Wednesday, June 29, 2005

Department of Justice Files Motion Outlining Proposed Remedies

The Department of Justice has just filed its motion with the D.C. District Court outlining its proposed remedies should the tobacco companies be found liable for RICO violations. The major proposed remedies are:

Monetary Remedies
  • $10 billion over 5 years for a national smoking cessation program available to all smokers, including a national telephone quitline, access to cessation counseling and medication, and a national media campaign;
  • $2 billion over 5 years for a national anti-smoking media campaign to be run by the American Legacy Foundation; and
  • Penalties to each company if the percentage of youths smoking its cigarette brands does not fall by 6% each year, for a total decrease of 42% by 2013 (the penalty is $3,000 per youth times the number of youth by which the target is missed);
Non-Monetary Remedies
  • Corrective communications on tobacco company web sites, in newspapers, and on cigarette packaging regarding the health effects of smoking, addictive nature of smoking, lack of health benefit of low-tar and low-nicotine cigarettes, and impact of cigarette marketing on youth smoking behavior;
  • Continued disclosure of tobacco industry documents, including marketing documents;
  • Court appointment of monitors to investigate and report on the activities of tobacco companies that may relate to future RICO violations;
  • A prohibition on cigarette companies making any false or misleading statements regarding their products;
  • A ban on companies using descriptors like "mild," "light," "ultra-light," etc. which may convey an implied health benefit message; and
  • Prohibition on companies conducting any marketing that appeals to youths, in the judgment of the court-appointed monitors.
The Rest of the Story

The remedies requested are largely inconsistent with the D.C. Appeals Court ruling and for the most part, have little chance of being either imposed by Judge Kessler or upheld by the Appeals Court.

The monetary remedies, in their totality, I find inconsistent with the RICO statute and I think there is essentially no chance of their being upheld. A national smoking cessation program for all smokers is clearly a backwards-looking remedy. It is primarily intended to redress past industry wrongs, not to prevent future RICO violations.

Similarly, a national anti-smoking media campaign is a backwards-looking remedy. It is even less relevant to RICO violations. In fact, I don't see how it has anything to do with either preventing or restraining violations. It could be great to advance public health objectives and reduce smoking, but I don't see it as an appropriate remedy under RICO and in light of the appellate court ruling.

The penalties for failure to meet youth smoking targets are the only monetary remedy that is forward-looking. However, I don't see any chance for this remedy to be imposed or upheld because it is far too indirectly related to future RICO violations. Youth smoking prevalence is not a direct measure of cigarette company RICO violations. There are a large number of factors that affect youth smoking, of which industry targeting of youth in its marketing is one. But I don't see how one can argue that failure to meet targets for reduction in youth smoking prevalence directly reflects the continued violation of RICO provisions. If all RICO violations were to end today, would youth smoking decline by 42% in the next 7 years? I don't know, but I am certainly not aware of any strong evidence to suggest that we know that would occur.

In fact, it is theoretically possible for the tobacco companies to reach the youth smoking targets while continuing to commit RICO violations. If they continued to market to youths, but simply raised the price of cigarettes enough, then youth smoking probably would drop by the prescribed amounts, even though RICO violations were continuing. Obviously, the cigarette companies would not have an interest in doing this, but the fact that it could occur demonstrates the disconnect between youth smoking prevalence and RICO violations.

Another reason why the evidence does not support these penalties as an effective and appropriate remedy is that one cannot attribute changes in youth smoking that have occurred even in the past decade to changes in the degree of industry RICO violations. Does the large decline in youth smoking in the late 1990s that recently plateaued indicate that the industry stopped or reduced its youth targeting in the late 1990s but recently re-instituted or increased that targeting? Clearly, youth smoking prevalence is not any kind of direct measure of the extent of industry RICO violations.

In summary, I do not find any of the monetary remedies to have any reasonable chance of being imposed and upheld by the district and appeals courts.

On the other hand, the non-monetary remedies do seem to be forward-looking and are certainly more directly tied to preventing the defendants' continued violation of RICO. However, there are a number of problems:

First, I doubt that the court will find favor with the idea of prescribing a specific set of statements for the cigarette companies to make to correct past misbehavior. That sounds much more like a legislative approach than a legal one. I doubt Judge Kessler is going to be comfortable with playing the role of chief tobacco control science and policy expert in the country and fashioning, much less prescribing these specific statements. I would think she would defer to someone like the Surgeon General, and unfortunately, he and she has already failed miserably in that regard. But it is really up to Congress to correct that, not the courts. Or so I think Judge Kessler will opine. So I believe that the corrective statements will probably go by the wayside.

Second, Judge Kessler has already expressed reservations about the idea of the court playing such an intensive role as appointing and supervising the investigative work of industry monitors. This also seems to be far beyond the role of the court. I think Kessler would rather issue a decision and leave this case behind her, rather than make her Court a permanent (or even temporary) administrative arm for tobacco industry corporate surveillance. For this reason, I think the industry monitors will also go by the wayside.

Third, the prohibition against marketing that appeals to youth is problematic for two reasons. First, the simple fact that advertising may appeal to youths does not imply that it will entice them to smoke. They first have to be exposed. And the basic government complaint is not simply that the industry marketing practices were appealing to youths but that the industry specifically targeted youths in their marketing.

Second, how would one measure whether advertising or marketing "appeals" to youths. According to the proposed remedy, the court-appointed monitors would make this judgment, but if that remedy is rejected, then who would make the decision about what is appealing and what is not? And is the Court likely to find this remedy narrow enough to make it appropriate under the law? Can one outlaw all advertising that is appealing to youths, even if some of it is clearly intended to reach and affect adults? This remedy has a chance, but it is not without some significant problems.

The three remedies that I think have the best shot are continued document disclosure, prohibition of false or misleading statements, and elimination of health descriptors. Unfortunately, these are the remedies that are probably least likely to have any substantial effect on protecting the public's health.

What does this all mean? I think it means that as currently specified, the government's proposed remedies are either: (1) not allowable under the law; or (2) not likely to have any substantial impact on the public's health.

Does this mean that the case is not worthwhile pursuing? For me, no. I think the pursuit of justice itself is an important end, and a simple finding of liability on the part of the cigarette companies would have profound implications for the way in which the companies could portray themselves in the public's eye. That could, in and of itself, have a larger effect on the public's health than any of the proposed remedies.

But for anti-smoking organizations, I doubt that the pursuit of justice itself is enough. I think money is what they are largely after, and there's simply none to come by.

The rest of the story suggests that what is really going on here is that the government is trying to fit a square peg into a round hole. They are trying to achieve a lot of monetary gains and a lot of public health gains, but they are trying to achieve those gains using a law that simply doesn't allow for those type of remedies. Could it be possible to develop more effective remedies that would be consistent with the law? I don't know. But the Proposed Final Judgment and Order is certainly not that round peg.

2 comments:

norbert hirschhorn said...

Dear Michael,

With you glum assessment for any possible redress you may end up looking like Cassandra (never popular before or after her prophesies), but I find this statement of yours rather silly:

"[A]simple finding of liability on the part of the cigarette companies would have profound implications for the way in which the companies could portray themselves in the public's eye."

The Big Two (PM and BAT) have ALREADY found themselves guilty of unwholesome past practices, and are now bleating 'social responsibility'. The only public opinion that counts is that of investors who,judging by share prices, seem to approve of the new look.

bert hirschhorn

Michael Siegel said...

Bert,
You may well be right. I can't help but think, however, that a verdict against the companies for racketeering and corruption that is highly publicized in the media would not have at least a short-term impact on their public image. But perhaps I'm exaggerating the actual impact.