INTERIM SUMMARIES: Defense: DOJ Case a “shambles;” Besides, remedies are already in place from the MSA.

April 21, 2005 12:38 pm by Gene Borio

B&W/Reynolds lawyer David Bernick began the defense’s Interim Summation this morning by saying the DOJ’s RICO case is “in a shambles” and can’t “legally or factually be salvaged.”

He said there is no proven RICO “enterprise.” The government’s “association in fact” cannot be construed as a RICO enterprise. He said even at the Plaza hotel meeting in 1953, no one was shown to have said, “Let’s keep this whole matter secret.” Even if you feel the industry did not adhere to the Frank Statement, that is either a) a conspiracy, not a RICO violation, and/or b) a breach of promise–but not fraud.

Mr. Bernick asked, where is the individual who really thought causation was established, and who said, ‘we want to mislead people and say, no, not proven.’ They haven’t told us who that is, he said; there is no proof of a corporate specific intention to commit fraud.

Mr. Bernick also claimed there was no materiality, no evidence that any supposed fraudulent positions actually affected any consumer. He said it was not proven that any of the companies’ actions “had commercial traction.”

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Mr. Bernick complained that the public and the media accepted as a given that the industry lied about causation, and marketed to teens. When he began to talk about youth marketing, he said, “And I hope the New York Times is here and covers this point.” I thought I saw Michael Janofsky flinch a bit, but Judge Kessler jumped right in and said very strongly,

“Let’s not have argument directed at various members of the media. They can take care of themselves.”

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But Philip Morris’ Dan Webb made the more far-reaching arguments on the case’s merits, saying the companies had changed their supposedly-bad behavior both on their own and in response to the MSA. He said the suits leading to the MSA were virtually identical to this one, went over all the same issues, and those issues were addressed by the MSA’s mandates, which are monitored by the AGs and will go on forever.

The organizations that represented the enterprise and committed the supposed fraud are gone due to MSA: CTR, CIAR and the Tobacco Institute. So where would future enterprise fraud come from?

“The government wants to remedy what was already remedied by the AGs in 1998.”

In addition, the industry has changed its positions on addiction and causation.

Mr. Webb used Philip Morris USA’s activities to represent the activities of all the defendants over the last 8 years, since 1997. This is a bit unfair, as it can be argued that PM is the most radical of the companies in limiting its advertising venues and in its website statements. (A listing of website statements on addiction listed RJR’s:

“R.J. Reynolds tobacco company believes that smoking in combination with other factors causes disease in some individuals.”

7 Responses to “INTERIM SUMMARIES: Defense: DOJ Case a “shambles;” Besides, remedies are already in place from the MSA.”

  1. tobacco observer Says:

    “Mr. Webb used Philip Morris USA’s activities to represent the activities of all the defendants over the last 8 years, since 1997. This is a bit unfair, as it can be argued that PM is the most radical of the companies in limiting its advertising venues and in its website statements.”

    It can also be argued that this case is CALLED “DOJ vs. PMUSA” and that PMUSA is the main defendant! So how now are they not representative of the industry?

    Looking at this a bit differently, PMUSA sells as many cigarettes as all of the other defendants put together (perhaps more). Therefore PMUSA all by itself represents the majority of the industry, and ipso facto PMUSA’s positions legitimately are the dominant industry positions. With only 25% of the market, its RJR that is the “radical” outlier here, not PMUSA.

    The defendants didn’t lump themselves together. The gov’t did that. If there is a split between the various defendants on this issue, then that only highlights one of the major flaws in the gov’ts case. Either all of the tobacco companies ARE acting together as part of a criminal racketeering conspiracy, as the gov’t alleges, or they are NOT. If there are major discrepancies between that the various companies claims about the risks of tobacco, then what does that say about the gov’ts charges that they are acting in collusion?

  2. krueger Says:

    “Either all of the tobacco companies ARE acting together as part of a criminal racketeering conspiracy, as the DoJ alleges, or they are NOT”

    What a naive view!

    Any serious student of this industry knows that sometimes and in some areas this industry conspires to protect its common interest, and sometimes individual companies compete. That at some times there is competition and differences exist does not mean collusion and conspiracy never happened.

    Likewise, organized crime sometimes conspires and sometimes competes. The competition lowers profits, so organized crime doesn’t like it, but it happens sometimes. That hardly precludes conspiracy at other times or on other matters.

  3. sagebrush Says:

    Of course the industry was united in its deceptions. This was manifested in the industry’s formation of global groups to fight public health, like the International Committee on Smoking Issues and INFOTAB. There was also the Tobacco Action Network, which strove to unite and organize opposition not only from all manufacturers and their employees, but also from their allies in the retail and advertising sectors. In this 1991 quote, RJR Executive Herbert Osmon refers several times to the industry’s united front:

    “We believe [the] attack on the manufacturers will increase in intensity and viciousness…The anti-smoking zealots want to break up the tobacco family. They want to put a wedge between the manufacturers and the smokers…They want to fracture our united front…They know that if they get us fighting among ourselves, they will eventually be able to dance on our graves, because we won’t be able to resist the pressures if we are not united….But if we do not take their bait, if we do remain united and continue to do everything we can to resist the efforts to destroy our business, then history can repeat itself….We must remain united, and we must fight the anti-smokers at every opportunity…” 511384849

  4. krueger Says:

    Document cited may be viewed at:

    http://legacy.library.ucsf.edu/tid/vyy43d00

    And so many, many, more like it could be cited. Indeed, one thing about having these documents in public now: you no longer have to say “the industry presents a united front”; you can point to where the industry itself says it.

    Again, this does not mean that Philip Morris sees everything the exact same way that RJR does. It means that the major manufacturers in this industry, worldwide and for decades, have agreed to act in common, to say and do, and not say and not do, certain things on a wide variety of issues.

    This is one of the reasons that Gulson’s testimony is so interesting. Gulson reveals Big Tobacco acting in common on a scale that really boggles the imagination:

    http://www.tobacco-on-trial.com/archives/2005/02/16/frederick-gulson

  5. krueger Says:

    Philip Morris claims:

    “The organizations that represented the enterprise and committed the supposed fraud are gone due to MSA: CTR, CIAR and the Tobacco Institute.”

    But:

    “All we’re going to do is change the name on the door. We’re going to continue to do what we’ve always done.” Walker Merryman, Vice President, the Tobacco Institute. Los Angeles Times, June 24, 1997

    Philip Morris says:

    “the companies had changed their supposedly-bad behavior”

    I always love this argument: “we didn’t do it, and we promise not to do it again.”

    Then Philip Morris claims:

    “the industry has changed its positions on addiction and causation.”

    But the industry’s own statements in this very suit show that little has changed. The same waffling, obfuscation, softpedaling, and denial we’ve heard for decades from this industry.

    “Despite their attempts to portray themselves as new and responsible companies, leading cigarette manufacturers continue to deny or evade in the DOJ litigation the truth about the health effects of smoking, the harm of environmental tobacco smoke, and the addictiveness of nicotine.”

    http://democrats.reform.house.gov/Documents/20040827162948-44223.pdf

    The truth is, the only “change in position” here is a shift from complete lies to very carefully worded half-truths and quarter-truths. Is this progress? The American Council on Science and Health doesn’t think so:

    “When an industry has been lying for more than half a century, then announces it is going to tell the truth but only tells a fraction of the truth, the impact can be as bad as or worse than the original lie.”

    http://www.acsh.org/healthissues/newsID.461/healthissue_detail.asp

  6. tobacco observer Says:

    No one denies that the tobacco companies have similar interests in many issues and act in unison on those issues. That’s true of any industry, and there is absolutely nothing wrong or sinister about that. My point was specifically about ongoing *criminal* conspiracy.

    Remember, that’s what this trial is supposedly about. The gov’t alleges as as part of this civil RICO case that not only did tobacco criminally conspire to hide the addictive nature and risks of smoking from the public, but they either continue to actively do so, or are likely to do so in the future.

    The point is, with PMUSA now openly and fully admitting that tobacco is addictive, and with RJR saying another more “weaselly” thing about addiction, that alone is evidence that the companies are NOT acting in concert anymore (if ever they did so to begin with). So where is the collusion here? Where is the deception?

    If the point is that the entire industry has suddently now “changed its mind” by conceding that tobacco is addictive, isn’t that *exactly* what the gov’t claims they were supposed to do?

  7. krueger Says:

    Is there an ongoing criminal conspiracy? You might say that’s an issue in this trial. Some say there is. The author of RICO for instance, says there is:

    http://tobacco.neu.edu/litigation/cases/DOJ/Blakey_Congress.htm

    If there is an ongoing criminal conspiracy, does it go away if Philip Morris says something different from RJR? Of course not.

    If there is an ongoing criminal conspiracy, does it go away if Philip Morris utters half-truths that are supposed to show a change? Let’s see, Philip Morris now says (softly) that cigarettes are addictive. Has it stopped engineering its product for addiction? No? So how much change has happened here?

    The reality is, this industry has a long history of saying pretty things when it’s in trouble, pretending to change, making promises, and we all find out later that the changes were cosmetic. That the changes protected Big Tobacco more than the public. “Give an inch, gain a decade”:

    http://www.ash.org.uk/html/conduct/html/tobwars.html

    The history is, Big Tobacco is pretty good at making promises. It’s just not so good at keeping them:

    http://tc.bmjjournals.com/cgi/content/full/11/suppl_1/i110

    I’d say this adds up to reason for skepticism about Big Tobacco’s latest “open” and “honest” and “responsible” image campaign. Has Big Tobacco really changed its mind? Or just its PR strategy?

    If there is an ongoing criminal conspiracy, does it go away if its PR strategy changes? Hardly. If anything it suggests the conspiracy intends to continue, since it’s investing heavily in the appearance of change for the specific purpose of avoiding any real change.

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