United States District Court for the District of Columbia
May 28, 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 Motion of British American
Tobacco (Investments) Limited ("BATCo") for Summary Judgment ("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.
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 $280 billion
dollars*fn3 of ill-gotten gains 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.
One of the Defendants, BATCo, is a British corporation. It sells State
Express 555 brand of cigarettes in the United States, and historically
has always held a very small share of the United States market (never
more than .06%). Until 1979, Brown & Williamson ("B&W") was a subsidiary of BATCo. In a corporate
reorganization in 1979, BATCo relinquished ownership of B&W and became
Defendant BATCo seeks summary judgment on all claims against it on the
grounds that the Government cannot establish BATCo's liability under
either Sections 1962(c) or (d) of RICO.*fn4 Section 1962(c) liability
attaches to one who "participate [s] in the operation or management of
the enterprise itself." Reves v. Ernst & Young, 507 U.S. 170, 185 (1993)
(emphasis in original). Under Section 1962(d), it is "unlawful for any
person to conspire to violate any of the provisions of subsection . . .
(c) of this section." 18 U.S.C. § 1962 (d). BATCo argues that there is no
evidence either connecting it to the "operation or management" of the
RICO enterprise or demonstrating a knowing agreement that it embraced the
objectives of the alleged conspiracy. See Motion, at 3-4. In addition, BATCo argues that the claims against it must be
dismissed because they are based on its relationship with B&W and, as a
matter of law, affiliates cannot conspire with each other. Id. at 22.
In turn, the Government asserts that there is substantial evidence of
BATCo's participation in and benefit from the conspiracy. See Govt's
Opp'n. at 5-7. In particular, the Government argues that BATCo
participated in the "operation or management of the Enterprise" by
supporting its scheme to defraud the public. Id. In addition, the
Government argues that BATCo can and did conspire with B&W, as well as
the other Defendants. See id. at 21.
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. See 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 Washington Post Co. v. United States
Dep't of Health and Human Servs., 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 Bhd. of Teamsters, 310 F.3d 758, 761 (D.C.
B. There Are Material Facts in Dispute About Whether and To What
Extent BATCo Participated in the Operation or Management of the Alleged
RICO Enterprise or Conspired To Do So
First, BATCo argues that the Government's claims as to its liability
under Sections 1962(c) must fail as a matter of law because the
Government has failed to present any evidence that it participated in the
operation or management of the alleged RICO enterprise. See Motion at 7;
Reves, 507 U.S., at 179 (showing of "operation or management" of the RICO
enterprise requires proof [of] "some part in directing [the Enterprise's]
In particular, BATCo notes that it did not attend the December 1953
meeting of cigarette company executives at which, according to the
Government, the alleged enterprise was conceived, and it did not sign the
"Frank Statement" advertisement which, according to the Government, began
the alleged scheme to defraud to the American public. See Motion, at 10.
In addition, BATCo points out that it was never a member, or represented
on the board or management, of either CTR or TI, entities which the Government alleges coordinated the
operation and direction of the enterprise. Id. at 11. Finally, BATCo
argues that, because it never had more than a .06% market share in the
United States and because its primary business interests have always been
outside the United States, it had neither the means nor the motive to
participate in the "operation or management" of an enterprise whose goal
was to affect the US market. Id.
The Government, in its Opposition, demonstrates that there are numerous
material issues in dispute about whether BATCo participated in the
"operation or management" of the alleged enterprise. For example, while
BATCo asserts that it was not an official member of CTR or TI, the
Government claims BATCo created and/or joined other related
organizations, such as the International Tobacco Information Center
("INFOTAB") and the Tobacco Research Council ("TRC"), in order to
conceal, suppress, and destroy information that might adversely affect
the enterprise's interests. See Govt's Opp'n. at 7.
In addition, according to the Government, despite BATCo's small share
of the United States market, it had a significant economic interest in
the enterprise because its activities would enhance the position of the
tobacco industry generally, as well as its affiliate, B&W, in
particular. Id. at 5. The Government argues that global coordination was
essential for many reasons including the concern that "any adverse action or result in litigation,
regulation, or legislation anywhere else in the world could lead to a
`domino effect' in other countries." Id. at 5. Thus, it is clear that the
Government's description of BATCo's economic interest stands in stark
contrast to its own assertion that it lacked the motive or means to
participate in the operation or management of the enterprise.
Second, BATCo argues that liability under Section 1962(d) must fail
because the Government cannot show that it conspired with anyone to
violate Section 1962(c). See BATCo's Obj., at 14. BATCo asserts that
there is no evidence that it agreed with any of the Defendants to embrace
the objectives of the conspiracy. Id. at 15. In fact, BATCo asserts that
the claims against it are premised solely on its relationship with its
affiliate, B&W, and its implementation of normal document management
policies, which the Government alleges were in furtherance of the RICO
enterprise. With respect to the former, BATCo claims that it communicated
with B&W only in the "normal course of business." Id. at 17, 23. With
respect to the latter, BATCo argues that the Government cannot prove that
its document management policy was fraudulent, unreasonable, or
instituted in bad faith. Id. Based on these assertions, BATCo argues that
the Government cannot meet its burden of showing any agreement to
conspire to violate Section 1962(c).
However, the Government argues that there is substantial circumstantial evidence that BATCo embraced the objectives of the
conspiracy by: (1) fraudulently denying the adverse health effects of
smoking; (2)concealing and destroying documents connecting smoking and
adverse health effects; (3)working with the enterprise to perpetuate the
myth of independent smoking and health research; and (4) making
fraudulent representations regarding low tar cigarettes. See Govt's
Opp'n., at 8-11.
The foregoing recitation of the parties' positions makes it eminently
clear that there are numerous disputes about material facts, and about
the inferences and interpretations to be drawn from those facts, which
can only be resolved at trial. Consequently, summary judgment is
For all the foregoing reasons, Defendant BATCo is not entitled to
summary judgment on the claims against it, and its Motion is denied. An Order will accompany this opinion.
This matter is now before the Court on British American Tobacco
(Investments) Limited's ("BATCo") Motion for Summary Judgment
("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, Defendant BATCo's Motion is denied.