Thursday, August 25, 2005

DOJ Defends its Remedies Requests - POST 1: National Smoking Cessation Program

In a post-trial brief submitted yesterday, the Department of Justice defended its proposed remedies in the RICO case against the tobacco companies, addressing specifically the argument that these remedies are not consistent with the D.C. Court of Appeals decision that RICO civil remedies must be forward-looking, designed to prevent and restrain future RICO-related misconduct of the defendants.

Today marks the first of a series of three posts that will address the 3 major monetary remedies: a smoking cessation program, a national anti-smoking education campaign, and youth smoking reduction targets. This post will deal with the first of these - the request for a national smoking cessation program.


DOJ argues that "As a result of Defendants’ pervasive marketing efforts, the Court can find as a matter of fact that smokers will continue to be affected by Defendants’ fraudulent conduct occurring after the date of a final judgment in this case. For this reason, the Court should require Defendants to fund a smoking cessation program targeted at a population equal in size to those smokers who are reasonably likely to be the future victims of Defendants’ conduct, specifically addressing Defendants’ future violations with forward-looking relief. ... funding a smoking cessation program in an amount determined by the reasonably likely future effects of Defendants' post-judgment fraudulent activity in order to elminate the impact of Defendants' future fraud is quintessentially forward-looking."

The Rest of The Story

What is quite interesting here is that DOJ is specifically not claiming that its proposed smoking cessation remedy will help prevent and restrain future RICO violations, as I thought they would try to claim. Instead, the government is arguing that because future RICO violations cannot be effectively restrained in short order by other remedies, it is necessary to have some remedy available for smokers who continue to be affected by the defendants' misconduct in the future (in particular, during the first year after judgment is issued). And the smoking cessation program is designed to serve as a remedy for the future effects of future violations.

Here's why I think this is a losing argument:

From the get-go, DOJ is admitting that this remedy is not designed to prevent and restrain future RICO violations. Right out of the box, this does not bode well for the remedy, since the civil remedies provision of RICO [18 USC 1964(a)] states that: "The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by...". It does not state that the courts have jurisdiction to remedy, repair, fix, undo, or patch up the effects of RICO violations, whether in the past or continuing in the future. Instead, section 1964 outlines a procedure [see 18 USC 1964(c)] for persons injured by RICO violations to sue the defendants: "Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court...".

It does not appear to me that Congress had in mind a civil remedies scheme by which courts would take on the role of remedying the effects of RICO violations for the population. Instead, Congress fashioned a system by which courts would act to prevent and restrain future violations on a population basis, and then individuals could seek redress for the injuries they may have suffered by suing in federal court. Had Congress intended for the courts to redress the wrongs committed by RICO violators on a population basis, would it not have specified a procedure to do so, or provided the courts with such jurisdiction in section 1964(a)?

Without section 1964(c), the government might have an argument because it could claim that the law is vague on what to do about redressing the effects of RICO violations and that the D.C District Court sitting in 2005 should have the freedom to provide population redress for violations in a way that is not inconsistent with the provisions of section 1964(a). But Congress appears to have specifically considered the problem of a need for redress from RICO violations, and its decision appears to have been to deal with this through individual lawsuits, not a population-based, court-designed system to remedy the wrongful acts.

Most importantly, however, the DOJ's argument here does not address the D.C. Court of Appeals' ruling, which clearly stated that: "The Government would have us interpret § 1964(a) instead to be a plenary grant of equitable jurisdiction, effectively ignoring the words 'to prevent and restrain' altogether. This not only nullifies the plain meaning of the terms and violates our canon of statutory construction that we should strive to give meaning to every word, ... but also neglects Supreme Court precedent...".

The Court of Appeals has made it clear that it will not interpret section 1964(a) in a way that ignores the presence of the phrase "to prevent and restrain violations." It seems to me that issue has already been decided once. And it will certainly be decided the same way the second time around.

In one case then cited by the Court of Appeals, the Supreme Court "held that compensation for past environmental cleanup was ruled out by the plain language of the Resource Conservation and Recovery Act which authorized actions “to restrain” persons who were improperly disposing of hazardous waste." In that case, redress for past environmental wrongs was not permitted because the language of the statute in question provided jurisdiction to restrain the environmental violations.

Unless the RICO statute specifically granted jurisdiction to provide equitable relief, or unless it had been left so vague as to not make it clear what the nature of the jurisdiction were, then it is quite clear that the Appeals Court will interpret it to disallow equitable relief (on a population basis) for the wrongs suffered as a result of RICO violations.

Finally, there is nothing in the D.C. Court of Appeals' decision that leads me to believe that it will have any different interpretation of the civil remedies provision of the RICO statute as it would apply to past violations versus future violations.

The D.C. Court of Appeals seems exquisitely clear in spelling out that: "The structure of RICO similarly limits courts’ ability to fashion equitable remedies." I don't quite see any vagueness or ambiguity here. The law is simply not being interpreted in a way that gives courts the ability to fashion equitable relief. They can only act to prevent and restrain future violations. But what DOJ is asking for is clearly a form of equitable relief.

It appears that DOJ has succesfully addressed the issue of a backwards-looking versus a forwards-looking remedy, but they have not addressed the rest of the appellate court's decision, which dealt with the difference between injunctive and equitable relief.

The rest of the story suggests that DOJ's defense of its proposed smoking cessation remedy is weak and unlikely to be compelling, because while it does address the issue of a backwards-looking versus forwards-looking remedy, it fails to confront the most basic issue at hand: the fact that the RICO statute's civil remedies provision has been interpreted by the D.C. Court of Appeals to preclude courts from fashioning population-based equitable relief (i.e., remedies that will redress RICO violations).

I don't think it matters whether those RICO violations to be redressed occurred in the past, or will occur in the future, and I suspect that the appellate court won't think it matters either. Because the fact is that the statute has been interpreted in a way that makes it clear that courts may only impose injunctive (preventive) relief, not equitable relief.

For these reasons, I believe that the proposed smoking cessation remedy will not be ordered by Judge Kessler, or if ordered, will certainly be overturned by the D.C. Court of Appeals.

UPDATE (August 25, 2005; 10:30 pm): It should now be clear just why I have been arguing for weeks now that the change in the proposed smoking cessation remedy from $130 billion to $10 billion is of no particular consequence and doesn't weaken the case. If anything, it strengthened the case slightly by at least changing the remedy from a backwards-looking one into a forwards-looking one. After reading the post-trial brief, I think it seems quite clear that the decision to change the smoking cessation remedy was not an example of political interference to protect the tobacco industry, but instead, a strategic legal decision. At this point, I think the information available suggests that all the fuss the D.C. health groups and ANR made over this issue, including their personal and political attacks, were unwarranted.

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