The Justice Department and top cigarette makers both won something and lost something when the Supreme Court on Monday denied separate appeals in the government’s racketeering case against the tobacco industry.
The action left intact a landmark 2006 ruling by federal judge Gladys Kessler that major tobacco companies had engaged in a decades-long conspiracy to deceive the public about the risks and addictiveness of smoking in order to sustain their profits. However, Monday’s decision also preserved an appeals court ruling that barred Kessler from considering the government’s demand that the industry surrender as much as $280 billion in past profits. As a result, the companies will not pay financial damages despite being found guilty of fraud and racketeering.
Philip Morris USA, its parent company Altria Group Inc., R.J. Reynolds Tobacco Co., British American Tobacco Investments Ltd. and Lorillard Tobacco Co all filed separate appeals to overturn the 2006 ruling that convicted them of civil fraud and racketeering for actively lying to the public about the dangers of smoking. They also wanted to overturn a subsequent federal appeals court decision that upheld the ruling.
The companies claimed that the Racketeer Influenced and Corrupt Organizations Act—a law often used against organized crime–should not have been used against them. They also argued that the court denied them the First Amendment right to engage in the debate over cigarettes when it deemed their claims about smoking were fraudulent.
The racketeering suit, filed in 1999 by the Clinton administration, had sought to force the industry to disgorge billions of dollars in ill-gotten profits, and pay billions of dollars more to fund smoking cessation programs. However, in the middle of a nine month long trial, a federal appeals court ruled that such damages weren’t available under civil provisions of the racketeering law, which the court said permitted only “forward-looking remedies.”
Kessler ultimately issued a scathing, 1,653 page ruling, but declared that the appeals court decision had tied her hands in imposing damages. One part of her order–a ban on promoting cigarette brands as “light” or “mild”–was incorporated into the 2009 law giving the Food and Drug Administration authority to regulate tobacco products.
In its appeal, filed by U.S. Solicitor General and Supreme Court nominee Elena Kagan, the Justice Department said that the industry’s deception about the dangers of smoking “has cost the lives and damaged the health of untold millions of Americans.”
