The opinion of the court was delivered by: GLADYS KESSLER, District Judge
This matter is now before the Court on Defendants'*fn1 Motion for
Partial Summary Judgment on Claims that Defendants Advertised, Marketed,
and Promoted Cigarettes to Youth and Fraudulently Denied Such Conduct.
Upon consideration of the Motion, the Government's Opposition and the
entire record herein, and for the reasons stated below, the Joint
Defendants' Motion is denied.
Plaintiff, the United States of America ("the Government") has brought
this suit against the Defendants pursuant to Sections 1962(c) and (d) of
the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961, et
seq.*fn2 Defendants are manufacturers of cigarettes and other
tobacco-related entities. The Government seeks injunctive relief and
billions of dollars 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
about, among other things, the harmful nature of tobacco products, the
addictive nature of nicotine, and the possibility of manufacturing safer
and less addictive tobacco products. Amended Complaint ("Am. Compl.") at
The present Motion focuses on one sub-scheme of the overarching
conspiracy alleged by the Government, namely the Government's allegations
that the Defendants have deliberately marketed cigarettes to children and
fraudulently denied doing so. According to the Government, even though
the sale of cigarettes to children is illegal, and even though Defendants
deny doing so, they have marketed their products to children. Defendants
are allegedly motivated to target children as new smokers because they
"fail to appreciate the risk that, by engaging in smoking while they are
adolescents, they will become long term smokers because of the
development of an addiction to nicotine." Am. Compl. at ¶ 95. Once
addicted, these new smokers serve as "replacements" for older smokers who
quit smoking or die. Am. Compl. at ¶ 94.
R.J. Reynolds' Joe Camel campaign is just one of the most well-known
examples of what the Government characterizes as Defendants' practice of
"aggressively target[ing] their campaigns to children." Am. Compl. at
¶¶ 96-97. According to the Government, Defendants have conducted
research on young people and designed their marketing practices to
exploit what they have learned about their interests and vulnerabilities,
in order to induce them to smoke. Gov't Mem. in Opp'n at 7 (citing United
States' Master Rule 7.1/56.1 Statement of Material Facts Demonstrating
the Existence of Genuine Issues for Trial ("Master Stmt"). Defendants
have allegedly enticed children to smoke using advertising that
"glamorizes smoking," using "content . . . intended to entice young
people to smoke, for example, as a rite of passage into adulthood or as a
status symbol." Am. Compl. at 1 96.
Defendants are also alleged to have advertised in stores near high
schools, given away cigarettes at places where young persons congregate,
paid for product placement in movies with youth audiences, placed
advertisements in magazines with high youth readership, and sponsored
sporting events, rock concerts, and other events of interest to children.
Am. Compl. at 1 96. At the same
time, according to the Government, Defendants have consistently
made false and misleading statements that their expenditures on
advertising and marketing were directed exclusively at convincing current
smokers to switch brands, not at enticing children to start smoking. Am.
Compl. at ¶ 100.
Defendants vehemently deny that they have advertised, marketed and
promoted cigarettes to children. In their Motion they seek summary
judgment against the Government's allegations relating to what Defendants
call "the youth marketing sub-scheme." Mem. in Supp. at 13. Defendants
ask the Court to dismiss with prejudice all of the Government's
racketeering acts*fn3 related to this sub-scheme along with the related
These racketeering acts comprise two groups. The first category is
actual cigarette advertisements that allegedly promote cigarettes to
children along with conduct, apart from advertising, that furthers the
goal of marketing smoking to children, such as obtaining surveys of youth
smoking habits (collectively "youth marketing acts"). The second category
of racketeering acts are Defendants' denials that they targeted their
marketing at children.
Defendants advance three principal arguments that these racketeering
acts should be dismissed:
(1) The youth marketing acts do not constitute RICO predicate acts of
mail and wire fraud.
(2) Their conduct is protected by the First Amendment.
(3) Their denials of marketing to children were not part of a scheme to
defraud anyone of "money or property" as required by the mail and wire
Defendants are not entitled to summary judgment on the basis of any of
these arguments, for the following reasons; consequently, the Government
must be given the opportunity to prove its claims about Defendants' youth
marketing sub-scheme at trial.
First, the youth marketing acts cannot be assessed in isolation, but
must be evaluated in the context of the totality of the Government's
allegations of fraud.
Second, whether Defendants have targeted children
as replacement smokers and whether they have falsely denied doing so,
involve disputed factual issues of intent that must be resolved at
Third, the Government has, contrary to Defendants' argument, alleged a
deprivation of "money or property," namely the purchase ...