Cigarette Makers Violated Racketeering Laws. A federal judge ruled today that the nation’s top cigarette makers violated racketeering laws, deceiving the public for years about the health hazards of smoking.
U.S. District Judge Gladys Kessler stopped short of ordering the companies to pay for a quit-smoking program.
The judge did order the companies to publish in newspapers and on their Web sites “corrective statements” on the adverse health effects and addictiveness of smoking and nicotine.
Kessler said that adoption of a national smoking cessation program, as sought by the government, “would unquestionably serve the public interest” but that she was barred by an appeals court ruling that said remedies must be forward-looking and not penalties for past actions.
The government had asked the judge to make the companies pay $10 billion for smoking cessation programs, though the Justice Department’s own expert said $130 billion was needed.
That reduction in remedies led to accusations that Associate Attorney General Robert McCallum, a Bush administration political appointee, tried to weaken the case. However, an internal Justice Department cleared him of wrongdoing, saying he was supporting a figure he thought could be sustained on appeal.
Tobacco companies denied committing fraud and said changes in how cigarettes are sold now make it impossible for them to act fraudulently in the future.
Civil racketeering laws require a finding that fraud occurred. If a judge does make that finding, action must be taken to prevent it from occurring again.
The Bush Administration Pursued It.
The suit was first filed in 1999 under the Clinton administration. The Bush administration pursued it after receiving early criticism for openly discussing the case’s perceived weaknesses and attempting unsuccessfully to settle it.
A separate court issued an interim ruling in the case last year, finding that civil racketeering laws did not permit the government to seek $280 billion from the companies for money they allegedly earned over many years through fraud.
During the trial, Kessler heard accusations that the companies established a “gentleman’s agreement” in which they agreed not to compete over whose products were the least hazardous to smokers. That was to ensure they didn’t have to publicly address the harm caused by smoking, government lawyers said. Tobacco lawyers denied the contention.
The government also argued that the tobacco industry has marketed to kids while lying about doing so. Again, tobacco lawyers denied the charge.
Kessler’s decision came nearly a decade after the states reached legal settlements with the industry worth $246 billion and aimed at recovering health care costs. Those settlements imposed some restrictions on the industry, such as banning ads on billboards and public transportation.
The defendants in the federal lawsuit are: Philip Morris USA Inc. and its parent, Altria Group Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co.; British American Tobacco Ltd.; Lorillard Tobacco Co.; Liggett Group Inc.; Counsel for Tobacco Research-U.S.A.; and the now-defunct Tobacco Institute.
The only cigarette maker excluded from Kessler’s ruling was Liggett.