United States District Court for the District of Columbia
March 17, 2004.
UNITED STATES OF AMERICA, Plaintiff,
PHILIP MORRIS USA, Inc., f/k/a Philip Morris, Inc. et al., Defendants
The opinion of the court was delivered by: GLADYS KESSLER, District Judge
This matter is now before the Court on the Defendants'*fn1 Motion
for Summary Judgment on the Grounds that the Government's RICO Claims
Violate Separation of Powers ("Motion"). Upon consideration of the
Motion, the Opposition, the Reply and the entire record herein, and for
the reasons set forth below, the Defendants' Motion is denied.
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.*fn2 Defendants are
manufacturers of cigarettes and other tobacco-related entities. The
Government seeks injunctive relief and $289 billion*fn3 for what it
alleges to be a four-decade long unlawful conspiracy to intentionally and
willfully deceive and mislead the American public. The Government's
factual allegations have been described in some detail in prior opinions,
and need not be repeated here. See e.g., United States v.
Philip Morris Inc., 116 F. Supp.2d 131, 136-138 (D.D.C. 2000).
In their Motion, Defendants seek summary judgment on the basis of the
separation of powers doctrine. This doctrine reflects the "basic
principle of our constitutional scheme that one branch of the Government
may not intrude upon the central prerogatives of another." Loving v.
United States, 517 U.S. 748, 757 (1996). According to the
Defendants, the Government is improperly "usurping the legislative
function" by bringing this RICO suit. Defs.' Mem. in Supp. at 2. They do
not deny that the conduct alleged falls within the scope of RICO.
Instead, they argue that Congress has created a distinct regulatory
regime for tobacco, one which
reserves for Congress itself the power to regulate in this area and
that the Government's claims and proposed relief "seriously impinge" on
this reserved authority. Defs.' Mem. in Supp. at 9. For the reasons set
forth below, Defendants are not entitled to summary judgment on this
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. 1989). In this Motion we are
concerned with issues of law, rather than factual disputes.
A. Tobacco-Specific Legislation
Congress has enacted legislation addressing tobacco. and health on at
least six separation occasions since 1965. FDA v. Brown &
Williamson Tobacco. Corp., 529 U.S. 120, 137 (2000).
Through this legislation Congress has created a "distinct scheme to
regulate the sale of tobacco. products." Id. at 157. For
example, in the Federal Cigarette Labeling and Advertising Act ("FCLAA"
or "Labeling Act"), 15 U.S.C. § 1331-40, Congress mandated the
warnings that appear on every package of cigarettes sold in the United
States, 15 U.S.C. § 1333. Congress has also, among other things,
prohibited the advertisement of tobacco. through "any medium of
electronic communication," subject to regulation by the Federal
Communications Commission, 15 U.S.C. § 1335; required the Secretary
of HHS to report to Congress concerning the addictive nature of tobacco,
42 U.S.C. § 290aa et. seq., and created incentives for
States to regulate the sale of tobacco. products to minors,
15 U.S.C. § 300x et.seq.
Defendants argue that this tobacco-specific legislation, viewed
collectively, comprises a regulatory scheme in which Congress has
expressed its intent to reserve to itself alone the authority to regulate
tobacco, except where it has made some express delegation of that
authority. Therefore, according to
Defendants, the Government's RICO claims must be dismissed because
they impinge on this exclusive authority.
In a prior motion Defendants argued that certain of the Government's
claims came within the exclusive jurisdiction of the FTC and would
effectively repeal the tobacco. regulatory regime that was purportedly
administered by that agency alone. See Joint Defs.' Mot. for
Partial Summary Judgment on Advertising, Marketing, Promotion and Warning
Claims ("FTC Motion"). The court rejected this argument because it found
that RICO did not conflict with either the FTC Act or the FCLAA.
United States v. Philip Morris, 263 F. Supp.2d 72 (D.D.C.
2003) ("FTC Opinion"). Defendants' argument in this Motion that the RICO
claims infringe on powers reserved exclusively to Congress fails for
B. In Bringing Its RICO Claims, the Government is Enforcing
Legislation Enacted by Congress, Not "Regulating" the Industry Being
It is undisputed that the conduct alleged falls within the reach of
RICO and that the statute has no explicit exemption for tobacco-related
entities or conduct.*fn4 The argument that the Government is usurping
the role of the Congress is based, not on the text of RICO, but on the
mistaken premise that the claims beubg
brought can properly be described as "regulation" of tobacco.
However, Congress has explicitly authorized the Attorney General to bring
RICO suits, such as this one, 18 U.S.C. § 1964 (b), and Defendants
cite no authority for the proposition that when the Government acts
pursuant to such authority, it is "regulating." Instead, when the
Government sues under RICO, it is enforcing the law and carrying out
Congress' intent to ensure that the laws it enacts are complied with.
See INS v. Chadha, 462 U.S. 919, 954 n.16 (1983)(when the
Attorney General performs his duties pursuant to a statute that delegates
authority to him "he does not exercise `legislative' power" but acts "in
his presumptively Art. II capacity").*fn5
Agency "regulation" involves, among other things, the issuance of rules
of general applicability that have legal force. See BLACK'S LAW
DICTIONARY 1289 (7th ed. 1999) (defining "regulation" as "the act or
process of controlling by rule or restriction" or " [a] rule or order,
having legal force, issued by an administrative agency " such as
"Treasury regulations [which] explain and interpret the Internal Revenue
Code"). Here, the Attorney General, through the Department of Justice, is
enforcing the law as written by Congress,
not generating further rules, interpretative or otherwise, and not
engaging in policymaking. The Department of Justice is exercising the
kind of discretion that prosecutors typically exercise in choosing, on a
fact-specific, case-by-case basis, which lawsuits to bring. Pursuit of
fraud-based claims against tobacco. companies simply cannot be equated
with the regulation of smoking and health issues attempted by the Federal
Drug Administration in 1996 when it issued Regulations for Restricting
the Sale and Distribution of Cigarettes and Smokeless Tobacco. to Protect
Children and Adolescents. 61 Fed. Reg. 4400 (1996).
That Congress may not have envisioned this particular lawsuit, or even
RICO's application to this industry, when it enacted RICO, as argued by
Defendants, is obviously of no moment because RICO is a statute of
general application. See United States v. Palumbo Bothers,
Inc., 145 F.3d 850, 868 (7th Cir. 1998)("RICO is a statute of
general application, and it is impossible for Congress to anticipate,
identify, and define each and every context in which a violation of the
listed statutes would qualify as a predicate act in a pattern of
Defendants point out that the Government has not alleged that they have
failed to comply with any tobacco-specific legislation. Def s. ` Mem. in
Supp. at 11. From this premise, Defendants conclude that the Government's
claims "assume obligations and duties beyond those and, indeed
. . . inconsistent with those that Congress
chose to impose." Id. There are two fundamental
weaknesses with this argument.
First, the Government seeks to enforce RICO; thus, any obligations
imposed by that statute were imposed by the Congress itself. RICO may
overlap with tobacco-specific legislation but, as this Court observed in
the FTC Opinion, there is a duty to enforce overlapping federal statutes,
as long as they are capable of co-existence. 263 F. Supp.2d at 76
(citing FCC v. NextWave Personal Communications, Inc.,
537 U.S. 293, 304 (2003)).
RICO is a broad statute that often overlaps with
more specifically targeted laws and
regulations. . . . The relevant issue is not
whether one of two overlapping statutes is more
specific than the other, but whether the statutes
actually conflict with one another. So long as
they do not, both must be given effect.
Id. at 77 (internal citations omitted). Overlapping
federal statutes must each be given effect "in the absence of inherent
conflict." Id. at 76 (citing NextWave, 537 U.S. at
304). Defendants have not even attempted to demonstrate any concrete
inherent conflict between RICO and any tobacco-specific legislation.
Second, Defendants suggest that imposing liability on tobacco-related
entities beyond the requirements of tobacco-specific legislation
impermissibly upsets "the balance struck" by Congress. Defs.' Mem. in
Supp. at 12. However, this theory is inconsistent with the holding of
Cipollone v. Liggett Group, 505 U.S. 504 (1992)(plurality
opinion). In Cipollone, the Supreme Court held
that certain state law claims against tobacco. manufacturers were
not preempted by the Labeling Act. In the FTC Opinion, this Court noted
that "Cipollone involved the same `comprehensive' regulatory
regime at issue here" and that the Government's claims in this case are
"virtually identical" to the claims held not preempted in that case.
United States v. Philip Morris, Inc., 263 F. Supp.2d 72 at
Defendants are correct that Cipollone involved state law
claims, and thus, technically, addressed questions of federalism and
preemption, not separation of powers. Defs.' Mem. in Supp. at 14 n.11.
However, in the FTC Opinion, the Court rejected Defendants' arguments
that the Government's RICO claims would be disruptive to the FTC's
administrative responsibilities because they "fail[ed] to explain how
that can be the case when the Supreme Court has already concluded in
Cipollone that state law claims based on the same duties will
not have that adverse effect." 263 F. Supp.2d at 80. Similarly here,
they do not offer any reason to think that federal RICO claims will so
interfere with the tobacco
regulatory regime established by Congress as to violate the
separation of powers doctrine when the state law counterparts of these
claims are not preempted by that same regime.
C. Defendants' Reliance on FDA v. Brown & Williamson Is
Defendants rely heavily on Brown & Williamson. In that
case, the Supreme Court held that the FDA lacks authority to regulate
tobacco. products. The Court found that FDA jurisdiction over tobacco
would be "inconsistent with the intent that Congress has expressed in the
FDCA's [Food Drug and Cosmetic Act's] overall regulatory scheme and in
the tobacco-specific legislation" described above. 529 U.S. at 125.
According to Defendants, Brown & Williamson "repeatedly
makes clear that the regulatory scheme Congress has created for tobacco
products reflects Congress' balancing of the health and economic concerns
raised by tobacco. products" and that Congress has "retained for itself
the sole authority" to regulate cigarettes. Defs.' Mem. in Supp. at 6.
Defendants' interpretation of Brown & Williamson is
overbroad and their reliance on that case is misplaced for several
First, there was no question in Brown & Williamson about
whether the FDA was seeking to "regulate" tobacco. That case arose out of
a challenge to the FDA's assertion of jurisdiction over tobacco. when it
initiated a notice and comment rulemaking by issuing proposed
regulations. 529 U.S. at 125 ("in 1996, the [FDA] asserted jurisdiction
to regulate tobacco. products."). Here, as
discussed above, supra, pp. 5-8, the Government is not
seeking to assert any such regulatory authority over tobacco. Therefore,
the RICO claims in this case do not impinge on Congress' reservation to
itself of the authority to regulate tobacco.
Second, the Supreme Court found that the exercise of jurisdiction by
the FDA over tobacco. created the kind of irreconcilable conflict between
the FDCA and tobacco-specific legislation that does not exist between
RICO and the FCLAA, or other tobacco-specific legislation. Specifically,
the FDA had "exhaustively documented that tobacco. products are unsafe,
dangerous and cause great pain and suffering from illness." Id.
at 134 (internal quotation omitted). The Supreme Court emphasized that
these findings "logically impl[ied]" under the standards of the FDCA that
"the FDA would be required to remove" tobacco. from the market.
Id. at 135. A ban on tobacco. would contradict Congress' clear
intent because the "collective premise" of the tobacco-specific
legislation Congress has enacted has been that tobacco. "will continue to
be sold in the United States." Id. at 139. Here, Defendants do
not claim that the application of RICO to tobacco-related entities
logically implies a ban on tobacco; nor does the Government seek such a
ban as part of its requested relief. Defendants fail to point to any
other concrete conflict between RICO and tobacco-specific legislation.
Third, in Brown & Williamson, the Supreme Court
considered the fact that in its tobacco-specific legislation, Congress
"acted against the backdrop of the FDA's consistent and repeated
statements that it lacked authority under the FDCA to regulate tobacco",
and that Congress had "considered and rejected bills that would have
granted the FDA such jurisdiction." Id. at 144. Here, the Defendants do
not claim that the Government has disavowed its authority to bring RICO
claims against tobacco-related entities or that Congress has considered
and rejected any bills to grant such authority.
For all these reasons, Defendants' reliance on Brown &
Williamson is misplaced.*fn7
D. Unsuccessful Legislative Proposals Are Not Probative of
Congressional Intent Regarding the Scope of RICO
Defendants also argue that overlap between some of the relief requested
by the Government and certain legislative tobacco. proposals that
Congress has considered and rejected demonstrates that Congress did not
intend to permit the Government to bring these claims. Defendants place
special emphasis on the proposed National Tobacco. Policy and Youth
Smoking Reduction Act ("McCain Bill"), S. 1415, 105th Cong. (1997), which
"encompassed various grants, funds, and other programs to restructure the
tobacco. industry." Defs.' Mem. in Supp. at 8. However, even if some of
these bills related to topics generally at issue in this case, such as
youth smoking or the nicotine yields of cigarettes, these unsuccessful
legislative efforts do not demonstrate that Congress intended to preclude
these RICO claims.
The Supreme Court has cautioned against reliance on legislative
proposals which have not been enacted. See Central Bank of Denver,
N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 187
(1994)("failed legislative proposals are a `particularly dangerous ground
on which to rest an interpretation of a prior statute.'")(quoting
Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 650
(1990)). Here, reliance on such failed proposals would be particularly
unwarranted because none of them address the Attorney General's authority
to bring RICO claims against tobacco-related entities. In addition,
Defendants do not claim that any of the proposals were put forth as
remedies for alleged mail or wire fraud. Therefore, there is no
justification for concluding that because Congress has failed to enact
certain legislative proposals, it has spoken directly to the question at
issue in this Motion.*fn8
Defendants are not entitled to summary judgment on the basis of the
separation of powers doctrine for several related reasons.
First, in bringing these RICO claims pursuant to an explicit statutory
grant of authority, the Government is enforcing the law that Congress
passed, not usurping its legislative function.
Second, as a matter of law, Defendants have failed to show that these
claims are somehow inconsistent with the regulatory regime governing
tobacco. that Congress has established, a regime that the Supreme Court
has held can accommodate similar state law claims. Defendants do not deny
that the conduct alleged in this case falls squarely within the reach of
RICO. Nor have they pointed to any concrete inherent conflict between
RICO and any tobacco-specific legislation.
Third, overlap between some of the relief proposed by the Government in
this case and unsuccessful legislative proposals that addressed neither
RICO nor allegations of mail or wire fraud fails to demonstrate
Congressional intent to preclude these claims.
For all these reasons, Defendants are not entitled to summary judgment
on the basis of the separation of powers doctrine. The Supreme Court
observed in Cipollone that "Congress offered no sign that it
wished to insulate cigarette manufacturers from
longstanding [state] rules governing fraud." 505 U.S. at 529. Here,
Defendants do not point to any sign that Congress wished to insulate them
from federal statutory rules governing fraud. Therefore, the Government
must have an opportunity to prove its case at trial.
An Order will accompany this opinion.
This matter is now before the Court on the Defendants' Motion for
Summary Judgment on the Grounds that the Government's RICO Claims Violate
Separation of Powers ("Motion"). Upon consideration of the Motion, the
Opposition, the Reply and the entire record herein, and for the reasons
set forth in the accompanying Memorandum Opinion, the Defendants' Motion