The opinion of the court was delivered by: GLADYS KESSLER, District Judge
This matter is now before the Court on the Joint Motion for Summary
Judgment by Defendants The Council for Tobacco Research U.S.A., Inc.
("CTR") and the Tobacco Institute ("TI") ("Motion").*fn1
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 $280 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, 136-38 (D.D.C. 2000).
CTR and TI are not-for-profit organizations created by the tobacco
industry in the 1950s for the stated purposes of scientific research and
trade association, respectively. The Government alleges that CTR and TI
acted to facilitate a RICO conspiracy among the other Defendants by
providing a uniform voice for those Defendants' misrepresentations,
presenting a facade of independence, and offering mechanisms for enforcing
the conspiracy. As a result of other litigation, both CTR and TI were
ordered in 1998 to dismantle their operations and to cease all
functions. See Motion, at 5-6, 9. Funding for CTR and TI was terminated
in 1999. Id. CTR and TI now exist solely to conclude any pending
litigation, such as the present case.
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
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 Washington Post Co. v. United States
Dep't of Health and Human Servs., 865 F.2d 320, 325 (D.C. Cir. 1989).
CTR and TI claim that they are entitled to summary judgment on all
claims against them because the Government's allegations are insufficient
as a matter of law to support an order of relief under Section 1964(a).
See Motion, at 13. As this Court held, both the injunctive and
disgorgement remedies which the Government seeks in this action are
equitable and thus require a showing that there is a "likelihood of
future violations." Philip Morris, 116 F. Supp.2d at 146; Memo. Op. on Joint Defs.' Mot. for Partial Sum. J. Dismissing the
Govt's Disgorgement Claims, at 7. Accordingly, CTR and TI argue that the
Government cannot prove any likelihood of future violations by these two
entities because they have ceased operations and have been dissolved.
Id. at 14. CTR and TI also claim that they are entitled to summary
judgment on all claims because the relief the Government seeks in this
case would involve the Court disrupting New York's administrative efforts
dismantling these two entities, in violation of the Burford abstention
The Government does not dispute that CTR and TI have been dissolved.
See Govt's Opp'n., at 4. However, the Government argues that CTR and TI
remain liable for RICO violations incurred prior to dissolution. Id. at
6-20. In addition, the Government argues that CTR and TI remain
vicariously liable for the actions of their co-conspirators even after
they have dissolved.*fn4 Id. at 8.
A. Summary Judgment as to Remedy Is Inappropriate Because There Is
Not Yet a Finding as to Liability Every lawsuit has two components: liability and remedy. This Court has
held that the essential elements of RICO liability are: (1) conduct (2)
of an enterprise (3) through a pattern of racketeering activity. Philip
Morris, 116 F. Supp.2d at 146. If there is a finding of liability, courts
may order any equitable remedy under RICO Section 1964(a), including the
injunctive relief and disgorgement which the Government seeks in this
action, only upon a showing of a future likelihood of RICO violations.
See id. at 148; Mem. Op. to Joint Defs.' Mot. for Partial Sum. J.
Dismissing the Govt's Disgorgement Claim, at 7.
Defendants do not argue for summary judgment on liability, as they
cannot in light of the myriad material facts in dispute regarding all
Defendants' liability. Instead, CTR and TI focus their Motion on the
issue of remedy alone, arguing that, as a matter of law, even if the
Government can prove their liability under RICO Sections 1962(c) and
(d), it cannot establish the requirements for imposition of any remedy
under Section 1964(a). However, this argument puts the "cart before the
horse." Without the requisite predicate finding of CTR's and TI's RICO
liability, it would be premature for the Court to consider whether
summary judgment should be granted because RICO remedies may not be
available. If, after finding liability, the Court concludes that the
Government cannot show a reasonable likelihood of future RICO violations by CTR and TI, a dismissal of the case against them may
B. The Burford Abstention Doctrine Does Not Preclude the Government's
CTR and TI also argue that they are entitled to summary judgment on the
basis of the Burford abstention doctrine. See Motion, at 17. This
doctrine requires courts to abstain from hearing claims whose
adjudication in a federal forum "would be disruptive of state efforts to
establish coherent policy with respect to a matter of substantial public
concern." Burford v. Sun Oil, 319 U.S. 315, 332 (1943). CTR and TI
contend that the relief the Government seeks in this case would
necessitate disrupting the New York administrative scheme for dismantling
these two entities. See Motion, at 17. The Government, in turn, argues
that the Burford doctrine is inapplicable to the instant case because the
adjudication of its RICO claims involves exclusively federal law issues.
Govt's Opp'n., at 24.
In Burford, the Sun Oil Company brought action in federal court, based
on diversity grounds, to enjoin enforcement of an administrative order of
a Texas State commission granting Burford a permit to drill four oil
wells on a particular oil field. Burford, 319 U.S. at 332. The Supreme Court concluded that the Texas
courts should have the first opportunity to consider the substantial
problems posed by the lawsuit because: (1) the order under consideration
was part of the general regulatory system devised for the conservation of
oil and gas in Texas; (2) Texas had substantial interests in the
regulation of its natural resources; and (3) Texas had already devised a
system of review regarding oil regulation that could be impaired by
inconsistent federal decisions trying to ascertain the complex state law
governing such matters. Id. at 318, 321-30. Due to the potentially
overlapping claims of many parties who had an interest in a common pool
of oil in Texas, the Court held that these factors weighed in favor of
federal abstention to allow for state adjudication. Id. at 332.
None of the factors that made abstention appropriate in Burford are
present in this case. The relief which the Government seeks will not
interfere with New York's enforcement of its dissolution of CTR and TI.
Rather, the remedies sought mirror and supplement New York's
administrative efforts. In addition, adjudication of these RICO claims
does not involve complex or significant issues of State law or policy in
which New York has a substantial interest. In fact, this case involves
enforcement of a federal statute protecting the United States' paramount
sovereign interests, which New York's administrative scheme does not
address. The Supreme Court has emphasized that the "presence of federal law
issues must always be a major consideration weighing against
[abstention]." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 26 (1983). The task in abstention cases is not to find some
substantial reason for the exercise of federal jurisdiction by the
district court but rather to ascertain whether there exist "exceptional"
circumstances that can justify the surrender of that jurisdiction. Id. at
25. Accordingly, the Court concludes that adjudication in federal court
of the RICO claims against CTR and TI involves exclusively federal law
issues, that there are no exceptional circumstances justifying surrender
of federal jurisdiction, and therefore application of the Burford
abstention doctrine is not warranted.
Though Defendants CTR and TI have effectively ceased to exist and may
not be reasonably likely to commit future RICO violations, it is
premature for the Court to address dismissal because of inapplicability of
available remedies before there is even a finding on liability. In
addition, because this case involves enforcement of a federal statute,
the Burford abstention doctrine does not preclude this Court from
exercising jurisdiction over the claims against CTR and TI. Accordingly,