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United States v. Philip Morris Usa Inc.

United States District Court, District of Columbia

February 8, 2016

UNITED STATES OF AMERICA, Plaintiff, and TOBACCO-FREE KIDS ACTION FUND, et al., Intervenors-Plaintiffs,
v.
PHILIP MORRIS USA INC., et al., Defendants, and ITG BRANDS LLC, et al., Post-Judgment Intervenors as to Remedies.

MEMORANDUM OPINION

GLADYS KESSLER, District Judge.

More than 15 years ago, the United States filed this RICO action against the major cigarette manufacturers operating in 1999. In 2006, after years of discovery, pre-trial litigation, and a nine-month bench trial, this Court issued an Opinion containing over 4, 000 findings of fact and concluding that the Government had proven by "overwhelming evidence" that the Defendants had maintained an illegal racketeering enterprise in violation of the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1962(d). See U.S. v. Philip Morris USA. Inc.. 449 F.Supp.2d 1 (D.D.C. 2006) ("Original Opinion"). Thereafter, in 2009, the Court of Appeals affirmed the greater part of the District Court's Remedial Order. U.S. v. Philip Morris USA. Inc.. 566 F.3d 1095 (D.C. Cir. 2009) ("Affirmance Opinion"). In that Opinion, the Court of Appeals rejected the Defendants' challenge to the corrective-disclosures remedy, vacating only the requirement that the statements be published on retail displays. Id. at 1138-44. Significantly, in that Opinion, the Court of Appeals ruled that the corrective statements would qualify as commercial speech and satisfy the First Amendment and would prevent Defendants from misleading consumers through fraudulent marketing in the future. Id. at 1143-45. The Court of Appeals then remanded the case to the District Court to draft the required corrective disclosures.

Thereafter, the Court prepared five separate sets of bullet points and ordered the cigarette manufacturers to disseminate them in the public media. U.S. v. Philip Morris USA. Inc., 907 F.Supp.2d 1 (D.D.C. 2012) ("Corrective Statement Opinion I").

Four of the original Defendants - Philip Morris USA Inc., Altria Group, Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco Company - appealed, arguing that the corrective statements exceeded this Court's remedial authority under RICO and violated the First Amendment.

In 2015, the Court of Appeals ruled that a number of the arguments raised by the Defendants had been waived for failure to have raised them at an earlier appropriate time. Other arguments were denied on the basis of the law-of-the-circuit doctrine. U.S. v. Philip Morris USA. Inc., 801 F.3d 250, 261-63 (D.C. Cir. 2015) ("Corrective Statement Opinion II"). Most importantly, the Court of Appeals upheld all of the corrective statements prepared by this Court - except for one sentence only - namely, the preamble to the statements themselves.

Thereafter, this Court was led to believe by the Parties that mediation might be successful; unfortunately, it was not. The Parties were then given time to submit briefs and provide actual language to correct the one sentence that the Court of Appeals had rejected.

Despite the fact that the Court of Appeals accepted the five topics that the Court had chosen to include and had rejected one sentence in the preamble designed to introduce the beginning of each of those topics, Defendants submitted a 40 page opening brief in opposition to the opening briefs of the Government and the Public Health Intervenors. In that brief, Defendants rewrote much of the five statements already approved by the Court of Appeals. Thus, when all is said and done, Defendants would now have this Court return to the drawing board and start the process all over again.

That is ridiculous - a waste of precious time, energy, and money for all concerned - and a loss of information for the public. The Court has no intention of following that path, although it is obvious that Defendants are, once again, attempting to stall any final outcome to this long-standing litigation.

After careful reading of all the briefs, the Court concludes that the revised wording of the preambles submitted by the Government and Intervenors has remedied the concern of the Court of Appeals in its 2015. Opinion and Remand. Corrective Statement Opinion II, 801 F.3d at 261-63. The Court of Appeals ruled that the phrase "deliberately deceived the American public" in the preambles could not be used because it "disclose[d] defendants' prior deceptive conduct" instead of using language that "would prevent and restrain future RICO violations by [r]equiring Defendants to reveal the previously hidden truth about their products. '" Id . (emphasis in original). The Government and Intervenors have totally withdrawn that phrase and the preambles have been shortened. The Government and Intervenors' reworking of the text, as set forth herein, is fully consistent with the Court of Appeals ruling that nothing in the corrective statements could refer to the past fraudulent conduct of Defendants.

Prior introductory text United States' proposed introductory text A Federal Court has ruled that Altria, R.J. A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public USA to make this statement about [particular about [particular topic], and has ordered those topic]. companies to make this statement. Here is the truth: Here is the truth:

A. Adverse Health Effects of Smoking

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about the health effects of smoking.
Here is the truth:
• Smoking kills, on average, 1, 200 Americans. Every day.
• More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined.
• Smoking causes heart disease, emphysema, acute myeloid leukemia, and cancer of the mouth, esophagus, larynx, lung, ...

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