Wednesday, September 28, 2005

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

On Monday, the six intervening public health groups in the DOJ tobacco case - 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 - filed their reply to the defendants' response to Intervenors' post-trial brief, which argued for expanded remedies in the case, including an industry-funded $130 billion smoking cessation program, a $600 million per year public education campaign, and industry penalties for failing to reduce youth smoking by 42% in 7 years.

In the reply, the Intervenors counter the two primary arguments made by Defendants in asserting that the post-trial brief does not support the requested remedies.

First, the reply responds to the Defendants' argument that Intervenors' have inappropriately applied the RICO statute's allowance of a remedy that would divest the liable party of any interest in any enterprise in order to prevent and restrain future violations.

The Intervenors now argue that "the defendants’ argument cannot be squared with the plain language of the statute, which states that a defendant may be divested of any interest in “any enterprise,” 18 U.S.C. § 1964(c) (emphasis added), not just an interest in “the” enterprise that has committed the unlawful acts." Therefore, the Intervenors argue: "under the plain language of Section 1964(a), this Court may impose remedies that will “divest” the defendants of this interest" (that interest being the future stream of dividends/income derived from addicted smokers).

Second, the reply responds to the Defendants' argument that the proposed monetary remedies are appropriately crafted to prevent and restrain future RICO violations. The Intervenors make 3 basic assertions in support of their proposed remedies:

1. "the benchmarks will provide a specific incentive and a direct indication of whether the defendants are continuing to engage in deceptive practices.

2. "the benchmarks proposed by the Public Health Intervenors – i.e., the points at which the defendants will no longer have to fund these various programs – are inextricably tied to the defendants’ own behavior. Accordingly, because the cost of continuing to fund these programs, and the cost of failing to end deceptive practices that continue to attract young people to smoke, will eventually outweigh the financial benefits that the defendants continue to reap from the concomitantly reduced pool of potential and existing smokers (as the cessation, public education and countermarketing programs prove effective in reducing the number of people who smoke), these remedies will necessarily “prevent and restrain” further such practices."

3. "These remedies will also make it more difficult for the defendants to defraud the target audiences. Once those target audiences receive and digest the countermarketing and public education, the defendants will not be able to mislead them about the related topics anymore. Though these remedies will prevent the defendants from engaging in certain types of future violations because the acts that constitute the violations will no longer be able to accomplish the defendants’ goals."

The Rest of the Story

What has clearly happened here, I believe, is that pressed to the wall by the Defendants' effective argument against the "divestment" rationale for the proposed monetary remedies, the Intervenors have now had to dig even deeper into their wildly exaggerated interpretation of the RICO statute, and have now proposed a new and improved interpretation of the statute, by which it now can be construed as allowing remedies that divest the liable party not only of any interest in the enterprise associated with the RICO violations, but in any enterprise whatsoever.

This, however, is a wild interpretation, because as the Intervenors themselves admit, the purpose of this language was to "address the problem of unorganized crime infiltrating legitimate businesses." I simply don't see any way in which requiring tobacco companies to pay the American Legacy Foundation to run an anti-smoking media campaign or to pay for a national smoking cessation program is fashioned to address the problem of unorganized crime infiltrating legitimate businesses.

That's a huge stretch at best, and a completely frivolous interpretation and application of the statute, at worst.

In addition, this explanation was nowhere to be found in the Intervenors' original post-trial brief. So it is clearly, I think, an interpretation that was developed post-hoc in order to attempt to square the proposed remedy with the requirements of the law. I don't think that dismisses the argument in and of itself, but it certainly exposes that the Intervenors are grasping desperately to try to justify their original argument.

I also find each of the 3 major Intervenors' arguments in support of their repeated assertion that the monetary remedies are narrowly crafted to directly prevent and restrain future RICO violations to be seriously flawed.

First, the benchmarks in no way provide a "direct indication of whether the defendants are continuing to engage in deceptive practices." Take, for example, the 5% benchmark for youth smoking prevalence that must be reached before the Defendants are no longer required to pay for the public education and counter-marketing campaign. It is entirely possible, and I think quite likely, that even if the tobacco companies completely desist from committing any and all of the alleged RICO violations, youth smoking prevalence will not fall to below 5%. There are simply too many other factors that influence youth smoking, and over which the tobacco companies do not have direct control (or over which they do have control but not representing RICO violations).

The prevalence of youth smoking, for example, is largely influenced by adult smoking. It is hard to imagine that adult smoking could remain anywhere close to the levels it is at today but that youth smoking could dramatically drop to unprecedented levels, never seen in more than 50 years. So even if all marketing to youth stopped and all misleading statements about the health dangers of smoking discontinued, adult (including parental) smoking would still strongly influence youth smoking, and I do not think it is reasonable to suggest that youth smoking would fall to below 5%.

It is also possible that I am wrong in my opinion that there is no evidence to believe that the American Legacy Foundation's "truth" campaign will save millions of lives as they have claimed, and that instead, it does have the tremendous effect on youth smoking that Legacy claims. If that's true, then youth smoking could well fall to below 5% over the next 7 years even if the tobacco companies continue to commit the RICO violations alleged by the Department of Justice.

Second, the benchmarks are not "inextricably tied to the defendants’ own behavior." For example, I do not find the benchmark that 90% of the public must be "fully informed of the disease risks and other harms associated with exposure to secondhand smoke" to be inextricably tied to the defendants' behavior. Even if the tobacco companies remained completely silent on the issue of secondhand smoke, I don't think it is plausible to suggest that all of the sudden, 90% of the population would be fully informed of the disease risks associated with secondhand smoke. There are too many sources of information out there which influence public opinion - the tobacco industy's statements are one source, but certainly not the only source.

Moreover, this begs the question of what it means for 90% of the public to be fully informed of the disease risks associated with secondhand smoke. Is breast cancer caused by secondhand smoke? I don't know. There is some evidence to suggest so, but I don't yet find the evidence convincing enough to draw a definitive conclusion. But the California EPA apparently does. Does that mean that I would fall into the segment of the population that is "not fully informed" of the disease risks of secondhand smoke?

And what does "fully informed" mean? Suppose I believe that secondhand smoke causes heart disease, lung cancer, and asthma in nonsmokers. Am I fully informed? Or do I also have to believe that secondhand smoke causes nasal sinus cancer, as concluded by the California EPA? And what about SIDS? Suppose I believe that secondhand smoke causes nasal sinus cancer, but not SIDS? Am I fully informed, or not?

Third, I am not aware of any possible public health campaign that could create a situation by which "Once those target audiences receive and digest the countermarketing and public education, the defendants will not be able to mislead them about the related topics anymore." It is simply impossible. And I find it irrational to argue that the American Legacy Foundation (or any anti-smoking organization) can run a campaign that will completely immunize or inoculate the American public from misleading and deceptive marketing efforts of the tobacco companies. The Intervenors appear to be living in fantasy land.

And anything short of near complete inoculation of the public is going to, unfortunately, increase, not decrease the economic incentives for the tobacco companies to continue the alleged RICO violations. Because as it becomes harder for the companies to deliver their messages, they are going to have to become ever more aggressive and intensive in their campaigns to do so.

Contrary to what the Intervenors argue, I find their monetary remedies to create strong financial incentives for the tobacco companies to continue, if not increase the alleged RICO violations.

The rest of the story suggests that the Intervenors' reply brief has no legal merit. It is based on contorted and distorted interpretations of the RICO statute, implausible assertions, impossible claims, and increasingly wild post-hoc reasoning in a last gasp attempt to salvage a huge pot of money for anti-smoking causes, but with no justification under the law.

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