Defense’s SCOTUS Brief

September 21, 2005 10:01 pm by Gene Borio

The Defense filed its opposition to certiorari on Sept. 16. Submitted by Jones Day’s Todd R. Geremia and Michael A. Carvin (who argued the cause for appellants at the DCCA), it is a concisely-worded argument which not only strictly parses the language of Congress and case law, but subtly presents an apocalyptic vision of chaos–in the economy as well as in the legal and legislative branches of the government — should the DOJ win its case. Yes, I know the DOJ’s appeal is only about disgorgement as a viable RICO remedy, but the brief cleverly goes much, much further.

Some may find the brief’s rather prejudiced rehash of the case superfluous. However, even assuming the Supreme Court Justices’ ability to filter out such side argumentation, the brief’s efforts to bolster Defense’s case outside of the legal issues make for a powerful environment in which to see things in the Defense’s light.

ONE NATION, UNDER MSA . . .

The brief argues that the MSA oversees the tobacco industry just fine already, and this precludes future misbehavior anyway:

[T]o obtain any remedy at all, the government must prove that respondents are likely to violate RICO in the future, even though they are already subject to a panoply of ‘permanent injunctive relief’ pursuant to the ‘landmark’ 1998 settlement agreement among respondents and the States. . . . Under the 1998 settlement agreement, respondents are already barred from any continuation of the core violations alleged by the government here.

REMEDIES FROM HELL

The brief presents a chilling vision of a hamstrung, crippled industry should the DOJ’s remedies be approved. A footnote reads,

“The amount of disgorgement sought by the government was many times the combined net worths of all respondents,”

And the DOJ’S other remedies are “draconian.” In uncolored, ultra-plain language meant to let the Justices see it for themselves, the brief paints a stark black and white picture–clearly meant to come through as harrowing–of the industry suffering under the weight of all the remedies the DOJ has sought–the “no limit” sanctions, the multi-billion-dollar smoking cessation programs, the youth smoking rate targets, the court-appointed monitors privy to every document, every corporate meeting–but wait, there’s more!– even “more drastic relief” may be coming down the pike due to the Court’s allowance of Intervenors!

BACK ON EARTH: CASE LAW

Once this stage is set, the brief efficiently and effectively argues that the DOJ’s appeal is unwarranted or moot:

–Neither the RICO statute nor case law supports the government’s RICO claims

–The appeal is premature in that liability hasn’t even been established yet, and that such an interlocutory appeal, as opposed to the DCCA appeal, will have no affect on the case itself. And if the Court did not find liability, the Supreme Court ruling would merely be an “advisory opinion:”

” So far as we can discern, this Court has never taken an interlocutory appeal when the lower courts were still actively considering liability (and possible additional remedies). . . . [T]he government has offered no good reason why the Court should expend its scarce resources to decide a case in this posture.”

–There is no practical split in the Circuit Courts, just an academic, theoretical one with “no practical significance,” and therefore this kind of split does not provide the basis for a review:

Although there is a theoretical disagreement between the D.C. and Second and Fifth Circuits as to whether there would ever be a civil RICO case in which disgorgement could be ordered, there is agreement among the circuits that no such relief would be available in a case like this one. This case accordingly presents at most an academic conflict that does not warrant review. . . . In short, the “conflict” alleged by the government is at most academic, with no practical significance here. Under either the D.C. Circuit’s or the Second Circuit’s construction of 1964(a), the government would not be entitled to the disgorgement remedy it seeks. Because adoption of either circuit court’s interpretation of the statute would not have resulted in a different outcome, there is no conflict of the kind that provides a basis for this Court’s review.

DEUS EX SENATUM

Finally, after presenting this vision of an unnecessary but incredibly massive lawsuit, an industry in chaos, a Supreme Court docket under attack from “confusion and unnecessary piecemeal judicial review,” the Defense drops its hammer: an argument that seems outside of the legal parameters, but that may ring resoundingly for this non-activist Court:

IV. The Government’s Policy Arguments Are Better Directed At Congress

The government makes the unsupported policy argument that disgorgement must be allowed because it is a “critically important remedial tool.” . . . If the government truly believes it needs more expansive remedies under RICO, it ought to direct its concerns to Congress, not this Court. As the Court is well aware, the thrust of judicial opinion is not that RICO has been “severely constrain[ed]” (Pet. 22), but that, having “evolved into something quite different from the original conception of the enactors,” it threatens to inflict excessive liability on legitimate businesses. This “unbridled” expansion of the statute is exemplified by the instant case, where the government, for the first time, has used RICO to bring a federal product liability action for fraud against virtually an entire industry engaged in a lawful business important to the Nation’s economic well-being. . . . It is for Congress to weigh the policy implications of any extension of RICO remedies to the product liability field where carefully fashioned common law and statutory remedies already apply.

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Quotes from Defense Brief in Opposition to a Writ of Certiorari (9/16/05)

This interlocutory case does not satisfy the Court’s well-established standards for review. . . .

Any difference in approach among the courts of appeals on this issue is at most academic and has no bearing on the outcome here. Every appellate court to consider the issue has rejected the government’s sweeping interpretation of 1964(a). And no circuit has ever upheld an award of disgorgement under civil RICO. Indeed, even the Second Circuit, which has recognized the theoretical possibility of disgorgement under 1964(a) in limited circumstances, would not allow the disgorgement remedy the government seeks here. Nor is the issue a sufficiently recurring one to justify review. In the almost 35 years since the statute was enacted, the government has sought to use this so-called “critically important remedial tool” (Pet. 20) in only a handful of RICO cases-and never in one even remotely resembling this dressed-up product liability dispute.

The government’s petition asks this Court to rule on one possible remedy while the district court is still deciding liability (and whether to award other potential remedies). If the district court finds no liability, any review by this Court would result in an advisory opinion. . . . .

[T]he petition should be denied because the D.C. Circuit faithfully implemented this Court’s precedent governing the scope of statutory remedial provisions. The Court should also deny review because of the interlocutory posture of this case. The most efficient and orderly manner of proceeding is to permit the district court to issue its final judgment and then allow for appellate review in the ordinary course. . . .

If the government’s sweeping disgorgement theory were sustained, similar demands for the profits of manufacturers could be made in other product liability contexts where industry critics contend that manufacturers failed to give adequate warnings to consumers or disregarded evolving scientific evidence. It is for Congress to weigh the policy implications of any extension of RICO remedies to the product liability field where carefully fashioned common law and statutory remedies already apply.

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Full text follows of Defense Brief in Opposition to a Writ of Certiorari (9/16/05)

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No. 05-92

IN THE Supreme (Court of the United States

UNITED STATES OF AMERICA,

Petitioner,

V.

PHILIP MORRIS USA INC., ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit

BRIEF IN OPPOSITION

Tom R. GEREMIA

JONES DAY

222 East 41St Street

New York, NY 10017

(212) 326-3939

MICHAEL A. CARVIN

(Counsel of Record)

JONES DAY

51 Louisiana Avenue, NW.

Washington, D.C. 20001-2113

(202) 879-3939

Attorneys for Respondent R.J. Reynolds Tobacco Company

(Additional Counsel listed on inside cover)

WILSON-EPES PRINTING CO, INC. - (202) 789-0096 - WASHINGTON. D. C. 20001

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Murray R R. Gamick

ARNOLD & PORTER LLP

555 12th Street, N.W,

Washington, DC. 20004

-Attorneys for Respondents - - Philip Morris USA Inc. and Altria Group Inc.

J. William Newbold

Michael B. Minton

Richard P. Cassetta

THOMPSON COBURN LLP

One US Bank Plaza, Suite 3500 -

St. Louis, Missouri 63101-1693

Attorneys for Respondent Lorillard Tobacco Company

Bruce 0. Sheffler

CHADBOURNE & PARKE LLP -

30 Rockefeller Plaza, 34th Floor

New York, New York 10112-0219

Attorneys for Respondent British American Tobacco (Investments) - - Limited (f/k/a British-American Tobacco Company Limited) -

James A. Gould -

COVTNGTON & BURLING -

1201 Pennsylvania Avenue, N.W. -

Washington, D.C. 20004-2401 1

Attorneys for Respondent The Tobacco Institute, Inc.

David M. Bernick

Stephen R. Patton

KIRKLAND & ELLIS LLP

200 East Randolph Drive, Suite 5900

Chicago, Illinois 60601

- Attorneys for Respondent

Brown & Williamson Tobacco Corporation (individually, and as successor by merger to, The American Tobacco Company)

Steven Klugman

Steven S. Michaels

DEBEVOISE & PLIMPTON

LLP

919 Third Avenue

New York. New York 10022

Attorneys for Respondent The Council for Tobacco Research-U.S.A., Inc.

Aaron H. Marks

Leonard A Feiwus

KASOWITZ BENSON TORRES & FRIEDMAN LLP

1633 Broadway

New York, New York 10019

Attorneys for Respondent Liggett Group, Inc.

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CORPORATE DISCLOSURE STATEMENTS

Respondents make the following corporate disclosure statements pursuant to Supreme Court Rule 29.6:

Respondent Philip Morris USA Inc. is a wholly owned subsidiary of Altria Group, Inc. Altria Group, Inc. is the only publicly held company that owns 10% or more of Philip Morris USA Inc.’s stock.

Respondent Altria Group, Inc. has no parent company. No publicly held company owns 10% or more of Altria Group, Inc.’s stock.

R.J. Reynolds Tobacco Company, a North Carolina corporation, is the successor by merger to respondent R.J. Reynolds Tobacco Company, a New Jersey corporation. The existing R.J. Reynolds Tobacco Company is a wholly owned, indirect subsidiary of Reynolds American Inc., which is a Delaware corporation. Respondent Brown & Williamson Tobacco Corporation holds more than 10% of the stock of Reynolds American Inc.

Respondent Brown & Williamson Holdings, Inc. is a Delaware corporation. Brown & Williamson is wholly owned by BATUS Tobacco Services, LLC, which is a nonpublic holding company. Brown & Williamson’s ultimate parent is British American Tobacco, p.l.c., which is a publicly held United Kingdom corporation. All other indirect parent companies of Brown & Williamson are nonpublic companies.

Respondent Lorillard Tobacco Company is wholly owned by Lorillard Inc. Lorillard Inc. is wholly owned by Loews Corporation. Shares of Loews Corporation are publicly traded. Loews Corporation has also issued Carolina Group stock, a publicly traded tracking stock.

Respondent Liggett Group Inc. is a wholly owned, indirect subsidiary of Vector Group Ltd. Vector Group Ltd.’s stock is publicly traded on the New York Stock Exchange.

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ii

The following parent companies and publicly held companies have a 10% or greater ownership interest in respondent British American Tobacco (Investments) Limited: British American Tobacco p.l.c., British American Tobacco (1998) Limited, and British-American Tobacco (Holdings) Limited.

Respondent The Council for Tobacco Research-U.S.A., Inc. (”CTR”) had no parent companies, subsidiaries, or affiliates which have outstanding securities in the hands of the public. CTR was a not-for-profit New York corporation which has been dissolved, and which is in the process’ of winding up its affairs, pursuant to a plan of voluntary dissolution approved by the Supreme Court of the State of New York on November 6, 1998.

Respondent The Tobacco Institute, Inc. is a dissolved New York not-for-profit corporation. It had no shareholders, subsidiaries, or parent corporations.

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iii

TABLE OF CONTENTS

Page

CORPORATE DISCLOSURE STATEMENTS

TABLE OF AUTHORITIES iv

INTRODUCTION

STATEMENT OF THE CASE 3

A. The Government’s Claim 3

B. Pretrial Proceedings 4

C. The D.C. Circuit’s Decision 5

D. The Trial 7

REASONS FOR DENYING THE PETITION 9

I. The Government’s Interlocutory Petition Is Premature 9

II. The D.C. Circuit’s Decision Is Entirely Consistent With This Court’s Precedents 15

III. Any Circuit Conflict Is Academic And Not Implicated By This Case 24

1V. The Government’s Policy Arguments Are Better Directed At Congress 26

CONCLUSION 30

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iv TABLE OF AUTHORITIES Page

Cases

Agency Holding Corp. v. Malley-D uff & Associates, Inc., 483 U.S. 143 (1987) 23

Albemarle Paper Co. v. Moody, 422 U.s. 405 (1975) 20

Bartnicki v. Vopper, 532 U.S. 514 (2001) 12

Beneficial National Bank v. Anderson, 539 U.S. 1 (2003) 12

Brotherhood of Locomotive Firemen & Enginemen v.

Bangor & Aroosrook R.R. Co., 389 U.S. 327 (1967) 10

Bivens v. SL Unknown Named Agents of Federal

Bureau of Narcotics, 403 U.S. 388 (1971) 27

Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691 (2003) 12

Calhoun v. Yamaha Motor Corp., US.A., No. Civ.A.90-4295, 1993 WL 218833 (E.D. Pa. June 21, 1993) 12

Chan v. Korean Air Lines, Ltd., 490 U.S. 122 (1989) 12

Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992) 3

Cooper Industries v. Aviall Services, 125 S. Ct. 577 (2004) 22

Cutter v. Wilkinson, 125 S. Ct. 2113 (2005) 12

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v

TABLE OF AUTHORITIES (cont’d) Page

D.R. Wilder Manufacturing Co. v. Corn Products Refining Co., 236 U.S. 165 (1915) 24

Exxon Mobil Corp. v. Allapattah Services, Inc., 125 S. Ct. 2611 (2005) 19

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) 3,29

Gillespie v. United States Steel Corp., 379 U.S. 148 (1964) 11

Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002) 18

Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) 12

Griggs v. Provident Consumer Discount Co., 459 U.S. 56 (1982) 13

Hamilton-Brown Shoe Co. v. Wolf Brothers & Co., 240U.S. 251 (1916) 10,11

Harris Trust & Savings Bank v. Salomon Smith Barney Inc., 530 U.S. 238 (2000) 12

Holmes v. Securities Investment Protection Corp., 503 U.S. 258 (1992) 24,28

Jett v. Dallas Independent Sch. District, 491 U.S. 701 (1989) 19

Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369 (2004) 12

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vii

TABLE OF AUTHORITIES (cont’d) Page

Northwest Airlines, Inc. v. Transport Workers Union ofAmerica, 451 U.S. 77 (1981) 19

Porter v. Warner Holding Co., 328 U.S. 395 (1946) passim

Richard v. Hoechst Celanese Chemical Group, Inc., 355 F. 3d 345 (5th Cir. 2003), cert. denied, 125 S. Ct. 46 (2004) 25

Rotella v. Wood, 528 U.S. 549 (2000) 23

Russello v. United States, 464 U.S. 16 (1983) 22,

SEC v. Colello, 139 F.3d 674 (9th Cir. 1998) 17

Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) 29

Switchmen’s Union of North America v. NMB, 320 U.S.297(1943) 19

Texas Industries v. Radcliff Materials, Inc., 451 U.S. 630 (1981) 24

Tullv. United States, 481 U.S. 412 (1987) 17

United States v. 92 Buena Vista Avenue, 507 U.S. 111 (1993) 11

United States v. Carson, 52 F.3d 1173 (2d Cir. 1995) passim

United States v. Gilman, 347 U.S. 510 (1954) 22

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viii

TABLE OF AUTHORITIES (cont’d) Page

United States v. Philip Morris Inc., 116 F. Supp. 2d 116 (D,D.C. 2000) 7

United States v. Standard Oil, 332 U.S. 301 (1947) 22

United States v. Turkette, 452 U.S. 576 (1981) 28

United States v. United States Currency in the Amount of $228,536.00, 895 F.2d 908 (2d Cir. 1990) 27

Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199 (1996) 5, 5,12

Statutes

15U.S.C.’4 23

15U.S.C.’25 23

15U.S.C.1331 29

18 U.S.C. 1963(a) 22,28

18U.S.C.1964(a) passim

28 U.S.C. 1292(b) 2, 2,6

42 U.S.C. 1395y(b)(2) 3

42 U.S.C. 2651(a) 3

Other Authorities

RESTATEMENT OF RESTITUTION 1, cmt. a (1937) 17

Robert L. Stem & Eugene Gressman, et al., SUPREME COURT PRACTICE (8th ed. 2002) 10, 10,12

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INTRODUCTION

This interlocutory case does not satisfy the Court’s well-established standards for review. The D.C. Circuit held that both the plain text of 1964(a) and the “comprehensive and reticulated” remedial structure of RICO create “a necessary and inescapable” inference that 1964(a) is not a general grant of equity jurisdiction, but a carefully limited provision that allows only for forward-looking remedies. Pet. App. 2a. This forward-looking provision expressly permits district courts to issue orders to “prevent and restrain” future RICO violations, but does not authorize the “quintessentially backward-looking remedy” of disgorgement of past illgotten gains. Id. at 13a. The lower court’s straightforward construction of the statute follows directly from Meghrig v. KFC Western, Inc., 516 U.S. 479 (1996), and does not conflict with Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960), or Porter v. Warner Holding Co., 328 U.S. 395 (1946).

Any difference in approach among the courts of appeals on this issue is at most academic and has no bearing on the outcome here. Every appellate court to consider the issue has rejected the government’s sweeping interpretation of 1964(a). And no circuit has ever upheld an award of disgorgement under civil RICO. Indeed, even the Second Circuit, which has recognized the theoretical possibility of disgorgement under 1964(a) in limited circumstances, would not allow the disgorgement remedy the government seeks here. Nor is the issue a sufficiently recurring one to justify review. In the almost 35 years since the statute was enacted, the government has sought to use this so-called “critically important remedial tool” (Pet. 20) in only a handful of RICO cases-and never in one even remotely resembling this dressed-up product liability dispute.

The procedural posture of this case also makes review at this time inappropriate. The D.C. Circuit’s ruling is not simply interlocutory, which alone is a sufficient basis to

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deny review. The government’s petition asks this Court to rule on one possible remedy while the district court is still deciding liability (and whether to award other potential remedies). If the district court finds no liability, any review by this Court would result in an advisory opinion. Furthermore, even if liability were assumed, granting review at this stage would be premature because the supposed “critical” importance of a disgorgement remedy in this case cannot be assessed until the courts below resolve whether the other draconian remedies proposed by the government are available, appropriate, and sufficient. If the government is dissatisfied with the outcome of any appeal from the final judgment, it can pursue review in this Court then.

To be sure, the district court granted respondents permission to seek an interlocutory appeal under 28 U.S.C. 1292(b). Interlocutory appeal at that time made sense, however, because, as the district court found, a decision by the court of appeals on disgorgement would “dramatically affect the shape and length of the trial.” Pet. App. 150a. In fact, the D.C. Circuit issued its decision before the district court heard evidence relating to remedies. Thus, interlocutory appeal achieved its purpose: substantial evidence relating to disgorgement was not presented, and the trial was streamlined. Now, however, the trial is over, and the parties will have completed the post-trial briefing before the government’s petition is even circulated to the Court.

Accordingly, adding yet another layer of interlocutory review by this Court would not serve the purpose that prompted review before the D.C. Circuit. Notably, the government has offered no good reason why the Court should expend its scarce resources to decide a case in this posture-or what possible benefit would accrue if the Court abandoned its customary practice of refusing to review interlocutory orders. Nor has the government even attempted to explain how it would be prejudiced in this case if it were required to await an appeal from a final judgment.

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In short, the petition should be denied because the D.C. Circuit faithfully implemented this Court’s precedent governing the scope of statutory remedial provisions. The Court should also deny review because of the interlocutory posture of this case. The most efficient and orderly manner of proceeding is to permit the district court to issue its final judgment and then allow for appellate review in the ordinary course.

STATEMENT OF THE CASE

A. The Government’s Claim

The government brought this case on September 22, 1999, immediately after announcing its decision to conclude a criminal investigation of respondents without bringing any charges. In its complaint, the government sought billions of dollars in damages under the Medical Care Recovery Act, 42 U.S.C. 265 1(a), and the Medicare Secondary Payer statute, 42 U.S.C. 1395y(b)(2), for expenditures it claimed it made for the treatment of smoking-related diseases. On respondents’ motion, the district court dismissed these claims on the ground that the government could not state a claim for damages under those statutes. Pet. App. 79a-128a.

The government’s sole remaining claims are its civil RICO claims. These claims are predicated on the notion that respondents-who account for approximately 85% of all cigarette sales in the United States-are a RICO “enterprise.” The government alleges that, since 1953, much of respondents’ marketing and promotional activities relating to the sale of cigarettes were “predicate acts” of mail and wire fraud-even though many, if not most, of these acts were well known to the government, which has regulated cigarette labeling and advertising for decades. See, e.g., FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 137-38 (2000) (describing legislation addressing “problem of tobacco and health”); Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 542-46 (2001) (same); Czpollone v. Liggett Group, Inc., 505 U.S. 504, 514-15 (1992) (describing

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congressionally prescribed warnings designed to inform consumers of health risks of smoking).

The government’s prayer for relief included a broad range of injunctive relief under 18 U.S.C. 1964(a)–a provision that authorizes courts to order remedies that “prevent and restrain” RICO violations. Although no RICO provision expressly permits the government to seek a monetary remedy in a civil case, the government nonetheless asserted a claim to recover $280 billion under the label of equitable “disgorgement.” The government invoked 1964(a) as its legal authority for this claim.

B. Pretrial Proceedings

Respondents moved under Rule 12(b)(6) to dismiss the government’s disgorgement claim on the ground that this backward-looking monetary remedy does not “prevent and restrain” future RICO violations within the meaning of 1964(a). The district court disagreed, relying on United States v. Carson, 52 F.3d 1173 (2d Cir. 1995). Pet. App. 118a-121a. In Carson, the Second Circuit reversed a disgorgement award because it was not necessary to “prevent and restrain” the defendant. Carson also stated, however, that a truncated form of disgorgement might be allowable if ill-gotten “gains are being used to fund or promote the illegal conduct, or constitute capital available for that purpose.” 52 F.3d at 1182. The district court reasoned that, at the motion to dismiss stage, it could not make the finding suggested by Carson. Pet. App. 120a-121a.

At the close of discovery, respondents moved for summary judgment on the government’s disgorgement claim. Respondents reiterated their contention that disgorgement is not, as a general matter, available under 1964(a). They also argued that disgorgement was not available because the government had not shown that respondtents had any ill-gotten gains that “are being used to fund or promote the illegal conduct, or constitute capital available for that purpose” under Carson. Finally,

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respondents argued that the government failed to limit its disgorgement estimate to profits that were illegally obtained or could be used to promote racketeering.’

The district court denied respondents’ motion. Pet. App. 129a-147a. The court noted that it earlier had rejected respondents’ argument that disgorgement was not an available remedy under 1964(a). Id. at 135a. This time, the district court also rejected the Carson decision, saying that it “does not find persuasive Carson’s rationale for limiting disgorgement under Section 1964(a).” Id. at 145a. The court also rejected respondents’ arguments concerning the deficiencies in the government’s disgorgement model on the ground that they raised triable issues of fact. Id. at 135a147a. The district court certified its interlocutory order for appeal pursuant to 28 U.S.C. 1292(b), and the D.C. Circuit granted respondents’ petition for permission to appeal. Pet. App. 148a-153a, 154a.

C. The D.C. Circuit’s Decision

The D.C. Circuit reversed. It first addressed its jurisdiction under Yamaha Motor Corp., USA. v. Calhoun, 516 U.S. 199, 205 (1996), to decide “whether disgorgement is available at all.” Pet. App. 5a. Reasoning that its jurisdiction encompassed “any issue fairly included within the certified order,” Yamaha, 516 U.S. at 205, the court held that the question whether “disgorgement vel non is an available remedy” is “logically antecedent” to and “logically interwoven” with the more “narrow question of whether the disgorgement [the government] seeks is consistent with the standards of Carson.” Pet. App. 5a. Accordingly, the court ruled that it had jurisdiction to decide the issue. Id. at l2a.2

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1 The amount of disgorgement sought by the government was many times the combined net worths of all respondents.

2 In the D.C. Circuit, the government conceded that the court of appeals had jurisdiction to decide this issue, but argued that the court

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On the merits, the court of appeals held that disgorgement is not available under 1964(a) because the statutory language that confers jurisdiction to “prevent and restrain” RICO violations “indicates that the jurisdiction is limited to forward-looking remedies that are aimed at future violations.” Pet. App. 15a. Disgorgement of past ill-gotten gains does not fit within this express limitation, because it “is a quintessentially backward-looking remedy focused on remedying the effects of past conduct to restore the status quo.” Id. at 15a-16a.

The court of appeals also reasoned that reading a disgorgement remedy into 1964(a) would “thwart Congress’s intent in creating RICO’s elaborate remedial scheme.” Pet. App. 21a. The court stated that “Congress’ care in formulating such a ‘carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Id. at 19a (quoting GreatWest Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002)).

Judge Williams concurred to emphasize problems with the government’s “fallback” position that 1964(a) be interpreted as allowing a truncated form of disgorgement per Carson. Judge Williams reasoned that limiting disgorgement to the “actual assets” unjustly received would lead to “absurd results” because money was fungible and such a limitation “would allow a defendant to escape liability

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should exercise its discretion under 1292(b) and not decide it. See Oral Argument Transcript at 42 (”MR. DREEBEN: Well, I would agree, Judge Sentelle, that the Court should not decide the Carson issue without considering the antecedent question of whether disgorgement is available at all.”); id. at 43 (”[T]he court may choose to exercise jurisdiction . . . .”). The government’s petition here likewise does not challenge the court of appeals’ jurisdiction to determine whether disgorgement is an available remedy under 1964(a).

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by spending ill-gotten gains while husbanding other assets.” Pet. App. 24a. On the other hand, limiting disgorgement to reduce the defendant’s ability to commit future RICO violations would lead to “a virtually metaphysical quest to draw lines based on the likelihood that particular resources will be devoted to crime.” Id. at 25a.

Judge Tatel dissented. He adopted the government’s view that, notwithstanding the “prevent and restrain” limitation in 1964(a), “district courts have authority to order any remedy, including disgorgement, within their equitable powers.” Pet. App. 51 a.

The D.C. Circuit denied the government’s petition for rehearing or rehearing en banc without opinion.

D. The Trial

The nearly nine-month trial in the district court was not stayed pending the appeal to the D.C. Circuit. The trial began September 21, 2004, and concluded June 9, 2005. During 117 trial days, 85 witnesses testified live, and the prior testimony of 162 witnesses was introduced. Over 13,000 exhibits were offered into evidence. The D.C. Circuit’s decision, issued in the middle of trial, made it unnecessary for the district court to hear evidence related to disgorgement.

Much of the mammoth trial focused on as-yet undecided issues concerning the government’s liability case. These issues included whether the government proved the elements of a RICO claim-eg., whether the government has proven an “enterprise” and whether respondents conducted any enterprise” through a “pattern of racketeering activity.” Furthermore, as the district court held and the government concedes, under 1964(a) the government has to prove that there is a “reasonable likelihood” that respondents would continue to violate RICO in the future. United States v. Philip Morris Inc., 116 F. Supp. 2d 116, 148 (D.D.C. 2000). Thus, to obtain any remedy at all, the government must prove that respondents are likely to violate RICO in the

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future, even though they are already subject to a panoply of “permanent injunctive relief’ pursuant to the “landmark” 1998 settlement agreement among respondents and the States. Lorillard Tobacco Co. v. Reilly, 533 U.S. at 5333

Beyond this, a substantial portion of the trial was devoted to the non-disgorgement remedies that the government seeks. In sharp contrast to the Petition’s depiction of the opinion below as rendering civil RICO toothless, the government continues to seek billions of dollars in “equitable” relief under 1964(a), none of which has been expressly ruled on yet by the district court or the D.C. Circuit. For example, the government seeks at least $10 billion for a “national smoking cessation program” and billions of dollars more in other remedial measures and penalties if respondents do not meet specified annual “reductions in Youth smoking rates.” Docket No. 5531, Government’s Proposed Final Order IVA-D.

The government further seeks a vast array of injunctive and other relief. In addition to a general injunction against committing RICO violations, the government has proposed specific injunctions related to respondents’ manufacturing and marketing of cigarettes. See id. V. The government has also made a detailed proposal for court-appointed monitors, and their staff, to be paid for by respondents. See

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3 Under the 1998 settlement agreement, respondents are already barred from any continuation of the core violations alleged by the government here. For example, they are already enjoined from “target[ing]” youth in “advertising, promotion or marketing,” see Joint Defs.’ Ex. 045158, at 18-19; from making “any material misrepresentation of fact regarding the health consequences” of smoking, see id. at 36; from entering into any agreement with each other that would “limit[} or suppress[} research” on smoking and health or “into the marketing and development of new products,” see id. at 35-36; and from a wide array of advertising and marketing practices, see id. at 18-36. Moreover, the trial record showed that the States and Territories actively monitor and enforce respondents’ compliance with these injunctions.

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id. VI. These monitors would have the authority to “seek sanctions” with “no limit” against respondents for violating any provision of the government’s proposed final judgment. Id. VI.C(1)(m). They would also have “complete and unfettered access to” respondents’ internal documents, subpoena power and the power to compel testimony, and access to “any meeting of senior management or of the board of directors” of the respondents. Id. VI.C(1)(d), (e), (g). Each tobacco manufacturer would also have to appoint a “Compliance Officer” to “supervise that Defendant’s activities to ensure that the Defendant complies with” all of the government’s proposed injunctions and other requested relief. Id. VI.J. The district court has also allowed private parties to intervene for the purpose of seeking more drastic relief than that sought by the government.

The district court has not ruled on any of the remedies sought by the government or intervenors or determined whether any combination of the proposed remedies would suffice to “prevent and restrain” future RICO violations. Nor has it ruled on the antecedent question of whether respondents are liable for any RICO violations. By the end of September, the parties will have submitted a total of nearly 6,000 pages of proposed findings of fact and post-trial briefing to the district court on all of the liability and remedies issues yet to be decided in this case.

REASONS FOR DENYING THE PETITION

I. The Government’s Interlocutory Petition Is Premature

The issue presented in the government’s petition is not certworthy at any juncture, but review is particularly inappropriate at this interlocutory stage of the proceedings. The Acting Solicitor General asks this Court to decide the theoretical availability of one potential remedydisgorgement.-before the district court has decided liability or whether any of the other proposed drastic remedies would be appropriate and sufficient. So far as we can discern, this

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Court has never taken an interlocutory appeal when the lower courts were still actively considering liability (and possible additional remedies).

The fact that the D.C. Circuit’s decision is interlocutory weighs heavily against granting certiorari. 4 The government itself has repeatedly, and successfully, argued that the interlocutory nature of a case is “alone” a sufficient ground for denying certiorari .5 As the government has explained, the rule disfavoring interlocutory review “enables the Court to examine cases on a full and concrete record, prevents unnecessary delays in the trial, protects the Court from deciding issues unnecessarily, and allows the Court to consider all of the issues presented at one time.” U.S. Opp. at 17, Moussaoui v. United States, 125 S. Ct. 1670 (2005) (denying petition). None of the “extraordinary” circumstances warranting interlocutory review is present here. Hamilton-Brown Shoe Co. v. Wolf Brothers & Co.,

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4 Hamilton-Brown Shoe Co. v. Wolf Brothers & Co., 240 U.s. 251, 258 (1916); see also Bhd. of Locomotive Firemen & Enginemen v. Bangor & Aroostook R.R. Co., 389 U.S. 327, 328 (1967) (”[B]ecause the Court of Appeals remanded the case, it is not yet ripe for review by this Court. The petition for a writ of certiorari is denied.”); Robert L. Stern & Eugene Gressman, et a!., SUPREME COURT PRACTICE 4.19, at 260 (8th ed. 2002) (”[I]n the absence of some.. . unusual factor, the interlocutory nature of a lower court judgment will generally result in a denial of certiorari.”).

5 See e.g., Brief for the United States in Opposition (”U.S. Opp.”), 2005 WL 123450, Evans v. Stephens, 125 S. Ct. 1640 (2005) (denying petition) (”The interlocutory status of this case is ‘of itself alone’ a ’sufficient ground for the denial of the [writ].”‘) (quoting HamiltonBrown Shoe, 240 U.S. at 258); U.S. Opp., 2005 WL 45652, at *11-*12, City of New York v. United States, 125 S. Ct. 1295 (2005) (denying petition) (same); U.S. Opp., 2004 WL 530963, at *8, Christian p. United States, 541 U.S. 972 (2004) (denying petition) (”This Court’s customary practice is to ‘await final judgment in the lower court before exercising [its) certiorari jurisdiction.”) (quoting Va. Military Inst. v. United States, 508 U.S. 946, 946 (1993) (Scalia, J.)).

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240 U.S. 251, 258 (1916). Review at this juncture would not, for example, relieve any party of the burden caused by a preliminary injunction or avoid the potential burden of a future trial that conflicts with a defendant’s immunity. See, e.g., Mazurek v. Armstrong, 520 U.S. 968, 975-76 (1997); Gillespie v. United States Steel Corp., 379 U.S. 148, 153-54 (1964). The government offers no explanation why the usual rule against interlocutory grants of certiorari should not apply here.

The reasons for interlocutory review by the D.C. Circuit no longer apply. The district court granted respondents permission to seek interlocutory appeal because a ruling on disgorgement would “dramatically affect the shape and length of the trial.” Pet. App. 150a. The trial is now over, however, and the entire case is pending for decision before the district court. Interlocutory review by this Court would therefore result in none of the practical benefits provided by the D.C. Circuit’s earlier review.

On the other hand, interlocutory review would raise all of the problems that this Court has repeatedly recognized. The remedial issue on which the government seeks review may very well be rendered moot because the district court may find that respondents are not liable under RICO. The district court, for example, may well rule that respondents did not form an “enterprise,” did not conduct the “enterprise” through a “pattern of racketeering activity,” or are not reasonably likely to violate RICO in the future (especially in light of the 1998 settlement with States, see supra note 3). Alternatively, the district court may find that respondents are liable, but impose other equitable remedies that, in the district court’s view, will suffice to ensure that the companies are unable to violate RICO in the future. Thus, the potential for an unnecessary and purely advisory opinion in this case (or dismissal of certiorari to avoid that result) is

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far higher than in other cases where the Court has granted interlocutory review. 6

Apparently recognizing this fundamental deficiency, the government seeks to reassure the Court that the district court will find liability. Pet. 21, 26. The Acting Solicitor General goes so far as to suggest that the district court’s failure to indicate whether the government has met its burden of proof

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6 The cases cited by the government where interlocutory review was allowed are plainly distinguishable. First, in several of these cases, “the interlocutory orders certified to the courts of appeals had been converted into final orders of dismissal or summary judgment by the courts of appeals,” thus presenting this Court with a final judgment on one or more claims. Stern & Gressman, SUPREME COURT PRACTICE 4.19, at 261; see Cutter v. Wilkinson, 125 S. Ct, 2113, 2117 (2005); Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369, 372-74 (2004); Bartnicki v. Vopper, 532 U.S. 514, 522 (2001); Harris Trust & Sav. Bank v. Salomon Smith Barney Inc., 530 U.S. 238, 243-44 (2000). Second, in other cases, the Court granted interlocutory review to consider whether a federal court had jurisdiction or authority over the action. See Beneficial Nat’! Bank v. Anderson, 539 U.S. 1, 4 (2003); Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691, 693-94 (2003); Green Tree Fin. Corp.Alabama v. Randolph, 531 U.S. 79 (2000). The Court’s review in these cases ensured that a party was not forced to litigate in an improper forum–a harm that could not be remedied by later review. Third, the government cites cases where it says the Court granted certiorari to “addres[s} remedial issues in advance of a liability determination.” Pet. 26. But in Chan v. Korean Air Lines, Ltd., 490 U.S. 122 (1989), the defendant was “subjec[t] . . . to virtual strict liability,” with only the “amount of damages” left to be determined. In re Korean Air Lines Disaster of Sept. 1, 1983, 664 F. Supp. 1463, 1477 (D.D.C. 1985). And in Norfolk Southern Railway Co. v. Kirby, 125 S. Ct. 385 (2004), and Yamaha Motor Corp., U.S.A. V. Calhoun, 516 U.S. 199 (1996), the district courts stayed proceedings pending appeal, so that there was no risk, as there is here, that the remedial question would be mooted by a liability determination. See Calhoun v. Yamaha Motor Corp., U.S.A., No. Civ.A.90-4295, 1993 WL 218833, at *2 (E.D. Pa. June 21, 1993); Norfolk S. Ry. Co. v. Kirby, No.02-1228,2004 WL 909899, at *13 (Nov. 9, 2004). Likewise, in United States v. 92 Buena Vista Avenue, 507 U.S. 111 (1993), there were no proceedings on remand that could have mooted the case while this Court was considering it.

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somehow means that the court will likely rule in favor of the government. Id. at 26. That is simply nonsense. The district court’s failure to give any indication of its leanings suggests only that it recognizes the impropriety of prejudging cases prior to the full presentation of evidence and argument. It is obviously not a reason for this Court to assume liability.

Moreover, even if the government should win at the district court level, granting review now would likely lead to confusion and unnecessary piecemeal judicial review. First, as even the government acknowledges (Pet. 26 n. 10), it is most likely that the district court’s decision will be before the D.C. Circuit at the same time the disgorgement issue would be before this Court, leading to the inefficient if not unprecedented prospect of this Court and the D.C. Circuit considering the same case at the same time. Second, even aside from this problem, granting review now would not mean that the district court would address disgorgement before the plenary appeal. Instead, if the result of this Court’s ruling were a remand to the district court, that would likely occur at the same time the case is before the D.C. Circuit. See Pet. 26 n. 10. The district court would have little reason to resolve the fact-specific question of whether, and how much, disgorgement is appropriate while the liability and other remedial issues are on appeal-indeed, it may not even have jurisdiction to do so. See Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982). Thus, there is no reason to think that the disgorgement question will be resolved more quickly if the petition is granted than if it is addressed by this Court after an appeal from a final judgment. In short, interlocutory review would likely not even produce the feeble “benefit” of expedited resolution that the government proffers as the sole justification for immediate review. 7

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7 Nor does the possibility that the district court might stay proceedings solve the problem. First, the district court has never

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But even if some minor delay in resolving the disgorgement question did result from denial of review at this time, this would not cause any prejudice to the government or the public interest. Under the D.C. Circuit’s ruling, the district court retains full power to issue any appropriate injunctive relief necessary to prevent and restrain future RICO violations. The disgorgement remedy sought by the government, however, is purely a monetary transfer from the respondents to the federal treasury. So there is no cognizable prejudice to the government or the public caused by whatever minor delay might be entailed in resolving the disgorgement issue after entry of final judgment and a plenary appeal.

Granting review at this stage also would be premature because, even if the district court finds liability, the need for disgorgement as a remedy in this case cannot be assessed until the courts below resolve whether the other drastic, multi-billion-dollar remedies proposed by the government are permissible and sufficient to preclude future RICO violations. The Court should give the lower courts an opportunity to determine what, if any, remedies should be imposed before considering the availability of, and need for, a disgorgement remedy that the government has only rarely

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indicated that it would stay proceedings pending interlocutory review and, indeed, the court refused to stay the trial pending the interlocutory appeal to the D.C. Circuit. See Dist. Ct. Order #640. Second, a stay at this juncture would likely only further delay the resolution of this action-and thus produce the exact opposite result that the government ostensibly seeks with this petition. Indeed, a stay until this Court renders a decision in Spring 2006 would delay the district court’s decision to approximately the same time that an appeal would finally be resolved by the D.C. Circuit in the absence of a stay. See Pet. 26 n.10. (And, of course, a stay below would be affirmatively counterproductive if respondents were to prevail on the merits.)

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sought-and never in a case so far removed from the heartland of RICO.

In short, if this Court were to conclude that the disgorgement issue is otherwise worthy of review, it will have the issue before it in relatively short order on appeal from any final judgment. The case would then be in a posture in which this Court (1) would be assured that the issue would not be mooted in the middle of its deliberations by a liability finding in respondents’ favor, (2) could take up the issue without the uncertainty and awkwardness of having both it and the D.C. Circuit considering the same case at the same time, and (3) would have the benefit of a full record as to liability and other remedies. Nothing is lost by waiting until the case has ripened to a final judgment and nothing is gained by granting interlocutory review now.

II. The D.C. Circuit’s Decision Is Entirely Consistent With This Court’s Precedents

The decision below creates no conflict with the decisions of this Court. In holding that 1964(a) does not authorize a disgorgement remedy, the D.C. Circuit based its decision on that section’s specific “prevent and restrain” limitation on remedial authority, along with the overall structure of RICO’s comprehensive remedial scheme. The court concluded that these together create a “necessary and inescapable inference” that disgorgement is unavailable. Pet. App. 13a-21a.

Relying on Porter and Mitchell, the government argues that a sweeping power to disgorge should be inferred because federal courts purportedly possess “the full range of equitable powers” unless Congress explicitly says otherwise. Pet. 10. The government misreads Porter and Mitchell, both of which involved different statutory language and a fundamentally different remedial scheme, and each of which reached self-evidently sensible results that cannot be extrapolated to the vastly different RICO context.

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Porter and Mitchell simply stand for the proposition that, ” [u]nless otherwise provided by statute, all the inherent equitable powers of the District Court are available.” Porter, 328 U.S. at 398 (emphasis added). Where, as here, the statute by its explicit terms provides specific, limited remedies and has also omitted a remedy from its list, the statute has “otherwise provided” and has created the “necessary and inescapable inference, restrict[ing] the court’s jurisdiction in equity.” Id. In such circumstances, Congress has itself specified the remedies available to enforce the statute and therefore plainly has not “entrust[ed] to an equity court the enforcement of prohibitions.” Mitchell, 361 U.S. at 291-92.

Equally important, the government’s strained interpretation both renders 1964(a) wholly superfluous and conflicts with the well-established presumption against inferring a remedy that is not specified in a statute containing a comprehensive remedial scheme.

1. Section 1964(a) expressly limits the scope of a district court’s “jurisdiction” to only those “appropriate orders” that “prevent and restrain violations of section 1962 of this chapter.” 18 U.S.C. 1964(a). The statute goes on to provide an illustrative list of three types of forward-looking remedies, including divestiture, that meet this “prevent and restrain” limitation. 8

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8 As the D.C. Circuit explained, although the statute uses the words “including, but not limited to” in introducing a non-exhaustive list of examples, under the canons of noscitur a sociis and ejusdem generis, any other non-listed remedy must be similar in nature to those enumerated remedies. Pet. App. 19a. “The remedies explicitly granted in 1964(a) are all directed toward future conduct and separating the criminal from the RICO enterprise to prevent future violations.” Id. Accordingly, because disgorgement is aimed at separating the criminal from his prior ill-gotten gains, it “may not be properly inferred from 1964(a).” id.

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Since it is impossible to prevent and restrain that which has already occurred, Section 1964(a)’s “jurisdiction is limited to forward-looking remedies that are aimed at future violations.” Pet. App. I5a. As the D.C. Circuit correctly held, disgorgement is an inherently backward-looking remedy. Id. at 13a. The focus and purpose of disgorgement is not to prevent or restrain future conduct, but to undo the effects of past misconduct by restoring the status quo ante. Tull v. United Stales, 481 U.S. 412, 424 (1987) (disgorgement is “a remedy only for restitution.., limited to restoring the status quo”) (emphasis added; internal quotation marks omitted).9 Disgorgement is awarded wholly without regard to whether a defendant will act unlawfully in the future. Pet. App. 17a; SEC v. Colello, 139 F.3d 674, 679 (9th Cir. 1998) (”To order disgorgement, the district court need not have found that {the defendant] was likely to violate securities laws in the future.”). It is neither measured by, nor directed toward, future conduct. Pet. App. 17a.

The government does not dispute this. Rather, it argues that, notwithstanding 1964(a), RICO vests courts with the same power as if the statute had expressly authorized the “full range of equitable” remedies, including those, like disgorgement, that do not prevent or restrain. Pet. 10. The government’s position therefore renders the words “prevent and restrain” meaningless: district courts would enjoy precisely the same remedial power if those words were eliminated from the statute. As the D.C. Circuit explained, the government’s position “nullifies the plain meaning of the terms and violates [the] canon of statutory construction that we should strive to give meaning to every word.” Pet. App. 16a. Statutory language limiting available remedies “must

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9 See also RESTATEMENT OF RESTITUTION 1, cmt. a (1937) (”A person obtains restitution when he is restored to the position he formerly occupied either by the return of something which he formerly had or by the receipt of its equivalent in money.”).

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mean something” and may not be rendered “superfluous.” Mertens v. Hewitt Assocs., 508 U.S. 248, 258 n.8 (1993) (emphasis in original); see also Great-West Life, 534 U.S. at 209-10.

Indeed, under the government’s interpretation, the entirety of 1964(a), not just its “prevent and restrain” language, would be meaningless. The next subsection, 1964(b), authorizes the Attorney General to bring a civil RICO action. Under the government’s interpretation of Porter, this provision would impliedly authorize the government to seek the full panoply of equitable remedies. The government’s argument that 1964(a) does the same thing–instead of serving as a limit on equitable remedies–thus assigns no meaning at all to that subsection and renders it entirely superfluous. That simply cannot be. The only possible interpretation that makes sense of the entirety of 1964 is that subsection (a) constrains equitable remedies, limiting them to forward-looking remedies like those expressly mentioned in that provision.

2. The government’s position is also contrary to the “elemental canon of statutory construction” that, “where a statute expressly provides a particular remedy or remedies,” courts should not order additional, unspecified remedies against the wrongdoer-equitable or otherwise. Meghrig, 516 U.S. at 488 (quoting Middlesex County Sewerage Auth. v. Nat ‘l Sea Clammers Ass’n, 453 U.S. 1, 14-15 (1981)). To the contrary, “Congress’ care in formulating such a ‘carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Pet. App. 20a (quoting Great-West Life, 534 U.S. at 209; emphasis in original).10 Indeed, since, as this

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10 See also Middlesex County, 453 U.S. at 15 (”In the absence of strong indicia of a contrary congressional intent, we are compelled to conclude that Congress provided precisely the remedies it considered

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Court has “said many times,” federal courts “possess only that power authorized by Constitution and statute,” the limited statutory authorization to prevent and restrain may “not . . . be expanded by judicial decree” to encompass disgorgement. Exxon Mobil Corp. v. Allapattah Servs., Inc., 125 S. Ct. 2611, 2616-17 (2005) (internal quotation marks omitted); Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

Thus, “whatever” Porter and Mitchell may say about “the judicial power to imply or create remedies, it has long been the law that such power should not be exercised in the face of an express decision by Congress concerning the scope of remedies available under a particular statute.” Jeti v. Dallas Indep. Sch. Dist., 491 U.S. 701, 732 (1989). While the government is correct that Porter “stated a rule of general applicability,” that rule plainly does not permit the judiciary to add drastic new equitable remedies to a comprehensive statutory scheme where Congress has determined the appropriate set of remedies. Pet. 12.

The issue in Porter was whether the Emergency Price Control Act of 1942 authorized courts to compel disgorgement of excess rental charges imposed in violation of the statute. Unlike 1964(a), the statutory language in Porter authorized courts to grant “a permanent or temporary injunction, restraining order, or other order,” against a person who “has engaged” in a statutory violation. 328 U.S. at 397 (emphases added). Authorizing an “other order,” in

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appropriate.”); Northwest Airlines, Inc. v. Transp. Workers Union of Am., 451 U.S. 77, 93-94 (1981) (”The comprehensive character of the remedial scheme expressly fashioned by Congress strongly evidences an intent not to authorize additional remedies.”); Nat’! R.R. Passenger Corp. v. Nat’l Ass’n of R. R. Passengers, 414 U.S. 453, 458 (1974) (remedies limited where Congress “expressly provid[es] a particular remedy or remedies”); Switchmen’s Union of N. Am. v. NMB, 320 U.S. 297, 301 (1943) (”[T]he specification of one remedy normally excludes another.”).

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additionto prospective injunctions, for prior violations plainly authorizes retrospective equitable remedies such as restitution. In Mitchell, the Court addressed the question whether reimbursement of lost wages for wrongful discharge was available under the Fair Labor Standards Act (FLSA). Mitchell inferred a remedy for back pay “in the face of a silent statute,” where Congress had not delineated the scope of this remedy. Albemarle Paper Co. v. Moody, 422 U.S. 405, 416 (1975) (emphasis added). Indeed, the FLSA was not only silent on back pay; it contained a strong presumption that a remedy for reimbursement of lost wages for wrongful discharge was available.” Thus, Porter did not infer the availability of a remedy outside the scope of a narrow jurisdictional grant and Mitchell did not interpret a comprehensive statutory scheme that dealt with the remedy at issue.

3. Any ambiguity on this point is eliminated by this Court’s later ruling in Meghrig, in which the Court unanimously rejected precisely the interpretation of Porter that the government advances again here. There, the government argued that “equitable restitution” for clean-up costs was authorized because “district courts retain inherent authority to award any equitable remedy.” 516 U.S. at 487.

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11 Prior to Mitchell, Congress had amended the pertinent FLSA remedial provision in the wake of two appellate decisions holding that courts had the power both to award reimbursement of unpaid overtime wages and to award back pay for unlawful discharges in actions brought by the Secretary of Labor. See Mitchell, 361 U.S. at 294. The amended provision took away the power to award unpaid overtime wages, but did not take away a monetary remedy for lost wages caused by an unlawful discharge. See id. at 289. The differential treatment of the Secretary’s power with respect to overtime wages and back pay for wrongful discharge created a strong negative pregnant that the latter remedy remained available. The Court therefore concluded that Congress intended the FLSA’s remedial provision to “empower[] a District Court to order reimbursement for loss of wages caused by an unlawful discharge or other discrimination.” Id. at 289, 296.

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This Court rejected that argument, ruling that the grant of authority to “restrain” violations of the Resource Conversation and Recovery Act (RCRA) did not encompass “equitable restitution,” but only a “prohibitory injunction.” Id. at 484. The Court also found that the remedy of restitution was inconsistent with the “limited remedies described.” Id. at 487. Under the “elemental canon of statutory construction,” it “cannot be assumed that Congress intended to authorize by implication additional judicial remedies” outside the scope of a statutory grant of authority. Id. at 488.12 Consequently, Meghrig explicitly rejects both the government’s major premise (that Porter requires reading equitable powers into a comprehensive statutory scheme) and its minor premise (that “restrain” connotes “a broad grant of equitable jurisdiction,” including “restitution”). Pet. 9.

In response to Meghrig, the government asserts that lawsuits implicating the “public interest”-like Porter and this case-justify broader “equitable powers” than those permissible in a “mere private controversy,” like that supposedly at issue in Meghrig. Pet. 17. But nothing in Meghrig (or elsewhere) even remotely suggests that the rules governing the interpretation of the statutory term “restrain” somehow differ depending on whether the lawsuit implicates the “public interest” or whether the plaintiff is a “citizen” or the government. These considerations are for Congress to weigh. Moreover, whether a particular remedy “restrains” violations depends on what the remedy does, not who seeks it. Indeed, if anything, the Court is more reluctant to infer a monetary remedy for the federal treasury than it is when the

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12 Indeed, the statute in Meghrig was far more susceptible to inferring equitable restitution than RICO is because, unlike 1964(a), RCRA broadly authorizes courts to order polluters “to take such other action as may be necessary” and contained an express provision “preserving remedies under statutory and common law.” Id. at 484, 487 (emphasis added).

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actual victims of a defendant’s wrongdoing seek compensation for that loss. See United States v. Standard Oil, 332 U.S. 301, 314-15 (1947); United States v. Gilman, 347 U.S. 510, 512-13 (1954). (In both Porter and Mitchell the disgorged sums would have been paid to the victims of the defendants’ infractions.) In any event, the environmental statute and lawsuit in Meghrig directly implicated the “public interest” in eliminating toxic waste, and there is no hint in Meghrig, or any other case, that these important environmental statutes or suits somehow implicate only “private” interests. Thus, the D.C. Circuit’s decision” is entirely consistent with both Porter and Mitchell and correctly applies this Court’s holding in Meghrig.

4. The D.C. Circuit properly rejected the government’s interpretation of 1964(a) for additional reasons.

First, such a construction of the statute not only would supplement a comprehensive and integrated remedial scheme, but would (unlike in Porter and Mitchell) ” subsumeother remedies” that are set forth explicitly. Nat ‘1 R.R. Passenger Corp. v. Nat’! Assn. of R.R. Passengers, 414 U.S. 453, 458 (1974) (emphasis added). Congress authorized the government to obtain a defendant’s ill-gotten gains only under the tightly controlled conditions specified in 1963(a)’s criminal forfeiture provision-i.e., when the government proves a criminal violation and complies with such procedural protections as a heightened burden of proof, notice requirements, and a five-year statute of limitations. The government’s reading of 1964(a) would nullify these important procedural protections. As this Court recently noted in rejecting a similar effort to inject the equitable remedy of contribution into a remedial scheme that provided for that remedy only in a specific circumstance, “[t]here is no reason why Congress would bother to specify conditions under which a person may bring a contribution claim [] and at the same time allow contribution actions absent those conditions.” Cooper Indus. v. Aviall Servs., 125 S. Ct. 577, 583 (2004); see also Russello v. United States, 464 U.S. 16,

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23 (1983) (”[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (internal quotation marks omitted). Indeed, under the government’s logic, it is in a better position to claim respondents’ allegedly illegal proceeds because it determined that no criminal charges were justified and, instead, commenced this civil action. See p. 3, supra.

Second, the decision below accords with the settled principle that the interpretation of RICO should be guided by the interpretation of the antitrust statutes, which also provide the district court with jurisdiction to “prevent and restrain” violations. 13 In the more than 90 years that the Sherman Act and the Clayton Act have been on the books, no court has ever interpreted either statute as permitting civil disgorgement. See, e.g., In re Multidistrict Vehicle Air Pollution, 538 F.2d 231, 234 (9th Cir. 1976). Indeed, the government itself has made clear that the “prevent and restrain” limitation in the antitrust laws precludes disgorgement. See 67 Fed. Reg. 12090, 12135 (Mar. 18, 2002) (explaining the government’s decision not to seek disgorgement in United States v, Microsoft because “[this is a government civil action for injunctive relief, and monetary damages are not available in such actions”).

More generally, it has long been established that the antitrust laws’ express remedies cannot be supplemented by

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13 See 15 U.S.C. 4 (providing district courts “with jurisdiction to prevent and restrain” violations); 15 U.S.C. 25 (”The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of this Act.”). As this Court has repeatedly noted, “[t]he use of an antitrust model for the development of remedies against organized crime was unquestionably at work when Congress later considered the bill that eventually became RICO.” Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 151-52 (1987); see also Rotella v. Wood, 528 U.S. 549, 557 (2000).

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implied equitable remedies. See Texas Indus. v. Radcliff Materials, Inc., 451 U.S. 630 (1981) (courts may not infer equitable remedy of contribution into antitrust laws); see also D.R. Wilder Mfg. Co. v. Corn Prods. Ref. Co., 236 U.S. 165, 174 (1915) (no inherent authority to award equitable remedies under antitrust laws). Consequently, as the Acting Solicitor General recently argued, it is wrong to assess the remedies available under 1964(a) by “relying on courts’ ‘inherent powers” to issue equitable relief. Br. of U.S. at 24 n.5, Scheidler v. Nat’l Org. for Women, Inc., Nos. 04-1244, 04-1352 (filed Sept. 9, 2005). In its brief in Scheidler, the government explains that, because early antitrust precedent clearly established that “the remedy can be only that which the statute prescribes,” it was wrong to infer additional, unspecified remedies, such as injunctive relief in private civil RICO suits. Id. at 24. “In light of this Court’s precedents construing the Sherman Act, Congress is presumed to be aware when it enacted RICO that, absent inclusion of an express private right to obtain injunctive relief, the language it selected would be construed to exclude such a right.” Id. at 25 (emphasis in original). See also Holmes v. Sec. Investor Protection Corp., 502 U.S. 258, 268 (1992) (Court may “fairly credit the 91st Congress, which enacted RICO, with knowing the interpretation federal courts had given the words … in the [antitrust laws]”). By the same token, the established antitrust principle rejecting inference of additional remedies, especially disgorgement, is powerful proof that the remedy is not available under 1964(a).

III. Any Circuit Conflict Is Academic And Not Implicated By This Case

There is also no genuine circuit split on the question presented by this case. A conflict is meaningful only if the case at hand would be decided differently depending on the circuit in which it arose. That is not the case here. Although there is a theoretical disagreement between the D.C. and Second and Fifth Circuits as to whether there would ever be a civil RICO case in which disgorgement could be ordered,

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there is agreement among the circuits that no such relief would be available in a case like this one. This case accordingly presents at most an academic conflict that does not warrant review.

No appellate court has ever allowed disgorgement in a civil RICO action. Nor has any appellate court ever adopted the government’s interpretation that 1964(a) grants a district court unbridled equitable powers pursuant to Porter and Mitchell. To the contrary, both the Second and Fifth Circuits have agreed with the D.C. Circuit that 1964(a) and its “prevent and restrain” limitation restrict courts to forward-looking remedies aimed at future unlawful conduct. See Richard v. Hoechst Celanese Chem. Group, Inc., 355 F.3d 345 (5th Cir. 2003), cert. denied, 125 S. Ct. 46 (2004); United States v. Carson, 52 F.3d 1173 (2d Cir. 1995). Any “conflict” among these decisions is hypothetical only, with no bearing on the outcome of this case.

In Richard, the Fifth Circuit dismissed a RICO disgorgement claim as a matter of law because, under 1964(a), “equitable remedies are available only to prevent ongoing and future conduct.” 355 F.3d at 355. Although the Fifth Circuit, citing Carson, hypothesized in dictum that there might be such a thing as forward-looking disgorgement, the court found that the disgorgement claim at issue was “impermissible under 1964(a)” because it would not “prevent and restrain’ similar RICO violations in the future.” Id. The court concluded that the disgorgement sought would “do little more than compensate for the alleged loss.” Id.

Similarly, the Second Circuit in Carson emphasized that remedies under 1964(a) must be “designed to ‘prevent and restrain’ future conduct rather than to punish past conduct.” 52 F.3d at 1182 (emphasis in original). Thus, the remedial powers conferred by 1964(a) do not “afford broader redress” than “foreclosing future violations.” Id. The statute certainly “does not authorize the government to recapture all

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26

the losses of those wronged by civil RICO violators.” Id. Indeed, as the D.C. Circuit noted, Carson emphatically rejects Judge Tatel’s argument that disgorgement can be said to prevent and restrain because it “serves a crucial deterrent function.” Pet. 13 n.5. “If this were adequate justification, the phrase ‘prevent and restrain’ would read ‘prevent, restrain, and discourage,’ and would allow any remedy that inflicts pain.” Pet. App. 18a (quoting Carson, 52 F.3d at 1182).

To be sure, the D.C. Circuit held that disgorgement is not authorized at all, while the Second Circuit suggested that it might somehow be permissible under limited circumstances if “the gains [to be disgorged are being used to fund or promote the illegal conduct, or constitute capital available for that purpose.” Pet. App. 21a (quoting Carson, 52 F.3d at 1182). However, the Second Circuit has never authorized disgorgement under this standard, and the limitations it adopted leave no doubt that it would reject the government’s open-ended disgorgement claim here. The government did not even attempt to construct a disgorgement model that was limited to respondents’ “available” ill-gotten gains, as Carson requires. As Judge Williams’ concurrence noted, the government “reject[s] any limitation to ‘ill-gotten gains’ in the form of specific money or resources so gained.” Pet. App. 23a-24a.

In short, the “conflict” alleged by the government is at most academic, with no practical significance here. Under either the D.C. Circuit’s or the Second Circuit’s construction of 1964(a), the government would not be entitled to the disgorgement remedy it seeks. Because adoption of either circuit court’s interpretation of the statute would not have resulted in a different outcome, there is no conflict of the kind that provides a basis for this Court’s review.

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IV. The Government’s Policy Arguments Are Better Directed At Congress

The government makes the unsupported policy argument that disgorgement must be allowed because it is a “critically important remedial tool.” Pet. 20, 23. The government’s hyperbole is belied by the fact that there are only a handful of reported decisions in which the government has sought disgorgement under civil RICO-and never before outside the organized crime context. See, e.g., Carson, 52 F.3d at 1181 (citing just three cases where government has sought civil disgorgement, all against organized crime enterprises). It is also telling that, although RICO has been on the books for almost 35 years, the government has never stressed the importance of civil disgorgement before this case, and has done so here only following the dismissal of its claims for damages. It is equally telling that Congress, which is “normally quite solicitous where the federal purse [is] involved” (Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 396 (1971)), did not think that disgorging funds to the federal treasury was a sufficiently important remedy to hint at its existence anywhere in the statute or even the legislative history.

RICO’s comprehensive scheme demonstrates that, in the civil context, Congress made the government responsible for prospective equitable relief under 1964(a) and made private parties exclusively responsible for the monetary relief of treble damages under 1964(c). Thus, 1964(a) provides solely, and expressly, for forward-looking relief, such as divestiture, the purpose of which is to separate the defendant from the unlawful enterprise and thereby impair the defendant’s ability to violate RICO in the future. Pet. App. 15a. Notably, the party subject to divestiture is permitted to retain the full value of the divested interest. In stark contrast, disgorgement strips the defendant of past profits without compensation. See, e.g., United States v. United States Currency in the Amount of $228,536.00, 895 F.2d 908 (2d

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Cir. 1990) (”‘ [Forfeiture’ is best described as… divestiture without compensation.”). 14

Congress deliberately limited the government’s ability to obtain monetary relief to those situations warranting criminal prosecution. See 18 U.S.C. 1963(a). This does not mean that RICO violators will be able to “retain their profits,” as the government contends. Pet. 23. It simply means that criminal prosecution or private actions for damages are the methods for depriving violators of their ill-gotten gains, as has been done very effectively under the antitrust laws (even without any criminal forfeiture provision). Indeed, given the’ right of private parties to obtain treble damages under 1964(c), limiting the government’s ability to obtain monetary relief in the civil context is necessary to avoid the “duplicative recovery” that would result if defendants had to pay both treble damages and disgorgement. Such a result was precisely the potential evil that led this Court, in Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 269 (1992), to refuse to infer a cause of action not specified in RICO. As the Court noted, it is “unjustified by the general interest in deterring injurious conduct” to infer an unspecified remedy into RICO because the injured victims “can generally be counted on to vindicate the law as private attorneys general.” id.

—–

14 Thus, contrary to the government’s assertion (Pet. 20-21) divestiture is the opposite of disgorgement. For this reason, the government’s reliance on the statement in United States v. Turkette, 452 U.S. 576, 585 (1981), that the purpose of RICO is to “divest the association” of “ill-gotten gains” is misplaced. Pet. 21. The Turkette Court was simply making the point that divesting a racketeer of his interest in the “enterprise” is among the “aim[s]” of the remedies expressly “provided by 1964.” 452 U.S. at 585. The Court’s discussion of the “aim” of express remedies obviously cannot support the use of disgorgement, which is excluded from both the text of 1964(a) and the discussion in Turkette itself.

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If the government truly believes it needs more expansive remedies under RICO, it ought to direct its concerns to Congress, not this Court. As the Court is well aware, the thrust of judicial opinion is not that RICO has been “severely constrain[ed]” (Pet. 22), but that, having “evolved into something quite different from the original conception of the enactors,” it threatens to inflict excessive liability on legitimate businesses. See, e.g., Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 481 (1985). This “unbridled” expansion of the statute (id. at 500) is exemplified by the instant case, where the government, for the first time, has used RICO to bring a federal product liability action for fraud against virtually an entire industry engaged in a lawful business important to the Nation’s economic well-being. See 15 U.S.C. 1331; FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 137 (2000)) 15

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I5 If the government’s sweeping disgorgement theory were sustained, similar demands for the profits of manufacturers could be made in other product liability contexts where industry critics contend that manufacturers failed to give adequate warnings to consumers or disregarded evolving scientific evidence. It is for Congress to weigh the policy implications of any extension of RICO remedies to the product liability field where carefully fashioned common law and statutory remedies already apply.

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CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

TODD R. GEREMIA

JONES DAY

222 East 41st Street

New York, NY 10017

(212) 326-3939

MICHAEL A. CARVIN

(Counsel of Record)

JONES DAY

51 Louisiana Avenue, N.W.

Washington, D.C. 20001-2113

(202) 879-3939

Attorneys for Respondent R.J. Reynolds Tobacco Company

September 16, 2005

8 Responses to “Defense’s SCOTUS Brief”

  1. tobacco observer Says:

    >>Some may find the brief’s rather prejudiced rehash of the case superfluous.

    Certainly the gov’t would, considering that in their petition they have asked the Supreme Court to make the simplifying assumption that the case is already over and that they have already won!

    The Supreme Court generally won’t even consider cases without a final decision, except in fairly extraordinary circumstances. In this case, the gov’t is asking the SCOTUS to make a decision about a particular possible remedy, even before its been shown that there is any liability that needs to be remedied. In other words, even if the SCOTUS were to accept certiorari, there is a not insignificant chance that the whole appeal will become moot if Tobacco isn’t found civilly liable under the RICO act.

    So to circumvent this glaring and fundamental weakness in their petition, the gov’t is playing a little “trick”. The DOJ is acting as if they have already won their case, even before its over. Direct quote from the gov’ts petition:

    ****The government has put forward extraordinarily extensive evidence in
    the nine-month trial that respondents have violated RICO. >, the court of appeals’ decision will severely constrain the remedies available to the government.****

    In terms of “prejudice”, I think it would be impossible to find a more blatant example than this one. The gov’t has claimed that they’ve compellingly “shown” (ie proven) liability, even though no such judgment has been made or entered yet by the trial judge!

    Now, in direct response to this claim, Tobacco has presented a summarized version of its defense case, to rebut this presumption.

    >>the Defense drops its hammer: an argument that seems outside of the legal parameters, but that may ring resoundingly for this non-activist Court: [If the gov’t is unhappy with RICO they should be asking Congress, not the SCOTUS, to change it].

    This is probably the very most fundamental argument one can put in front of the Supreme Court, namely that the law is quite clear and that changing it a function of the legislature, not the judiciary.

    Again, the gov’t is claiming in their petition that civil RICO disgorgement is a critically important tool, absolutely necessary here for the public good. This is what they said:

    ***the government faces the prospects that it cannot effectively compel RICO violators to address the consequences of their statutory violations and that those violators may retain the profits of their unlawful activity no matter how destructive the consequences for the American public as a whole. Congress did not intend that result, which in this case could prevent the government from formulating effective equitable remedies and obtaining disgorgement of many billions of dollars of proceeds that respondents obtained through the violation of federal law.***

    So the DOJ is making an argument about Congressional intent. They are saying that without civil disgorgement the RICO act is toothless and worthless. Its a pretty strange claim considering that in the 30+ history of the RICO act civil disgorgement has not been applied to *ANY* defendant, even ONE time.

    Tobacco is rebutting this in the broad sense, making the same argument they used to win in front of the DCCA, namely that the civil RICO act specifies various remedies, but not disgorgement, and if the Congress intended that remedy to be available, they would have simply said so.

  2. krueger Says:

    “The other unique feature of the tobacco analysts is that they are all keen students of law, as they must be since their industry’s outlook is completely dominated by its legal issues. But they always seem to read the law very narrowly, in the way that favors their clients, er, I mean companies.”

    Wake-Up Call / The Tobacco Tar Pit, David Smith, July 17, 2000

  3. tobacco observer Says:

    So the US Supreme court has just rejected the gov’t petition for certiorari on the issue of civil RICO disgorgement.

    It appears that in this case the “tobacco analysts” (as usual) were correct about this. I believe most of them predicted that the SCOTUS would reject this appeal, just as I have done on this site several times previously. No “narrow reading” was necessary. As I detailed above, the gov’t request was fairly strained, and had it actually have been granted, the ensuing situation would have been literally unprecedented in the 200+ year history of the Supreme Court.

    This time, the only ones who thought the DOJ was going to get their appeal were a bunch of anti-tobacco activists, who (as usual) have substituted wishful thinking about the destruction of the industry for sound legal analysis.

    Now lets see what Judge Kessler has to say about Tobacco’s petition for partial summary judgment on the smoking cessation remedy.

    With the DCCA’s ruling now the immoveable law for the remainder of her time with this case, I think Kessler will have no choice but to kneecap the remainder of the gov’t case by eliminating that illegal remedy. If it happens, counting this SCOTUS rejection as the second, that would be the third “body blow” this case will have received, and it could put the case “down for the count”.

  4. krueger Says:

    ” the ‘tobacco analysts’ (as usual) were correct”

    As usual?

    Like, say, oh, Fitch analyst Judi Malter?

    December 16th, 2002: Malter reports “Major tobacco firms consistently appeal adverse verdicts and they have not lost a case on appeal which resulted in a payout”.

    Except they had. March 2001, Brown and Williamson, having lost its final appeal, paid $1,087,191 to Grady Carter.

    Perhaps that’s why columnist David Smith observes:

    “Tobacco analysts are a unique and distinctive group on Wall Street. For one thing, they would to a man prefer to flack for the tobacco industry than actually make a correct investment recommendation and be seen to make one. As a result of being so wrong for so long, Wall Street’s tobacco analysts have probably cost investors as much money as anyone engaged in lawful activities there ever has…”

    “The other unique feature of the tobacco analysts is that they are all keen students of law, as they must be since their industry’s outlook is completely dominated by its legal issues. But they always seem to read the law very narrowly, in the way that favors their clients, er, I mean companies.”

    Wake-Up Call / The Tobacco Tar Pit
    David Smith, July 17, 2000

    I expect tobacco “analysts” now to gush that Big Tobacco’s legal woes are behind it. A story we’ve heard from those same analysts many times before.

    But hey, they may be right. It may be perfectly legal in this country to engineer addictive slow poison and get 12 year olds addicted to it. No laws broken here!

  5. tobacco observer Says:

    Congratulations on finding an instance three years ago where a tobacco analyst has made a mistake. Does that have anything to do with this case?

    With respect to actual legal errors, I think this is a bit more timely and relevant to this website. . .apparently the legal “talent” from the Tobacco liability project was certain that the US Supreme Court would accept reject this appeal:

    http://www.tobacco.neu.edu/litigation/cases/pressreleases/certpetitionfiled.htm

    “There are several reasons why the U.S. Supreme Court will accept the DOJ’s Petition and review the decision: a) There exists a conflict among the federal circuits on the question of whether disgorgement is an available remedy under Civil RICO; b) the Court of Appeals decision eviscerates Civil RICO claims brought by DOJ against any defendant and would effectively mean that the government would no longer have this legal tool available to fight corporate fraud; and, c) historically, the U.S. Supreme Court has been more apt to grant review of petitions from the DOJ than petitions from private parties, because the underlying cases often have significant law enforcement implications, as is the case here.”

    So it appears that once again the “professional” legal talent from the anti-tobacco litigation lobby has been outsmarted by a bunch of “would-be” two-bit legal hacks from Wall Street. Not the first time this has happened during this case, and probably not the last.

    >>I expect tobacco “analysts” now to gush that Big Tobacco’s legal woes are behind it. A story we’ve heard from those same analysts many times before.

    I doubt any of them are going to go that far, but point in fact, with an effectively permanent loss of this disgorgement remedy, any chance of a bankrupting judgment or MSA-like tax-penalty in this case has just evaporated. At *best* all the gov’t can hope for now is a few $$ billion per year spread out over many years over the entire industry, and even that appears unlikely given the specific (and now absolutely binding) constraints of the DCCA’s ruling on available remedies in civil disgorgement cases.

    So indeed, the legal outlook for the Tobacco industry today actually is arguably significantly better than it was yesterday.

    In the meantime, the gov’ts case here has just received another “body blow”, this one a bit harder than the last. With its grossly impermissible remedy requests it appears clear that the gov’t had pinned all its hopes on this SCOTUS long-shot. Now they don’t have that, and there is no more time or room for them to ask for anything else.

  6. krueger Says:

    “Congratulations on finding an instance three years ago where a tobacco analyst has made a mistake.”

    Thank you. Here’s a more modern mistake: claiming the Campaign for Tobacco-Free Kids aims to ban tobacco:

    http://www.tobacco-on-trial.com/archives/2005/04/07/day-90-szymanczyk-grilled-on-corporate-responsibility#comment-396

    “Does that have anything to do with this case?”

    A mistake with more to do with this case: claiming that Big Tobacco had not yet been found liable for anything in this case:

    http://www.tobacco-on-trial.com/archives/2005/07/19/doj-files-tough-scotus-petition#comment-581

    Getting the facts wrong, again and again and again: might not be the best basis for analysis.

    But all the same, you may be right. Big Tobacco may beat the rap. It may in essence be perfectly legal in this country to make massive profits by engineering slow poison for addiction. There may be no real legal problems with getting 3000 kids a day addicted to a product that will end up killing 1000 of them.

  7. tobacco observer Says:

    >>But all the same, you may be right. Big Tobacco may beat the rap.

    I suspect that in the end there probably won’t be any finding of liability under civil RICO 1964(a) and the Department of Justice won’t end up with any of the cash it has been trying to grab from the Tobacco industry for the past six years.

    Not for lack of trying, mind you; just for lack of a fundamental civil RICO case on the gov’ts part. You can’t build a silk purse out of a sow’s ear, and the gov’t appears to have picked the wrong law, and the wrong industry to bully this time around.

    >> It may in essence be perfectly legal in this country to make massive profits by engineering slow poison for addiction.

    Massive profits? That’s a curious thing to say considering the Federal gov’t that brought this case actually makes more money from its excise taxes on each pack of cigarettes sold in the USA than the tobacco companies do in profits. The State gov’ts, in fact, make several times more “profits” from the sale of cigarettes than the tobacco companies do. So in every real sense the Tobacco industry is only a minority partner in the tobacco business. The overwhelming majority of the “profits” go to the gov’t.

    Of course its perfectly legal to sell cigarettes, as it has been since the inception of the United States and before. If you don’t like them, you certainly aren’t obligated to buy or smoke them, just like you don’t have to buy liquor or drink it.

    If you don’t like the “engineered” kind of cigarettes, or alternatively think the poison is too slow for your taste, you can buy any kind you like better, including “all natural” kinds, unfiltered cigarettes, high tar, low tar, or a whole host of other brands. Or you can stick to cigars or even pipe tobacco if you choose.

    >>There may be no real legal problems with getting 3000 kids a day addicted to a product that will end up killing 1000 of them.

    To the contrary. Apart from the obvious fact that nobody is forcing anyone to smoke anything, giving or selling cigarettes to minors is a crime in every state of the Union and has been for decades.

    Point in fact, most if not all of the the large domestic tobacco companies that are defendants in this case don’t actually sell cigarettes retail at all. They sell only to distributors, who then sell to retailers, etc. If kids are smoking, its because individual adults are breaking the law. Perhaps the Federal and State gov’ts ought to be chasing them rather than the manufacturers.

    (Incidentally, that would be “kids” under the age of 18 who are smoking illegally, not legal smokers aged 18-21 whom the gov’t arbitarily defined as “youth” for purposes of this RICO lawsuit).

  8. krueger Says:

    “the wrong industry to bully”

    But of course it’s the other way around. “With their army of top-flight corporate defenders, the tobacco companies have far outnumbered and clearly outspent the government”
    Myron Levin, LA Times, September 12 2004.
    available at http://www.no-smoking.org/sept04/09-13-04-5.html

    “Federal gov’t that brought this case actually makes more money from its excise taxes on each pack of cigarettes sold in the USA ”

    You might want to read what I wrote.

    Yes indeed the Federal government gets money from this product.

    Does the Federal government engineer slow poison for addiction?

    That’s what Big Tobacco does to make its money.

    That’s what I wrote.

    The federal goverment didn’t make Big Tobacco engineer the product for nicotine addiction. No one made Big Tobacco do that. Big Tobacco chose to do that. You might say it was an adult choice.

    Big Tobacco chose to develop genetically engineered high-nicotine tobacco plants.

    Big Tobacco chose to add ammonia to its product to “free base” nicotine:

    http://www.pulitzer.org/year/1996/national-reporting/works/impact.html

    Big Tobacco chose to mount a large, long term, sophisticated research campaign to engineer the product for nicotine delivery:

    http://tobaccodocuments.org/profiles/nicotine_manipulation.html

    http://tobaccodocuments.org/product_design/00052845-2846.html

    And Big Tobacco chose to hide all this, cover it up, lie about it to the public, the Congress, and the courts.

    Big Tobacco goes way, way beyond “selling a legal product”.

    However “selling a legal product” is a wonderful catchprase in Big Tobacco’s PR. The PR can be summarized as:

    “…the tobacco industry’s cosy explanation of itself - as the supplier of a legal product used for widely-enjoyed social habit by adults who are fully aware of the risks and choose to take them to experience the pleasures.

    When you take a good look at this industry, see what it says inside the industry:

    “Instead a much darker explanation emerges: it is a predatory industry whose market dynamics demand that it recruits young people. It does this by deploying vast promotional expenditures to create, communicate and amplify a set of positive values associated with the product. Once the glamour phase subsides, nicotine addiction takes over making the customer dependent on the product and securing a profitable cash flow. Trapped by nicotine addiction, the smoker is subject to a variety of sub-lethal illness which culminate in a one in two probability of death through smoking-related disease. The smoker’s death means a replacement customer must be found - and the cycle begins again.”

    Tobacco Explained: The truth about the tobacco industry in its own words. June 25, 1998
    ASH-UK
    http://www.ash.org.uk/html/conduct/html/tobexpld0.html

    Big Tobacco is not in court for selling a legal product. In this case or any other.

    Big Tobacco is in legal trouble for what it did and does that leaves “selling a legal product” far behind.

    “giving or selling cigarettes to minors is a crime in every state of the Union and has been for decades.”

    “If kids are smoking, its because individual adults are breaking the law.”

    Ah, more Big Tobacco PR! The fantasy: it’s the seller’s fault, the parent’s fault, the kid’s fault, the kid’s peers fault, society’s fault. It’s everybody’s fault but ours. We in the industry are horrified that anyone would let kids have cigs! Right.

    The reality: the tobacco industry:

    * Examined young people as young as five – some studies did not even set a lower age limit. As one executive says “they got lips, we want them”.

    * Thought about using honey and comic strip, as well as advertising, to entice youngsters to smoke.

    * Looked at ways of preventing teenagers from quitting.

    * Undertook studies how to manipulate pubescent/teenage anxieties into making people smoke. Examined the attitudes, aspirations, and lifestyles of the young and how to exploit them. One document says the company needs to “Create a Living Laboratory”.

    Previously secret tobacco industry documents show that:

    * Marketing executives set out to present cigarettes as part of adulthood initiation - an illicit pleasure, which like sex, is one of a few initiations into the adult world.

    * Advertisers set out to equate cigarettes with rebellion, self-expression, self-confidence, independence, freedom, adult identity, masculinity for boys and femininity for girls.

    * Two of the most successful advertising campaigns: Marlboro’s Cowboy and RJ Reynolds’ Old Joe Camel pitched their appeal directly to youth.

    * The companies advertised in sports magazines and sponsored motor racing as new ways to market to youth

    ASH-UK
    Tobacco Explained: 3. Marketing to children
    http://www.ash.org.uk/html/conduct/html/tobexpld3.html

    Who are candy flavored cigarettes for?

    http://www.usatoday.com/news/health/2005-01-05-smokes-usat_x.htm

    “It’s a well-known fact that teen-agers like sweet products. Honey might be considered”
    1972 Brown & Williamson memo, among documents released by U.S. Rep. John Conyers in Feb., 1998

    Why did Philip Morris secretly place its products in more than 191 movies, including Grease, Rocky II, Crocodile Dundee, Die Hard, Who Framed Roger Rabbit, and Field of Dreams?

    “Marlboro’s phenomenal growth rate in the past has been attributable in large part to our high market penetration among young smokers … 15 to 19 years old . . . my own data, which includes younger teenagers, shows even higher Marlboro market penetration among 15-17-year-olds.”

    “The teen-age years are also important because those are the years during which most smokers begin to smoke, the years in which initial brand selections are made, and the period in the life-cycle in which conformity to peer-group norms is greatest”

    1975 report from PM researcher Myron E. Johnston to Robert B. Seligman; Richmond Times-Dispatch 05/09/98

    “Evidence is now available to indicate that the 14-to-18- year-old group is an increasing segment of the smoking population. RJR-T must soon establish a successful new brand in this market if our position in the industry is to be maintained over the long term.”

    1976 Claude Teague draft report, “Planning Assumptions and Forecast for the Period 1977-1986 for R.J. Reynolds Tobacco Company.”

    “The adolescent seeks to display his new urge for independence with a symbol, and cigarettes are such a symbol since they are associated with adulthood and at the same time adults seek to deny them to the young.”

    “Since how the beginning smoker feels today has implications for the future of the industry, it follows that a study of this area would be of much interest. Project 16 was designed to do exactly that –learn everything there was to learn about how smoking begins, how high school students feel about being smokers, and how they foresee their use of tobacco in the future.”

    “Serious efforts to learn to smoke occur between ages 12 and 13 in most cases.”

    “Ads for teenagers must be denoted by lack of artificiality, and a sense of honesty”

    “Project 16,” Oct. 18, 1977 Kwechansky Marketing Research Inc. Report for Imperial Tobacco Limited

    That’s the reality.

    The fantasy: oh gosh we hate to see kids smoke, we’re from the tobacco industry and we’re here to help you. There should be laws stopping kids from smoking! There are laws! We support those laws!

    The reality: Big Tobacco influences government to pass only weak youth access laws that will be ineffective. An example given by Victor Crawford, a former industry lobbyist:

    “…you can’t get a bill through making the owner responsible. We wouldn’t let you.”

    http://www.gaspforair.com/gasp/gedc/artcl-new.php?ID=76

    The reality: Big Tobacco depends on getting tobacco product to kids and getting kids addicted to it. Otherwise the tobacco industry would cease to exist as we know it.
    “Getting young people to start smoking is vitally important to the survival of the tobacco industry.”

    http://www.yale.edu/ynhti/curriculum/units/1996/2/96.02.03.x.html

    http://www.health20-20.org/Dewees.htm

    http://www.tobacco-on-trial.com/archives/2005/04/06/its-only-brand-switching

    That’s the reality.

    But if you prefer the fantasy, be my guest! Smoking has nothing to do with $12 billion a year of advertising, marketing, and promotion! Smoking has nothing to do with addictive product! Smoking has nothing to do with how Big Tobacco engineers product for addiction! Kids smoking has nothing to do with how Big Tobacco markets to kids! That’s all just a coincidence! Which Big Tobacco greatly regrets! It’s a legal product, you know! Ah, fantasy. So pretty.

    The reality is uglier.

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