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CHRISTMAS COMES EARLY FOR TOBACCO INDUSTRY AS JUSTICE DEPARTMENT INEXPLICABLY REDUCES DAMAGE DEMAND BY OVER 92% IN CIVIL RACKETEERING CASE

Jun 9, 2005 | www.Newsinferno.com

The battle lines were drawn. The heavy artillery was in place. The enemy was cowering in fear. But, when the big guns opened fire; all anyone heard was a whimper; all anyone saw was a small puff of smoke. Sounds a bit silly, doesn’t it? Well this is exactly what happened in U.S. District Court on Tuesday when the Justice Department ended an eight-month trial in its six-year-old civil racketeering case against the tobacco industry for engaging in a 50-year conspiracy to defraud and addict smokers by intentionally concealing information regarding the dangers associated with smoking.

For years, the government has pursued the tobacco industry for "a decades-long pattern of material misrepresentations, half-truths, deceptions and lies that continue to this day." (Excerpt from summation of Associate Attorney General Sharon Eubanks.) The monetary damages the government has always been expected to demand from the industry was based on the testimony of expert witnesses like Michael C. Fiore, a medical professor at the University of Wisconsin and director of a tobacco research center who chaired the subcommittee on tobacco cessation in the Department of Health and Human Services’ Interagency Committee on Smoking and Health.

That figure was anticipated to be a $130-billion, 25-year smoking cessation program along with other penalties and injunctive relief prohibiting tobacco companies from targeting young smokers in their marketing campaigns. Anti-smoking advocates were all in favor of such a substantial award which they believed would act as a deterrent to future improper conduct as well as provide funding for badly needed cessation programs. Smoking kills an estimated 400,000 people each year and is the number one preventable disease.

The tobacco industry and its attorneys were braced for that figure and understandably worried about how much of that demand and penalties U.S. District Court Judge Gladys Kessler would impose. (A federal appeals court had already determined that the government could not seek to force the tobacco industry to pay $280 billion in ill-gotten gains.)

Much of the evidence presented by the government was comprised of highly incriminating internal documents that included written memos from tobacco executives and scientists which described plans to encourage young people to smoke and to keep the public ignorant of the potentially dangerous and addictive nature of cigarette smoke. Significantly, this very same evidence was introduced in a prior litigation brought by states to recover their costs for the medical treatment of smokers. The industry settled that case for $246 billion.

Thus, it came as a complete shock to everyone in the courtroom when the Justice Department lawyers inexplicable scaled back their demand to a rather paltry $10-billion, 5-year program which amounts to little more than petty cash to the defendants which include Phillip Morris USA; RJ. Reynolds Tobacco Co. and Brown & Williamson (now Reynolds American Inc.); British American Tobacco; the Lorillard Tobacco unit of Loew’s Corp.; and Vector Group Ltd.’s Ligget Group Inc. The reduced demand also significantly limits the amount of damages which can be awarded by Judge Kessler.

Anti-smoking advocates like William V. Corr, director of the Campaign for Tobacco Free Kids, immediately assailed the government’s unexpected move as "a political decision to take into consideration the tobacco companies’ financial interest rather than health interests of 45 million addicted smokers." These groups believe the government’s proof more than justifies the imposition of the damages testified to by Professor Fiore thereby making the decision to ask for so less than 8% of that amount a severe blow to efforts to help American smokers.

On Wednesday, the second day of closing arguments, the trial judge, herself, questioned the reduction in the demand as suggesting "that there are some additional influences being brought to bear on the government’s position in this case." Tobacco analysts and some lawmakers have already speculated that politics played a role in the decision.

The Justice Department offered no real explanation for the reduced figure and the members of its trial team declined comment. It was clear, however, that the defendants and their attorneys couldn’t be happier. As Dan Webb, the coordinating defense attorney in the case, stated: "We were very surprised. They’ve gone down from $130 billion to $10 billion with absolutely no explanation. It’s clear the government hasn’t thought through what it’s doing." Many legal experts and consumer advocates couldn’t agree more.


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