U.S. Eases Demands on Tobacco Companies
Justice Department lawyers Tuesday asked a federal judge for sweeping sanctions against the biggest tobacco companies, saying the government had proved a 50-year industry conspiracy to mislead the public with “half truths, deceptions and lies that continue to this day.”
But without explanation, government attorneys drastically reduced their most expensive demand, scaling back a proposed industry-funded smoking-cessation program from $130 billion to $10 billion.
The surprise development came in closing statements in the government’s racketeering case against the tobacco industry, which has been in trial for 8 1/2 months. The tobacco companies will make their summations today, and rebuttal arguments by the Justice Department are expected Thursday. A ruling is not expected for weeks or months.
In prior expert testimony, the government had outlined a proposal that tobacco companies pay more than $5 billion a year to provide a smoking-cessation program for 25 years. This effort would include telephone quit lines, cessation clinics and training and research on the most effective quit methods.
But near the end of the government’s presentation before U.S. District Judge Gladys Kessler on Tuesday, Justice Department lawyer Stephen Brody said the government was seeking a five-year program funded at $2 billion a year.
A person familiar with the situation, speaking on condition of anonymity, said the change was “forced on the tobacco team by higher-level, politically appointed officials of the Justice Department,” including Associate Atty. Gen. Robert McCallum, who oversees the civil division.
McCallum, who issued a statement lauding the “tireless efforts” of the trial team, declined to discuss the matter. Brody and Sharon Eubanks, director of the government trial team, also declined to comment.
Justice Department officials Tuesday night issued a statement describing the proposed five-year program as “an initial requirement” that could be extended in the future if court-appointed monitors decided the industry was committing fraud.
“This proposal has been designed to be a forward-looking remedy to prevent and restrain future wrongful conduct by” the tobacco companies, the statement said.
Dan Webb, a lawyer for Philip Morris USA, said the scaled-back request showed that government lawyers “had not thought through these expensive remedies.”
But an official with one anti-smoking group said he was concerned that the change was not based on public health or the law.
“The question is, is this a political decision that’s been made by the Department of Justice?” said Vince Willmore, communications director for the Campaign for Tobacco Free Kids, an ardent supporter of the racketeering case.
The giant tobacco lawsuit was inherited from the Clinton administration, and there was wide speculation that the Bush administration would pull the plug. But the Bush administration eventually poured millions of dollars into the case.
Before his appointment in the Justice Department in 2001, McCallum had been a partner at Alston & Bird, an Atlanta-based firm that has done trademark and patent work for R.J. Reynolds Tobacco. In 2002, McCallum signed a friend-of-the-court brief by the administration urging the Supreme Court not to consider an appeal by the government of Canada to reinstate a cigarette smuggling case against R.J. Reynolds that had been dismissed. The department’s ethics office had cleared McCallum to take part in that case.
Apart from the smoking-cessation program, government lawyers Tuesday asked Kessler to order an array of other anti-smoking measures. Among them:
* A ban on price-cutting promotions, such as the buy-two, get-one-free deals that have become a mainstay of brand marketing. The offers are particularly enticing to price-sensitive teens, the government said.
* Fines against tobacco companies if youth smoking doesn’t decline by targeted amounts.
* Barring the use of descriptors such as “light” and “mild” on lower-tar brands, because industry research shows that smokers make up for lower tar and nicotine by drawing deeper or smoking more cigarettes.
* An industry-financed education campaign focused on the hazards of smoking and of secondhand smoke.
* So-called corrective statements by the industry that acknowledge, for example, that secondhand smoke causes cancer and other serious harm.
* Court-appointed industry monitors with the power to oversee the remedial programs and remove senior executives who skirt court directives.
Along with Philip Morris and R.J. Reynolds, defendants include Brown & Williamson, which has merged with R.J. Reynolds to form Reynolds American Inc; British American Tobacco; the Lorillard Tobacco unit of Loews Corp. and Vector Group Ltd.'s Liggett Group Inc.
The cigarette makers contend they never conspired to deceive the public. They also have accused the government of ignoring its own longtime support for the tobacco business and of failing to acknowledge significant reforms by the industry since its landmark 1998 settlement with the states.
But Eubanks, who split the summation with three other government lawyers, told the judge that the government had succeeded in establishing what it had described at the outset of the trial as its “Seven Pillars of Fraud.”
The government said it proved that the industry had lied about the risks of smoking and secondhand smoke; had falsely promised to sponsor independent research; had lied about addiction; had manipulated nicotine levels to hook smokers; had deceptively promoted low-tar or “light” cigarettes; had falsely denied targeting youth; and had suppressed evidence that would have undermined its public-relations stands and defenses in court.
To prevail in the case, the government must show not only that the industry committed fraud in the past but also that such conduct is continuing or is likely to occur in the future.