Tobacco deadline approaches
on Jul 17, 2005 at 8:38 pm
The Justice Department’s opportunity to ask the Supreme Court to give it the authority to force the tobacco industry to surrender $280 billion in “ill-gotten gains” apparently is now in its final hours.
If the Department fails to pursue an appeal now, it would mean that the industry had escaped the most drastic remedy that might have come out of the government case that is now approaching its sixth anniversary in federal court. A decision not to appeal also seems certain to set off loud protests in Congress, and among anti-smoking advocacy groups — already troubled by the Department’s decision to scale back the remedies it is seeking. There is an ongoing internal Justice Department investigation into whether improper influence was exerted on the trial team to reduce the remedies sought.
The lawsuit, originally filed in September 1999, is the government’s attempt to hold the industry to blame for a four-decade campaign of alleged deception of the American public about the dangers of smoking cigarettes, and the addictive nature of nicotine, a key ingredient of cigarettes.
Since there is no record that the Department asked the Supreme Court for more time to file an appeal, Monday night would seem to be the deadline for it to seek review of the D.C. Circuit ruling that “disgorgement” of past gains is never available as a remedy for a civil violation of the 1970 anti-racketeering law, known popularly as “RICO.” The Circuit Court ruling, according to the District Court judge trying the government’s case against the industry, dealt “a body blow” to that lawsuit.
In fact, top Department officials have said that they scaled back the remedies they are still seeking — other than the disgorgement request — because they felt the D.C. Circuit had given them no other choice. The D.C. Circuit had ruled that remedies for violating RICO had to be limited solely to “forward-looking” court orders to control the industry’s future conduct, if it is found to have violated RICO.
Should the government appeal that decision, there appear to be a number of reasons to expect that the Justices might well agree to hear it. (The Court, of course, has complete discretion to deny review.) Here are some of the reasons favoring review:
First, this would be an appeal by the federal government on a major question about the scope of remedies for a civil lawsuit under the RICO statute — an issue that could have an impact well beyond the tobacco case itself.
Second, the enormity of the impact of the D.C. Circuit ruling on the government’s case is now very clear, and the government could make a major argument based on this point alone. At this stage, little may be left of a case that has consumed nearly six years of court and lawyer time, cost the Justice Department dearly, and produced vast amounts of attorney fees.
Third, there is now a direct conflict in the federal courts of appeals on that issue, with the D.C. Circuit barring disgorgement of any past gains in a civil RICO case, and the Second Circuit allowing that remedy under some circumstances.
Fourth, the participating judges in the D.C. Circuit split evenly, 3 to 3, in refusing on April 19 to grant en banc review, an indication that this is not a minor or a transitory dispute. The D.C. panel that decided the case itself was split 2-1.
There are, as always, some arguments against review by the Justices:
First, there has been talk of — and some maneuverng toward — an out-of-court settlement of the entire case, and thus the disgorgement issue could simply vanish if there is a deal. The trial judge, in fact, has several times pressed for a settlement, and did so again last month.
Second, the case would be reaching the Supreme Court on a pre-trial issue, and the Justices in general do not favor such appeals. They have heard other cases at that stage, of course, but they may simply opt this time to see what happens to the case in the trial that is still proceeding in District Court. The judge, in fact, has not yet ruled on whether the industry did violate RICO, though all of the evidence is in on that issue. If there is no finding of liability, there would be no need to confront the remedy question — an argument the industry would surely make in response to an appeal. The trial judge, Gladys Kessler, has moved on to the final remedy phase — the stage at which the disgorgement issue would have been the predominant dispute, had the D.C. Circuit not taken it off the table. At this stage, the remedies the department is seeking would be mainly a smoking-prevention or cessation program aimed at people who take up the habit in the future.
The Supreme Court would not be expected, if normal practice is followed, to act on any government appeal until after its summer recess — that is, not until late September (unless, of course, the government asked for and was granted expedited review). Judge Kessler could decide the liability issue even before the Court acted on a government appeal, although the pace of the trial up to this point does not support that prospect.
Thus, very little would be settled definitively on Monday if there is an appeal. But, if there is not, the political fallout could be expected immediately.
