United States (and Tobacco-Free Kids Action Fund) v. Philip Morris, 556 F.3d 1095 (D.C. Cir. 2009)

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Status: Open

Legal Issue 

Whether several major tobacco companies violated the Racketeer Influenced and Corrupt Organizations Act by engaging in a conspiracy to defraud the public about the health risks of smoking and to market tobacco products to children.

Overview

In 1999, the United States Department of Justice (DOJ) sued several major tobacco companies for fraudulent and unlawful conduct and reimbursement of tobacco-related medical expenses.  The circuit court judge dismissed the DOJ’s claim for reimbursement, but allowed the DOJ to bring its claim under the Racketeer Influenced and Corrupt Organizations Act (RICO).  The DOJ then sued on the ground that the tobacco companies had engaged in a decades-long conspiracy to (1) mislead the public about the risks of smoking, (2) mislead the public about the danger of secondhand smoke; (3) misrepresent the addictiveness of nicotine, (4) manipulate the nicotine delivery of cigarettes, (5) deceptively market cigarettes characterized as “light” or “low tar,” while knowing that those cigarettes were at least as hazardous as full flavored cigarettes, (6) target the youth market; and (7) not produce safer cigarettes. 

In February 2005, the U.S. Court of Appeals for the D.C. Circuit ruled that disgorgement of illegal profits, a remedy aimed at past violations, is not a valid remedy since it does not prevent or restrain future RICO violations. In July 2005, the circuit court granted health group organizations, including the Tobacco-Free Kids Action Fund, motion to intervene in the lawsuit for the purpose of being heard on the issue of the permissible and appropriate remedies that the court should order.

On February 4, 2005, the Tobacco Control Legal Consortium filed an amicus brief, recommending that the district court’s proposed remedies include enhanced provisions relating to document disclosure, prohibited practices, and corrective communications.

On November 26, 2007, the Tobacco Control Legal Consortium filed an amicus brief arguing that because Defendants’ commercial speech was false, misleading, and deceptive, it was not protected by the First Amendment. We explained that Defendants’ statements were not protected by the Noerr-Pennington Doctrine, a judge-made principle that provides First Amendment protection to the collective activities of companies when they join together to seek to influence government policies. Finally, we argued that Judge Kessler’s remedies, which included a campaign of corrective communications, were ordered to prevent future harm rather than correct the effects of past conduct and did not offend the First Amendment. The brief was written by Professor David Vladeck, Georgetown University Law Center on behalf of the Tobacco Control Legal Consortium.

One of the 2006 remedies ordered by the U.S. District Court for the District of Columbia was a requirement that the tobacco companies place "corrective statements" in multiple media summarizing the court's massive factual findings, including the tobacco industry's deliberate deceptions about the health effects and addictiveness of its products.  In October 2014, the tobacco companies appealed the district court's remedial order, arguing that the corrective statements would violate their First Amendment free speech protections.  On December 8, 2014, the Consortium filed an amicus brief supporting the court's order and pointing out that the mandated corrective statements should be viewed in the context of the tobacco industry's "extraordinary history of lethal deception" - a history these statements are designed to counter.

Outcome

On August 17, 2006 Judge Kessler issued a 1,683 page opinion holding the tobacco companies liable for violating RICO by fraudulently covering up the health risks associated with smoking and for marketing their products to children.

The tobacco companies filed an appeal to the U.S. Court of Appeals. The court granted the motion, and on May 22, 2009 the three-judge panel unanimously upheld Judge Kessler’s decision finding the tobacco companies liable. The court upheld most of the ordered remedies, but denied additional remedies sought by public health interveners and the Department of Justice.  The court also found that the First Amendment does not protect fraudulent statements, stating that “Defendants knew of their falsity at the time and made the statements with the intent to deceive. Thus, we are not dealing with accidental falsehoods, or sincere attempts to persuade.” The court dismissed the defendants’ argument that their statements were protected by the First Amendment.