FEDERAL SUIT: DOJ Sues Tobacco for Fraud, Racketeering
The Department of Justice yesterday sued the nation's largest tobacco companies under the federal Racketeer Influenced and Corrupt Organizations act, seeking hundreds of billions of dollars stemming from a 45-year campaign "to preserve their enormous profits whatever the cost in human lives." Attorney General Janet Reno said, "They placed their profits above the public health. The cigarette companies realized -- at least since 1953 -- that the truth poses a mortal threat to their businesses." The suit claims Big Tobacco conspired since 1953 to defraud and mislead the public, by concealing data, sponsoring biased research and suppressing development of a safer cigarette. The action names Philip Morris Inc., Philip Morris Cos., R.J. Reynolds Tobacco Co., American Tobacco Co., Brown & Williamson Tobacco Corp., British-American Tobacco PLC, British-American Tobacco (Investments) Ltd., Lorillard Tobacco Co. Inc., Liggett and Myers Inc., the Council for Tobacco Research USA Inc. and the Tobacco Institute Inc. (AP/Arizona Daily Star, 9/23). It contends that the federal government spends more than $20 billion annually treating sick smokers (Deibel/Straub, Scripps Howard/Chicago Sun- Times, 9/23). The $250 billion to $500 billion sought "would dwarf any prior single lawsuit in jurisprudence history." The government will not, however, continue to pursue a criminal investigation against Big Tobacco (Jackson, Dallas Morning News, 9/23). President Clinton said, "Over the years, smoking-related illnesses have cost taxpayers billions of dollars, through Medicare, veterans' health and other federal health programs. ... The tobacco companies should answer to the taxpayers for their actions. The taxpayers of our country should have their day in court" (statement, 9/22).
The tobacco industry stated immediately that it would not back down. Seth Moskowitz, a spokesperson for R.J. Reynolds, said the industry will "vigorously defend" themselves, adding, "We don't believe the federal government has any basis for filing a lawsuit against the tobacco industry." A statement issued by Philip Morris proclaimed, "We do not believe this kind of politically motivated lawsuit is in anyone's interest" (BBC News, 9/23). Philip Morris associate general counsel Greg Little said, "The lawsuit should be dismissed, and we believe it will. We are right on the law, we're right on the facts, and we fully expect to prevail" (Deans, Cox News/Atlanta Journal-Constitution, 9/23). They argue that the Medical Care Recovery Act, on which the government bases many of its claims, "doesn't permit aggregation of thousands of claims into one massive cost-recovery suit." They also dismiss as unfounded DOJ's attempt to recover damages under RICO (Cloud/Fairclough, Wall Street Journal, 9/23). Many others seemed to agree, rushing to criticize the terms of the lawsuit. Todd Gaziano, senior fellow at the Heritage Foundation, said, "The RICO statute was designed for mobsters that engage in criminal enterprise. Regardless of what you think of the tobacco companies, their actions don't fit the terms of the RICO statute" (Burn/Stefanova, Washington Times, 9/23). "I can't remember an entire industry that was targeted as if it was a racketeering enterprise," added former federal prosecutor Joseph DiGenova. United States Chamber of Commerce Executive Vice President Bruce Josten said, "No business can feel secure in the United States when the enormous power of the Justice Department can be unleashed against them for the purpose of raising revenue and scoring political points. This is nothing more than taxation through litigation" (Lacey, New York Times, 9/23).
Responding to the criticism, President Clinton said, "Well, if you look at the record of this administration, we've been out there on this issue a very long time. No one else ever tried to do that. And we did our best to work with them and with the Congress to resolve many of these matters legislatively, and they declined, and I believe this is the appropriate thing to do" ("PBS Newshour," 9/22). Longtime tobacco foe Rep. Henry Waxman (D-CA) said, "When the Justice Department wins, it will be a great victory by the American taxpayers. The tobacco companies have perpetrated a fraud on the American people for decades. When it comes to a matter of law, all their campaign contributions won't matter." The case is being handled by Judge Gladys Kessler, who is known for pushing parties to resolve disputes out of court (New York Times, 9/23).