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* Tobacco industry once known for big spending on campaigns, effective lobbyists
* As public opinion has turned on Big Tobacco, courts and Congress has too
* Despite moves against industry, "tobacco wars are anything but over," author says . . .
"My own view is that in many ways, the tobacco industry invented the kind of special-interest lobbying that has become so characteristic of the late 20th- and earlier 21st-century American politics," said Allan Brandt, dean of Harvard's Graduate School of Arts and Sciences.
The industry was known for its giant spending on political campaigns and effective lobbyists. The industry's representatives often had experience in politics or close ties to major power players.
"Today obviously, that lobby is much less powerful and successful than it was a generation ago," said Brandt, author of "The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product That Defined America." . . .
And just last month, in what Brandt considers "one of the most significant racketeering and fraud litigations" the U.S. Court of Appeals for the D.C. Circuit upheld U.S. District Judge Gladys Kessler's ruling in a Racketeer Influenced and Corrupt Organizations, or RICO, case, which found the tobacco industry guilty of engaging in a decades-long conspiracy to defraud the American public about the health risks of tobacco.
"Given the character of Kessler's findings -- and now the fact that her findings have been upheld by the appeals court -- this is really in a way a road map to tobacco regulation," Brandt said.
Stanton Glantz, a longtime anti-tobacco advocate and director of the Center for Tobacco Control Research and Education at the University of California, San Francisco, said the RICO ruling is what the public health community should use in its fight against the tobacco industry.
"I think it really can undermine the power of the industry politically by going to politicians and saying, 'These guys are crooks. They are crooks according to the D.C. Court of Appeals. Not just me,' " Glantz said.
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After more than a decade of struggle -- and countless smoking-related deaths -- the Senate overwhelmingly approved a bill on Thursday that gives the Food and Drug Administration the power to regulate tobacco products. The House approved a similar bill in April, also by an overwhelming margin. The days when this rogue industry could inflict its harmful products on Americans with impunity are drawing to a close.
This is an enormous victory for public health. For that, we owe thanks to tireless advocacy by the Campaign for Tobacco-Free Kids, a nonprofit organization, and strong endorsements from medical groups.
It still might not have passed without the decision by Philip Morris . . .
To the extent allowed by the First Amendment, the regulators could restrict advertising and promotions to children -- industry needs to addict them to keep replenishing the population of smokers -- and could shape advertisements aimed at adults as well. The agency could prohibit unsubstantiated health claims about supposedly "reduced risk" products and require larger, more effective health warnings on packages and advertisements. . . .
It has now been proved beyond a shadow of a doubt that cigarette makers have spent decades making false statements, suppressing evidence of harm, and manipulating the design of cigarettes to increase their addictiveness. Federal regulators should be able to stop many of these abuses -- and we hope help prevent more Americans from losing their lives to smoking.
R.J. Reynolds Tobacco Company is disappointed that the U.S. Court of Appeals for the District of Columbia affirmed many of the findings of the district court in the lawsuit United States v. Philip Morris et al, particularly the finding that cigarette manufacturers violated federal racketeering laws.
“R.J. Reynolds strongly believes that neither the evidence presented at trial nor the legal standards justify a finding of liability,” said Martin L. Holton III, senior vice president and general counsel for R.J. Reynolds.
“R.J. Reynolds is pleased, however, that the Court of Appeals reaffirmed that the disgorgement of profits is not an available remedy in this case,” Holton adds. “We are also pleased that the Court of Appeals affirmed the district court’s decision not to require several of the remedies sought by the government, and ruled that some of the remedies the district court ordered were too broad.”
After her clerkship, Gillibrand returned to Davis Polk, where she worked for nine years, logging long workweeks for a series of clients including the tobacco conglomerate Philip Morris. During her 2008 congressional reelection, operatives for Sandy Treadwell, her Republican opponent, compiled boxes of information that documented Gillibrand’s involvement with Philip Morris, but the media was largely uninterested. The New York Times revisited the material after Gillibrand’s Senate appointment. The Times’ 2,700-word front-page story depicted Gillibrand as a key player on the account, making trips to Philip Morris’s European cigarette-testing lab and using her office as a war room to plot strategy to defend the company against government claims that it knew tobacco was a carcinogen and hid that information from consumers. The story noted that Davis Polk allowed associates to decline to work for certain clients if they found the work ethically objectionable, but that Gillibrand appeared to have thrown herself wholeheartedly into her Philip Morris assignment.
. . . I asked her if she regretted her work, she answered with a defiant “No.” She didn’t defend the work on its own terms, however. “I had an opportunity to work with Robert Fiske on the case, and he is universally regarded as one of the great lawyers of our time,” she told me. Then she said, “And the work on that case allowed me to do pro bono cases.” . . .
Gillibrand says it was Bible study that awakened her to public service. “When I was working in New York, I taught a Bible class for 10-year-olds,” she says. “My favorite parable is the one Jesus tells about the talents.” She’s referring to the story in which a master becomes angry with a servant for wasting a coin, or “talent,” he was given. “What I took from that is we have to do the most with the talents God has given us. I was working as a corporate lawyer, where I wasn’t helping people. I was just helping big companies make money. And I wanted to do more.” The story may be true, but it clearly sounded rehearsed. . . .
It’s Schumer, more than anyone, who is responsible for Gillibrand’s relaunch. At Gillibrand’s lowest point, shortly after the Times tobacco story, New York’s senior senator agreed to cooperate with (and some suspect he orchestrated) what was viewed by some as a Times makeup call, a front-page story about how Schumer was taking Gillibrand under his wing. The piece implied that Schumer was supporting Gillibrand because he could manage her. The message Schumer meant to send was clear: He is on Gillibrand’s side and expects others to be as well.
I had an opportunity to work with Robert Fiske on the case, and he is universally regarded as one of the great lawyers of our time. . . . And the work on that case allowed me to do pro bono cases.NY Sen. Kirsten Gillibrand defends her work for Philip Morris in a NY Magazine article.
The Senate is expected to consider this month a bill that would give the Food and Drug Administration regulatory authority over tobacco products. Regardless of objections by tobacco state senators, the Senate should not hesitate to pass the bill. It’s already been passed by the House. And a vigorous ruling by a federal appeals court two weeks ago, and the latest report by a noted lung cancer research doctor, make the case for regulation indisputably clear. . . .
Judge Kessler ruled that the companies “marketed and sold their lethal product with zeal, with deception, with a single-minded focus on their financial success and without regard for the human tragedy or social costs that success exacted.” . . .
Given its record of deceit and fraud, however, tobacco companies deserve no relief. Through their deceit, fraud and legacy of dead tobacco users, they’ve earned strict regulation.
But defense lawyers and legal scholars following the case point out that the tobacco industry did not walk away with a wholesale loss. The cigarette makers "lost liability, but they lost the liability question years ago," said University of Notre Dame Law School professor G. Robert Blakey, who drafted the RICO law in the 1970s. "What they've won in this case is the narrowest possible remedy." . . .
Going forward, there are two main areas for a defense attack: corporate liability and available remedies.
The D.C. Circuit opinion -- issued per curiam by Chief Judge David Sentelle and judges David Tatel and Janice Rogers Brown -- rejected for a second time the government's bid for disgorgement as a remedy to prevent future RICO violations. . . .
Lawyers following the case predict the tobacco companies will also seek review in the high court on the liability finding, which is rooted in the government's theory that the defendants made up an "association-in-fact" enterprise with individuals and trade associations. Lawyers for the tobacco companies argued in briefs that association-in-fact enterprises involve individuals, not corporations. The D.C. Circuit, citing its own precedent, ruled that corporations can also be part of an association in fact.
The risk, say defense lawyers, is that a company will face RICO liability as part of an association-in-fact based on the actions of just a few employees. "It creates a huge opportunity for plaintiffs to haul multiple defendants into court, scare them with treble damages and induce them to settle cases that otherwise lack merit," said Steven Cottreau, a Washington partner at Clifford Chance who has defended clients in civil RICO cases.
More good news from a defense vantage: The appellate judges directed the trial court to re-examine whether subsidiaries should be lumped in with parent companies under the same remedial restraining order.
The unanimous ruling by a three-judge panel of the United States Court of Appeals for the District of Columbia upheld major elements of a 2006 lower court decision that found big tobacco companies guilty of racketeering and fraud as part of a prolonged campaign to deceive and addict the public. That 1,742-page opinion, rendered by Judge Gladys Kessler, laid out in painstaking detail how the tobacco companies made false statements and suppressed evidence to deny or play down the addictive qualities and the adverse health effects of smoking. . . .
The House has already voted to give the F.D.A. power to regulate tobacco. Senators, who are getting ready to vote on similar legislation, now have fair warning, if they needed any more, that this is a rogue industry. It can't be trusted to behave responsibly or even adhere to agreements it has signed. It is time to grant the F.D.A. the power to regulate the content and marketing of tobacco products.
On May 22, 2009, the DC Circuit Court of Appeals affirmed in large part one of the most damning verdicts ever rendered against the tobacco industry. . . .
Mirroring Judge Kessler's findings is the equally damning case of Engle v. Liggett et al. [PDF file]. Originally brought by Stanley and Susan Rosenblatt in Miami-Dade Circuit Court as a national class action in 1994, later reduced to a statewide class in 1996, a jury ultimately returned a record punitive damage award against the tobacco companies in the amount of $145 billion following a year-long trial. . . .
While the Florida Supreme Court took away the punitive damage award and decertified the class, like the DC Appeals Court, it let stand the Engle jury's unprecedented findings that the tobacco companies committed fraud, were negligent and concealed from consumers the addictive nature and dangers of smoking in order to sell more cigarettes. . . .
Having closed both the federal and state loops on tobacco companies' wrongdoing, the task of tobacco trial lawyers in Florida and elsewhere is to enlighten juries and even judges about the depth of the tobacco industry's deceit. As a Florida personal injury attorney representing 157 Engle progeny clients, the Appeal Court's ruling has just made the challenge of overcoming juror bias against smokers that much easier.
Also known as the “"you screwed up by trusting us" defense, tobacco companies continue to blame smokers for the sickness and death caused by addiction to nicotine. . . .
For those who are sick and dying, and for those whose families carry on the battle in their absence, the Engle and DC Appeal Courts' rulings stand as monuments to transparency that will provide beacons of hope and truth to all who think the deck is stacked against them, that the system is broken and that they could have stopped smoking had they only chosen to do so."
I believe the most important aspect of the appellate court's decision was its upholding of the district court's denial of monetary remedies against the tobacco companies. . . .
What this decision demonstrates is that the anti-smoking groups were wrong in their attack on McCallum and their insistence that the reduction of the $130 billion smoking cessation remedy to $10 billion represented an undermining of the case designed to aid the tobacco companies. As it turns out, that change had no effect on the government's case because, as I argued, no smoking cessation remedy was allowable in the first place.
As I wrote on August 18, 2006: "McCallum's decision to substitute a $10 billion smoking cessation remedy for a $130 billion smoking cessation remedy had no impact whatsoever on the case, because as Judge Gladys Kessler ruled, $0 of smoking cessation remedy was allowable under the D.C. Appeals Court's interpretation of the RICO statute."
If anything, McCallum's insistence on changing the request for a massive $130 billion smoking cessation remedy helped the Department of Justice save face somewhat.
Now it will be interesting to see if the anti-smoking groups apologize to McCallum and retract their political accusations, which have now been shown to have had no reasonable basis or merit. Americans for Nonsmokers' Rights (ANR) went so far as calling McCallum a "cancer" in the Justice Department. Certainly, ANR owes Mr. McCallum an apology. It will be interesting to see if ANR retracts its attack and apologizes.
Other groups which had attacked McCallum, accusing him of political interference, and which therefore need to retract their attacks and apologize, include the Campaign for Tobacco-Free Kids and the Stan Glantz Announcement List-Serve.
Lung Cancer Alliance (LCA) hailed the US Court of Appeals' decision on Friday upholding the 2006 ruling that found tobacco companies guilty of fraud and lying about the dangers and addictiveness of smoking. . . .
"This is an extremely important victory," said Laurie Fenton Ambrose, LCA President & CEO, "as it draws the brightest line on those who have committed decades of massive fraud and deception upon the American public. For the lung cancer community -- this is not just long overdue -- but life saving."
Fenton Ambrose continued, "But I must add that as important as this ruling is -- I am disappointed that it did not allow for additional remedies called for by LCA and other public health groups to help victims of the fraudulent practices of the tobacco companies." . . .
"Even though the Court ruling is disappointing on this front," continued Fenton Ambrose, we can take heart that the courts clearly recognize the highly addictive nature of nicotine, the deliberate collusion over the past fifty years by the tobacco companies to manipulate the amount of nicotine and their marketing strategies to addict more what they blandly referred to as 'replacement smokers' for those who died."
"If the courts recognize this, hopefully our public health policy makers will begin to understand that smoking is an addiction, that no one chooses to have lung cancer and that lung cancer, as the biggest single cancer killer, must be given priority in research funding," she said.
We are maintaining our fair value estimates for the tobacco companies . . .
there were some favourable elements in the ruling. The original decisions that the government could neither force the tobacco companies to repay $280 billion in profit generated from the malpractice, nor force them to fund a $10 billion smoking cessation programme, were both upheld. This piece of the ruling is important, in our view, because it reaffirms the previous decisions of several courts to avoid imposing a financial penalty so severe that the future of tobacco manufacturers as going concerns would be jeopardised. Although the original ruling ordered tobacco firms to issue statements on their Web site to inform readers of the damaging nature of their products, this requirement is unlikely to be imposed while the case is still under appeal. Altria and Reynolds American will now appeal to the US Supreme Court, and we expect the remaining defendants--Lorillard and British American Tobacco--to follow suit.
Although this ruling itself imposes no financial penalties on tobacco manufacturers, we are concerned that it could open the door to future prosecutions by the Department of Justice. However, we think we have suitably accounted for the risk of litigation in our valuation of the tobacco manufacturers, and until the magnitude of potential penalties becomes apparent, we do not intend to adjust our fair value estimates as a result of this ruling.
Philip Morris USA and other U.S. cigarette makers lost an appeal yesterday to a 2006 landmark ruling that found the nation's top tobacco companies guilty of racketeering and fraud for deceiving the public about the dangers of smoking. . . .
"This is a pretty important decision," said Carl Tobias, a law professor at the University of Richmond.
The significance, he said, is that the panel upheld nearly all of the lower court's decisions.
"They are substantially affirming [the judge's] judgment," Tobias said. "If they believe the judge got it right, I would be somewhat surprised to see the Supreme Court grant an appeal."
But Philip Morris USA and its parent company, Henrico County-based Altria Group Inc., said they will appeal to the Supreme Court.
"The court's conclusions are not supported by the law or the evidence presented at trial, and we believe the exceptional importance of these issues justifies further review," Altria attorney Murray Garnick said in a statement. . . .
Edward L. Sweda Jr., a senior attorney for the Tobacco Products Liability Project at Northeastern University, said he was surprised at the unanimous opinion, which included Chief U.S. Circuit Judge David Sentelle, a North Carolina native appointed to the appeals court by President Ronald Reagan in 1987. Sentelle had ruled against the government in an earlier appeal in the case.
"This ruling reinforces the validity of [the lower court judge's] ruling in 2006 that the tobacco company defendants are racketeers and their racketeering conduct isn't just a matter of ancient history," Sweda said.
Yesterday's ruling, Sweda said, not only is bad public relations for tobacco companies but it also will be used as ammunition by plaintiff attorneys in smoking-death cases across the country.
"This gives further strong support to those claims," he said.
The Justice Department, which prosecuted the case, said it was satisfied with the decision.
"This ruling is a victory for the American people that bans the use of misleading terms such as 'light and low tar,' and provides the government with the ability to pursue these companies should they continue with their deceptive practices," said U.S. Deputy Attorney General David Ogden.
While the appeals court upheld that the tobacco companies violated the Racketeer Influenced and Corrupt Organizations (RICO) Act - a law generally reserved for mobsters - it did not completely agree with the government's position.
The judges denied the Justice Department's request that the companies pay $10 billion for a national smoking cessation program, anti-smoking marketing campaign and monitoring of the companies. . . .
According to court records, the heads of the largest tobacco companies met in 1953 to figure out a way to deflect the growing health worries related to smoking. The companies agreed that no brand would advertise as being any safer than the others and they issued a joint advertisement the following year that claimed the health concerns about cigarettes were an "open question."
"Evidence at trial revealed that at the same time defendants were disseminating advertisements, publications, and public statements denying any adverse health effects of smoking and promoting their 'open question' strategy of sowing doubt, they internally acknowledged as fact that smoking causes disease and other health hazards,"
A federal appeals court dealt a blow to cigarette makers yesterday by upholding a landmark 2006 ruling that the companies lied for decades about the dangers of smoking.
In a 93-page opinion, a three-judge panel cleared the way for new restrictions on how cigarette companies market and sell their products. Under the decision, the manufacturers will no longer be allowed to label brands "light" or "low tar" and will have to purchase ads on television and in major newspapers that explain the health dangers and addictiveness of their products.
Tobacco companies indicated that they will appeal the decision to the Supreme Court, a process that would probably put compliance with the ruling on hold for at least several months. . . .
"The evidence at trial demonstrated that the results of this research -- essential to the core of Defendants' operations, including strategic planning, product development, and advertising -- were well known, acknowledged, and accepted throughout the corporations," the judges wrote. "These results established that cigarette smoking causes disease, that nicotine is addictive, that light cigarettes do not present lower health risks than regular cigarettes . . . and that secondhand smoke is hazardous to health."
The evidence at trial demonstrated that the results of this research . . . were well known, acknowledged, and accepted throughout the corporations. These results established that cigarette smoking causes disease, that nicotine is addictive, that light cigarettes do not present lower health risks than regular cigarettes . . . and that secondhand smoke is hazardous to health.Judges' verdict on the DOJ suit from U.S. Court of Appeals for the D.C. Circuit.
Although there is strong evidence that the tobacco companies lied, or at least omitted material facts, on those first three topics, Kessler erred in portraying the debate about secondhand smoke as a fake controversy invented by cigarette manufacturers. Because nonsmoking bystanders are exposed to much lower doses of toxins and carcinogens than smokers are, measuring the hazards of secondhand smoke pushes the limits of epidemiology. There is a substantial, irreducible amount of uncertainty about the meaning of studies that find an association between secondhand smoke and lung cancer or heart disease. Many people (including me) have expressed honest doubts about whether these associations, which are weak and usually not statistically significant, signify causal relationships. Tobacco company officials say they too have criticized the case against secondhand smoke in good faith, and the evidence to the contrary cited by the appeals court is pretty weak: . . .
None of this shows that tobacco company executives privately conceded secondhand smoke causes lung cancer or heart disease. Forcing people to remedy an unproven fraud by saying something they do not believe raises clear First Amendment problems, no matter how many times the D.C. Circuit inserts the word commercial before speech. . . .
If advertising and public relations become racketeering once a judge declares that a scientific controversy has ended, any company that comments on alleged risks associated with its product could be violating RICO without realizing it. . . .
I think it's mainly because the industry has acquired such a reputation for bald-faced dishonesty (precisely because of its long history of contradicting common knowledge) that jurors have started to overlook the fact that smokers voluntarily assume the risks associated with their habit.