Thursday, June 09, 2005

DOJ Slashes Amount of Funds Requested for Smoking Cessation Program Remedy

The Department of Justice, in its closing arguments yesterday, requested only $10 billion ($2 billion annually for 5 years) for a national smoking cessation program which it has proposed as a remedy should the government prevail in its RICO lawsuit against the tobacco companies. However, the expert witness who the government called to support the rationale for such a program had testified that an appropriate national smoking cessation program would require $130 billion over 25 years.

The abrupt change in the monetary amount of the request has prompted an outcry among some public health groups, claims that the Bush administration has interfered in the case to try to cushion the potential blow to the tobacco industry, and a Congressional call for an investigation into possible political interference with the case.

The Rest of the Story

First, it is important to make it clear that whether the government asks for $130 billion or $10 billion for a smoking cessation program, under the parameters of the D.C Court of Appeals' decision regarding the nature of allowable remedies under the RICO statute, the government is most likely to receive $0 billion for such a remedy.

I have already presented an analysis explaining why a smoking cessation program is not an appropriate remedy under RICO. Briefly, such a remedy is inconsistent with section 18 U.S.C. section 1964(a) (the civil remedies provision of the RICO statute) and is therefore not likely to be upheld by the Appeals Court. I do not see how funding a smoking cessation program has anything to do with changing tobacco company conduct with regard to the alleged RICO violations. Such a remedy appears to be aimed at "remedying the effects of past conduct to restore the status quo," exactly what the Appeals Court ruled was not permissible under RICO. It's not clear to me how forcing the companies to fund smoking cessation would help prevent and restrain future RICO violations.

So the change in the Department's request from $130 billion to $10 billion is hardly relevant from a strictly legal standpoint. The Department could have asked for $1 trillion and its case would not have been legally strengthened or weakened at all. Unless it can provide evidence to support a contention that forcing companies to provide smoking cessation services for current smokers will prevent future RICO violations (and I'm not aware of any such evidence presented), then the amount of money requested for such a remedy doesn't really have a material effect on the legal strength of the case.

Second, I think it is important to acknowledge that given the weakness in the government's statutory foundation in requesting a $130 billion smoking cessation program, there is at least a possibility that the decision to reduce the amount to $10 billion was motivated by a judgment (presumably on the part of higher Department officials and perhaps not agreed with by the lawyers prosecuting the case) that given the shaky foundation for this remedy request, it might have a greater chance of squeaking through if it represented a much more modest financial remedy.

In other words, it could have been reasoned that a $130 billion request under shaky legal grounds was certain not to be granted and/or upheld, but that a $10 billion request could potentially squeak through. I don't believe that even a $5 request will pass the scrutiny of the D.C. Court of Appeals since the remedy is clearly backwards-looking, but it is at least possible that the decision was a strategic one, rather than a political one.

There is no question, even if that is the case, that such a strategic decision coming this late in the case would be highly unusual and that it would be damaging to the overall case. While the case may not be weakened on strictly legal grounds, it does send an overall message to the Court that the government doesn't really have all of its arguments and evidence in order. That is most certainly not a favorable message to be sending on the final day of closing arguments. You would have thought that such an important strategic decision would have been made far in advance, and certainly in advance of presenting an expert witness to support the need for such a remedy.

So in summary, I think that whatever the reason for the abrupt change in the request, it was a rather silly decision. If it was politically motivated, as an attempt to protect the tobacco companies from financial harm, it was silly because it was unnecessary. The D.C. Court of Appeals has already protected the companies from the possibility of having to shell out $130 billion for a backwards-looking smoking cessation remedy. There was no need for the Administration to intervene, make front-page headlines for alleged political interference, and launch a Congressional call for an investigation, all to weaken the blow from a remedy that will most likely never see the light of day.

If the decision was indeed a strategic one, then it was also silly, because lowering the amount of a remedy that is simply not consistent with statute is not likely to significantly increase its chances of passing legal muster. But such a decision is likely to cast a cloud over the overall credibility and coherence of the government's overall case.

There is one other possibility that I can think of. It is the most cynical explanation, but seems to be the only one that doesn't require the invokation of extremely poor strategic judgment on the part of the Administration. That possibility is that the government is preparing to settle the case, perhaps in light of its weak chances of obtaining any substantial financial remedies, and it wants to lower the amount of its financial request so that if a settlement is announced, it will not appear that the government has settled for a fraction of what it was requesting.

This last possibility doesn't seem particularly likely, given that the government, including Associate Attorney General Robert D. McCallum Jr. (who has been invoked as the possible source of political meddling since he previously worked in a law firm that represented R.J. Reynolds) has stated publicly that the Department will await the Court's decision. If a settlement were planned, would it not have been more prudent to make a more vague statement about "seeking justice" or something that did not specify a Court decision? And perhaps more important, wouldn't it have made much more sense to settle the case earlier, rather than wait until the Department had painstakingly presented its entire case?

Interestingly, in only one of these scenarios is there any real wrong-doing that would justify the call for an investigation. Administration political interference into the case to shield the tobacco companies from potential damages would certainly represent a breach of appropriate conduct and a breach of justice. But the other two scenarios really reflect strategic legal decisions and I do not think they inherently represent any wrong-doing.

While I do not purport to be able to read the minds of the Administration nor have some internal knowledge about what motivated the abrupt change in strategy, I do think it is clear that the reduction in the amount being requested, in and of itself, does not represent an action that does a disservice to the American people by denying them of "cessation programs that could have saved their lives," as one anti-smoking organization claimed. These services would never have been approved by the Court (or upheld by the Appeals Court) anyway, so the reduction in the amount requested is not really the issue.

Instead, the issue is whether there was indeed political interference or whether this was simply a strategic move, and if strategic, whether the government is preparing to settle the case or simply wanted to try to squeak a smaller cessation program through.

UPDATE (Thursday, June 9; 3:40 pm): Gene Borio reports that DOJ today attempted to clarify the reasons for the reduction in requested costs to $10 billion, stating that the remedy is narrowly-tailored so that the cessation program is available only to newly addicted smokers, not to current smokers. This would certainly explain the greatly reduced costs as well as the shorter time frame of the proposed remedy. If true, then this supports the potential reason I listed above for the announced change - that the Department is changing the nature of the proposed remedy to increase its chances of passing legal muster. The reasoning outlined by Gene would certainly have a greater chance of convincing the judge that the remedy is forward-looking, since the funded smoking cessation program would only be available to newly-addicted smokers. The problem that remains, however, is how such a program could distinguish between newly-addicted smokers who were addicted because of a continuing RICO violation versus because of some other reason. Unfortunately, it's not clear to me that this amended remedy would have any reasonable chance to be upheld. But at least it is clearly not designed to redress past wrongs.

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