Judge Rules Tobacco Firms Misled Public

By Peter Hardin, John Reid Blackwell, Times-Dispatch Staff Writers
August 18, 2006 A1

Philip Morris USA and other tobacco companies broke U.S. racketeering law over five decades and deceived the public to “fill the coffers” with profits, a federal judge ruled yesterday.

But the companies escaped major penalties. U.S. District Judge Gladys Kessler, saying her hands were tied legally by an earlier appeals court opinion, did not order the industry to pay for any broad smoking-cessation or public education programs.

Kessler ordered the companies to publish in newspapers and on their Web sites corrective statements on the adverse health effects and addictiveness of smoking and nicotine. She did not order damage awards, while she said the government could recoup its costs for trying the case.

The judge also ordered a ban on the tobacco companies using any descriptive terms that “convey implicit health claims,” saying cigarettes marketed with labels such as low tar, light and mild are no less likely to be harmful.

The decision “is a very good outcome for the industry,” said law professor Jonathan Turley of George Washington University, who has tracked the case. The result “can only be viewed as a strategic loss for the government,” he added, saying it finished with “more rhetorical than real victories.”

The lawsuit alleged a five-decade scheme by tobacco companies, including the largest cigarette-maker, Philip Morris USA, and its parent company, Altria Group, to hide the health dangers of smoking.

Altria said the company would seek a review of the ruling.

“Philip Morris USA and Altria Group, Inc. believe much of today’s decision and order are not supported by the law or the evidence presented at trial, and appear to be constitutionally impermissible or infringe on Congress’ sole right to provide for the regulation of tobacco products,” said William S. Ohlemeyer, Altria Group vice president and associate general counsel.

“Moreover, the conclusion that PM USA and Altria are reasonably likely to engage in future wrongdoing is flawed in light of the profound and permanent changes in the way cigarettes are marketed today, including requirements imposed by agreements with the state attorneys general and other voluntary – and irrevocable – changes made by our companies,” he said.

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The Justice Department initially sought to force the tobacco companies to surrender $280 billion in profits the department alleged were ill-gotten. But a federal appeals panel threw out that legal tool last year.

The tobacco industry denied it conspired, or behaved fraudulently, and argued that the government endorsed, participated in and often regulated much of the actions addressed in the lawsuit.

Kessler disagreed sharply, writing that the tobacco companies over 50 years “lied, misrepresented, and deceived the American public, including smokers and the young people they avidly sought as ‘replacement smokers,’ about the devastating health effects of smoking and environmental tobacco smoke.

“They suppressed research, they destroyed documents, they manipulated the use of nicotine so as to increase and perpetuate addiction, they distorted the truth about low tar and light cigarettes so as to discourage smokers from quitting,” Kessler wrote.

The industry “abused the legal system in order to achieve their goal – to make money with little, if any, regard for individual illness and suffering, soaring health costs, or the integrity of the legal system,” Kessler wrote.

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Both sides found something to applaud and something to lament in the more than 1,600-page opinion in the case, titled U.S.A. v. Philip Morris USA Inc. et al. Brought in 1999 during the Clinton administration, the case led to the largest-ever civil racketeering trial. It took eight months and ended in June 2005.

“We are pleased with the court’s finding of liability on the part of the defendants, but disappointed that the court did not impose all of the remedies sought by the government,” the Justice Department said in a statement.

“Nevertheless, we are hopeful that the remedies that were imposed by the court can have a significant, positive impact on the health of the American public.”

William V. Corr, executive director of the Campaign for Tobacco- Free Kids, applauded what he called Kessler’s labeling the tobacco companies as racketeers and a rogue industry.

But he said he was deeply disappointed that Kessler felt constrained from not taking broader steps to prescribe fixes, or legal remedies, and he called on the Bush administration to appeal that part of Kessler’s decision.

Similarly Rep. Henry A. Waxman, D-Calif., an ardent tobacco foe, said in a statement the decision “confirms . . . Big Tobacco’s conspiracy of lies” but “falls far short of imposing real, comprehensive remedies” and the government should appeal.

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Legal experts said the case could be appealed all the way to the U.S. Supreme Court.

Law professor Carl Tobias of the University of Richmond said the lack of monetary damages seems to take the sting out of the ruling, but the judge’s finding that the companies violated the racketeering statute “is very serious.”

“I think the companies are likely to resist that, so it is certainly something they would want to appeal,” Tobias said.

During the trial, one of the government’s witnesses proposed a 25- year nationwide smoking-cessation program that would have cost the industry $130 billion.

But the government, stirring controversy, ultimately reduced its claim to $10 billion over five years for a smoking-cessation program and $4 billion over 10 years for a public-education campaign.

The lawsuit filed by the government alleged the conspiracy started at New York City’s Plaza Hotel on Dec. 15, 1953, when tobacco executives began cooking up a public-relations plan in response to a Sloan-Kettering Institute report linking cigarette smoke and cancer in mice.

In addition to Philip Morris and Altria, defendants named in the suit are: 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 that Kessler excluded from her ruling was Liggett, which she said broke ranks with the tobacco industry in 1996.

Altria Group Inc., parent company of the largest cigarette- maker, Philip Morris USA, signaled it would seek a review of yesterday’s ruling against the tobacco companies. Legal experts said the case could go all of the way to the U.S. Supreme Court before it is ultimately decided.

(The Associated Press contributed to this story.)

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