Justice Dept. Won't Seek Rehearing On Tobacco Case
July 31 2009 - 6:27PM
Dow Jones News
The U.S. Justice Department won't seek a rehearing of a landmark
decision this spring that found the tobacco industry violated
federal racketeering laws, potentially increasing the odds that the
controversy could make its way to the Supreme Court.
Tobacco companies involved in the litigation filed requests due
Friday to have the matter heard by the full circuit court, but the
Justice Department won't do the same.
"We will not be filing something today," said Justice Department
spokesman Charles S. Miller. He declined to elaborate.
The May 22 opinion in the largest civil racketeering case to
date was a mixed bag for the U.S. government, with the panel
agreeing that cigarette makers conspired to deceive the public
about the dangers of smoking, while rejecting the Justice
Department's request for additional penalties against cigarette
manufacturers.
The unanimous decision by a three judge panel of the U.S. Court
of Appeals for the D.C. Circuit also affirmed an earlier ruling
that the government could not force cigarette companies to forfeit
up to $280 billion of profits.
Odds that an appeals court will agree to rehear a case decided
by a smaller three-judge panel are slim, particularly when the
panel's decision is unanimous. The fact that the Justice Department
isn't asking for the full circuit to review the earlier ruling
makes a rehearing even more of a long shot and could prompt
litigants to seek review by the Supreme Court.
Attorneys representing the tobacco companies declined to comment
or could not be reached immediately for comment.
Defendants in the case include Altria Group Inc.'s (MO) Philip
Morris subsidiary, Reynolds American Inc. (RAI), British American
Tobacco PLC (BTI) and Lorillard Inc. (LO).
In legal documents filed Friday, the tobacco companies offered
numerous arguments as to why the full court should rehear the
matter, including legislative changes approved in June that they
say will tighten federal oversight of the tobacco industry to the
point that industry members aren't likely to violate federal
racketeering laws again, mooting the panel's ruling.
British-American Tobacco raised other issues, saying the panel's
decision conflicts with those of other federal appellate courts and
the U.S. Supreme Court on the application of U.S. anti-racketeering
laws to non-U.S. firms. It called the panel's ruling "a
breathtaking extension" of RICO, the Racketeer Influenced and
Corrupt Organizations Act, to a foreign company, and called for
review to correct an "unwise and unwarranted" extension of the U.S.
law to a foreign firm.
The May ruling affirmed most of the remedies that a trial judge
imposed against tobacco companies in 2006, including restrictions
on tobacco marketing and a requirement that the industry make
corrective public statements about the health effects and
addictiveness of smoking. But in a blow to the government and
anti-smoking groups, the court rejected additional penalties they
sought, including tobacco industry funding of a $10 billion
national smoking-cessation campaign.
The court said the tobacco companies "knew about the negative
health consequences of smoking, the addictiveness and manipulation
of nicotine, the harmfulness of secondhand smoke," and agreed with
the government's argument that tobacco firms were likely to commit
future racketeering violations.
-By Judith Burns, Dow Jones Newswires, 202-862-6692; Judith.Burns@dowjones.com
(Brent Kendall contributed to this article.)