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Department of Justice (DOJ) Tobacco Lawsuit
Background Information
Status
The case of United States of America v. Philip Morris USA Inc., et al., case no. 99-CV-02496 (GK), was filed on September 22, 1999, in the United States District Court for the District of Columbia. After several years of pretrial activity, during which all of the government's theories except for the civil RICO claims were dismissed, a federal judge began hearing trial testimony in September 2004. During trial, the U.S. Court of Appeals issued a major ruling disallowing much of the relief (disgorgement of profits) sought by the government. The trial court ultimately ruled in August 2006 that the defendants violated a provision of civil RICO but did not award the government any monetary relief. The defendants are now asking the appeals court to set aside the ruling in its entirety. 
Origins of the Case
In 1997, then-Attorney General Janet Reno declared at a Congressional hearing that “the federal government does not have an independent cause of action” against the tobacco industry for violations of Medicare or Medicaid statutes. Notwithstanding this position, President Clinton announced in his January 1999 State of the Union address that he had directed the DOJ to undertake a medical cost-recovery civil action against the domestic tobacco industry for federal funds spent to treat alleged tobacco-related illnesses. During the period between those events – after Attorney General Reno's statements but prior to President Clinton's State of the Union comments – Congress considered and rejected a proposal for national tobacco legislation known as the McCain Bill. The DOJ filed suit only after Congress' June 1998 rejection of the proposed legislation. The Los Angeles Times wrote shortly after the failure of the McCain Bill that “The White House, frustrated by the collapse of anti-smoking legislation, is giving increasingly serious consideration to a strategy aimed at extracting massive monetary damages from cigarette makers by filing a lawsuit on behalf of the government's Medicare program.” The DOJ ultimately filed its complaint in federal court in Washington, D.C. on September 22, 1999, the same day the DOJ announced the closure of its criminal investigation of the tobacco industry without filing charges.
Trial
The trial phase of this case concluded on June 9, 2005. There were 117 trial days. Eighty-five witnesses testified live and introduced about 6,700 exhibits. Also, an additional 162 witnesses testified by submitting testimony that had been earlier taken. That prior testimony comprises more than 22,500 pages and about 7,000 exhibits.
Decision
On August 17, 2006, U.S. District Court Judge Gladys Kessler ruled that PM USA, Altria Group and the other cigarette companies violated civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO). The court refused to order the companies to pay $10 billion for a smoking cessation program or $4 billion for a "counter-marketing" youth advertising program sought by the government but found, among other things, the companies must remove descriptors such as "light" or "ultra light" from cigarette packages and publish statements concerning smoking and health issues. On October 31, 2006, the U.S. Circuit Court of Appeals for the District of Columbia stayed implementation of Judge Kessler’s remedies order until the companies are able to appeal the merits of the case. In the interim, all remedies ordered in the case have been stayed.
Appeal
On May 22, 2007, the U.S. Circuit Court of Appeals for the District of Columbia set the briefing schedule, which requires the following:
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Defendants' opening brief -- due August 10, 2007
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Government's responsive/cross-appeal brief -- due November 19, 2007
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Intervenors' responsive/cross-appeal brief -- due December 10, 2007
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Defendants' cross-response/reply brief -- due February 27, 2008
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Government's reply brief on its cross-appeal -- due April 14, 2008
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Intervenors' reply brief on their cross-appeal -- due April 28, 2008
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Deferred appendix -- due May 5, 2008
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Final briefs -- due May 19, 2008
An argument date has not yet been scheduled.
The Defendants
The Department of Justice (“DOJ”) named the following cigarette manufacturers as defendants: British American Tobacco (Investments) Limited; Brown & Williamson Tobacco Corporation; Liggett Group, Inc.; Lorillard Tobacco Company; Philip Morris USA Inc. and its parent, Altria Group, Inc.; and R.J. Reynolds Tobacco Company Inc. (B.A.T. Industries p.l.c. was initially named as a defendant but has since been dismissed for lack of personal jurisdiction.) Also named were two nonprofit cigarette trade organizations, the Council for Tobacco Research and the Tobacco Institute, Inc., both disbanded as a condition of the 1998 Master Settlement Agreement (“MSA”) between the states and the tobacco industry.
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