Monday, September 19, 2005

Attorneys General Intervene in DOJ Tobacco Case, Ask for Bailout

In a September 12 amicus brief submitted by the attorneys general of 22 states, these states have asked the D.C. Court hearing the DOJ's tobacco lawsuit to direct the tobacco companies to pay for the continued funding of the American Legacy Foundation's "truth" campaign to combat youth smoking, should the Court find the companies liable for RICO violations.

The AG's preface their argument by stating that: "an effective public education program would be appropriate 'to prevent and restrain violations' of RICO in the future."

They then argue that: "there are other forms of advertising and promotion, not specifically addressed in the MSA, that result in large and continuing exposure of youth to cigarette advertising. A substantial and well-funded public education program like that carried out by the Foundation is needed to counteract the effects of that exposure, particularly in light of the fact that many state legislatures have significantly reduced funding for state smoking-prevention programs."

The AG's also argue that funding to continue Legacy's public education program is necessary because of the "sunset" clause in the MSA, which ends payments for this program if the market share of non-participating manufacturers exceeds 0.95% (which it has).

The Rest of the Story

This amicus brief appears to have no legal merit, at least regarding the public education remedy (the brief also addresses the document disclosure remedy, which I will not discuss here).

The brief has no legal merit because although it prefaces its argument for a public education remedy by stating that such a program would prevent and restrain future RICO violations, it provides no argument for how such a program would do that. Instead, it argues that such a program is necessary because it is needed in order to counteract the effects of continued tobacco marketing to youths. But counteracting the effects of RICO violations is very different than preventing or restraining such violations, and it is something that the D.C. Court of Appeals has precluded from justifying a civil remedy under RICO.

So what does this brief really amount to if it isn't providing any credible legal argument?

What is amounts to is an attempt by the state attorneys general to bail themselves out of a stupid decision that they made in signing the Master Settlement Agreement. They signed a contract in 1998 that clearly intended to abolish the anti-smoking public education and counter-marketing campaign if the market share of non-participating manufacturers reached 1% or greater.

There was nothing hidden in the MSA - it was clearly stated and the AG's were presumably aware of the provision before they signed the contract. They really have no one to blame other than themselves for signing such a bad contract (bad in terms of serving the public's interest). Given the role of generic, discount, and deep discount cigarettes in the overall market, it should have been anticipated that the market share of non-participating manufacturers would soon exceed 1%.

Now, the AG's are basically asking the court to bail them out of this mess by restoring funding for the "truth" campaign. I suppose that would be OK, except that they are asking the court to misapply the law in order to do that.

The AG's are also asking the court to bail out their states for failing to allocate money from the MSA payments for tobacco prevention programs. They actually argue to Judge Kessler that because the states have failed to allocate sufficient funding for such programs, she should require the tobacco companies to fund such programs. Why should the court serve the function of redressing the effects of legislative funding decisions, even if they did represent inappropriate budget allocation priorities?

This case is certainly not about redressing the actions of legislators in making funding decisions; nor is it about redressing the mistake that the AG's made in signing a contract that essentially guaranteed that funding for the Legacy Foundation's public education campaign would come to an end in the not-so-distant future.

Given the D.C. Court of Appeals' decision, this case is not even about redressing the specific effects of tobacco company RICO violations. The remedies aspect of the case is specifically about asking the court to impose injunctive relief that will effectively prevent and restrain future RICO violations.

The rest of the story suggests that the 22 intervening states, in arguing for continued funding for Legacy's "truth" campaign, are simply trying to bail themselves and their states out of a mess that they themselves created. And they are misusing the law in order to do so.


Bill Godshall said...

The Amici Curiae brief submitted by the 22 State AGs isn't the same as a Petition to Intervene (which was filed by the health organizations and approved by Judge Kessler).

As such, the 22 State AGs technically haven't intervened in this case, as indicated in the title and last paragraph of your article.

Intervenors are actual participants in a case, whereas those filing amicus briefs are simply urging the court to do something.

BTW While I encouraged the State AGs and Legacy to file amicus briefs in the DOJ case more than a year ago (requesting funds for Legacy), I tend to agree with your analysis of this brief filed by the AGs.

Michael Siegel said...

Thanks for clarifying that the states are not intervenors in the case in the same way that the health groups are. However, I still do view filing an amicus brief as a form of intervention in the case. After all, a third party to the case is asking the court to consider its own opinions - I think that is a form of intervention (I'm not criticizing the intervention per se - it's the legal merit of the arguments used in the brief that are problematic).
Thanks as always Bill for your thoughtful comments.

Gene Borio said...

Speaking as an amateur, it does seem on the face of it weird to accompany a request to file an amici brief with the brief itself. Especially such a perfunctory one.

That said, the AGs' brief did re-emphasize the DOJ' Post-trial Brief's argument that document disclosure could serve to "prevent and restrain" future violations.

To me, this stands a chance of passing RICO muster--an alternative to court-appointed monitors. This way, the entire world can function as monitors. It would be a much weaker remedy, of course, but far, far less costly, complicated and constitutionally-threatened to put into practice. The Court could simply agree to hear complaints from the parties, who of course would be alerted and spurred on by journal and newspaper articles, etc.

Unfortunately, the mandated document disclosures would probably have to be narrowed to specific RICO violations.

John R. Polito said...

I can't help but feel that the nation's AGs should be filing suit against the American Legacy Foundation for violation of its charter instead of supporting it.

This is the NAAGs link to the Master Settlement Agreement -

Pages 41 to 47 establish the "National Foundation" that is today known as the American Legacy Foundation. The ALF was specifically charged with "developing and disseminating criteria for effective cessation programs; monitoring and testing the effectiveness of such criteria; and continuing to develop and disseminate revised versions of such criteria, as appropriate." Now that its money is almost gone where are the criteria it developed for effective cessation programs and where is the effectiveness of its programs being monitored?

The folks at the ALF know as much about smoking cessation as I know about making commercials. Yes, recently it has thrown a few dollars in various directions but it was at the last moment and only when publicly criticized for violating its charter cessation obligations.

Take a brief look at the ALF's new "Learn to Quit" section at its website ( It has been so haphazardly thrown together that the words don't even fit the screen. Click on the link to "Help in Your Area." The link doesn't work. As for content, the ALF's quit smoking pages have more content about the effects of secondhand smoke than about how to quit. What they do is provide a list of links to outside websites that existed prior to the MSA being signed.

Still, we've yet to see ALF develop and disseminate national cessation program criteria as charged and suit should be filed by the AGs to enforce the MSA's cessation program mandates.

Section (g) authorizes the Foundation to "make grants from the National Public Education Fund to Settling States and their political subdivisions." By limiting grants to government the drafters guaranteed that all Foundation grant spending would be subject to full and complete disclosure pursuant to each state's Freedom of Information Act. As seen on page 45, the agreement establishes four specific criteria that must be met in order to make a grant to "a Settling States or their political subdivisions."

Where does the agreement authorize the ALF to make grants to non-government organizations, which have zero accountability to "we the people?" It doesn't. Here in S.C. we have a non-government organization whose non-profit filings with our Secretary of State indicate receiving almost a million dollars of ALF funds. Although I resided in the same city that this organization claims to be based in I have never seen any literature put out by this organization and am having difficulty learning where any of the money was spent. I'm hoping that what I'm seeing here in SC is an isolated instance but am not so sure..

If you go to the ALF's website it lists its #1 corporate partner as Time Warner, the tobacco industry's #1 media partner in helping enslave America's youth. Is it by chance that we see more smoking in Time Warner youth rated movies than adult rated movies? How can ALF ignore the fact that today Time Warner is knowingly putting tobacco ads in magazines headed into America's middle and high schools. Take a look inside Popular Science, Field & Stream or a host of other Time Warner magazines with high youth readership.

It's like the ALF is pretending to ignore that Time Warner's chairman was a decade long board member of Philip Morris USA where he owed fiduciary duties, or that Philip Morris wanted him for its CEO. Is it by chance that another former Philip Morris CEO today sits on its board? Is ALF leadership serious about youth prevention or has it forgotten why it was created?

John R. Polito