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United States v. Philip Morris USA

May 06, 2004

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PHILIP MORRIS USA., F/K/A PHILIP MORRIS, INC. ET AL. DEFENDANTS.



The opinion of the court was delivered by: Gladys Kessler United States District Court Judge

MEMORANDUM OPINION

This matter is now before the Court on Defendants' Motion for Summary Judgment on the Grounds That There Is No Reasonable Likelihood of Future RICO Violations ("Motion"). Upon consideration of the Motion, the Government's Opposition, the Reply and the entire record herein, and for the reasons stated below, the Motion is denied.

I. BACKGROUND

Plaintiff, the United States of America ("the Government") has brought this suit against the Defendants*fn1 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 disgorgement of billions of dollars for what it alleges to be Defendants' 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 ¶ 3.

II. Analysis

In the present Motion, Defendants seek summary judgment on all claims on the grounds that the Government cannot meet its burden of showing a reasonable likelihood of Defendants' future RICO violations. As this Court previously held, imposition of any equitable remedies under Section 1964(a), including the injunctive relief and disgorgement which the Government seeks in this action, must be drawn so as to prevent and restrain any future violations of RICO. See Memorandum Opinion on Defendants' Motion for Partial Summary Judgment on Government's Disgorgement Claim. Defendants argue that the Government cannot meet this threshold showing in light of the Master Settlement Agreement ("MSA"), which Defendants entered into with all 50 States and the District of Columbia to settle state tobacco litigation. See Motion at 8. Defendants also argue that all post-MSA acts upon which the Government relies are legal and legitimate and therefore insufficient to make the requisite showing. Id. at 17-18.

The Government responds that there is substantial evidence of ongoing RICO violations. In addition, the Government asserts that it can show a reasonable likelihood of future RICO violations based on the Defendants' past RICO violations alone.

A. 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 Serv., 865 F.2d 320, 325 (D.C. Cir. 1989).

Additionally,"if the evidence presented on a dispositive issue is subject to conflicting interpretations, or reasonable persons might differ as to its significance, summary judgment is improper." Greenberg v. FDA, 803 F.2d 1213, 1216 (D.C. Cir. 1986). At the summary judgment stage,"the court is not to make credibility determinations or weigh the evidence." Dunway v. Int'l Brotherhood of Teamsters, 310 F.3d 758, 761 (D.C. Cir. 2002).

B. The MSA, In and of Itself, Does Not Preclude Relief.

Defendants argue that, with the MSA in place, there is no likelihood of future RICO violations because the MSA"severely limits virtually every aspect of Defendants' businesses and specifically precludes the conduct which the Government claims Defendants undertook illegally in the past."*fn3 Motion at 8. In addition, Defendants assert that the MSA is actually broader than the relief which the Government seeks in this action, that it is accomplishing the objectives sought in this litigation, and that it is effectively enforced by the States Attorneys General. Id. at 8-10. Defendants emphasize that courts in every state and the District of Columbia retain jurisdiction over enforcement actions to remedy violations of the MSA. Id. at 10. Further, Defendants argue that the States have not hesitated to pursue enforcement actions in those few instances of violations of the MSA,. Id. at 12. In light of the implementation and effective enforcement of the MSA, Defendants claim that no further equitable relief is necessary.

Despite the superficial appeal of Defendants' argument, the Court concludes that the existence of the MSA cannot establish, as a matter of law, that there is no reasonable likelihood of Defendants committing future RICO violations. As the Court has previously noted, at a much earlier point in this litigation,"[i]n arguing that the MSA obviates the need for injunctive relief, Defendants implicitly ask the Court to make the following two assumptions: that Defendants have complied with and will continue to comply with the terms of the MSA and that the MSA has adequate enforcement mechanisms in the event of noncompliance." United States v. Philip Morris, 116 F.Supp.2d at 149. However, there are many reasons the Court is not prepared to accept those assumptions at the summary judgment stage just as it was not prepared to do so at the motion to dismiss stage.

First, in Section 1964(b), Congress has given the obligation to enforce RICO to the federal government not to the States. As the Government argues, the MSA does not trump the"paramount sovereign interests" of the United States in enforcing its own laws, especially given that it is not even a party to the MSA and that this Court has no jurisdiction to enforce the MSA. Govt's Opp'n. at 9,12. The enforcement responsibilities ...


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