The U.S. Government's racketeering case against Big Tobacco

On September 22, 1999, the United States Department of Justice, under the Admistration of then-President William J. Clinton, filed a racketeering lawsuit against the major cigarette manufacturers and two industry affiliated organizations.the The U.S. Government sought $280 billion in penalties on the grounds that the tobacco companies had conspired to deceive the public about the dangers of smoking.

The defendants in the case were:
 * Philip Morris Companies (now Altria)
 * R.J. Reynolds Tobacco Company (RJR), now Reynolds American
 * Brown & Williamson Tobacco Corporation (BW), now part of Reynolds American
 * Lorillard Tobacco Company
 * The Liggett Group
 * American Tobacco (now part of Reynolds American)
 * British American Tobacco Industries (BATCo)
 * The Council for Tobacco Research (CTR)
 * The Tobacco Institute, Inc.

Specifically, the Department of Justice (DOJ) alleged that the cigarette industry has purposely and fraudulently misled the public about the risks and dangers of cigarette smoking. The government alleged that "the Defendants have engaged in and executed – and continue to engage in and execute – a massive 50-year scheme to defraud the public, including consumers of cigarettes, in violation of RICO". [Taken from DOJ Final Proposed Findings of Fact (FPFF), Executive Summary, page 1.]

DOJ's Proposed Finding of Fact in the case alleged that starting in 1953 the Defendant tobacco companies met and engaged in a conspiracy to launch a public relations campaign to counteract the growing body of scientific evidence showed cigarettes were harmful, while at the same time the Defendants' own internal scientific research confirmed the findings that cigarettes caused disease, death and addiction. The object of this campaign was to maximize the number of smokers and profits, and "to avoid adverse liability judgments and adverse publicity." {DOJ FPFF page 3].

Parts of the Government's case were dismissed. The government originally sought reimbursement for tobacco-related disease medical expenses paid as required by Medicare, according to the Medicare Recovery Act 42 U.S.C. 2651-53; and Medicare Secondary Payer Act, 42 U.S.C. 1395. The judge dismissed these claims, ruling that the statutes did not permit the type of recovery sought by the government.

Because the DOJ sought only equitable relief, and because such relief is only granted by a judge, the case was not heard by a jury, but a single Federal judge, Gladys Kessler of U.S. District Court.

Attempts to exert political influence over the case
A January 30, 2000 internal Philip Morris (PM) email written by Greg Little (Associate General Counsel for PM) indicates a strong and successful effort by PM to exert political influence over the course of the U.S. Department of Justice lawsuit against the American tobacco companies. Little credits PM's DOJ Team [Department of Justice Team] with silencing the White House on the suit, reducing federal funding for the suit, neutralizing political pressure around the suit and creating a beneficial atmosphere for the company during litigation. The entire text of Little's memo is as follows: "I would like to take this opportunity to thank this group for doing such a great job. It was a privilege to work with you. When you look back to last year's State of the Union Address, I think most people assumed that the DOJ suit would turn into a constant barrage of attacks by the White House, joined by the Anti's and supported by a well-funded Justice Department suit.  Instead, since the formation of the PM DOJ Team, Congress refused to fund the suit, the White House has been noticeably silent, and the Anti's have had to turn their attention elsewhere. You should consider it a tremendous accomplishment that, since the filing of the suit, the only comment from DOJ has been 'we will do our talking in court.' I suspect that view has little to do with professionalism, and everything to do with recognizing that this suit is not politically popular.  You deserve great credit for creating that atmosphere and we in litigation greatly appreciate it. Now that you have neutralized the political pressure we will do our very best to have this suit dismissed on legal grounds. If we succeed, it will be due in large part to your efforts. Thank you."

Conviction
After 6 years of litigation, 9 months of trial, hundreds of depositions and thousands of exhibits, on August 17, 2006 U.S. District Court Judge Gladys Kessler ruled that the Government had proven its case and found that the tobacco company defendants have violated the Racketeer Influenced Corrupt Organizations Act (RICO).

Final Findings
Based on the evidence presented in the case, Judge Kessler ruled that:


 * Defendants knew for fifty years or more that cigarette smoking caused disease, but repeatedly denied that smoking caused adverse health effects. Defendants publicly distorted and minimized the hazards of smoking for decades.


 * Defendants concealed and suppressed research data and other evidence showing nicotine is addictive, and withheld information about their internal research on addiction, from the American public, the government, and the public health community, including the United States Surgeon General. The Defendants acted this way to maintain profits by keeping people smoking and attracting new consumers, to avoid iability, and  prevent regulation of the industry.


 * Defendants falsely denied that they can and do control the level of nicotine delivered to smokers to create and sustain addiction.


 * Defendants falsely marketed and promoted low tar/"light" cigarettes as less harmful than "full flavor" cigarettes to keep people smoking and sustain corporate revenues.


 * From the 1950s to the present, different tobacco companies using different methods have intentionally marketed cigarettes to young people under the age of 21 in order to recruit "replacement smokers" who would ensure the future economic viability of the Tobacco Industry.


 * Defendants publicly denied, while internally acknowledging, that secondhand tobacco smoke is hazardous to nonsmokers.


 * At various times, Defendants attempted to, and did suppress and conceal scientific research and destroy documents relevant to their public and litigation positions.

Website on the case

 * Justice Department tobacco litigation: http://www.usdoj.gov/civil/cases/tobacco2/

Other SourceWatch resources

 * Sharon Eubanks
 * Robert McCallum
 * Tobacco industry
 * Philip Morris

Legal Documents From the Case

 * The United States District Court's entire Final Opinion in the case (over 1700 pages, 5.7 mb): http://www.tobaccolawcenter.org/documents/FinalOpinion.pdf
 * DATTA transcripts, has the actual trial transcripts (2004-2005), along with many court filings.
 * Tobacco-on-Trial.com, contains Gene Borio's daily blog of the case (2004-2005), links to ongoing news (it's not over yet), and many court filings--depositions, written testimonies, exhibits, judgements, etc.
 * Lung Cancer Alliance, "Amicus Brief", September 2, 2005.
 * A sectioned summary of the verdict, The Verdict Is In: Findings from United States v. Philip Morris, which compiles select quotes from 1,259 pages of Findings in a legal document over 1,700 pages long, from the Tobacco Control Legal Consortium. Sections are as follows:
 * The Hazards of Smoking
 * Addiction
 * Nicotine Levels
 * Light Cigarettes
 * Marketing to Youth
 * Suppression of Information

General Articles

 * Bob Burton, "The PR Plan Behind Big Tobacco's Big Victory", February 8, 2005.
 * John R. Wilke and Vanessa O'Connell, "Cigarette Makers And U.S. Seek Deal:After Government Setback, Judged Urged Both Sides To Take Matter to Mediator", Wall Street Journal, March 22, 2005.
 * Hiliary Rowe, "Court nixes U.S. request in tobacco trial", BusinessWeek, April 20, 2005. (This is an Associated Press story).
 * Michael Janofsky, "Government's Racketeering Case Against Tobacco Companies Wraps Up Its First Phase," New York Times, April 22, 2005. "After seven months of testimony, the federal government's racketeering case against the nation's largest cigarette companies reached the end of its first phase on Thursday as lawyers disputed whether the companies had misled the public about the health effects of smoking. After a recess next week, the trial will move into its final stage, witness testimony on remedies that the judge, Gladys Kessler of Federal District Court, may apply if she decides in favor of the government."
 * Michael Janofsky, "Government's Racketeering Case Against Tobacco Companies Wraps Up Its First Phase", New York Times, April 22, 2005.
 * Anthony Ramirez, "Tobacco Industry Is Given Victory by a Panel of U.S. Judges", New York Times, May 7, 2005.
 * Vanessa O'Connell, "Lifting Clouds: New Tactics at Philip Morris Help Stem Tide of Lawsuits", Wall Street Journal, May 11, 2005.
 * Myron Levin, "U.S.' Years-Long Battle With Tobacco Firms Nears an End: Billions of dollars are at stake in a lawsuit as closing remarks start. A ruling may take months", Los Angeles Times, June 7, 2005.
 * Carol D. Leonnig, "Tobacco Escapes Huge Penalty: U.S. Seeks $10 Billion Instead of $130 Billion", Washington Post, June 8, 2005.
 * Myron Levin, "U.S. Eases Demands on Tobacco Companies", Los Angeles Times, June 8, 2005.
 * Representatives Henry Waxman and Martin Meehan, "Letter to DOJ Inspecter General Glenn A. Fine", June 8, 2005.
 * Office of Professional Responsibility, Department of Justice, "Update: Handling of Tobacco Case To Be Investigated", Office of Henry Waxman, June 13, 2005.
 * Michael Janofsky, "Tobacco Trial Ends, but Not the Arguing", New York Times, June 10, 2005.
 * Eric Lichtblau, "Lawyers Fought U.S. Move to Curb Tobacco Penalty", New York Times, June 16, 2005.
 * Myron Levin, "Deeper Cuts Had Been Sought in Tobacco Case: U.S. prosecutors had been told to slash their request for sanctions on the industry to as low as $6billion, sources say", Los Angeles Times, June 17, 2005.
 * Carol D. Leonnig, "Expert Says He Was Told to Soften Tobacco Testimony", Washington Post, June 20, 2005.
 * Henry O. Waxman, "Government Witness in Tobacco Case Says Justice Department Lawyers Asked Him to Weaken Testimony", Media Release, June 20, 2005.
 * Henry O. Waxman, "Letter to H. Marshall Garrett", June 20, 2005. (Pdf file).
 * Eric Lichtblau, "U.S. Seeks Higher Damages in Tobacco Industry Suit", New York Times, July 19, 2005.
 * Lung Cancer Alliance, "Lung Cancer Alliance Takes Landmark Action - Seeks Lung Cancer Research and early Detection Fund From Tobacco Industry", Media Release, September 7, 2005.
 * Pete Yost, "Head of Gov't Tobacco Trial Team Quits", Washington Post, November 30, 2005. (This is an Associated Press story).