The opinion of the court was delivered by: GLADYS KESSLER, District Judge
This matter is now before the Court on the United States' Motion for
Partial Summary Judgment on Defendants'*fn1 Equitable Defenses of
Waiver, Equitable Estoppel, Laches, Unclean Hands, and In Pari Delicto
("Motion"). The Government argues that each of these affirmative defenses
is insufficient as a matter of law and must be dismissed.*fn2
The essence of the Government's argument is that the equitable defenses
of waiver, equitable estoppel, laches, unclean hands and in pari
delicto may not be asserted against the United States when,
as here, "it is acting in its sovereign capacity to exercise public
rights to protect the public interest." Motion at 1-2. Defendants argue
to the contrary that equitable defenses are routinely available against
the Government and are supported by the evidence in this case.
The case law overwhelmingly supports the Government's position. The
United States brings its RICO claims in its capacity as sovereign, acting
on behalf of the public to vindicate public rights. The Supreme Court has
stated that any waiver of such sovereign authority must be unmistakable,
United States v. Cherokee Nation of Oklahoma, 480 U.S. 700, 707 (1987)
(internal citation omitted), yet the Defendants have not pointed to
anything in the record that constitutes an unmistakable waiver of the
Government's right to pursue these claims. The case law is also clear
that if equitable estoppel is ever to apply to the Government, the
justification for it must be compelling and must go beyond the showing a
party would have to make against an ordinary opponent in an ordinary
case. ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (D.C. Cir.
1988). In this case, the Defendants have not even satisfied the
traditional elements of equitable estoppel. It is equally clear that,
under the law of this Circuit, laches and unclean hands are both
unavailable as a matter of law when, as here, the Government acts in the
public interest. Illinois Central Railroad Co. v. Rogers, 253 F.2d 349,
353 (D.C. Cir. 1958)(laches);
United States ex rel. Purcell v. MWI Corp., 254 F. Supp.2d 69, 74 n.2
(D.D.C. 2003)(laches); SEC v. Sprecher, No. 92-2860, 1993 WL 544306, *2
(D.D.C. 1993) (citing Pan American Petroleum & Transport Co. v.
United States, 273 U.S. 456, 506 (1927))(unclean hands); SEC v. Gulf
& Western Ind., Inc., 502 F. Supp. 343, 348 (D.D.C. 1980)(unclean
hands). Finally, in pari delicto is only available when a party has
"violated the law in cooperation with the defendant," Pinter v. Dahl, 486
U.S 622, 632 (1988). Since Defendants have not even alleged that the
Government has committed any illegality during the period covered by the
Complaint's allegations of conspiracy, the defense of in pari delicto has
Upon consideration of the Motion, the Opposition, the Reply and the
entire record herein, and for the reasons set forth below, the United
States' Motion is granted.
Plaintiff, the United States of America ("the Government") has brought
this suit against Defendants pursuant to Sections 1962(c) and (d) of the
Racketeer Influenced and Corrupt Organizations Act ("RICO),
18 U.S.C. § 1961 et seq.*fn3 Defendants are manufacturers of
cigarettes and other tobacco-related entities. The Government seeks
injunctive relief and $289 billion *fn4 for what it alleges to be an
unlawful conspiracy to deceive the American public.
The Government's Amended Complaint describes a four-decade long
conspiracy, dating from at least 1953, to intentionally and willfully
deceive and mislead the American public. According to the Government, the
underlying strategy Defendants adopted was to deny that smoking caused
disease and to consistently maintain that whether smoking caused disease
was an "open question." Am. Compl. at ¶ 34. In furtherance of that
strategy, Defendants allegedly issued deceptive press releases, published
false and misleading articles, destroyed and concealed documents which
indicated that there was in fact a correlation between smoking and
disease, and aggressively targeted children as potential new smokers. Am.
Compl. at ¶ 36.
The Government also alleges that over the course of the conspiracy,
Defendants made false and misleading statements concerning the
addictiveness of nicotine. Defendants continually denied that nicotine is
addictive, even in the face of what the Government calls overwhelming
evidence to the contrary. Am. Compl.
at ¶¶ 71-72. Defendants allegedly took actions to make cigarettes even
more addictive by manipulating and increasing the potency of nicotine in
their cigarettes. Am. Compl. at ¶ 77. Nevertheless, Defendants have
repeatedly denied that they manipulated the level of nicotine in their
products. Am. Compl. at ¶ 79.
The Government also alleges that Defendants used deceptive marketing to
exploit smokers' desire for less hazardous products and "misled consumers
by marketing products that consumers believe are less harmful, even
though they are not." Am. Compl. at ¶ 83. For example, according to
the Government, Defendants have marketed "light" or "low tar/low
nicotine" cigarettes as being less hazardous to smokers even though there
is no basis for believing they are any safer than other cigarettes. Am.
Compl. at ¶ 86.
Defendants have asserted a variety of affirmative defenses to these
allegations in their Answers, responses to interrogatories, and in Joint
Defendants' Preliminary Proposed Conclusions of Law Regarding Affirmative
Defenses ("J.D. PPCL"). These defenses include waiver, equitable
estoppel, laches, unclean hands and in pari delicto.
The thrust of Defendants' equitable defenses is that the Government
itself has been involved with, permitted, encouraged, and even mandated
the very conduct it now challenges in this RICO action. For example,
while the Government claims that the
Defendants deceived its agencies and employees about the relationship
between smoking and disease, Defendants respond that the Government
itself has known of that relationship for decades. Mem. in Opp'n at 1.
Regarding allegations of Defendants' concealment of the addictive nature
of nicotine, they claim that "the Government seeks to obscure the fact
that . . . it officially maintained that nicotine was not `addictive'
until the Surgeon General changed the definition of addiction in 1988."
Id. According to Defendants, despite the fact that the Federal Trade
Commission ("FTC") required Defendants to use the so called FTC
Method for reporting tar and nicotine, the Government now alleges that
their compliance with this requirement is fraudulent. J.D. PPCL 816.
Similarly, regarding the allegation that they affirmatively suppressed
research into safer cigarettes, Defendants claim that "the Government
disregards that, for over ten years, it worked closely with [D]efendants
in pursuit of such a cigarette, and that it was responsible for
disbanding the joint effort." Mem. in Opp'n at 1. Although the Government
now attacks Defendants' development and marketing of low tar cigarettes,
"it was the Government that actively encouraged and publicly lauded the
development of those cigarettes." Id. (emphasis in original).
In short, Defendants contend in their affirmative defenses that "the
Government's involvement with, acquiescence in, and
encouragement of the challenged conduct forecloses equitable relief."
Mem. in Opp'n at 5.
II. SUMMARY JUDGMENT STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment
is appropriate if the pleadings, depositions, answers to interrogatories
and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
Material facts are those that "might affect the outcome of the suit under
the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). In considering a summary judgment motion, "the evidence of the
non-movant is to be believed, and all justifiable inferences are to be
drawn in his favor." Id. at 255; see also Washington Post Co. v. United
States Dep't of Health and Human Servs., 865 F.2d 320, 325 (D.C. Cir.
The Court will assume for purposes of this Motion that the facts relied
upon by Defendants ...