Big Tobacco, Obama Administration Duel in Supreme Court

Tobacco giant Philip Morris USA, a division of Altria Group (MO), on Friday asked the U.S. Supreme Court to throw out the landmark ruling saying the cigarette industry misled the public about the dangers of smoking. Hours later, the Obama administration asked the court to allow it access to nearly $300 billion in what it calls ill-gotten profits from the industry. The dueling filings are the latest chapter in an epic legal fight that has gone on for more than a decade.In its filing, Philip Morris asked the court to overturn a massive racketeering verdict that forced the company to change its practices and increase its warnings about the dangers of smoking. Philip Morris argued that, in addition to letting the U.S. "pervert" the racketeering statute, known as RICO, the courts had violated its First Amendment rights.

"Absent further review, the government will henceforth be free to pervert RICO into a device for evading the legislative process, penalizing and chilling public debate on scientific matters, and constraining constitutionally protected speech through vague and sweeping injunctions," Philip Morris said in its appeal.

Evidence 'Overwhelming'

John Banzhaf, executive director of the group Action on Smoking and Health, which helped advise the U.S. on how to use the RICO statute against the industry, says it's unlikely the court will agree to hear the industry's appeal. But even if it does, Banzhaf says he doesn't think the industry's arguments hold merit. "The great majority of RICO cases don't involve organized crime like the Mafia, but rather involve businesses that engage in fraud and deception," Banzhaf says. "It seems to me that the evidence is overwhelming against the tobacco industry."

The Obama administration has asked the court to allow it to seek $280 million in past profits from the industry. If the Supreme Court overturns the RICO conviction, the government's request for access to industry profits will be moot.

Phillip Morris: Our Free Speech Was Violated

Philip Morris also said that the court's judgment to punish the industry for what it determined to be fraudulent statements about smoking violated the industry's First Amendment rights. "As long as these statements were true or made in good faith, they fall squarely within the First Amendment's Speech and Petition Clauses, which provide constitutional protection for 'debate on public issues,'" the statement said.

The courts "should not have the virtually unreviewable authority to make factual findings that deny a defendant its fundamental First Amendment freedoms," the company said, adding that the government's case represented "an unprecedented effort to use litigation to obtain extensive regulatory authority over the tobacco industry that, until recently, it had been unable to secure through the legislative process."

Banzhaf doesn't think that argument holds water, either. "This is not political speech," Banzhaf says. "When you're advertising or promoting a product, the free-speech parameters are much tighter. And the courts have ruled numerous times that there is no protection for false statements when marketing a product to the public."

Administration: Industry Damaged Health of Millions

In 2006, seven years after the Clinton administration launched the case, U.S. District Judge Gladys Kessler determined that the tobacco companies had conspired to defraud the public about the negative health effects of smoking. She ruled that the companies could no longer tout certain brands as "light" or "low tar." A federal appeals court upheld that ruling last year.

But Kessler said she lacked the authority to require the tobacco companies to fund a public health campaign to help smokers quit. The courts have also previously barred the government from asking the industry to disgorge $280 billion in past profits. The Obama administration, along with public health groups, wants the Supreme Court to allow it to collect that money.

"For the last half century, those defendants have engaged in a pattern of racketeering activity and a conspiracy to engage in racketeering that has cost the lives and damaged the health of untold millions of Americans," Solicitor General Elena Kagan, the Obama administration's top attorney, told the Supreme Court in its filing.
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