Federal Judge Rules Justice Department Lawsuit Against Tobacco Companies Can Continue Despite Settlement
U.S. District Court Judge Gladys Kessler on Wednesday ruled that the 1998 Master Settlement Agreement between tobacco companies and 46 states does not protect the companies from a Department of Justice lawsuit filed over alleged violations of the federal Racketeer Influenced and Corrupt Organization Act, Dow Jones/Wall Street Journal reports (Dow Jones/Wall Street Journal, 7/8). Under the MSA, tobacco companies agreed to provide 46 states with $206 billion to cover the cost of treatment for ill smokers; the four other states settled separately with the companies for $40 billion (Zuckerbrod, AP/Spokane Spokesman-Review, 7/8). The DOJ lawsuit, filed in March 2003, seeks $289 billion from Brown & Williamson, Philip Morris USA, R.J. Reynolds, Lorillard Tobacco and the Liggett Group. DOJ alleges that the tobacco companies manipulated nicotine levels, misled consumers about the health risks of smoking and directed multibillion-dollar promotional campaigns at children. DOJ made the allegations as part of 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 (California Healthline, 7/6).
In her decision, Kessler said, "This court has already held on two occasions that the MSA, in and of itself, does not preclude a finding of RICO liability in this action." As a result of the decision, the tobacco companies cannot use the MSA "as an absolute defense at the trial," Dow Jones/Journal reports (Dow Jones/Wall Street Journal, 7/8). However, Kessler said that she will consider the advertising and marketing restrictions included in the MSA if she has to establish remedies for alleged wrongdoing, the AP/Spokesman-Review reports (AP/Spokane Spokesman-Review, 7/8). A spokesperson for Altria, parent company of Philip Morris USA, said that the decision "recognizes that, contrary to the government's contentions, the agreement, which places significant restrictions on how the tobacco companies advertise and market their products, may be allowed into evidence at the appropriate time during trial." The trial is scheduled to begin Sept. 13 (Dow Jones/Wall Street Journal, 7/8). However, the tobacco companies on Tuesday filed an interim appeal with the U.S. Court of Appeals for the District of Columbia that asks the court to overturn a Kessler decision in May that allows DOJ to pursue their past profits (AP/Spokane Spokesman-Review, 7/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.