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U.S. to Make Case for Monitoring of Tobacco Industry

From Reuters

The Justice Department has said it will argue for court-appointed monitors to oversee the tobacco industry as part of its racketeering case against cigarette makers.

Government lawyers said in a court pleading filed Monday that they would make the case for monitors as one of the remedies they might ask a federal court to impose if the government prevailed in the 5-year-old case.

Such a monitor would have the authority to recommend the dismissal of an industry executive if a judge concluded that the executive violated court orders, the Justice Department said.

But in the same pleading, department lawyers denied that they had plans to seek the immediate removal of senior tobacco industry executives as a broad remedy to prevent future wrongdoing by the industry.

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The comments came about a week after the Justice Department notified the court that one of its witnesses, Harvard Business School professor Max Bazerman, would recommend “structural changes,” including “the removal of senior management and changes in oversight and reporting arrangements.”

In response, tobacco industry lawyers have asked U.S. District Judge Gladys Kessler to rule out the idea of ousting executives or any other new remedy proposals from the government.

The government’s case, being tried since September, is based on claims that the industry conspired for decades to mislead the public about the dangers of smoking. Last month the case was dealt a serious blow when a federal appeals court ruled that the government could not use civil racketeering laws to force the industry to repay $280 billion in past industry profits.

Targeted in the government’s lawsuit, filed in September 1999, are Altria Group Inc. and its Philip Morris unit; Loews Corp.'s Lorillard Tobacco unit, which has a tracking stock, Carolina Group; Vector Group Ltd.'s Liggett Group; Reynolds American Inc.'s R.J. Reynolds Tobacco unit; and British American Tobacco unit British American Tobacco Investments Ltd.

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The tobacco companies deny that they illegally conspired to promote smoking and say the government has no grounds to pursue them after they drastically overhauled marketing practices as part of a 1998 settlement with state attorneys general.


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