Thursday, September 22, 2005

Defendants File Response to Intervenors' Post-Trial Brief in DOJ Tobacco Case

On September 14, the tobacco company defendants in the DOJ tobacco case filed a response to the Intervenors' post-trial brief which had urged the Court to extend the government's proposed smoking cessation remedy, public education and counter-marketing remedy, and youth smoking reduction target remedy. The Intervenors consist of the Tobacco-Free Action Fund (associated with the Campaign for Tobacco-Free Kids), the American Heart Association, the American Lung Association, the American Cancer Society, Americans for Nonsmokers' Rights, and the National African American Tobacco Prevention Network.

The response essentially asks the Court to disregard the Intervenors' brief because it is "virtually useless" and makes no "meaningful contribution to the necessary legal analysis."

The Defendants argue that the brief offers no meaningful legal analysis because it fails to offer any reasoning to support the assertion that the proposed remedies will "prevent and restrain" the alleged RICO violations, as required by 18 U.S.C. section 1964(a) (the civil remedies provision of the RICO statute).

The brief provides two major arguments, which address each of the major arguments made by the Intervenors in support of their proposed remedies' appropriateness under the RICO statute as interpreted by the D.C. Court of Appeals.

First, the Defendants argue that the idea that the smoking cessation, counter-marketing, and youth smoking reduction remedies are necessary in order to divest the tobacco companies of their interest in the RICO enterprise is "frivolous" and "bizarre." How could the individual smokers who were the alleged victims of the fraud constitute the enterprise? And how could forcing the tobacco companies to pay for smoking cessation programs or other programs to encourage smokers to quit constitute divestiture of the defendants' interest in the enterprise? After all, the government's theory in the case does not suggest that individual smokers are somehow members of the enterprise. And even if this bizarre smokers-as-enterprise theory were tenable, how would reducing the number of smokers prevent and restrain future RICO violations?

Second, the Defendants argue that the Intervenors fail to demonstrate (actually, that they provide no viable argument) that the proposed remedies will prevent and restrain RICO violations.

The Intervenors assert that the 3 proposed monetary remedies will prevent and restrain RICO violations by reducing the pool of smokers or the pool of youths to whom fraudulent marketing practices could be directed and help inoculate these groups against such practices, thus making it less profitable for the companies to commit RICO violations and ultimately, serving as a deterrent to their interest in committing these violations.

However, the Defendants point out that the D.C. Court of Appeals has ruled that simple deterrence is not enough to justify a remedy under RICO's "prevent and restrain" requirement, citing Judge Williams' concurring opinion that: "pure deterrence [is] an impermissible objective of orders under [section] 1964(a)". Defendants assert that the appellate court decision makes it clear that allowable remedies must "actually stop future violations from occurring, not merely mitigate their effects or theoretically make them less profitable by shrinking the size of a defendants' business."

The Rest of the Story

With regards to the proposed monetary remedies in this case, I find the Defendants' arguments to be entirely compelling.

First, with respect to the Intervenors' assertion that programs to encourage smoking cessation and prevent smoking initiation are statutorily appropriate because they would divest the companies of their interest in the RICO enterprise, I agree with the Defendants that this is both a bizarre and a frivolous argument (although I chose to describe it as a "rather wild" interpretation of the statute):

"This is a rather wild interpretation of the statute, which was clearly designed to prevent future RICO violations by breaking up the criminal enterprise - i.e., the business ventures, structures, and relationships - that would allow the violations to continue. As the intervenors themselves state: 'the civil remedies must be employed as a means of requiring individuals who have used racketeering methods to acquire or operate legitimate businesses to divest themselves of their ill-gotten interests and to refrain from entering the same lines of business.' This is a far cry from the purpose to which the intervenors would put the civil remedies provision of RICO. Running smoking cessation programs does not represent any direct breakup of any business enterprise. It does not force the defendants to refrain from entering the same lines of business."

Second, with regard to the Intervenors' assertion that the proposed monetary remedies meet the "prevent and restrain" requirements of the RICO statute because they will create an economic incentive for tobacco companies not to commit future RICO violations, I think one only need look as far as the appellate court decision itself to see that this argument lacks merit.

In fact, Judge Williams actually jokes about the argument that fashioning a remedy that deters illegal activity under RICO by imposing financial disincentives would meaningfully prevent and restrain future violations, given the other more direct remedies available under the statute:

"I find it hard to imagine a waffling villain—already in court for RICO violations—saying to himself: 'Well, my chances of escaping § 1963(a) forfeiture and imprisonment because of the statute of limitations and the burden of proof, and of escaping treble damages under § 1964(c), and contempt penalties for violating the court’s orders, still leave RICO violations attractive on a net basis; but that implied disgorgement under § 1964(a)—wow! Too much. It tilts me over the line.'"

Williams makes it clear that "the court must try to draw lines between equitable remedies that merely “hurt” the defendant and ones that have a genuine tendency to “prevent and restrain” his future violations."

And Judge Sentelle also makes it clear that a general deterrent effect of a proposed RICO remedy is not sufficient to meet the statutory requirement that the remedy prevent and restrain future violations: "It is true, as the Government points out, that disgorgement may act to “prevent and restrain” future violations by general deterrence insofar as it makes RICO violations unprofitable. However, as the Second Circuit also observed, this argument goes too far. “If this were adequate justification, the phrase ‘prevent and restrain’ would read ‘prevent, restrain, and discourage,’ and would allow any remedy that inflicts pain.”

While these arguments are sufficient to dismiss the Intervenors' brief, the Defendants make two additional critical arguments.

First, they point out that by mucking with the government's proposed remedies at this late date (after all the testimony and evidence in the trial has been presented), there are really no sufficient grounds on which the Court can make a credible judgment with regard to the added components of the proposed smoking cessation, public education, and youth smoking reduction programs. There has not been testimony on this aspect of the case and the defendants have not been given an opportunity to respond. In other words, there has been no litigation of these issues.

The specific issues added by the Intervenors include:
  • a requirement that the smoking cessation program continue until less than 10% of smokers report that they want or intend to quit;
  • a requirement that the public education and counter-marketing program continue until youth tobacco use declines to 5%;
  • a requirement that the public education and counter-marketing program continue until less than 10% of the public fails to "fully understand the comparative health risks of different health products"; and
  • a requirement that the public education and counter-marketing program continue until less than 10% of the public fails to be "fully informed of the disease risks and other harms associated with exposure to secondhand smoke."
However, the Intervenors provided no evidence to explain or support the need for a 10% threshold for smokers wanting to quit, a youth smoking prevalence target of 5%, and so on. And they have introduced a complex issue of how to measure "fully understand the comparative health risks...", be "fully informed of the disease risks...", and "want or intend to quit," without any opportunity for litigation of this issue.

I myself, as an experienced practitioner in the tobacco control field, have no idea what it means to say that a person "fully understands" the comparative health risks of different tobacco products or that a person is "fully informed" of the disease risks associated with secondhand smoke. And I have no idea how one would define or measure that. It is certainly possible that a method could be discussed and worked out, but it would certainly warrant some evidence and some testimony for the Court to even begin to grapple with the issue (even assuming that the remedy was otherwise appropriate and permissible).

The second additional critical argument made by the Defendants is that by mucking with the government's proposed remedies, the Intervenors have now fashioned remedies that require the defendants to do something beyond which they have control.

For example, it is not clear to me that by ceasing the alleged RICO violations, the tobacco companies could achieve the result of fewer than 10% of smokers saying that they want to quit. If anything, if those alleged violations ceased, I would think that the proportion of smokers who stated they want to quit would go up substantially because perhaps there would be less deception about the potential safety of smoking light or low-yield products!

And it is even less clear that a counter-marketing campaign could lower youth smoking levels to below 5%. That is certainly not under the defendants' control. There are simply too many other factors that influence youth smoking to assert that the tobacco companies single-handedly have the ability, through funding a counter-marketing campaign, to lower youth smoking prevalence to below 5%.

Finally, I would add one additional argument that would render the proposed monetary remedies unallowable even if a deterrent effect were ruled to be consistent with the "prevent and restrain" requirement. I do not believe that proposed smoking cessation, counter-marketing, and youth smoking reduction remedies would in fact create an economic incentive to deter future RICO violatioins. In fact, I think they would create a strong incentive for such violations to continue, especially under the scheme concocted by the Intervenors (whereby payments for these programs would continue essentially regardless of whether the companies were actually continuing to commit RICO violations or not).

The rest of the story suggests that the tobacco company defendants in the DOJ case have offered an entirely compelling set of arguments for why the Intervenors' post-trial brief has little if any legal merit and why it should therefore be disregarded.

I think the Defendants are right on the mark when they conclude that: "At bottom, the Intervenors’ brief — like the very fact of their intervention — simply underscores the extent to which this civil RICO lawsuit has degenerated into a public policy free-for-all, with segments of the public health community vying for this Court’s attention and lobbying for adoption of their favorite 'anti-smoking' wish-lists. But this lawsuit is not a seminar or public debate on the best ways to reduce smoking; it is a legal proceeding in which the Court’s jurisdiction is sharply limited to taking actions necessary to 'prevent and restrain' RICO violations."

In that sense, I think the public health community will be lucky if the Intervenors' brief is disregarded. Because if it is regarded (even if dismissed), it is going to help demonstrate to the Court what is really going on in this case. And that could be a fatal blow not only to the inappropriate monetary remedies, but to the entire house of cards.


Michael J. McFadden said...

My, my! For once I have to agree with the Antismokers in the RICO suit: I fully agree it would be beneficial if the public were "fully informed of the disease risks associated with" secondary smoke.

I think Judge Kessler should rule that the Intervenors (i.e. the Antismoking groups) should be forced to fund a massive TV advertising campaign to let nonsmokers know that even the EPA findings only claimed that 30 to 40 years of constant daily exposure would increase one's lifetime risk of lung cancer from about four tenths of one percent to about five tenths of one percent.

Nonsmokers should be informed that the millions of dollars spent on ads showing things like giant rats crawling up from subways poisoned by the arsenic present in secondary smoke would be more accurate if they showed 165,000 cigarettes burning while nonsmokers nearby inhaled the "government approved as safe" arsenic equivalent contained in a large glass of ordinary tap water.

Nonsmokers should also be informed that the risk of dying of lung cancer from living with a smoker is probably less than the risk of dying of an infectious disease from living with a nonsmoker.

Unfortunately, for Judge Kessler to make such a judgement within the present scope of the RICO suit would be difficult or more likely, impossible. However, perhaps a new RICO suit should be brought forward, one with Americans for Nonsmokers Rights, the Robert Wood Johnson Foundation, The Center for Tobacco Free Kids, and the as targets. The damage done to smokers by their distortions and exaggerations (I'm being kind here.) on personal and economic levels has been enormous. The damage done to nonsmokers who have had neurotic fears born and encouraged because of the outright propaganda that has flooded the airwaves and print media over the past 20 years has also been enormous. The RICO conditions of conspiracy (I'm not a lawyer, so forgive me if I'm a bit off here.) are clearly met and testified to simply by the public record of the multi-million dollar conferences where such strategies are laid out and developed by these groups.

Whether the Attorney Generals who have seemingly knowingly and illegally made compacts between the states in order to extort vast sums from smokers or threaten food chains with huge lawsuits should also be defendents in such a RICO pursuit should also be explored. As perhaps should the efforts of various states to selectively single out smokers for supposed interstate tax violations while ignoring citizens who purchase more "approved of" products through SearsRoebuck catalogs,, and the Home Shopping Club.

Am I being comedic with such a proposal? I don't know... if I had a staff of lawyers and the same sums of money spent to develop and pursue the current RICO case the comedic aspects might swiftly pale.

At its root though, the original demand of the Antismoking groups as to fully informing the public of the TRUE risks of contact with normal levels of secondary smoke in today's modern business environments is a sound one... but the Truth should certainly not originate with and its well-funded front groups and allies.

Michael J. McFadden
Author of "Dissecting Antismokers' Brains"

CampaƱa NO tabaco said...

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