KESSLER: “Stop Lying and Racketeering.” TOBACCO: “Could You be More Specific?”

August 25, 2006 8:28 am by Gene Borio

Tobacco defendants have filed a tough reply to the DOJ’s objections to their request for an emergency stay. Defendants argue that Judge Kessler’s injunctions for them to a) tell the truth to the public and b) stop racketeering, are much too general; they argue that the non-specificity of these 2 orders makes them impossible to interpret, and is in fact disallowed by Rule 65 of the Federal Rules of Civil Procedure as well as case law.

EXCERPTS FROM: DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF THEIR EMERGENCY MOTION FOR STAY OF JUDGMENT PENDING RESOLUTION OF DEFENDANTS’ MOTION FOR STAY OF JUDGMENT PENDING APPEAL, August 24, 2006:

“[A]t least two provisions of the Court’s Order create great uncertainty as well as potential unfairness and hardship for defendants, depending on how the Court interprets them. The Order provides that defendants are ‘permanently enjoined from committing any act of racketeering, as defined in 18 U.S.C. § 1961(1), relating in any way to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States.’ (Order at 2). The Order also provides that defendants are ‘permanently enjoined from making or causing to be made in any way, any material false, misleading, or deceptive statement or representation, or engaging in any public relations or marking endeavor that is disseminated to the United States public and that misrepresents or suppresses information concerning cigarettes . . . .’ . . . .

“Rule 65 expressly mandates that ‘[e]very order granting an injunction . . . shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained.’ . . . . The Supreme Court has emphasized that ‘the specificity provisions of rule 65(d) are no mere technical requirements.’ . . . To the contrary, ‘[s]ince an injunctive order prohibits conduct under threat of judicial punishment, basic fairness requires that those enjoined receive explicit notice of precisely what conduct is outlawed.’ Id.1 And, courts have repeatedly emphasized that injunctions that amount to nothing more than an instruction to ‘obey the law’ do not satisfy the specificity requirements of Rule 65. . . .

“The government therefore has made it clear that in its view the Court’s order requires defendants to sift through more than 1000 pages of findings in an attempt to give meaning to the phrases ‘deceptive statements’ and ‘acts of racketeering.’ The Court’s opinion discusses numerous aspects of defendants’ marketing and other practices, often expressing disapproval or distaste for those practices, but it is impossible to be confident which particular practices this Court would consider to be RICO violations, or deceptive conduct, for purposes of enforcing its Order. The government’s reading, if adopted by the Court and applied immediately, would wreak havoc on defendants’ businesses, leaving them unable to discern what they are and are not permitted to do to comply with the Order, potentially infringing upon their lawful business activities and the exercise of constitutional rights guaranteed by the Due Process Clause and the First Amendment.”

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Text follows of
DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF THEIR EMERGENCY MOTION FOR STAY OF JUDGMENT PENDING RESOLUTION OF DEFENDANTS’ MOTION FOR STAY OF JUDGMENT PENDING APPEAL, August 24, 2006

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

And

TOBACCO-FREE KIDS ACTION FUND,

et al.,

v.

PHILIP MORRIS USA INC. (f/k/a

PHILIP MORRIS INCORPORATED), et

al.,

Defendants.

Civil Action No. 99-CV-2496 (GK)

Next Scheduled Court Appearance: None

DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF THEIR EMERGENCY MOTION FOR STAY OF JUDGMENT PENDING RESOLUTION OF DEFENDANTS’ MOTION FOR STAY OF JUDGMENT PENDING APPEAL

Defendants’ pending request is limited: this Court should grant a short, interim stay to give defendants an opportunity to file a formal motion for a stay (with supporting evidence) pending completion of the appellate process. Granting the modest stay requested here will prejudice no one. To the contrary, a short stay of an Order of this magnitude — for the time it will take for the formal motion for a stay pending appeal to be filed and decided — is the only fair manner to proceed. Indeed, given that the government sought a stay of the remedies phase of the trial while a prior appeal was pending, the government has no reasonable basis for resisting an interim stay. Accordingly, defendants request that this Court grant their emergency motion.

The need for an interim stay is particularly important given the ambiguity of whether any immediate action on the part of defendants is necessary to comply with the Order. To be sure, as the Court indicated during the August 18, 2006, conference call, the Order imposes no new

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affirmative obligation on defendants that takes effect immediately. For example, the Court has ordered defendants to issue corrective statements, the proposals for which need not be submitted until sixty days after the date of the Order. Order at 4-9. Similarly, defendants’ use of brand descriptors must stop by January 2007.

But, in contrast to these specific injunctions, at least two provisions of the Court’s Order create great uncertainty as well as potential unfairness and hardship for defendants, depending on how the Court interprets them. The Order provides that defendants are “permanently enjoined from committing any act of racketeering, as defined in 18 U.S.C. § 1961(1), relating in any way to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States.” (Order at 2). The Order also provides that defendants are “permanently enjoined from making or causing to be made in any way, any material false, misleading, or deceptive statement or representation, or engaging in any public relations or marking endeavor that is disseminated to the United States public and that misrepresents or suppresses information concerning cigarettes . . . .” (Order at 3).

Defendants anticipate seeking clarification of these provisions in their stay motion and/or post-judgment motions. As we will explain, defendants believe that the correct interpretation of these general injunctive provisions is that they set forth broad principles that are then applied by, and implemented through, the specific injunctions set forth in the remainder of the Court’s Order. In other words, the general provisions should not be read as imposing obligations on defendants above and beyond those specific injunctions set forth in the Order. Given the potential breadth and scope of the language of the Order, such an interpretation is the only one that is consistent with the Federal Rules of Civil Procedure and controlling precedent from the United States Supreme Court and the D.C. Circuit. Rule 65 expressly mandates that “[e]very

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order granting an injunction . . . shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained.” Fed. R. Civ. P. R. 65(d). The Supreme Court has emphasized that “the specificity provisions of rule 65(d) are no mere technical requirements.” Schmidt v. Lessard, 414 U.S. 473, 476 (1974). To the contrary, “[s]ince an injunctive order prohibits conduct under threat of judicial punishment, basic fairness requires that those enjoined receive explicit notice of precisely what conduct is outlawed.” Id.1 And, courts have repeatedly emphasized that injunctions that amount to nothing more than an instruction to “obey the law” do not satisfy the specificity requirements of Rule 65. See, e.g., Burton v. City of Belle Glade, 178 F.3d 1175, 1201 (11th Cir. 1999); Payne, 565 F.2d at 898.

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1 See also Gunn v. Univ. Comm. to End the War in Vietnam, 399 U.S. 383, 388-89 (1970) (specificity requirement outlined in rule 65 “is essential in cases where private conduct is sought to be enjoined”); Int’l Longshoremen’s Ass’n., Local 1291 v. Phila. Marine Trade Ass’n., 389 U.S. 64, 75-76 (1967) (a federal court must “frame its orders so that those who must obey them will know what the court intends to require and what it means to forbid”);Gulf Oil Corp. v. Brock, 778 F.2d 834, 843 (D.C. Cir. 1985) (injunction containing ambiguous phrase “similar in nature” violated specificity requirements of rule 65); Common Cause v. Nuclear Regulatory Comm’n, 674 F.2d 921, 926-27 (D.C. Cir. 1982) (deeming an injunction violative of F.R.C.P. Rule 65 because it was “susceptible to more than one interpretation” and “failed to give adequate notice to the [enjoined party] of the nature of the prohibited activity”); SEC v. Savoy Indus., Inc., 665 F.2d 1310, 1316-17 (D.C. Cir. 1981) (striking injunction ordering the defendant “not to engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person” because it was “so vague as to put the whole conduct of [the defendant’s] business at the peril of a summons for contempt”) (internal quotation marks and citations omitted); Corning Inc. v. PicVue Elec., Ltd., 365 F.3d 156, 158 (2d Cir. 2004) (concluding that a preliminary injunction violated rule 65 because it was “not possible to ascertain from the four corners of the order precisely what acts [were] forbidden”) (internal quotation marks and citations omitted); United States v. Dinwiddie, 76 F.3d 913, 928 n. 12 (8th Cir. 1996) (concluding that “[w]ith its prohibition on activities that can be ‘remotely construed’ to violate FACE and its lack of a definition for legitimate personal activity, the [challenged] injunction violate[d] Rule 65(d) by calling on [the defendant] to guess at what kind of conduct is permissible”)(citations and internal quotation omitted); Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 748 (2d Cir. 1994) (striking down an injunction prohibiting the defendant from violating the Lanham Act and state trademark statutes because “requiring [the defendant] to guess — on pain of contempt — at what conduct the Lanham Act proscribes is too onerous a burden”); Calvin Klein Cosmetics Corp. v. Parfums de Coeur, Ltd., 824 F.2d 665, 669 (8th Cir. 1987) (vacating injunction that “too broadly require[d] [the defendant] to guess at what kind of conduct would be deemed [prohibited conduct]”); Payne v. Travenol Labs., Inc., 565 F.2d 895, 897 (5th Cir. 1978) (noting that rule 65’s “command of specificity is a reflection of the seriousness of the consequences which may flow from a violation of an injunctive order”);United States v. Vitasafe Corp., 345 F.2d 864, 871 (3d Cir. 1965) (finding that an injunction prohibiting distribution of literature considered “otherwise false and misleading” violated rule 65).

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The government’s brief itself demonstrates the need for an interim stay. Far from acknowledging, as the Court did in last week’s conference call, that no immediate action on the part of defendants is required, the government describes the injunction as a general requirement to obey the law. The government therefore has made it clear that in its view the Court’s order requires defendants to sift through more than 1000 pages of findings in an attempt to give meaning to the phrases “deceptive statements” and “acts of racketeering.” The Court’s opinion discusses numerous aspects of defendants’ marketing and other practices, often expressing disapproval or distaste for those practices, but it is impossible to be confident which particular practices this Court would consider to be RICO violations, or deceptive conduct, for purposes of enforcing its Order. The government’s reading, if adopted by the Court and applied immediately, would wreak havoc on defendants’ businesses, leaving them unable to discern what they are and are not permitted to do to comply with the Order, potentially infringing upon their lawful business activities and the exercise of constitutional rights guaranteed by the Due Process Clause and the First Amendment. This Court should grant an interim stay to give defendants an opportunity to present argument and evidence on the interpretation of the Court’s order, the irreparable injury it would impose depending on how the Order is interpreted, and the need for a stay pending completion of the appellate process.

Finally, it bears emphasizing that this motion is not one for a stay pending appeal, and therefore those standards need not be rigorously applied. To the contrary, defendants simply request that the status quo be preserved for the short time it will take to submit — and for the court to rule upon — a motion for a stay pending appeal. Given the ambiguity of the Order, and the modest nature of the pending request for an interim stay pending full briefing and argument on the anticipated stay motion, this Court should grant the pending motion.

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DATED: August 24, 2006

Respectfully submitted,

/s/ Matthew A. Campbell for _______________

Timothy M. Broas (D.C. Bar No. 391145)

WINSTON & STRAWN LLP

1700 K Street, N.W.

Washington, D.C. 20006-3817

Telephone: (202) 282-5000

Fax: (202) 282-5100

Dan K. Webb

Thomas J. Frederick

WINSTON & STRAWN LLP

35 West Wacker Drive

Chicago, Illinois 60601-9703

Telephone: (312) 558-5600

Fax: (312) 558-5700

Theodore V. Wells, Jr. (D.C. Bar No.

468934)

James L. Brochin (D.C. Bar No. 455456)

PAUL, WEISS, RIFKIND, WHARTON &

GARRISON LLP

1285 Avenue of the Americas

New York, New York 10019-6064

Telephone: (212) 373-3000

Fax: (212) 757-3990

Attorneys for Defendants

Altria Group Inc. and Philip Morris USA Inc

/s/ Matthew A. Campbell for _______________

Robert F. McDermott (D.C. Bar No. 261164)

Peter J. Biersteker (D.C. Bar No. 358108)

JONES DAY

51 Louisiana Avenue, N. W.

Washington, D.C. 20001-2113

Telephone: (202) 879-3939

Fax: (202) 626-1700

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Paul G. Crist

JONES DAY

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114-1190

Telephone: (216) 586-3939

Fax: (216) 579-0212

Attorneys for Defendant

R. J. Reynolds Tobacco Company

/s/ Matthew A. Campbell for _______________

David E. Mendelson (D.C. Bar No. 471863)

KIRKLAND & ELLIS LLP

655 15th Street, N.W., Suite 1200

Washington, D.C. 200005

Telephone: (202) 879-5000

Fax: (202) 879-5200

David M. Bernick

Stephen R. Patton

Renee D. Honigberg

KIRKLAND & ELLIS LLP

200 East Randolph Drive, Suite 5900

Chicago, Illinois 60601

Telephone: (312) 861-2000

Fax: (312) 861-2200

Attorneys for Defendant

Brown & Williamson Tobacco Holdings, Inc.

/s/ Matthew A. Campbell for _______________

J. William Newbold

Michael B. Minton

THOMPSON COBURN LLP

One US Bank Plaza, Suite 3500

St. Louis, Missouri 63101-1693

Telephone: (314) 552-6000

Fax: (314) 552-7597

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Gene E. Voigts

Richard L. Gray

SHOOK, HARDY & BACON LLP

2555 Grand Blvd.

Kansas City, Missouri 64108-2613

Telephone: (816) 474-6550

Fax: (816) 421-2708

Attorneys for Defendant

Lorillard Tobacco Company

/s/ Matthew A. Campbell for _______________

Bruce G. Sheffler

David L. Wallace

CHADBOURNE & PARKE LLP

30 Rockefeller Plaza, 34th Floor

New York, New York 10112-0219

Telephone: (212) 408-5100

Attorneys for Defendant

British American Tobacco (Investments)

Limited (f/k/a British-American Tobacco

Company Limited)

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Text follows of Rule 65

Federal Rules of Civil Procedure

VIII. PROVISIONAL AND FINAL REMEDIES > Rule 65

Rule 65. Injunctions

(a) Preliminary Injunction.

(1) Notice.

No preliminary injunction shall be issued without notice to the adverse party.

(2) Consolidation of Hearing with Trial on Merits.

Before or after the commencement of the hearing of an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with the hearing of the application. Even when this consolidation is not ordered, any evidence received upon an application for a preliminary injunction which would be admissible upon the trial on the merits becomes part of the record on the trial and need not be repeated upon the trial. This subdivision (a)(2) shall be so construed and applied as to save to the parties any rights they may have to trial by jury.

(b) Temporary Restraining Order; Notice; Hearing; Duration.

A temporary restraining order may be granted without written or oral notice to the adverse party or that party’s attorney only if (1) it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party or that party’s attorney can be heard in opposition, and (2) the applicant’s attorney certifies to the court in writing the efforts, if any, which have been made to give the notice and the reasons supporting the claim that notice should not be required. Every temporary restraining order granted without notice shall be indorsed with the date and hour of issuance; shall be filed forthwith in the clerk’s office and entered of record; shall define the injury and state why it is irreparable and why the order was granted without notice; and shall expire by its terms within such time after entry, not to exceed 10 days, as the court fixes, unless within the time so fixed the order, for good cause shown, is extended for a like period or unless the party against whom the order is directed consents that it may be extended for a longer period. The reasons for the extension shall be entered of record. In case a temporary restraining order is granted without notice, the motion for a preliminary injunction shall be set down for hearing at the earliest possible time and takes precedence of all matters except older matters of the same character; and when the motion comes on for hearing the party who obtained the temporary restraining order shall proceed with the application for a preliminary injunction and, if the party does not do so, the court shall dissolve the temporary restraining order. On 2 days’ notice to the party who obtained the temporary restraining order without notice or on such shorter notice to that party as the court may prescribe, the adverse party may appear and move its dissolution or modification and in that event the court shall proceed to hear and determine such motion as expeditiously as the ends of justice require.

(c) Security.

No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. No such security shall be required of the United States or of an officer or agency thereof.

The provisions of Rule 65.1 apply to a surety upon a bond or undertaking under this rule.

(d) Form and Scope of Injunction or Restraining Order.

Every order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise.

(e) Employer and Employee; Interpleader; Constitutional Cases.

These rules do not modify any statute of the United States relating to temporary restraining orders and preliminary injunctions in actions affecting employer and employee; or the provisions of Title 28, U.S.C., § 2361, relating to preliminary injunctions in actions of interpleader or in the nature of interpleader; or Title 28, USC, § 2284, relating to actions required by Act of Congress to be heard and determined by a district court of three judges.

(f) Copyright Impoundment.

This rule applies to copyright impoundment proceedings.

One Response to “KESSLER: “Stop Lying and Racketeering.” TOBACCO: “Could You be More Specific?””

  1. Professor Nancy A. Fandel Says:

    I am just appalled that after the Surgeon General’s report on secondhand smoke and its DEADLY effects on everyone, no one, no one, no one!!! is holding the FDA, tobacco manufacturers, and the US Congress’s feet to the fire about STOPPING the manufacture of tobacco products, the way they are manufactured today! This is a do no harm and protect the rights of ALL human beings to health issue.

    Response, please. This is my quest till the day I die. No more manufacture of these deadly products. Smoke ANYTHING else that’s less harmful, and I’m fine with that, but do NOT manufacture these products anymore in this way.

    Professor Fandel

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