Opening Arguments in Justice Department Lawsuit Against Tobacco Companies To Begin on Tuesday
Attorneys for the Department of Justice on Tuesday will begin opening arguments in a lawsuit filed over allegations that the four largest U.S. tobacco companies violated the federal Racketeer Influenced and Corrupt Organization Act, the Wall Street Journal reports (Rayburn, Wall Street Journal, 9/20). The lawsuit alleges that Brown & Williamson, Philip Morris, R.J. Reynolds, Lorillard Tobacco and the Liggett Group 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 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.
The lawsuit seeks $280 billion in past profits, which represents revenues from sales to smokers younger than age 21 between 1971 and 2000, as well as interest. In addition, the lawsuit seeks $9 billion to pay for smoking-cessation programs and research into safer cigarettes (California Healthline, 7/6).
The trial likely will last at least six months, with 100 witnesses expected to testify in person and 200 others to testify through depositions or testimony in other trials. The lawsuit is the largest civil case prosecuted under the RICO act and marks the "biggest legal challenge the tobacco industry has ever faced," according to the New York Times.
In the trial, DOJ attorneys will seek to prove that the tobacco companies engaged in a conspiracy to sell cigarettes through misstatements about the health risks of smoking, the addictive nature of cigarettes, the manipulation of nicotine as the addictive ingredient, the promotion of low-tar cigarettes as safer and the suppression of evidence that would adversely affect sales, according to unnamed department officials (New York Times, 9/20). DOJ attorneys also will seek to prove that the tobacco companies continue to deny the extent of health risks from second-hand smoke. In addition, DOJ attorneys will seek to portray the efforts of the Tobacco Institute and the Council for Tobacco Research as a public relations campaign to deny the health risks of smoking.
William Schultz, a former DOJ attorney who helped develop the case, said, "What the government will argue is that the tobacco industry had a strategy to create doubt over health risks that make smokers more hesitant to quit and those not smoking more likely to start. The fraud is that the companies knew about the health risks but created doubt and controversy about them to maintain their sales" (Kaufman, Washington Post, 9/20).
Peter Keisler, assistant attorney general in the DOJ civil division, said, "The government has provided extensive evidence to support our case. We look forward to presenting it in court."
Attorneys for the tobacco companies in the trial will highlight industry reforms enacted since 1998, according to the Times. In court documents, the tobacco companies said, "The focus of this case should be on recent history, the activities of the defendants today and an actual threat of a specific ongoing or future violation" (New York Times, 9/20).
Tobacco company officials maintain that their Web sites include links to organizations that provide information on smoking cessation and that they have removed advertisements from many magazines with large youth readerships, ended distribution of free products and eliminated some sponsorships. Attorneys for the tobacco companies also maintain that DOJ cannot prove fraud because cigarette packs have included health warnings since 1966 (Scherer, Christian Science Monitor, 9/20).
William Ohlemeyer, vice president and associate general counsel for Altria, parent company of Phillip Morris, said that the past positions held by the tobacco companies "can be wrong without being evidence of committing fraud." He added, "The court is required to review the totality of circumstances. It's difficult for the government to argue that the past is a reasonable predictor of the future. It ignores a detailed list of how cigarettes are sold today versus the past. ... We intend to rebut the charges that fraud was committed in the past. And we're going to make it very clear to the judge that no evidence currently exists of an intent to commit fraud in the future" (New York Times, 9/20). Ohlemeyer added that "if there's any upside for us, it's that now the government will have to finally prove their allegations. We will have a chance to respond and show how much we've changed, and people -- and the judge -- will be able to see and evaluate for themselves. ... The government's case is wrong on the facts and wrong on the law" (Washington Post. 9/20).
A decision in favor of DOJ in the case would have "major financial consequences" and could bankrupt the tobacco companies, the Times reports. Martin Feldman, an analyst for Merrill Lynch who tracks the tobacco industry, estimated that the tobacco companies have a combined net worth of less than $200 billion (New York Times, 9/20). Such bankruptcies could affect payments currently made to states by the tobacco companies under previous settlements (Louis, Winston-Salem Journal, 9/19).
The DOJ lawsuit is of the most expensive litigated in the United States to date; the department has spent about $135 million on the case to date (Christian Science Monitor, 9/20).
Mary Aronson, a litigation analyst who follows the tobacco industry, said, "Not only is this a case for large monetary awards and with the potential for modifying the industry's behavior, but the fact that it is being done under an administration normally seen as pro-business is stunning to a lot of people (Washington Post, 9/20).
The Richmond Times-Dispatch on Sunday published a series of articles related to the DOJ lawsuit. Headlines of the articles appear below.
- "Government's $280 Billion Fraud Case Against Cigarette Companies Begins This Week" (Blackwell , Richmond Times-Dispatch, 9/19).
- "Losing Case Would Hit Manufacturers Hard" (Blackwell  Richmond Times-Dispatch, 9/19).
- "Players Are Experienced: Some of the Best Lawyers in the Business Are Representing Tobacco Industry, Government" (Hardin , Richmond Times-Dispatch, 9/19).
- "Trial to Affect FDA Control? Congress Could Take Legislative Cue from Courtroom Events?" (Hardin , Richmond Times-Dispatch, 9/19).