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United States of America v. Philip Morris Usa Inc.

April 19, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PHILIP MORRIS USA INC., ET AL., DEFENDANTS.



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

MEMORANDUM OPINION

The United States has filed a Motion for Clarification Regarding Defendants' Obligation to Disclose Disaggregated Marketing Data [Dkt. No. 5854]. Upon consideration of the Motion, the Responses of Defendants and Public Health Intervenors, the Reply, Defendants' Surreply, and the entire record, the Court concludes that the Motion should be granted for the following reasons.

In its Motion, the United States indicates that the parties disagree about the meaning of certain language contained in paragraphs 16-19 of the Court's Final Order (Order #1015), United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1, 944-945 (D.D.C. 2006) aff'd in part and vacated in part, 566 F.3d 1095 (D.C. Cir. 2009) (per curiam), cert. denied, 561 U.S. __, 130 S. Ct. 350 (2010) (hereafter "the Opinion"), and that their disagreement centers on two issues:

(1) what categories of data Defendants are required to provide; and

(2) whether the Department of Justice may share the data with other Government agencies. After considering the parties' papers, it is clear that there is also a third area of disagreement and that is the period of time during which the Defendants are subject to the provisions of the Final Order. The Court will address each of these areas in turn.

l. Paragraph 16 of the Final Order requires each Defendant "to disclose all disaggregated marketing data to the Government in the same form and on the same schedule which Defendants now follow in disclosing disaggregated marketing data to the Federal Trade Commission." Id. at 944. The dispute between the parties boils down to the issue of whether Defendants need disclose only the disaggregated marketing data that they are required to give the Federal Trade Commission or whether Defendants are required to provide all marketing data which is disaggregated by geographical region, type of marketing, and any categories of data that are collected or maintained on Defendants' behalf.

The term "disaggregated marketing data" is defined in the Glossary contained in Appendix I to the Opinion, id. at 946-47, as follows:

Disaggregated Marketing Data: Data that has been broken down by type of marketing (including sales data), brand, geographical region (to the smallest level of geographic specificity maintained by each Defendant), type of promotion or marketing used, number of cigarettes sold, advertising in stores and any other category of data collected and/or maintained by or on behalf of each Defendant.*fn1 After concluding that "Defendants' suppression and concealment of information has been "integral to the Enterprise's overarching scheme to defraud," the Court ruled that disaggregated marketing data must be disclosed "in order to prevent and restrain such RICO violations in the future." Id. at 928. As the Court noted, "[n]ot only have Defendants failed to publicly disclose all the information they internally held about their cigarettes, but they have created false controversies about the existence of such information." Id.

The Court explained that "[d]isclosing such information will allow the public to monitor what Defendants are doing internally and to assess the accuracy of future information they may make available about their activities and their products. Imposing such disclosure requirements will act as a powerful restraint on Defendants' future fraudulent conduct." Id. at 928-29.

While it is true, as Defendants argue, that they do disclose to the Federal Trade Commission a certain amount of marketing data, the amount is limited in scope, and does not include any sales information broken down by "type of marketing," "geographical region," or "type of promotion." Id. at 946-47.

When the language in paragraph 16 of the Final Order is read in conjunction with the definition of the term "disaggregated marketing data" contained in both the Glossary and footnote 90, and in conjunction with the purpose to be accomplished by the requirements set forth in paragraph 16, there is no question that the Glossary defines the term "disaggregated marketing data" used in paragraph 16 of the Final Order and establishes the parameters of the Defendants' obligation to produce such data to the Government. Defendants must therefore disclose data "broken down by type of marketing (including sales data), brand, geographical region (to the smallest level of geographic specificity maintained by each Defendant), type of promotion or marketing used, number of cigarettes sold, advertising in stores and any other category of data collected and/or maintained by or on behalf f each Defendant." Id.

2. The United States argues that the Department of Justice should be allowed to share whatever disaggregated marketing data Defendants are required to provide under the Final Order with other appropriate Executive Branch agencies. The United States totally agrees with Defendants that any such disaggregated marketing data is subject to the confidentiality requirements of paragraph 19 of the Final Order and Orders #7 and #36.

Defendants oppose the clarification the Government seeks on the ground that it is overbroad. However, Defendants do agree that "[a]t most, DOJ should be permitted to disclose Defendants' disaggregated marketing data to other Executive Branch agencies only to the extent necessary to enforce Order #1015." Defs.' Response to Mot. for Clarification at 10.

The Court concludes that the disaggregated marketing data which Defendants must provide to the Government under paragraph 19 may be disclosed to other Governmental entities. Any such disclosures are, of course, subject to the confidentiality ...


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