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United States v. Philip Morris USA

March 16, 2007

UNITED STATES OF AMERICA, PLAINTIFF, AND TOBACCO-FREE KIDS ACTION FUND, AMERICAN CANCER SOCIETY, AMERICAN EART ASSOCIATION, AMERICAN LUNG ASSOCIATION, AMERICANS FOR NONSMOKERS' RIGHTS,: AND NATIONAL AFRICAN AMERICAN TOBACCO PREVENTION NETWORK, INTERVENORS,
v.
PHILIP MORRIS USA, INC., (F/K/A PHILIP MORRIS, INC.), ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

Defendants*fn1 have moved for Clarification or in the Alternative for Relief Under Rules 52, 59 and 60 with respect to the Court's August 17, 2006 Order. Upon consideration of the Motion, the Oppositions of the Plaintiff and Intervenors, the Replies, and the lengthy record herein, the Court concludes that the Motion should be denied in part and granted in part.

First, Defendants seek clarification on two issues relating to Order #1015, the Final Judgment and Remedial Order in this case. They seek clarification as to the meaning and applicability of the General Injunctive Relief set forth in ¶¶ II. A. 1. and II. A. 3. of the Order. Second, Defendants seek clarification regarding the scope of the provisions in the Order, prohibiting the use of descriptors and requiring corrective statements at retail point of sale.

I. Request for Clarification Regarding General Injunctive Relief In § II. A. 1. of the Remedial Order, the Court has permanently enjoined Defendants

from committing any act of racketeering as defined in 18 U.S.C. § 1961(1), relating in any way to the manufacturing, marketing, promotion, health consequences, or sale of cigarettes in the United States.

In Section II. A. 3. of the Remedial Order, the Court has permanently enjoined Defendants

from making, or causing to be made in any way, any material false, misleading, or deceptive statement or representation, or engaging in any public relations or marketing endeavor that is disseminated to the United States public and that misrepresents or suppresses information concerning cigarettes. Such material statements include, but are not limited to, any matter that: (a) involves health, safety, or other areas with which a reasonable consumer or potential consumer would be concerned; (b) a reasonable consumer or potential consumer would attach importance to in determining whether to purchase or smoke cigarettes; or (c) the Defendant, Covered Person or Entity making the representation knows or has reason to know that its recipient regards or is likely to regard as important in determining whether to purchase cigarettes or to smoke cigarettes, even if a reasonable person would not so regard it.

The RICO statute expressly authorizes the imposition of "reasonable restrictions on the future activities . . . of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, . . . ." 18 U.S.C. § 1964(a). As the Second Circuit has pointed out in United States of America v. Carson, 52 F.3d 1173, 1184 (2d Cir. 1995), "'a [D]istrict [C]court has broad discretion to enjoin possible future violations of law where past violations have been shown,"' quoting SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1100 (2d Cir. 1972) (emphasis added). The prohibition against committing any racketeering activity, as defined in 18 U.S.C. § 1961(1), has been upheld in numerous cases, including Carson itself, 52 F.3d at 1185 n. 10. See also S.C. Johnson & Son, Inc. v. The Clorox Co., 241 F.3d 232, 241 (2d Cir. 2001); Professional Association of College Educators, TSTA/NEA v. El Paso County Community College District, et al., 730 F.2d 258, 273 (5th Cir. 1984).

Federal Rule of Civil Procedure 65(d) requires specificity in injunctions so that "those enjoined will know what conduct the Court has prohibited," Mayer v. Brown & Root Constr. Co., 661 F.2d 369, 373 (5th Cir. 1981). Section II. A. 1. of the Remedial Order not only enjoins the Defendants from committing any act of racketeering, but further specifies that the activity being enjoined must relate to the "manufacturing, marketing, promotion, health consequences, or sale of cigarettes in the United States."

Section II. A. 3. of the Remedial Order covers the making of any "material false, misleading or deceptive statement or representation, . . . ." That Section then sets forth that such material statements which are enjoined include any material that "(a) involves health, safety, or other areas with which a reasonable consumer or potential consumer of cigarettes would be concerned"; (b) statements that a reasonable consumer would attach importance to; or (c) that the defendant knows that the recipient would regard as important.

As the Fifth Circuit said in Professional Association of College Educators, 730 F.2d at 273, "it is difficult to understand how the defendants could have legitimate difficulty understanding what they are forbidden to do, or to imagine how the injunction could have more specificity without attempting to catalog every conceivable means by which they might be violating or seeking to violate the injunction."

Finally, it must be noted that in determining whether injunctions do provide specific notice of prohibited conduct to those affected, the courts have emphasized that such injunctions will be evaluated "'in the light of the circumstances surrounding (the injunction's) entry: the relief sought by the moving party, the evidence produced at the hearing on the injunction, and the mischief that the injunction seeks to prevent.'" Common Cause v. Nuclear Regulatory Comm., 674 F.2d 921, 927 (D.C. Cir. 1982), quoting United States v. Christie Industries, Inc., 465 F.2d 1000, 1007 (3d Cir. 1972).

In this case, in light of the extensive Findings of Fact and the lengthy Conclusions of Law, the actual nine month trial record, and the complexity of the scheme to defraud outlined in those Findings of Fact, Defendants have more than sufficient notice of the illegal conduct that is prohibited under the Sections of the Remedial Order relating to General Injunctive Relief.

Given the entire context of this case, "Rule 65(d) does not require the [D]istrict [C]court to 'predict exactly what [the Defendants] will think of next.'" S.C. Johnson & Son, Inc., 241 F.3d at 240, quoting Sterling Drug v. Bayer AG, 14 F.3d 733, 748 (2d Cir. 1994). Indeed, it would be impossible to foresee what the ingenuity and creativity of Defendants' cadres of sophisticated lawyers could "think of next." For all these reasons, the ...


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