U.S. v. Philip Morris USA, Inc.

You are here

686 F.3d 832 (D.C. Cir. 2012)

Tobacco Control Act Does Not Render RICO Remedies Moot


On September 22, 1999, the U.S. Department of Justice (DOJ) sued several of the largest tobacco companies in federal district court for civil violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).1  On August 17, 2006, Judge Kessler of the U.S. District Court for the D.C. Circuit issued a 1,683-page opinion holding the tobacco companies liable for violating RICO due to their participation in a decades-long scheme to defraud the public about the health risks and addictiveness of smoking.2 The district court determined that there was a reasonable likelihood that the companies would commit RICO violations in the future and imposed a set of restrictions that, among other things, prohibited the companies from making false or deceptive statements about cigarettes and their health impact and required disclosures of marketing and sales information to the public and the DOJ.3  On May 22, 2009, the U.S. Court of Appeals for the D.C. Circuit largely affirmed the district court opinion and these remedies.4

In June 2009, the Tobacco Control Act was signed into law, granting the FDA comprehensive regulatory authority over the marketing, manufacture, and distribution of cigarettes and other tobacco products.  One month later, the tobacco companies that were defendants in the original RICO case filed suit to vacate, or set aside, the requirements imposed by the 2006 decision, arguing that the Tobacco Control Act rendered the RICO remedies moot.  On June 1, 2011, the district court rejected the tobacco companies’ arguments, refusing to set aside the ruling.5 The tobacco companies appealed.

The Court of Appeals’ Decision

On July 27, 2012, the U.S. Court of Appeals for the D.C. Circuit affirmed the 2011 decision of the district court.  First, the appeals court rejected the tobacco companies’ argument that the Tobacco Control Act made the trial court’s requirements irrelevant or unnecessary, finding that the Act’s restrictions do not make it impossible for the companies to commit future RICO violations.6  The court found that if the companies were not deterred by the penalties associated with RICO violations, there is no reason to believe they would be deterred by the restrictions imposed by the Act, which were not intended to address RICO violations.7  Moreover, the court noted that relevant provisions of the Tobacco Control Act are the subject of ongoing litigation.8  Even as the companies were arguing in this case that the Act will prevent them from violating RICO, the companies were simultaneously trying to limit their obligations under the Act by challenging its provisions in Discount Tobacco City & Lottery, Inc. v. United States.9

The appeals court also rejected the companies’ argument that the district court should defer to the FDA, which now has primary authority over tobacco products, finding that the issue the requirements addressed – whether the defendants would commit future RICO violations – was within the expertise of the district court, not the FDA.10  Furthermore, the Tobacco Control Act explicitly stated that it should not be interpreted to affect any pending legal action.11

Litigation Status

The tobacco industry did not seek review of the appellate court’s decision and so the decision not to dismiss the larger case is final. The rest of the litigation moves forward as the industry continues to press its challenge to the RICO remedies imposed by Judge Kessler.

For more information on this case visit: United States v. Philip Morris

Click to return to the Tobacco Control Act Cases page.

1 For more information on this case, see Tobacco Control Legal Consortium, Everything You Ever Wanted to Know about U.S. v. Philip Morris But Were Afraid to Ask (2013) available here; Tobacco Control Legal Consortium, The Verdict Is In: Findings from United States v. Philip Morris (2006) available here.
2 United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1 (D.D.C. 2006). 
3 Id.
4 United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1150 (D.C. Cir. 2009). 
5 Philip Morris 787 F. Supp. 2d at 68.
6 Philip Morris 686 F.3d at 836–37.
7 Id. at 837.
8 Id.
9 Disc. Tobacco City & Lottery, Inc. v. U.S., 674 F.3d 509 (6th Cir. 2012).
10 Philip Morris, 686 F.3d at 837–38.
11 Id. at 838.