction under the Racketeer Influenced and Corrupt Organizations (RICO) Act (U.S.A. v. Philip Morris USA Inc., et al., No. 99-2496, D. D.C.).

"The question before the district court here was whether it was still reasonably likely the defendants would commit future RICO violations despite the passage of the Tobacco Control Act," the appeals panel said. "As the district court observed, that question was squarely within its area of expertise; 13 years of litigation, nine months of trial, and 4000 findings of fact surely gave it unique insight into the defendants' tendency to circumvent or ignore the law.

"And while the Tobacco Control Act gave the [Food and Drug Administration] the authority to regulate much of the defendants' conduct, it gave the FDA no particular insight into whether the defendants were likely to comply with those restrictions. That is why courts consistently have refused to invoke the primary jurisdiction doctrine for 'claims based upon fraud or deceit' - claims that are 'within the conventional competence of courts.'"

Circuit Judge Janice Rogers Brown wrote for the court, with Chief Judge David B. Sentelle and Senior Circuit Judge Laurence H. Silberman concurring.

9-Month Trial

Following a nine-month bench trial in 2008, Judge Kessler found in favor of the U.S. government that the tobacco industry violated the RICO 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 D.C. Circuit, 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."

Shortly after that remand, the 2009 tobacco act was signed into law, whereupon the companies moved to vacate Judge Kessler's injunctions.

Earlier this year, Judge Kessler has decided not to postpone an order for corrective action against the industry until newer cases challenging marketing restrictions and proposed graphic cigarette warning labels can be decided, saying in a Jan. 26 opinion that the litigation could drag on for years.


The government is represented by Sarang Vijay Damle, Deputy Assistant Attorney General Michael F. Hertz, Mark B. Stern, Alisa B. Klein and Assistant U.S. Attorney R. Craig Lawrence of the U.S. Department of Justice in Washington.

Philip Morris USA Inc. and parent corporation Altria Inc. are represented by Miguel A. Estrada of Gibson, Dunn & Crutcher in Washington, Beth A. Wilkinson of Paul, Weiss, Rifkind, Wharton & Garrison in Washington and Thomas J. Frederick of Winston & Strawn in Chicago. R.J. Reynolds Tobacco Co. is represented by Robert F. McDermott Jr. and Peter J. Biersteker of Jones Day in Washington. Lorillard Tobacco Co. is represented by Michael B. Minton of Thompson Coburn in St. Louis.

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