Thursday, July 21, 2005

Tobacco Companies File Motion to Dismiss Two Remedies in DOJ Case

The tobacco industry defendants in the DOJ case yesterday filed a motion with the D.C. District Court asking Judge Gladys Kessler to throw out two of the monetary remedies that the government has requested: tobacco industry payments for a national smoking cessation program and for a national anti-smoking education campaign geared at preventing youth smoking.

The government has requested $10 billion over an initial five-year period to fund a national smoking cessation program and an additional $4 billion for an anti-smoking media campaign to be run by the American Legacy Foundation.

The tobacco industry's central argument is that both of these remedies are not permissible under the D.C. Court of Appeals' decision that disallowed disgorgement of past industry profits as a remedy for its alleged RICO violations. The industry now argues that both a smoking cessation program and a smoking education program are intended to redress past industry wrongs rather than to prevent and restrain future RICO violations, and thus, like disgorgement of past profits, are not consistent with the appellate court's decision.

The Rest of the Story

This may be a first for me, but I think the tobacco companies make a very strong argument that has clear legal merit, and I think their motion should be granted. The smoking cessation and anti-smoking media campaign remedies should be thrown out.

I have already explained (back on April 20) why I believe that these two remedies are inconsistent with the Court of Appeals' ruling. Here, I will simply repeat the clear language of that ruling: "Section 1964(a) provides jurisdiction to issue a variety of orders 'to prevent and restrain' RICO violations. This language indicates that the jurisdiction is limited to forward-looking remedies that are aimed at future violations. ... Disgorgement, on the other hand, is a quintessentially backwardlooking remedy focused on remedying the effects of past conduct to restore the status quo. ... It is measured by the amount of prior unlawful gains and is awarded without respect to whether the defendant will act unlawfully in the future. Thus it is both aimed at and measured by past conduct."

There seems to be no question, in my mind at least, that like disgorgement, requiring the companies to pay for smoking cessation programs for current smokers and for an anti-smoking media campaign are not intended to prevent future RICO violations, but to remedy past industry wrongs, exactly what the appellate court has ruled is not allowable under RICO's civil remedies provision.

In fact, I would go so far as to opine that these remedies would likely increase the chances of future RICO violations. If the industry is faced with a national anti-smoking campaign and smoking cessation programs that may significantly reduce the number of current and future smokers, this will create a strong incentive for them to do everything possible to counteract these campaigns by recruiting new smokers and dissuading current smokers from quitting. Committing the kind of RICO violations that have been alleged would be an ideal way of accomplishing this.

Thus, I feel that it is reasonable to argue that rather than prevent and restrain future RICO violations, establishment of a national smoking cessation program and a smoking prevention media campaign will create powerful incentives for the industry to continue to commit RICO violations.

No comments: