United States v. Philip Morris (D.O.J. Lawsuit)


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 district 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 district 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 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.  “As set forth in these Final Proposed Findings of Fact, substantial evidence establishes that Defendants have engaged in and executed – and continue to engage in and execute – a massive 50-year scheme to defraud the public, including consumers of cigarettes, in violation of RICO.”

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.

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