Judge Rejects Big Tobacco’s Rewrite of Court-Ordered Admission of Deception

Wednesday, February 10, 2016

By Lorraine Bailey, Courthouse News Service

 

(CN) - Philip Morris and other cigarette makers will soon be required to make public statements about the health effects of smoking, after a federal judge called the companies' rewrite request "ridiculous."

 

Monday's ruling stems from a case the U.S. brought 15 years ago against the nine companies under federal anti-racketeering law. A judge concluded at the end of a nine-month trial that the defendants had engaged in a "pervasive scheme to defraud customers and potential customers of cigarettes" for more than 50 years.

 

The judgment found that the cigarette makers joined together to "maximize their profits" by misleading the public about the "devastating health effects of smoking."

 

Despite that court's finding that it had the authority to order disgorgement of fraudulently gained profits, the D.C. Circuit barred that damages route "because disgorgement is aimed at past violations," and the RICO Act permits damages only to prevent future violations.

 

The government instead sought and won a judgment ordering the cigarette manufacturers to make corrective disclosures on cigarette packaging, in advertising and on their websites.

 

Affirming this remedy in 2009, the D.C. Circuit found that exposing "the previously hidden truth about their products [will] prevent and restrain" future RICO violations.

 

On remand, a federal judge approved a draft of the disclosures that the tobacco companies were required to make.

 

The draft required the cigarette makers to declare that they "intentionally designed cigarettes to make them more addictive," to "maximize the ingestion of nicotine, adding ammonia to make the cigarette taste less harsh, and controlling the physical and chemical make-up of the tobacco blend."

 

It also required that they include a preamble admitting that a federal court found they "deliberately deceived the American public" about the adverse health effects of smoking and second-hand smoke, the addictiveness of nicotine, the manipulation of cigarette design, and the lack of a significant difference between regular and "light" cigarettes.

 

R.J. Reynolds and the others appealed, however, saying such backward-looking corrective disclosures "force defendants to vilify and shame themselves for past wrongdoing" rather than "reveal the previously hidden truth."

 

A three-judge panel of the D.C. Circuit upheld the corrective statements last year, insofar as they correct possible misinformation about tobacco products, but said the tobacco companies cannot be forced to admit their past acts of deliberate deception.

 

After this ruling, parties went to mediation, but failed to agree on new preamble language.

 

And back in court, the tobacco companies filed a 40-page brief seeking to rewrite all five of the statements approved by the appeals court, even though the appellate panel rejected only one sentence in the preamble.

 

"That is ridiculous - a waste of precious time, energy, and money for all concerned - and a loss of information for the public," U.S. District Judge Gladys Kessler wrote in a Feb. 8 ruling. "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."

 

The government proposed a shortened preamble that eliminated the reference to the tobacco companies' prior bad acts, and simply states, "A federal court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about [particular topic]."

 

Kessler rejected the cigarette makers' proposal that the preamble should use the word "determined" instead of "ordered," as well as their proposal to remove a separate line stating, "Here is the truth." In addition, the tobacco companies sought to completely remove their names from the statements.

 

The judge also rejected the government's proposed modifications to the parties' Consent Order regarding the requiring date for publishing the notices.

 

"In accordance with the remand of the Court of Appeals, this court adopts the corrective statements submitted by the government," the 11-page opinion concluded.

 

To Learn More:

With 1,200 Deaths a Day, Tobacco Companies Finally Agree to Publish Ads Admitting They Lied about Dangers of Smoking (by Noel Brinkerhoff, AllGov)

Judge Orders Tobacco Companies to Admit They Lied about Dangers of Smoking (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Tobacco Industry Objects to Having to Admit it Lied about Dangers of Smoking (by Noel Brinkerhoff, AllGov)

Tobacco Companies Sue over Graphic Warning Labels (by Noel Brinkerhoff, AllGov)

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