Federal Court Rejects Appeal on Profit Disgorgement Decision in Department of Justice Tobacco Lawsuit
The U.S. Court of Appeals for the District of Columbia on Wednesday voted 3-3 to reject an appeal to reconsider a decision under which the Department of Justice cannot seek $280 billion in past profits in a racketeering lawsuit against several large U.S. tobacco companies, the Boston Globe reports (Roxe, Boston Globe, 4/21). A three-judge panel of the court on Feb. 4 ruled that DOJ could not claim $280 billion in profit disgorgements sought in the lawsuit and could only seek penalties that would prevent or restrain future violations.
The lawsuit alleges that Brown & Williamson, Philip Morris, R.J. Reynolds, Lorillard Tobacco and the Liggett Group misled consumers about the health risks of smoking and directed multibillion-dollar promotional campaigns at children in violation of the civil Racketeer Influenced and Corrupt Organization Act. DOJ made the allegations as part of a larger federal lawsuit first filed by the Clinton administration in 1999 that accuses the tobacco industry of conspiracy to mislead consumers about the dangers of smoking.
DOJ attorneys in February announced a new strategy under which the department would seek to require the tobacco companies "to fund sustained smoking-cessation programs that have been scientifically proven effective." In addition, DOJ would seek to require the tobacco companies to fund a public education campaign on the health risks of smoking and second-hand smoke and programs to discourage teenagers from smoking. DOJ also would seek to require the tobacco companies to pay future fines in the event that youth smoking rates do not decrease at an adequate rate (California Healthline, 2/7).
DOJ attorneys have not decided whether they will appeal the appellate court decision to the Supreme Court. "In the wake of the tied vote ... the United States will carefully review its options and make a determination in the near future as to what course of action it will pursue," Associate Attorney General Robert McCallum said.
The tobacco companies declined to comment on the decision.
William Corr, executive director of the Campaign for Tobacco-Free Kids, called on DOJ to appeal the decision, which he said "has a significant impact on the government's ability to use the RICO law against major corporate wrongdoing in all industries." Failure to appeal the decision also could leave "major questions about the remedies that are available" in the lawsuit, Corr said (Boston Globe, 4/21).