Monday, July 09, 2012

How Did the Reduction in the Smoking Cessation Remedy Amount Destroy the DOJ Tobacco Case?

That's the question I'm left asking after reading the new book written by Sharon Eubanks, JD, and Stanton Glantz, PhD, entitled “Bad Acts: The Racketeering Case Against the Tobacco Industry,” (American Public Health Association, 2012).

In a chapter entitled "Throwing the Case into the Toilet," Eubanks and Glantz argue that the reduction in the requested smoking cessation remedy from $130 billion to $12 billion, which was ordered by political appointees in the Department of Justice (especially Associate Attorney General Robert McCallum), basically destroyed the case.

But the D.C. Court of Appeals had already ruled that civil remedies under RICO must be forward-looking, rather than backwards-looking, and must be designed specifically to prevent and restrain future violations, rather than to punish companies for past violations. Requiring companies to fund a smoking cessation program for years to come, in order to help smokers quit, was clearly a backwards-looking remedy that would not directly prevent and restrain future violations, but instead, would punish companies for what they had done in the past.

The authors essentially admit this, when writing: "Steve [Brody, who was drafting the closing argument for the DOJ] began to put together the closing argument on smoking cessation with a cloud over his head. Many of the arguments that he planned and developed during the trial presentation were now useless to us because they supported the larger-scale remedy that we believed we had proven was necessary to prevent and restrain future misconduct by defendants, a requirement under RICO. This was a difficult argument to make since the addicted smokers who would be assisted by the smoking cessation remedy became addicted in the past. The D.C. Circuit, when considering the appeal regarding the disgorgement remedy, had in rejecting our arguments, stated that disgorgement was a 'quintessentially backward-looking remedy focused remedying the effects of past conduct to restore the status quo.' The appeals court rejected disgorgement on that basis and it was easy to see how a similar parallel might be drawn to our analysis on smoking cessation."

The Rest of the Story

If it is easy to see how a similar parallel might be drawn between the request for ill-gotten profits of the tobacco companies and the request for the companies to be forced to pay billions of dollars for a smoking cessation program, then perhaps the fact is that the smoking cessation remedy was not allowable under RICO, at least as that statute was being interpreted by the D.C. Circuit.

If many of the arguments that were planned and developed during the trial were now "useless" after the appellate court decision, then isn't it clear that the legal basis for the remedy was shaky, if not hollow, under the dictates set by the appeals court?

In other words, Eubanks and Glantz are acknowledging that in light of the appellate court decision, the original case (with respect to the smoking cessation remedy) had been rendered hollow. It was not the political appointees who destroyed the DOJ's case, but the D.C. Court of Appeals.

It's unclear why Eubanks was so negative about the idea of the Department reviewing and altering its case following the appeals court decision. She writes: "It would appear very strange, even for this case, for the United States to have fought for the ability to put on a particular remedy, only at closing to completely disavow it."

I don't get that point. Since the appeals court decision had been handed down during the case, and since it would not have been viewed unreasonable to alter the government's case in order to be consistent with that decision, I just don't see why there was a perceived need to stick exactly to the original drawing board, which was sketched out prior to knowing how the appeals court would rule.

An analogy might be to a baseball game in which a team is losing 10-0. The manager of the losing team, in the top of the 9th inning, decides to put in a pitcher who is terrible. The team then loses 14-0 after he gives up a grand slam. After the game, the fans complain that by putting in that bad pitcher, the manager "threw the game."

Well, not exactly. The game was pretty much over at 10-0 going into the ninth inning. Regardless of what the manager's motives were for putting a bad pitcher in during that last inning, the net effect of the action was not to throw away the game. The game was lost anyway.

Similarly, the DOJ had already lost the game of obtaining a smoking cessation remedy. The appeals court made it clear that such a remedy would not be allowable and would not see the light of day. So yes, it may have been true that political appointees required a reduction in the amount of the remedy from $130 billion to $12 billion. But the effect of that reduction was not to destroy the case. It really didn't have any effect at all on the case because the remedy wasn't going to see the light of day, at $10 billion, $12 billion, $14 billion, $130 billion, or $280 billion.

Eubanks and Glantz do make the weak argument that the smoking cessation remedy was indeed "forward-looking" because it "would address the future effects of the defendants' unlawful conduct." But that is not what RICO allows, according to the D.C. Circuit. Its civil remedies must be specifically designed to prevent and restrain future violations. Moreover, the program was not in any way tied to the number of future smokers. It was specifically tied to the number of current smokers. It was trying to remedy the effects of past violations, which resulted in these current smokers.

The rest of the story behind "Bad Acts," is that the true purpose of the smoking cessation remedy was to punish the tobacco industry for their behavior and to create a positive public health good from that extracted  punishment by using the money for a much-needed national smoking cessation program. That may be a good idea, but it is not a valid RICO remedy.

The authors appear to acknowledge the real purpose of the smoking cessation remedy in stating: "The smoking cessation remedy would become our new centerpiece, or such was the plan, requiring the defendants to shell out a lot of money to do a lot of good...".

Thus, the real purpose of this remedy was to punish the companies and in doing so, to extract loads of money for a valuable public health program. A great idea, but not a forward-looking remedy under RICO.

Interestingly, one of the intervenors in the case - the Campaign for Tobacco-Free Kids - which argued in favor of the smoking cessation remedy, opposed federal legislation that would have created essentially the same remedy via the legislative, rather than judicial route. Senator Enzi introduced legislation that would have legislatively mandated penalties on tobacco companies for youth smoking, and then would have allowed that money to be used for a number of anti-smoking programs (which could potentially have included a smoking cessation media campaign). But the Campaign opposed that bill.

There are two important implications of the rest of the story.

First, it demonstrates that we as anti-smoking advocates are often motivated by passion to achieve justice and to improve the public's health. That's a great thing. However, there are times when that passion needs to be checked by an appreciation of the boundaries of the law, as interpreted by the courts. It doesn't do any good to propose a $130 billion remedy that is going to be struck down by the appellate court. And a $130 billion remedy that is struck down is no better than a $12 billion remedy that is struck down. When Glantz and Eubanks write "So much for the law," they must understand that the law applies not only to the defendant tobacco companies, but also to the government and to public health organizations.

Second, the rest of the story actually reveals that Eubanks was more of a successful hero than she makes herself out to be. She somewhat downplays her success by dwelling so much on the change in the smoking cessation remedy. Ultimately, that had no bearing on the outcome of the case whatsoever. I don't think there was any need for her to downplay her success or limit her victory. She achieved what she could under the law. That was her job and no one could ask her to do more.

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