US: Court Blocks Nation From Seeking Billions From Tobacco Industry

Publisher Name: 
New York Times

WASHINGTON, Feb. 4 - A federal appeals court ruled today, in a big
victory for cigarette makers, that the federal government could not
use an antiracketeering statute to collect $280 billion from the
tobacco industry, which it accuses of conspiring for decades to hook
people on smoking and conceal the deadly effects of the habit.

A panel of the United States Court of Appeals for the District of
Columbia Circuit ruled, 2 to 1, that the government could not use the
Racketeer Influenced and Corrupt Organizations Act, familiarly known
as RICO, to "disgorge" billions of dollars from the

The majority held that "disgorgement," which a layman might
interpret as forcing a party to surrender its ill-gotten gains, was
not an appropriate remedy in this case because that particular remedy
is meant to make up for past violations - not for anticipated future

Judge Sentelle said the government might have sought remedies like
injunctions against future wrongful activities or dissolution of the
companies, but not disgorgement, which he called "a
quintessentially backward-looking remedy focused on remedying the
effects of past conduct to restore the status quo." As such, he
said, it is not allowed under civil sections of the RICO act, which
was originally meant as a weapon against organized crime.

Neither the tobacco companies nor the Justice Department had an
immediate reaction to the ruling. But given the importance of the
issue, and the thicket of suits against tobacco companies in recent
years, an appeal to the full District of Columbia Circuit is likely,
as is perhaps an eventual appeal to the United States Supreme

Judge Sentelle wrote for himself and Judge Stephen F. Williams that
there is no Supreme Court precedent dealing with disgorgement under
the RICO law. "With no Supreme Court case having direct
application, it is our duty to construe the statute," Judge
Sentelle held. "That is what we have done."

In so ruling, the majority overturned a district court ruling that
disgorgement was appropriate in this case, in which the government is
suing Philip Morris and other big tobacco companies.

The government could have proceeded under criminal sections of the
RICO act, but a much higher standard of proof would have been

Judge David S. Tatel wrote a sharply worded dissent, arguing that the
majority had interpreted the RICO section in question too narrowly and
that the government's claims that "the companies are likely to
continue their deceptive practices and commit further racketeering
violations in the future" were entitled to deference, and that
the district court had ruled correctly.

"If the district court concludes that the government has shown
that the tobacco companies have committed RICO violations by
advertising to youth despite assertions to the contrary and by falsely
disputing smoking's addictive, unhealthy effects, then it may order
whatever equitable relief it deems appropriate," Judge Tatel

AMP Section Name:Tobacco
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