Judge Is Boxed In in Tobacco Lawsuit

The massive civil racketeering case against big tobacco companies that wrapped up this week in federal court has been so battered by adverse rulings and government fumbling that a verdict may mean little even if the industry loses, observers say.

The Justice Department, in what many called a stunning gaffe, suddenly changed course in closing arguments, slashing its chief demand for an industry-funded smoking-cessation program by more than 90%.

Instead of seeking a $130-billion campaign that would take 25 years and help every smoker who wants to quit, lawyers asked for a five-year, $10-billion program that would serve only those who become addicted in the near future as a result of industry misconduct.

“My question is why they’ve suddenly pulled the plug on this [$130-billion program] at the last second,” said Robert Weisberg, a Stanford University law professor and racketeering expert. “It might send a signal to the judge of a lack of faith in the way the case has been developed overall.”

Whether the reduction in government demands was ordered by Justice Department officials for political reasons, as some have alleged, or for more practical purposes reflecting legal reality, the question now is whether the judge in the case can order any smoking cessation program at all.

After a trial that lasted 8 1/2 months, U.S. District Judge Gladys Kessler on Thursday set a schedule for final briefs and proposed findings of fact to be filed this summer. Then, if Kessler decides that the companies are guilty of fraud and racketeering, as many observers expect, her problem will be what she can do about it.

The 67-year-old judge, a Clinton appointee, must deal with two 800-pound gorillas in the case: a federal appeals court ruling restricting sanctions that can be imposed under the RICO law and 1st Amendment protections for commercial speech.

In February, with the trial in its fifth month, the U.S. Court of Appeals for the District of Columbia overturned a ruling by Kessler that the government could seek forfeiture of $280 billion in allegedly illicit profits, plus interest, gained by the industry over 30 years.

The appeals court declared that sanctions for civil violations of RICO cannot be aimed at curing past harm, only at preventing future acts of fraud.

Besides eliminating the biggest threat to the defendants, the ruling has raised questions about remaining possible sanctions.

For example, the Justice Department has asked Kessler to order the industry to fund a public education campaign on the ills of smoking and secondhand smoke.

It also wants a system of automatic fines if targets for reducing youth smoking aren’t met. Kessler would have to decide whether these remedies are forward-looking, as the government contends, or backward-looking measures that, according to the industry, would never pass muster with the appeals court.

For Kessler, the appeals court ruling was “a real 2-by-4 to the head,” said Jonathan Turley, a professor of public interest law at George Washington University.

“This is a judge that’s clearly from a different philosophy from the court of appeals,” he said. Yet it’s unclear how bold “this judge may ultimately prove in pushing the envelope.”

The government demand for a sweeping smoking-cessation program is caught in the dispute over the punishment available under RICO.

In defense of the move, Justice officials say it is more likely to withstand appeals court scrutiny than a program to treat all smokers who became addicted in the past.

But eight Democratic lawmakers, including Rep. Henry Waxman (D-Los Angeles) and Sen. Edward M. Kennedy (D-Mass.) called on the Justice Department’s inspector general to investigate whether top officials improperly intervened to shield the industry from a major hit.

On Friday, a coalition of anti-smoking groups, including the American Cancer Society and the Campaign for Tobacco-Free Kids, charged that the proposal “protects tobacco industry profits rather than public health.”

Law professor Turley said he believed “legal realism and political realism” were the main reasons for the 11th-hour retreat.

The Justice Department had “seemed to be in institutional denial” about the consequences of the appeals court defeat, Turley said. “By reducing the [requested] damages it brings the case more in line with that ruling.”

Noting that the case has lasted six years at huge cost to the government, Turley said Justice officials are “very sensitive about the ‘resume factor’ in this case.”

The change “lays the groundwork for the spin that they labeled the industry as racketeers and they got the damages they asked for,” he said.

Tobacco lawyers have ridiculed the new proposal. Said Ted Wells, a lawyer for Philip Morris USA, it was a $280-billion case, then a $130-billion case, now a $10-billion case and “eventually it will be a zero-dollar case.”

In questions to Justice Department lawyers during their summations this week, Kessler also questioned whether some measures they sought might run into 1st Amendment problems. One remedy she cited was a requirement that the industry issue so-called “corrective statements” admitting the dangers of smoking and secondhand smoke in wording approved by the court.

Another involved a demand that cigarette makers eliminate advertising imagery attractive to teens.

Kessler also voiced skepticism about a request that she delegate broad powers to court-appointed monitors who would ride herd on the industry by investigating and punishing violations of court orders.

Mary Aronson, a legal and policy analyst who attended most of the trial, said the judge made clear that a system of industry monitors could be “a big administrative pain in the butt.”

It’s conceivable that Kessler will find the industry liable but decide she can do little more than issue “an injunction saying don’t misbehave in the future,” Aronson said.

That would be “such a wimpy result, it’s almost laughable.”