Thursday, July 14, 2005

Deadline for DOJ to Appeal D.C. Circuit Court Ruling Looms

This coming Monday is the deadline for the Department of Justice to appeal (to the U.S. Supreme Court) the D.C. Circuit Court ruling that disallowed disgorgement of past tobacco industry profits as a potential remedy should the tobacco companies be found guilty of committing RICO violations. The ruling also disallows, in very clear terms, any potential remedy that focuses on past industry behavior and that is not designed specifically to prevent and restrain future tobacco company RICO violations.

Although there was at least one indication that DOJ was seriously considering an appeal to the Supreme Court, it is simply unclear at this time whether an appeal is planned. But the answer will come within the next three business days.

The Rest of the Story

What is most surprising to me is that despite all of the hullabaloo that anti-smoking groups have made about the Department of Justice's narrowing of the smoking cessation remedy that it initially requested (from $130 billion to $10 billion) and despite the intense anti-smoking group campaigns to malign the character and intentions of the senior lawyers involved in the case, there has been almost no attempt on the part of the anti-smoking community to try to mobilize a serious campaign to put pressure on DOJ to appeal the D.C. Court of Appeals' ruling to the Supreme Court.

While a number of anti-smoking groups, including the Campaign for Tobacco-Free Kids, American Cancer Society, American Heart Association, American Lung Association, and Americans for Nonsmokers' Rights have been quite vocal about the so-called devastation of the lawsuit that was a result of the change in the requested smoking cessation remedy and have engaged in a very strongly political campaign to protest what they see as the Bush Administration's role in destroying the case, the list of anti-smoking groups that have made any serious recent effort (to the best of my knowledge) to urge the public to pressure DOJ to appeal the all-important appellate court's legal ruling to the Supreme Court is rather small:

Smoke-Free Pennsylvania (see earlier post)
American Medical Association (see press release)

The Campaign for Tobacco-Free Kids' website has a number of action alerts and requests for donations that focus on the need to put pressure on the Bush administration to strengthen the proposed remedies, but I can find nothing encouraging its constituents to pressure DOJ to appeal the appellate court's ruling to the Supreme Court, other than a statement issued immediately after the appellate court ruling which did, in fact, urge DOJ to immediately appeal the ruling. In fact, unless I am missing something, the major current summary that the Campaign provides of the case does not even mention the D.C. Court of Appeals' ruling. What happened to the April 20 statement? Why has the Campaign not focused on pushing for an appeal of the appellate court ruling in recent weeks, when it would have been most important?

Similarly, the Americans for Nonsmokers' Rights website urges its constituents to rally against what ANR claims is political interference by a former tobacco industry lawyer (Associate Attorney General Robert McCallum, a lawyer who has never represented any tobacco company in a legal case), but, unless I am missing something, fails to urge citizens to take the only action which really has any chance of affecting the desired outcome of the case: appealing the appellate court ruling to the Supreme Court.

Another typical example is the American Lung Association, whose Minnesota chapter sent out an action alert and sample letter which urges DOJ to restore the $130 billion remedy (a worthless request in my opinion due to its lack of legal basis) but fails to urge DOJ to appeal the very decision that disallows that $130 billion remedy. But the very same action alert mentions that the letter which 50 U.S. Congresspersons sent to Attorney General Gonzales did ask him to appeal the decision.

As a member of the public health community who is on mailing lists for most of the major organizations above, I can attest to the fact that while I have been asked to accuse the Administration of political interference in the case and while I have been asked to accuse Robert McCallum of ethical misconduct, I have not been asked (other than by the 2 organizations listed above and in the April 20 Tobacco-Free Kids statement) to urge DOJ and/or the Administration to appeal to the Supreme Court.

I guess that I just find it absurd that anti-smoking groups are putting so much focus on trying to restore the $130 billion remedy, but very little focus on trying to overturn the very court decision that disallows the $130 billion remedy in the first place.

Let's face it. The only chance that anti-smoking organizations have of achieving the kind of result they would like to see (i.e., lots of $$$$$$ for anti-smoking programs) is for DOJ to appeal the case to the Supreme Court and for the Supreme Court to reverse the appellate court's decision and thus pave the way for disgorgement of past profits as a remedy, as well as the bulk of other remedies currently requested by the Department. Under the current law governing the case, it has essentially become a non-monetary case.

So first, on strategic grounds, I must commend Smoke-Free Pennsylvania and the American Medical Association for having enough legal insight to see that appealing the case to the Supreme Court is the only way, strategically, to have any chance of achieving a monetary outcome.

But at the same time, I must admit that it really is beginning to look like the bulk of the anti-smoking groups out there either have no idea of the legal issues involved in the case (they are acting as if the D.C. Court of Appeals doesn't exist or as if they didn't read its decision) or that they are simply trying to take advantage of a golden opportunity to take a swat at the Bush Administration in a way that is unlikely to have any tangible outcome on the fate of the lawsuit.

I also think it is important to point out that the non-monetary remedies requested by DOJ are hardly insubstantial and even without monetary remedies, one would think that anti-smoking groups would find the case worthwhile pursuing. In some ways, I think that making such a big stink over monetary remedies which have no chance of being upheld is detracting from the potential non-monetary remedies, some of which may not only be upheld, but may also result in substantial changes in tobacco industry marketing behavior.

Finally, I should note that I think it unlikely that the Supreme Court is going to overturn the D.C. Court of Appeals ruling, because I find the language in the RICO statute to be quite clear in requiring remedies under its civil provisions to be forward-looking remedies that directly prevent and restrain future RICO violations.

Here is the relevant provision in the RICO statue and the most relevant aspect of the D.C. Court of Appeals ruling, so that The Rest of the Story readers will be fully aware of the legal issues involved in the case:

Civil Remedies Section of RICO Statute:
"The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons."

Relevant Aspect of D.C. Circuit Court of Appeals Decision:
"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. ... Divestment, injunctions against persons’ future involvement in the activities in which the RICO enterprise had been engaged, and dissolution of the enterprise are all aimed at separating the RICO criminal from the enterprise so that he cannot commit violations in the future. 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."

UPDATE (Friday, July 15, 2005; 12:20 pm): The Tobacco Products Liability Project today became the third group I am aware of to issue an action alert urging constituents to pressure DOJ to appeal to the Supreme Court.

1 comment:

Bill Godshall said...

Action on Smoking and Health (ASH) sent a letter to AG Gonzales on July 12 urging the DOJ to appeal the DCCA ruling to the SCOTUS.

Also, Josh Alpert from Americans for Nonsmokers' Rights (ANR) sent me an e-mail stating that ANR's letter to AG Gonzales also urged the DOJ to appeal the DCCA ruling.

While the AMA House of Delegates approved a resolution in support of a DOJ appeal (of the DCCA ruling), the AMA's letter sent to the DOJ (that urged more than $10 billion for cessation programs) never mentioned the appeal of the DCCA ruling. I'm not aware that the AMA has sent a subsequent letter to the DOJ.

Regarding the RICO statute's scope of permissible remedies, you may be overlooking the key words "including, but not limited to," which allows remedies in addition to the few listed ones.

The DOJ can and should argue (to the SCOTUS) that a $280 billion disgorgement remedy serves as a huge financial disincentive for the defendants (as well as other cigarette companies that aren't defendants) to engage in misconduct in the future.

In fact, without disgorgement as a remedy, cigarette companies (and any other company) would have zero financial disincentive (and huge incentives) to violate the RICO statute in the future.

It also appears that the DOJ didn't request a variety of potentially effective remedies that are expressly permitted in the RICO statute clause "imposing reasonable restrictions on future activities or investments of any person."

Although the DOJ proposed some helpful restrictions on future activities, more effective restrictions that weren't proposed, include:

- rotating text and/or graphic warnings covering half of all cigarette packs, cartons and advertisments,

- an warning that states "Do not use this product indoors or near other people; cigarette smoke is poisonous,"

- a warning that states "Lights and ultra lights are just as harmful as other cigarettes,"

- eliminating single pack sales, allowing sales only by the carton,

- eliminating all cigarette price promotions,

- eliminating power wall promotional displays at retail stores,

- prohbiting defendants from opposing (and from paying others to oppose) smokefree indoor workplace legislation.

Bill Godshall
SmokeFree Pennsylvania