February 22, 2010 - The government and three cigarette makers separately asked the U.S. Supreme Court on Friday, February 19th to review a racketeering verdict against major tobacco companies that was upheld by an appeals court last year.
Defendents Altria Group Inc's Philip Morris USA unit, Lorillard Inc and the R.J. Reynolds Tobacco unit of Reynolds American Inc filed to overturn the verdict, while the government argues the appeals court wrongly denied the disgorgement of billions of dollars in ill-gotten gains by the tobacco industry.
Background: - The case is U.S. v Philip Morris USA et al, U.S. Court of Appeals (3-judge panel) for the District of Columbia, No. 06-5267. U.S. appeals court on Friday, May 22, 2009 upheld a trial judge's racketeering verdict agreeing that cigarette companies systematically lied for years in order to sell tobacco products they knew were dangerous. (U.S. appeals court fines tobacco companies lied..
The tobacco companies had appealed the decision of U.S. District Judge Gladys Kessler in August 2006 that included ordering cigarette makers to cease using expressions such as "low tar" or "light" in their cigarette marketing.
"Defendants knew of their falsity at the time and made the statements with the intent to deceive," said the 92-page ruling. "Thus, we are not dealing with accidental falsehoods, or sincere attempts to persuade; Defendants' liability rests on deceits perpetrated with knowledge of their falsity."
Other companies appealing Kessler's ruling were the R.J. Reynolds Tobacco unit of Reynolds American Inc, Lorillard Inc, Vector Group Ltd's Liggett Group, British American Tobacco Plc and its Brown & Williamson unit, as well as now defunct industry groups: the Council for Tobacco Research and the Tobacco Institute.
The case was filed in 1999 by the Clinton administration, which originally sought $289 billion in damages. During the original trial, which began in 2004, the Justice Department under the Bush administration scaled back its demands to $14 billion for anti-smoking campaigns. (US government opens racketeering case against tobacco industry, Anne Harding, BMJ. 2004 September 25; 329(7468): 701.)
In January 2010 tobacco industry lawyers met secretly with Solicitor General Elena Kagan in an effort to avoid the government's last-ditch attempt to extract billions from companies that illegally concealed the dangers of cigarette smoking,
(Solicitor General - the original Statutory Authorization Act of June 22, 1870, states, "There shall be in the Department of Justice an officer learned in the law, to assist the Attorney General in the performance of his duties to be called the Solicitor General." Office of the Solicitor General is tasked to conduct all litigation on behalf of the United States in the Supreme Court, and to supervise the handling of litigation in the federal appellate courts.)
Four cigarette makers that control nearly 90% of U.S. retail cigarette sales have until February 19 to persuade the government not to go to the Supreme Court. As part of any effort to convince the government that it should skip a trip to the Supreme Court, the tobacco companies may have to drop plans to ask the justices to overturn the ruling that the industry engaged in racketeering. (AP Exclusive: Tobacco's plea - no big US payments by PETE YOST Associated Press Writer, 1/16/2010)
If the Supreme Court agrees to take the case, it could redefine the reach of the Racketeer Influenced and Corrupt Organizations Act. The Supreme Court may take months to decide whether to review the case.
Reference: UPDATE 5-US, big tobacco take racketeering case to top court Reporting by Dan Margolies; Editing by Tim Dobbyn and Gerald E. McCormick, Reuters, 2/19/2010.
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