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U.S. v. PHILIP MORRIS USA

July 8, 2004.

UNITED STATES OF AMERICA, Plaintiff,
v.
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

MEMORANDUM OPINION

This matter is now before the Court on Defendants'*fn1 Motion for Partial Summary Judgment With Respect to the Government's Nicotine Manipulation and Addiction Allegations ("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 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 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.

  In the present Motion, Defendants challenge one sub-scheme of the overarching conspiracy, namely the Government's allegations that they "understood nicotine's addictive properties" and have been "developing and using highly sophisticated technologies to deliver nicotine in precisely calculated ways that are more than sufficient to create and sustain addiction." Id. at ¶¶ 72, 77. In support of these allegations, the Government offered, among other pieces of evidence, the testimony of the chief executive officers ("CEOs") of six major American cigarette manufacturers at the televised Congressional hearings held by Rep. Henry Waxman in April, 1994 examining whether nicotine should be regulated as a drug under the Food and Drug Administration Act, 21 U.S.C. § 321(G) (2001) ("Waxman Hearings"). At those hearings, each of the CEOs denied under oath any manipulation of nicotine content. The Government claims that this testimony constituted two acts of fraudulent denial of nicotine manipulation in furtherance of the alleged conspiracy to mislead the American public. The Government also relies on twenty-two other acts it alleges were in furtherance of a fraudulent scheme to deny that smoking is addictive.

  Defendants deny all the nicotine manipulation and addiction claims and ask the Court to dismiss with prejudice the alleged racketeering acts related to this sub-scheme.*fn3 See Motion, at 2.

  Defendants advance three principal arguments why these racketeering acts should be dismissed: (1) their opinions concerning nicotine manipulation and addiction do not constitute RICO predicate acts of mail and wire fraud; (2) their conduct is protected by the First Amendment; and (3) the testimony of the CEOs before Congress is afforded absolute immunity under the common law.

  None of these arguments entitle Defendants to summary judgment. First, the nicotine manipulation and addiction acts cannot be assessed in isolation, but must be evaluated in the context of the totality of the Government's fraud case. Second, whether Defendants have manipulated the nicotine content of their cigarettes, whether they have falsely denied doing so, and whether they have falsely denied that nicotine is addictive, involve disputed factual issues of intent and knowledge that can only be resolved at trial. Third, Defendants' sworn denials of nicotine manipulation and addiction are not immune from liability under common law. Finally, whether any of the challenged racketeering acts are properly defined as "petitioning," and thus immunized under the Noerr-Pennington doctrine, is a factual matter in dispute which must also be resolved at trial. Consequently, the Government must be given the opportunity to prove its claims about Defendants' alleged nicotine manipulation and addiction sub-scheme at trial.

  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 nonmovant 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).

  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).

  III. DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT

  A. Claims Relating to Nicotine Manipulation and Addiction Must Be Decided in the Context of the Entire Alleged Scheme to Defraud

  The Government has alleged the existence of a pervasive, overarching scheme to defraud the public of money which extends back fifty years and continues to the present. According to the Government, this conspiracy has been carried out through a variety of sub-schemes, one of which is the nicotine manipulation and addiction sub-scheme. The other sub-schemes allege that Defendants have (1) advertised, marketed, and promoted cigarettes to children while repeatedly denying such conduct, Am. Compl., at ¶¶ 94-97, 100; (2) disseminated false and misleading statements denying that smoking causes disease, United States' Master Rule 7.1/56.1 Statement of Material Facts Demonstrating the Existence of Genuine Issues for Trial ("Master Stmt"), ¶¶ 227-384, 572-672; (3) fraudulently promised to sponsor independent research into the health risks of smoking, id. at ...


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