DOJ Appeal: FINAL BRIEF FOR APPELLEE March 12, 2012

March 15, 2012 9:15 am by Gene Borio

The PDF is Here

EXCERPT:

SUMMARY OF ARGUMENT

The district court found that defendants violated RICO by conducting an enterprise, through a pattern of racketeering activity consisting of violations of federal mail and wire fraud statutes, as part of a scheme to defraud American consumers about the health effects and addictiveness of cigarettes. The court further found that defendants were reasonably likely to commit future RICO violations and that equitable relief was warranted pursuant to 18 U.S.C. § 1964(a). This Court affirmed the district court’s liability findings and remedial order in all significant respects. Philip Morris, 566 F.3d at 1150.

Defendants now argue that passage of the Tobacco Control Act has deprived the district court of jurisdiction by precluding “any reasonable possibility” of future RICO violations. Def. Br. 39. On this basis, defendants urge that there is no longer a live controversy and that the district court should be required “to vacate [its] injunctions and factual findings and dismiss the case with prejudice.” Def. Br. 61.

Their argument fails at every turn.

I. Congress did not believe that the Tobacco Control Act obviated the need for equitable relief in this litigation. Congress was fully aware of this litigation and its legislative findings make repeated references to the district court’s findings. See Pub. L. No. 111-31, § 2(47)–(49), codified at 21 U.S.C. § 387 note. Congress was also at pains to make clear that the legislation would not disturb the judgment affirmed by this Court. The statute provides that “[n]othing” in its provisions “shall be construed to . . . affect any action pending in Federal, State, or tribal court[.]” Pub. L. No. 111-31, § 4(a), 123 Stat. at 1782, codified at 21 U.S.C. § 387 note.

The district court properly rejected defendants’ contention that the Tobacco Control Act “forecloses any reasonable likelihood that Defendants will associate together in the future to commit joint RICO violations.” Def. Br. 32. The court explained that its previous ruling did not rest on the absence of legal restrictions. The court found a reasonable likelihood of future violations precisely because defendants, in this Court’s phrase, had demonstrated a “proclivity for unlawful conduct.” Philip Morris, 566 F.3d at 1137. The district court’s opinion is replete with findings that detail the varied means by which defendants violated or circumvented statutes, regulations, and settlement agreements. This Court substantially affirmed the remedial order precisely because of defendants’ demonstrated “proclivity for unlawful conduct.” Ibid. The district court was not required to assume that passage of the Tobacco Control Act would effect a sea change in defendants’ behavior so as to deprive it of jurisdiction.

Defendants’ strategy is impressively audacious. They ask this Court to order that this case be dismissed with prejudice in light of the Tobacco Control Act. At the same time, in litigation in this Circuit and the Sixth Circuit, they seek to have key provisions of the Act and its implementing regulations declared unconstitutional.

Were defendants to succeed in both efforts, they would thus dispense with both the RICO judgment and the Tobacco Control Act. Even apart from the other fundamental flaws in defendants’ contentions, they cannot properly seek vacatur and dismissal on the basis of a statute that they are attempting to invalidate.

II. Defendants’ invocation of the primary jurisdiction doctrine is equally unavailing. As the district court correctly explained, that doctrine applies in “circumstances in which an agency and a court ha[ve] to make the same determination under the same statute or regulation—obviously, not the case here.”

END EXCERPT

FULL TEXT:

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[SCHEDULED FOR ARGUMENT ON APRIL 20, 2012] No. 11-5145

IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

PHILIP MORRIS USA, INC., et al.,

Defendants - Appellants.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

FINAL BRIEF FOR APPELLEE

MICHAEL F. HERTZ

Deputy Assistant Attorney General

MARK B. STERN

ALISA B. KLEIN

SARANG VIJAY DAMLE

(202) 514-5735

sarang.damle@usdoj.gov

Attorneys, Appellate Staff

Civil Division, Room 7217

U.S. Department of Justice

950 Pennsylvania Ave., N.W.

Washington, DC 20530-0001 USCA Case #11-5145 Document #1363266 Filed: 03/12/2012 Page 2 of 56

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

Pursuant to D.C. Circuit Rule 28(a)(1), the undersigned counsel certifies as follows:

A. Parties and Amici.

The United States of America is the plaintiff-appellee in this appeal. The defendants in the district court, and appellants in this appeal, are Philip Morris USA Inc.; Altria Group, Inc.; R.J. Reynolds Tobacco Co. (individually and as successor to Brown & Williamson Tobacco Corporation); and Lorillard Tobacco Co. The intervenors in the district court, and appellees in this appeal, are The Tobacco-Free Kids Action Fund; American Cancer Society; American Heart Association; American Lung Association; Americans for Nonsmokers’ Rights; and the National African American Tobacco Prevention Network.

The following additional parties were defendants in the district court: The Council for Tobacco Research–USA, Inc., The Tobacco Institute, Inc., and Liggett Group, Inc.

The following additional parties intervened in the district court: the Federal Trade Commission; Elan Corporation, PLC; Impax Laboratories, Inc.; Novartis Consumer Health Inc.; Pharmacia Corp.; Pfizer Inc.; Smithkline Beecham Corp. and GlaxoSmithKline Consumer Healthcare, L.P.; and British American Tobacco Australia Services Ltd.

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The following additional parties appeared as amici in the district court:

Tobacco Control Legal Consortium; Tobacco Control Resource Center; American Medical Association; American Public Health Association; American Academy of Pediatrics; American Association of Public Health Physicians; American College of Chest Physicians; American College of Occupational and Environmental Medicine; American College of Physicians; American College of Preventive Medicine; American Dental Hygienists’ Association; American School Health Association; American Thoracic Society; Community Anti-Drug Coalitions of America; Legal Resource Center for Tobacco Regulation, Litigation and Advocacy at the University of Maryland School of Law; National Association of County and City Health Officials; National Association of Local Boards of Health; Tobacco Law Center; Tobacco Public Policy Center; Regents of the University of California; Citizens’ Commission to Protect the Truth; the States of Arkansas, Connecticut, Hawaii, Idaho, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Tennessee, Vermont, Washington, Wisconsin, and Wyoming, and the District of Columbia; Essential Action; City and County of San Francisco; Asian-Pacific Islander American Health Forum; San Francisco African American Tobacco Free Project; and the Black Network in Children’s Emotional Health.

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B. Rulings Under Review.

The ruling under review is the district court’s order of June 1, 2011 (Order #23-Remand) in United States of America v. Phillip Morris USA, Inc., Civil Action No. 99-2496 (D.D.C.) (Judge Gladys Kessler), which denied the defendants’ motion to vacate the District Court’s remedial order and the underlying factual findings, and to dismiss the case. The memorandum opinion is available at 787 F. Supp. 2d 68.

C. Related Cases.

Defendants have filed a separate appeal in this Court, No. 11-5146, from the district court’s clarification of one aspect of the remedial order entered in this case, requiring disclosure of disaggregated marketing data.

Defendants Reynolds and Lorillard have also challenged the Food and Drug Administration’s rule implementing the cigarette warning requirement enacted as part of the Family Smoking Prevention and Tobacco Control Act of 2009 (Tobacco Control Act), Pub. L. No. 111-31, 123 Stat. 1776. The district court enjoined implementation of the rule, and an appeal in that case is pending before this Court. See R.J. Reynolds Tobacco Co. v. Food and Drug Administration, — F. Supp. 2d —, 2011 WL 5307391 (D.D.C. Nov. 7, 2011), appeal pending No. 11-5332 (D.C. Cir.) (scheduled for oral argument on April 10, 2012).

In addition, Reynolds and Lorillard, together with other tobacco manufacturers and related entities, are challenging the constitutionality of several key aspects of the

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Tobacco Control Act. The district court granted in part and denied in part the companies’ request to enjoin various provisions of the Act, and an appeal is pending in the Sixth Circuit. See Commonwealth Brands, Inc. v. United States, 678 F. Supp. 2d 512

(W.D. Ky. 2010), appeals pending sub nom Discount Tobacco City & Lottery Inc. v. United States, Nos. 10-5234 & 10-5235 (6th Cir.) (oral argument heard July 27, 2011). Aspects of this case have come before this Court in several previous appeals: United States v. Philip Morris USA, Inc., 566 F.3d 1095 (D.C. Cir. 2009); United States v. British Am. Tobacco Australia Servs. Ltd., 437 F.3d 1235 (D.C. Cir. 2006); United States v. Philip Morris USA, Inc., 396 F.3d 1190 (D.C. Cir. 2005); United States v. British Am. Tobacco (Invs.), Ltd., 387 F.3d 884 (D.C. Cir. 2004); United States v. Philip Morris Inc., 347 F.3d 951 (D.C. Cir. 2003).

/s/ Sarang V. Damle

Sarang V. Damle

Counsel for Appellees

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TABLE OF CONTENTS

Page

STATEMENT OF JURISDICTION……………………… 1

STATEMENT OF THE ISSUES. ………………………….. 2

STATEMENT OF THE CASE. …………………………….. 2

STATEMENT OF THE FACTS. …………………………… 4

A.

Prior Proceedings In This Case. ………………………….. 4

1.

The district court’s liability finding and remedial order. …………….. 4

2.

This Court’s decision largely affirming the liability judgment and remedial order. …………………… 7

B.

The Tobacco Control Act and Related Litigation………………… 8

1.

Defendants’ mootness arguments. …………………………….. 8

2.

Defendants’ pending challenges to the Tobacco Control Act………………………………. 10

C. The Ruling Under Review. ……………………… 11

SUMMARY OF ARGUMENT. ……………………………. 14

STANDARD OF REVIEW…………………. 16

ARGUMENT. ……………………… 17

I. The Tobacco Control Act Does Not Moot This Case or Extinguish the District Court’s Jurisdiction Under RICO……………………. 17

A. The Tobacco Control Act did not alter the legal bases for this suit and the district court’s order………………………… 17

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B. Defendants cannot properly seek to vacate the decision in this case on the basis of a statute that they are vigorously seeking to invalidate……………………………. 20

C. The Tobacco Control Act would not in any event provide a basis for vacatur and dismissal. ………………… 23

D. For similar reasons, there is no basis to vacate particular provisions of the remedial order. ……………………………… 32

II. The District Court Did Not Abuse its Discretion in Declining to Dismiss this Suit Based on the Primary Jurisdiction Doctrine. ……………………….. 36

CONCLUSION. ………………….. 42

CERTIFICATES OF COMPLIANCE AND SERVICE

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TABLE OF AUTHORITIES

Cases: Page

Allnet Communication Service, Inc. v. Nat’l Exchange Carrier Ass’n,

965 F.2d 1118 (D.C. Cir. 1992)……………………. 38, 40

Altria Group, Inc. v. Good,

555 U.S. 70 (2008). …………………………… 26

American Ass’n of Cruise Passengers v. Cunard Line, Ltd.,

31 F.3d 1184 (D.C. Cir. 1994). ………………………….. 40

Camreta v. Greene,

131 S. Ct. 2020 (2011)…………………. 29, 30

Chamber of Commerce v. EPA,

642 F.3d 192 (D.C. Cir. 2011). ………………. 19, 22, 23

Church of Scientology of Cal. v. United States,

506 U.S. 9 (1992). …………………………….. 17

City of Erie v. Pap’s A.M.,

529 U.S. 277 (2000). …………………………. 18

Cody v. Cox,

509 F.3d 606 (D.C. Cir. 2007). ………………………….. 17

Commonwealth Brands, Inc. v. United States,

678 F. Supp. 2d 512 (W.D. Ky. 2010), appeals pending sub nom

Discount Tobacco City & Lottery Inc. v. United States,

Nos. 10-5234 (6th Cir.)……………………………. 4, 10, 11

County of Los Angeles v. Davis,

440 U.S. 625 (1979). …………………………. 29

* Authorities chiefly relied upon are marked with an asterisk.

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Dana Corp. v. Blue Cross & Blue Shield of N. Ohio,

900 F.2d 882 (6th Cir. 1990)……………………………… 39

Diffenderfer v. Gomez-Colon,

587 F.3d 445 (1st Cir. 2009). …………………………….. 18

Discount Tobacco City & Lottery, Inc. v. United States,

Nos. 10-5234 & 10-5235 (6th Cir)……………………………. 4, 10, 21

Green v. Mansour,

474 U.S. 64 (1985). ……………………… 30, 31

Himmelman v. MCI Communications Corp.,

104 F. Supp. 2d 1 (D.D.C. 2000). ……………………… 38

Israel v. Baxter Laboratories, Inc.,

466 F.2d 272 (D.C. Cir. 1972). ………………. 36, 37, 40

Kappelman v. Delta Air Lines, Inc.,

539 F.2d 165 (D.C. Cir. 1976). …………………….. 37, 38

Log Cabin Republicans v. United States,

658 F.3d 1162 (9th Cir. 2011)……………………………. 18

Lorillard, Inc. v. FDA,

No. 11-cv-440 (D.D.C.)……………………. 21

Los Angeles v. Lyons,

461 U.S. 95 (1983). …………………………… 29

Nader v. Allegheny Airlines, Inc.,

426 U.S. 290 (1976). …………………………. 39

National Telephone Co-op. Ass’n v. Exxon Mobil Corp.,

244 F.3d 153 (D.C. Cir. 2001). ………………………….. 16

* Authorities chiefly relied upon are marked with an asterisk.

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Philip Morris USA Inc. et al. v. United States, Nos. 09-976, et al. (U.S. May 25, 2010), cert. denied, 130 S. Ct. 3501 (2010)…………………… 3, 10

Reiter v. Cooper, 507 U.S. 258 (1993). …………………………. 36

R.J. Reynolds Tobacco Co. v. Food and Drug Administration,
— F. Supp. 2d —, 2011 WL 5307391 (D.D.C. Nov. 7, 2011), appeal pending No. 11-5332 (D.C. Cir.)………………………. 4, 11, 21

SEC v. First City Fin. Corp.,

890 F.2d 1215 (D.C. Cir. 1989)……………………. 23, 24

SEC v. Savoy Indus., Inc.,

587 F.2d 1149 (D.C. Cir. 1978)…………………………. 23

Texas v. United States,

523 U.S. 296 (1998). …………………………. 22

United States v. Concentrated Phosphate Export Assn., Inc.,

393 U.S. 199 (1968). …………………………. 30

United States v. Munsingwear,

340 U.S. 36 (1950). …………………………… 19

United States v. Philip Morris Inc.,

263 F. Supp. 2d 72 (D.D.C. 2003)…………………….. 36

United States v. Philip Morris USA, Inc.,

396 F.3d 1190 (D.C. Cir. 2005)…………………………. 28

* United States v. Philip Morris USA, Inc.,

449 F. Supp. 2d. 1 (D.D.C. 2006). …………………… 5, 6, 7, 23, 24, 25, 26, 27, 28, 31, 32, 33, 34, 35, 36

* Authorities chiefly relied upon are marked with an asterisk.
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* United States v. Philip Morris USA, Inc., 566 F.3d 1095 (D.C. Cir. 2009)………………… 2, 4, 5, 7, 8, 13, 14, 15, 16, 17, 24, 25, 26, 27, 31, 34, 35

United States v. Western Pacific Railroad Co.,

352 U.S. 59 (1956). ……………………… 36, 38

Statutes:

10 U.S.C. § 654(b)…………………. 18

15 U.S.C. § 45(a)(2). ………………………………. 25

15 U.S.C. § 1333 Note. ………………………….. 22

18 U.S.C. § 1962(c)…………………. 5

18 U.S.C. § 1962(d). ……………….. 5

18 U.S.C. § 1964(a)………………………. 1, 14, 17

18 U.S.C. § 1964(b). ……………….. 1

21 U.S.C. §§ 301 et seq. …………………………….. 8

21 U.S.C. § 387 note. ………………………. 3, 8, 9, 14, 15, 19

21 U.S.C. § 387c……………………. 33

21 U.S.C. § 387d. ………………….. 29

21 U.S.C. § 387g(e)……………….. 21

21 U.S.C. § 387k. ……………………………… 33, 39

28 U.S.C. § 1292(a)(1)……………………………… 1

* Authorities chiefly relied upon are marked with an asterisk.
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28 U.S.C. § 1331. ……………………. 1

28 U.S.C. § 1345. ……………………. 1

28 U.S.C. § 2201. ……………………. 1

FFDCA § 903(a)(1). ………………………………. 33

FFDCA § 903(a)(7)(A). …………………………. 33

FFDCA § 904(a). ………………….. 29

FFDCA § 904(b)…………………… 29

FFDCA § 911(b)(2)(A)(i). ………………… 32, 33

FFDCA § 911(b)(2)(A)(ii). …………………….. 33

FFDCA § 911(g)…………………… 32

FFDCA § 911(g)(1). ………………………………. 39

Pub. L. No. 111-31, 123 Stat. 1776 (2009)………………………… 2, 3, 8, 14, 15, 19

Pub. L. No. 111-321, 124 Stat. 3515 (2010)…………………………….. 18

Rules:

Fed. R. App. P. 4(a)(1)(B). ………………………. 1

* Authorities chiefly relied upon are marked with an asterisk.

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GLOSSARY

Term Definition

CIAR Center For Indoor Air Research

CTR Council for Tobacco Research–USA

FDA Food and Drug Administration

FFDCA Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et

seq.

Lorillard Lorillard Tobacco Company

MSA Master Settlement Agreement

RICO Racketeer Influenced and Corrupt Organizations Act,

18 U.S.C. §§ 1961 et seq.

Reynolds R.J. Reynolds Tobacco Co., now Reynolds American

TI Tobacco Institute

Tobacco Control Act Family Smoking Prevention and Tobacco Control Act of

2009, Pub. L. No. 111-31, 123 Stat. 1776

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IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 11-5145

UNITED STATES OF AMERICA, Plaintiff - Appellee,

v.

PHILIP MORRIS USA, INC., et al., Defendants - Appellants.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

BRIEF FOR APPELLEE

STATEMENT OF JURISDICTION

The district court has jurisdiction under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(a) & (b) and 28 U.S.C. §§ 1331, 1345 &
2201. The order on review, which denied defendants’ motion to vacate injunctive relief, was issued on June 1, 2011. JA1 (order); JA2–27 (memorandum opinion). Defendants filed a timely notice of appeal on June 3, 2011. See Fed. R. App. P. 4(a)(1)(B). This Court has jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).

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STATEMENT OF THE ISSUES

1. Whether the Family Smoking Prevention and Tobacco Control Act of 2009 (Tobacco Control Act), Pub. L. No. 111-31, 123 Stat. 1776, extinguished the district court’s jurisdiction over this case and required the court to vacate the remedial order and fact findings that this Court affirmed in United States v. Philip Morris USA, Inc., 566 F.3d 1095 (D.C. Cir. 2009).

2. Alternatively, whether vacatur of the remedial order is required under the doctrine of primary jurisdiction.

STATEMENT OF THE CASE

In May 2009, this Court issued a decision that largely affirmed the judgment of liability and injunctive remedies entered against the defendant cigarette manufacturers in this RICO case. Philip Morris, 566 F.3d 1095. This Court affirmed the finding that defendants violated RICO by engaging in a decades-long conspiracy to deceive consumers about the health effects and addictiveness of smoking, in order to increase cigarette sales. Id. at 1108. It affirmed the finding that defendants are reasonably likely to violate RICO in the future and, thus, that injunctive relief is warranted. Id. at 1134. And it also affirmed most of the injunctive remedies ordered by the district court, though it remanded for further proceedings on four discrete issues. See id. at 1150.

Several weeks after this Court issued its decision, Congress enacted the

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Tobacco Control Act, which vests the Food and Drug Administration (FDA) with authority to regulate tobacco products and contains various specific requirements and restrictions. Pub. L. No. 111-31, 123 Stat. 1776. The Act notes fact findings made in this case, and the Act expressly provides that “[n]othing” in its provisions “shall be construed to . . . affect any action pending in Federal, State, or tribal court.” Pub. L. No. 111-31, § 2(47)-(49), § 4(a), codified at 21 U.S.C. § 387 note.

This Court subsequently denied defendants’ petitions for rehearing en banc, and also denied a separate “Suggestion of Mootness And Motion For Partial Vacatur” filed by defendants Reynolds, Lorillard, and Philip Morris that relied on the Tobacco Control Act. The Supreme Court denied certiorari. 130 S. Ct. 3501 (2010).

On remand, defendants urged that the Tobacco Control Act requires the district court to vacate its remedial order and fact findings and to dismiss this case. The district court rejected that argument, finding that defendants “put forth no convincing evidence to suggest that this Court should revisit, let alone vacate, over four thousand factual findings, as well as the injunctive provisions contained in Remedial Order #1015.” JA16. The court likewise rejected defendants’ contention that vacatur is required under the doctrine of primary jurisdiction. JA18. The court found defendants’ request for vacatur “particularly unconvincing” because they “are simultaneously and vigorously challenging . . . many of the provisions of the Tobacco Control Act” in other litigation. JA13. The companies’ challenges to the Act are

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ongoing. See, e.g., R.J. Reynolds Tobacco Co. v. Food and Drug Administration, — F. Supp. 2d —, 2011 WL 5307391 (D.D.C. Nov. 7, 2011) (enjoining implementation of the Act’s cigarette health warning requirements), appeal pending No. 11-5332 (D.C. Cir.) (scheduled for oral argument on April 10, 2012); Commonwealth Brands, Inc. v. United States, 678 F. Supp. 2d 512 (W.D. Ky. 2010) (granting in part and denying in part requests to enjoin various provisions of the Tobacco Control Act), appeals pending sub nom Discount Tobacco City & Lottery, Inc. v. United States, Nos. 10-5234 & 10-5235 (6th Cir) (oral argument heard July 27, 2011).

STATEMENT OF THE FACTS

A. Prior Proceedings In This Case

1. The district court’s liability finding and remedial order

The factual and procedural background of this litigation is set out at length in this Court’s earlier opinion. See 566 F.3d at 1105–10. The United States brought this suit in 1999 against cigarette manufacturers and related trade organizations, alleging that defendants conducted the affairs of an enterprise through a pattern of mail and wire fraud in violation of RICO. The government alleged (among other things) that defendants engaged in a decades-long conspiracy to deceive American consumers about the health effects and addictiveness of cigarettes, thereby enhancing defendants’ cigarette sales and associated profits.

In 2006, after a nine-month bench trial, the district court entered final

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judgment, finding that defendants conspired to conduct the affairs of a RICO enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c) and (d). The court found that defendants engaged in a scheme to defraud smokers and potential smokers that involved several interrelated patterns of misconduct, including fraudulent statements about the health effects of smoking, the addictiveness and manipulation of nicotine, and the purported health benefits of their “low tar” and “light” cigarette brands. See 566 F.3d at 1105-06 (summarizing the findings).

The district court also found, based on “overwhelming[]” evidence, a reasonable likelihood that the manufacturer defendants (other than Liggett) would continue to violate RICO in the future, United States v. Philip Morris USA, Inc., 449 F. Supp. 2d. 1, 908–19 (D.D.C. 2006), and, on that basis, the court imposed several different forms of injunctive relief, id. at 937–45. The court found that “[t]he evidence in this case clearly establishes that Defendants have not ceased engaging in unlawful activity,” and that, “[e]ven after the Complaint in this action was filed in September 1999, Defendants continued to engage in conduct that is materially indistinguishable from their previous actions, activity that continues to this day.” Id. at 910.

To prevent and restrain future RICO violations, the district court barred the manufacturer defendants from committing further acts of racketeering relating to the

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production, marketing, or sale of cigarettes and from making further false, misleading, or deceptive representations about cigarettes that are disseminated to the United States public. Id. at 938. The court also barred defendants from using express or implied “health descriptors” for cigarette brands, such as “light,” “low tar,” and “mild.” Ibid. And the court required defendants to make court-approved corrective statements about addiction, the adverse health effects of smoking and secondhand smoke, manipulation of cigarette design and composition, and health descriptors. Id. at 938–41.

The district court also imposed disclosure requirements to make it more difficult for defendants to violate RICO without detection. It required that defendants maintain document depositories containing all documents and data produced during this and other tobacco litigation, and, for fifteen years, to continue adding to those depositories. Id. at 941–944.1 The court also ordered defendants to disclose specified marketing data to the government. Id. at 932, 944–45, as amended by Order #20-Remand (JA116–117).2

Other provisions of the remedial order barred defendants from reconstituting the form or functions of three entities—the Center for Tobacco Research (CTR),

1 The document depository requirements were amended in part by later district court orders. See JA48–50 (Order #1021); JA122–138 (Order #27-Remand); JA154–169(Order #28-Remand).

2 The requirement that defendants disclose specified marketing data is the subject of their appeal in No. 11-5146.

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The Tobacco Institute (TI), and the Center for Indoor Air Research (CIAR)—that defendants had used as part of their unlawful, deceptive enterprise, and barred defendants from transferring their brands or businesses unless the recipient agreed to comply with the provisions of the Court’s injunctive order. Id. at 938, 945.

2. This Court’s decision largely affirming the liability judgment and remedial order

On May 22, 2009, this Court issued a per curiam opinion that largely affirmed the district court’s findings of liability and remedial order. Among other holdings, this Court rejected defendants’ challenges to the sufficiency of the evidence underlying the findings of mail and wire fraud, and upheld the finding that defendants acted with specific intent to defraud consumers. 566 F.3d at 1118–22.

Rejecting defendants’ First Amendment defenses, this Court declared:

“Defendants knew of their falsity at the time and made the statements with the intent to deceive.” Id. at 1124. “Thus, we are not dealing with accidental falsehoods, or sincere attempts to persuade; Defendants’ liability rests on deceits perpetrated with knowledge of their falsity.” Ibid. “Indeed, if Defendants’ statements had not been made with fraudulent intent, there would be no basis for RICO liability in the first place.” Ibid.

This Court also upheld the finding that defendants are likely to violate RICO in the future and that injunctive relief is thus warranted. Id. at 1131–35. It explained that “[t]he likelihood of future wrongful acts is frequently established by inferences

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drawn from past conduct.” Id. at 1132 (quotation marks and citation omitted). The Court rejected defendants’ contention that the comprehensive provisions of the Master Settlement Agreement (MSA) eliminated any likelihood that defendants would violate RICO in the future. This Court noted the findings that “[d]efendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement,” and that “[d]efendants continued to commit violations even after 1999, well after the execution of the MSA.” Id. at 1133. This Court largely upheld the injunctive relief ordered by the district court, but vacated certain provisions of the injunction and remanded for further proceedings. Id. at 1136–50.

B. The Tobacco Control Act and Related Litigation

1. Defendants’ mootness arguments

Weeks after this Court issued its decision, Congress enacted the Tobacco Control Act. See Pub. L. No. 111-31, 123 Stat. 1776. Section 101(b)(3) of the Act amends the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. §§ 301 et seq., by adding a new Chapter IX that governs tobacco products. The legislative findings in the Tobacco Control Act repeatedly noted the district court findings in this case. See Pub. L. No. 111-31, § 2(47)–(49), codified at 21 U.S.C. § 387 note. Congress expressly addressed the “Intended Effect” of the legislation, providing that “[n]othing” in the new provisions “shall be construed to . . . affect any action pending in Federal, State, or tribal court[.]” Pub. L. No. 111-31, § 4(a), 123 Stat. at 1782,

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codified at 21 U.S.C. § 387 note.

After the Tobacco Control Act was enacted, defendants filed five separate petitions for rehearing en banc in this case. The petition filed by Philip Morris argued that the passage of the Tobacco Control Act “removes any reasonable possibility that Defendants will commit future racketeering acts or engage in future joint activity.” Philip Morris Petition for Rehearing and Rehearing En Banc at 5, Nos. 06-5267, et al. (D.C. Cir. July 31, 2009).

In addition, Philip Morris, Reynolds, and Lorillard filed a “Suggestion of Mootness And Motion For Partial Vacatur” that argued that the passage of the Tobacco Control Act had rendered the injunction’s ban on health descriptors moot. See Suggestion of Mootness and Motion for Partial Vacatur at 8–9, Nos. 06-5267, et al. (D.C. Cir. July 31, 2009). The government’s opposition explained that defendants should direct a request to modify the injunction in light of the legislation to the district court in the first instance. See Opposition to Suggestion of Mootness and Motion for Partial Vacatur at 3, Nos. 06-5267, et al. (D.C. Cir. Aug. 17, 2009). The government stressed, however, that the fact that “the district court may in its discretion reconsider aspects of its injunction in light of the legislation does not render the government’s claims moot or entitle defendants to eradicate the record of their wrongdoing.” Id. at 9–10.

This Court denied the rehearing petitions, and also denied the suggestion of

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mootness and vacatur motion.

Defendants then filed five separate petitions for certiorari in the Supreme Court, in which they renewed the mootness arguments they had raised in this Court. The government opposed the petitions, explaining that there was no merit to the “suggestion that the new legislation renders this case moot,” and that, in any event, a “claim that the injunction in this case should be modified in light of the new law” should be made in district court. See Br. of the U.S. in Opp. at 55–56, Philip Morris USA, Inc. et al. v. United States, Nos. 09-976, et al. (U.S. May 25, 2010). The Supreme Court denied certiorari. 130 S. Ct. 3501 (2010).

2. Defendants’ pending challenges to the Tobacco Control Act

Soon after the enactment of the Tobacco Control Act, defendants Reynolds, Lorillard, and other tobacco companies filed suit in the U.S. District Court for the Western District of Kentucky, alleging that provisions of the Tobacco Control Act violate their First Amendment rights. See Commonwealth Brands, Inc., 678 F. Supp. 2d 512, appeals pending sub nom Discount Tobacco City & Lottery, Inc. v. United States, Nos. 10-5234 & 10-5235 (6th Cir.). They challenged (among other provisions) the Act’s revisions to the health warnings required on cigarettes and other tobacco products, see id. at 528–32; the Act’s establishment of a pre-market FDA review requirement for tobacco products that are marketed as presenting reduced health risks, see id. at 532–34, as well as restrictions on forms of tobacco advertising that are especially

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attractive to children and adolescents, see id. at 526–28, 538–39. The district court in Commonwealth Brands upheld most of the challenged provisions but invalidated certain advertising restrictions. All parties appealed to the Sixth Circuit, which heard oral argument on July 27, 2011.

In separate litigation, defendants Reynolds, Lorillard, and other cigarette manufacturers brought suit in the U.S. District Court for the District of Columbia, alleging that the format of the cigarette health warnings established by the Tobacco Control Act and implementing FDA regulations violates their First Amendment rights. See R.J. Reynolds Tobacco Co. v. Food and Drug Administration, 2011 WL 5307391 (D.D.C. 2011), appeal pending No. 11-5332 (D.C. Cir.). On April 10, 2012, this Court will hear oral argument on the government’s appeal from a preliminary injunction that blocks implementation of the cigarette warning requirements for 15 months after the district court issues final judgment at an unspecified future date. See R.J. Reynolds, 2011 WL 5307391 at *11.

C. The Ruling Under Review

On remand, the district court ordered additional submissions on various issues. As relevant here, the court directed the parties to brief the impact of the Tobacco Control Act on this litigation.

Defendants urged that the Act removes any possibility that they will violate RICO in the future. For that reason, they claimed that the case is moot and that the

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district court no longer has statutory jurisdiction to “prevent and restrain” violations of RICO. Defendants also urged that vacatur is appropriate under the doctrine of primary jurisdiction. In the alternative, defendants argued that particular parts of the remedial order should be vacated.

The district court denied defendants’ motion for vacatur. It rejected defendants’ contention that the enactment of the Tobacco Control Act “renders the Defendants unlikely to commit future RICO violations,” finding that claim to be “simply unconvincing” in light of defendants’ lengthy record of violations. JA7, 10–11. The court found defendants’ position “particularly unconvincing” because they “are simultaneously and vigorously challenging . . . many of the provisions of the Tobacco Control Act.” JA13. The court noted that these challenges include the very provisions “which they claim render them unlikely to commit future violations of RICO.” JA13. The court thus found it “difficult to understand how Defendants can argue that the Tobacco Control Act will produce their future compliance with RICO when they do not believe that a great portion of the Act should apply to them at all.” Ibid.

The court explained, further, that RICO and the Tobacco Control Act have different aims, and that “FDA rulemaking is not designed to prevent future racketeering activity.” JA12. The court found no reason to accept defendants’ “contention that the Tobacco Control Act will produce their conformity to the law

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even though RICO and the MSA could not.” JA12–13. To the contrary, the court noted the parallels between defendants’ present argument and their earlier assertion that the MSA eliminated any reasonable likelihood of future violations—a claim that this Court rejected in light of the finding that “‘[d]efendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement.’” JA12 (quoting 566 F.3d at 1132–33).

The district court also rejected defendants’ request that it “invoke the doctrine of primary jurisdiction[,] dissolve its injunctions and decline to exercise any jurisdiction it might possess over this case.” JA16 (internal quotation marks and citation omitted). The court explained that the primary jurisdiction doctrine traditionally applies where “an agency and a court ha[ve] to make the same determination under the same statute or regulation[.]” JA20. That was “obviously, not the case here” because FDA “has no authority under the Tobacco Control Act to address RICO remedies.” JA20, 24. The court observed that defendants had “invoked no authority for the proposition that the primary jurisdiction doctrine requires a court to vacate an injunction resulting from RICO violations because an administrative agency has expertise in the defendant’s industry.” JA21. For similar reasons, the district court rejected defendants’ request that the court vacate specific features of the remedial order, because defendants had “point[ed] to no regulation in conflict with” any of those provisions. JA25.

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SUMMARY OF ARGUMENT

The district court found that defendants violated RICO by conducting an enterprise, through a pattern of racketeering activity consisting of violations of federal mail and wire fraud statutes, as part of a scheme to defraud American consumers about the health effects and addictiveness of cigarettes. The court further found that defendants were reasonably likely to commit future RICO violations and that equitable relief was warranted pursuant to 18 U.S.C. § 1964(a). This Court affirmed the district court’s liability findings and remedial order in all significant respects. Philip Morris, 566 F.3d at 1150.

Defendants now argue that passage of the Tobacco Control Act has deprived the district court of jurisdiction by precluding “any reasonable possibility” of future RICO violations. Def. Br. 39. On this basis, defendants urge that there is no longer a live controversy and that the district court should be required “to vacate [its] injunctions and factual findings and dismiss the case with prejudice.” Def. Br. 61.

Their argument fails at every turn.

I. Congress did not believe that the Tobacco Control Act obviated the need for equitable relief in this litigation. Congress was fully aware of this litigation and its legislative findings make repeated references to the district court’s findings. See Pub. L. No. 111-31, § 2(47)–(49), codified at 21 U.S.C. § 387 note. Congress was also at pains to make clear that the legislation would not disturb the judgment affirmed by

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this Court. The statute provides that “[n]othing” in its provisions “shall be construed to . . . affect any action pending in Federal, State, or tribal court[.]” Pub. L. No. 111-31, § 4(a), 123 Stat. at 1782, codified at 21 U.S.C. § 387 note.

The district court properly rejected defendants’ contention that the Tobacco Control Act “forecloses any reasonable likelihood that Defendants will associate together in the future to commit joint RICO violations.” Def. Br. 32. The court explained that its previous ruling did not rest on the absence of legal restrictions. The court found a reasonable likelihood of future violations precisely because defendants, in this Court’s phrase, had demonstrated a “proclivity for unlawful conduct.” Philip Morris, 566 F.3d at 1137. The district court’s opinion is replete with findings that detail the varied means by which defendants violated or circumvented statutes, regulations, and settlement agreements. This Court substantially affirmed the remedial order precisely because of defendants’ demonstrated “proclivity for unlawful conduct.” Ibid. The district court was not required to assume that passage of the Tobacco Control Act would effect a sea change in defendants’ behavior so as to deprive it of jurisdiction.

Defendants’ strategy is impressively audacious. They ask this Court to order that this case be dismissed with prejudice in light of the Tobacco Control Act. At the same time, in litigation in this Circuit and the Sixth Circuit, they seek to have key provisions of the Act and its implementing regulations declared unconstitutional.

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Were defendants to succeed in both efforts, they would thus dispense with both the RICO judgment and the Tobacco Control Act. Even apart from the other fundamental flaws in defendants’ contentions, they cannot properly seek vacatur and dismissal on the basis of a statute that they are attempting to invalidate.

II. Defendants’ invocation of the primary jurisdiction doctrine is equally unavailing. As the district court correctly explained, that doctrine applies in “circumstances in which an agency and a court ha[ve] to make the same determination under the same statute or regulation—obviously, not the case here.”

JA20.

STANDARD OF REVIEW

The district court’s determination that defendants remain reasonably likely to commit future RICO violations, notwithstanding the Tobacco Control Act, is subject to review for clear error. Philip Morris, 566 F.3d at 1131. The district court’s determination that vacatur of the remedial injunction is not warranted under the primary jurisdiction doctrine is reviewed for abuse of discretion. National Telephone Co-op. Ass’n v. Exxon Mobil Corp., 244 F.3d 153, 156 (D.C. Cir. 2001).

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ARGUMENT

I. The Tobacco Control Act Does Not Moot This Case or Extinguish the District Court’s Jurisdiction Under RICO.

A. The Tobacco Control Act did not alter the legal bases for this suit and the district court’s order.

1. The district court held that defendants engaged in a decades-long conspiracy to violate RICO and that there was a reasonable likelihood that they would violate RICO in the future. This Court affirmed and the Supreme Court denied defendants’ petitions for certiorari.

Defendants now seek to reopen the district court’s determination regarding the likelihood of future violations on the basis of the Tobacco Control Act which, in defendants’ view, obviates “any reasonable possibility” of future RICO violations. Def. Br. 39–40. They assert that the case does not present a live controversy; that there will be no future RICO violations for the court to “prevent and restrain,” 18 U.S.C. § 1964(a); and that the district court should therefore “vacate [its] injunctions and factual findings and dismiss the case with prejudice.” Def. Br. 61.

The Supreme Court and this Court have stressed that “[f]or a case to become moot, it must be ‘impossible for the court to grant any effectual relief whatever.’” Cody v. Cox, 509 F.3d 606, 608 (D.C. Cir. 2007) (quoting Church of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992)) (emphasis added); see also Philip Morris, 566 F.3d at 1135 (“A case is moot when ‘the challenged conduct ceases such that there is no

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reasonable expectation that the wrong will be repeated’ in circumstances where ‘it becomes impossible for the court to grant any effectual relief whatever to the prevailing party.’” (citing City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000))).

Defendants offer several examples of cases in which the statute or rule at issue had been repealed or amended in such a way as to terminate the existence of a live controversy. For example, defendants rely heavily on the Ninth Circuit’s decision Log Cabin Republicans v. United States, 658 F.3d 1162 (9th Cir. 2011) (per curiam), and the Government’s briefs in that case. Def. Br. ix, 4, 29–30, 35. That case addressed a constitutional challenge to the “Don’t Ask, Don’t Tell” statute, 10 U.S.C. § 654(b), and its implementing regulations. 658 F.3d at 1165. While the case was pending, Congress enacted the Don’t Ask, Don’t Tell Repeal Act of 2010, Pub. L. No. 111–321, 124 Stat. 3515 (2010), which repealed section 654. 658 F.3d at 1165. In finding the case moot, the Ninth Circuit explained that “[i]f Log Cabin filed suit today seeking a declaration that section 654 is unconstitutional . . ., there would be no Article III controversy because there is no section 654.” Ibid. (emphasis added); see also Diffenderfer v. Gomez-Colon, 587 F.3d 445, 451 (1st Cir. 2009) (cited in Def. Br. 29–30 & n.5) (challenge to Puerto Rico’s use of Spanish-only ballots moot after enactment of law requiring bilingual ballots); JA14–15 (district court op.) (making the same observation with respect to the cases cited in defendants’ brief).

These decisions underscore defendants’ fundamental misunderstanding of the

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mootness doctrine and the nature of this controversy. The district court found that defendants had violated RICO and were likely to do so again. The Tobacco Control Act did not repeal, alter, or amend RICO in any respect, and defendants remain subject to its strictures.

To the contrary, in enacting the Tobacco Control Act, Congress quite clearly did not intend to deprive the district court of jurisdiction and did not believe that the new statute eliminated the possibility of effective relief in this suit. Congress was fully aware of this litigation, and repeatedly cited the district court’s decision in the legislative findings. Pub. L. No. 111-31 § 2(47)–(49), codified at 21 U.S.C. § 387 note. The statute expressly addressed its “Intended Effect” and declared that “[n]othing” in the new provisions “shall be construed to . . . affect any action pending in Federal, State, or tribal court[.]” Pub. L. No. 111-31, § 4(a), codified at 21 U.S.C. § 387 note.

Defendants cite no authority whatsoever for their assertion that the district court should have vacated the thousands of findings of fact that it made on the basis of a nine-month trial. As this Court has explained, “vacatur ‘is commonly utilized . . . to prevent a district court judgment, unreviewable because of mootness, from spawning any legal consequences.’” Chamber of Commerce v. EPA, 642 F.3d 192, 210 (D.C. Cir. 2011) (quoting United States v. Munsingwear, 340 U.S. 36, 40 (1950)) (alterations omitted). The judgment that defendants seek to vacate “is not unreviewable,” id. at 211; it was exhaustively reviewed and affirmed on defendants’

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appeal. Nothing in the Tobacco Control Act provides a basis to expunge the record of defendants’ decades-long conspiracy to deceive American consumers about the health effects and addictiveness of cigarettes.

B. Defendants cannot properly seek to vacate the decision in this case on the basis of a statute that they are vigorously seeking to invalidate.

The Tobacco Control Act did not moot this suit and the district court did not abuse its discretion in concluding that, as a result of the Act, there was no longer a reasonable likelihood of future RICO violations. As we discuss below, that would be the case even if defendants were not actively seeking to nullify the very provisions that, they claim, will finally make future violations of RICO unlikely.

In cases pending in this Circuit and the Sixth Circuit, defendants are asking the courts to set aside the very provisions that “they claim render them unlikely to commit future RICO violations.” JA13. For example, defendants repeatedly rely upon the provisions of the Tobacco Control Act that require cigarette manufacturers to display more prominent health warnings on cigarette packaging and advertising. Def. Br. 10, 13–14, 38. Defendants declare that “[t]he possibility that Defendants could defraud the public in the future as to the health effects and addictiveness of smoking in the face of these warnings is, to say the least, remote.” Def. Br. 49.

Only in a footnote (Def. Br. 14 n.3) do defendants acknowledge that they have persuaded a district court in this Circuit to issue a preliminary injunction with respect

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to these provisions and to accept their contention that the size and placement of the health warnings, as well as the inclusion of images, violate the First Amendment. R.J. Reynolds Tobacco Co. v. Food and Drug Administration, — F. Supp. 2d —, 2011 WL 5307391 (D.D.C. Nov. 7, 2011), appeal pending No. 11-5332 (D.C. Cir.) (scheduled for oral argument on April 10, 2012). Defendants are also challenging the cigarette health warning requirements and key provisions of the Tobacco Control Act in Discount Tobacco City & Lottery, Inc. v. United States, Nos. 10-5234 & 10-5235 (6th Cir.), including its pre-market review scheme for tobacco products that are claimed to pose reduced health risks, see Def. Br. 12, and the statute’s restrictions on distributing free cigarette samples or branded merchandise (such as t-shirts and hats). Def. Br. 16.3

Defendants also observe that FDA has sought to exercise its authority under the Tobacco Control Act to study the health impact of menthol cigarettes. Def. Br. 11. They fail to note, however, that Reynolds and Lorillard have sued to block FDA from relying on a report on “the impact of the use of menthol in cigarettes on the public health” that was prepared by a scientific advisory committee pursuant to a specific mandate in the Tobacco Control Act (21 U.S.C. § 387g(e)). See Lorillard, Inc. v. FDA, No. 11-cv-440 (D.D.C.) (Leon, J.).

Defendants’ contention that the ultimate outcome of their various lawsuits is

3 The Sixth Circuit briefs are available through PACER.

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“conjecture,” and that jurisdiction is judged “based on present circumstances,” Def. Br. 41–43, fails at every level. By the terms of the Tobacco Control Act, defendants are not required to implement the new warnings until September 22, 2012. 15 U.S.C. § 1333 Note. “[B]ased on present circumstances,” therefore, the new warnings provide no basis at all to set aside the district court’s order. At present, moreover, manufacturers have obtained a preliminary injunction that precludes enforcement of the Tobacco Control Act’s health warnings. That ruling further purports to postpone the statutory deadline for compliance until 15 months after final judgment even if the warnings requirements are ultimately upheld.

In any event, a court could not properly ignore defendants’ pending challenges in ruling on its request for vacatur and dismissal with prejudice, and defendants offer no authority for this unlikely proposition. Texas v. United States, 523 U.S. 296 (1998) (see Def. Br. 42) did not address mootness at all—it held that a preenforcement challenge to the Voting Rights Act was not ripe. Id. at 300. Chamber of Commerce v. EPA, 642 F.3d 192 (D.C. Cir. 2011) (see Def. Br. 43) is equally inapt. In that case, a challenge to an EPA determination that allowed California to impose its own emission standards became moot when California adopted a new uniform federal standard. Id. at 198. The challenge was not saved from mootness by petitioners’ contention that “if the federal standards are invalidated in a pending court case, the California standards could be reimposed.” Id. at 208 (emphasis added). Here, in

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contrast, defendants seek to vacate an existing judgment based solely on the claim that the Tobacco Control Act will diminish the likelihood of future RICO violations. Defendants cannot obtain that relief on the basis of statutory provisions that, in their view, should not “apply to them at all.” JA13.

C. The Tobacco Control Act would not in any event provide a basis for vacatur and dismissal.

1. Even if defendants were not seeking to set aside the Tobacco Control Act, their arguments would provide no basis for vacatur. A reasonable likelihood of future violations may be established primarily by inferences drawn from past conduct. JA9; see SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978). And, as the district court explained, it already made “extensive factual findings”—based on a massive record compiled during a nine-month bench trial—that defendants are likely to commit future RICO violations if the remedial order does not remain in place. See JA9. The court found that defendants’ violations were not “isolated” but “part of a pattern”; that they were “flagrant and deliberate,” not “technical in nature”; and that defendants’ business “present[s] opportunities to violate the law in the future.” See Philip Morris, 449 F. Supp. 2d at 909 (internal quotation marks omitted) (quoting SEC v. First City Fin. Corp., 890 F.2d 1215, 1228 (D.C. Cir. 1989)). It further found that defendants knowingly and unlawfully defrauded the public about the addictiveness and health effects of smoking, in an effort to “maximize [their] revenues by recruiting

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new smokers (the majority of whom are under the age of 18), preventing current smokers from quitting, and thereby sustaining the industry.” Id. at 910. The court thus found that “[t]he evidence in this case clearly establishes that Defendants have not ceased engaging in unlawful activity,” and that this “activity . . . continues to this day.” Ibid.

The district court found that defendants were reasonably likely to commit further RICO violations based on thousands of fact findings that established their decades-long conspiracy to defraud American consumers despite the existing prohibitions of the mail and wire fraud statutes, the existing prohibition of false or misleading advertising, and the existing Master Settlement Agreement with the States. This Court affirmed the imposition of broad injunctive relief because of defendants’ “proclivity for unlawful conduct.” Philip Morris, 566 F.3d at 1137 (citation and internal quotation marks omitted). Defendants have offered “no facts which would warrant revisiting” these findings. JA11.

The court did not abuse its discretion in concluding that the enactment of new legal requirements did not alter defendants’ “proclivity for unlawful conduct.” 566 F.3d at 1137. Defendants declare that the “possibility that Defendants could defraud the public in the future as to the health effects and addictiveness of smoking in the face of [the Tobacco Control Act’s] warnings is, to say the least, remote.” Def. Br. 49. But “Surgeon General” warnings have appeared on cigarette packaging

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since 1965, and those warnings did not prevent defendants from conspiring to defraud the American public about the health effects of cigarettes. To the contrary, a central feature of defendants’ RICO enterprise was their attempt to discredit the warnings of the Surgeon General. Defendants’ “efforts to deny and distort the scientific evidence of smoking’s harms are demonstrated by not only decades of press releases, reports, booklets, newsletters, television and radio appearances, and scientific symposia and publications, but also by evidence of their concerted[] efforts to attack and undermine the studies in mainstream scientific publications such as the Reports of the Surgeon General.” Philip Morris, 449 F. Supp. 2d at 855. Indeed, “for more than thirty years after issuance of the Surgeon General’s first Report on smoking and health, Defendants maintained their position denying the causal relationship between smoking and disease.” Id. at 208.

Similarly, the Federal Trade Commission Act has long vested the FTC with authority to prevent unfair or deceptive advertising practices. See 15 U.S.C. § 45(a)(2). Nonetheless, “Defendants engaged in massive, sustained, and highly sophisticated marketing and promotional campaigns to portray their light brands as less harmful than regular cigarettes.” Philip Morris, 566 F.3d at 1124. Not only did defendants deceive American consumers; they also deceived the regulator: the cigarette companies failed to disclose to the FTC their research “showing that [machine] test results do not reflect the amount of tar and nicotine that consumers of ‘light’

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cigarettes actually inhale.” Altria Group, Inc. v. Good, 555 U.S. 70, 90 n.14 (2008); see also Philip Morris, 449 F. Supp. 2d. at 507–12 (detailing the manner in which Philip Morris, Reynolds, Brown & Williamson, and Lorillard deceived the FTC).

As the district court observed, defendants’ invocation of the Tobacco Control Act echoes the arguments that they made previously on the basis of the Master Settlement Agreement. JA12. This Court held that “future violations remain likely notwithstanding the MSA” inasmuch as “Defendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement[.]” 566 F.3d at 1132–33; see also ibid. (“the district court found, under the correct standard, that Defendants continued to commit violations even after 1999, well after the execution of the MSA”). Defendants offer no persuasive reason to “accept [their] contention that the Tobacco Control Act will produce their conformity to the law even though RICO and the MSA could not.” JA12–13.

Defendants similarly do not explain their assertion that the Tobacco Control Act “forecloses any reasonable likelihood” that defendants will engage in “joint RICO violations.” Def. Br. 32. The Act does not address the ability of cigarette manufacturers to undertake joint activities. It contains no measures that curb defendants’ ability to create new vehicles for cooperation in the mold of the “astonishing array of international entities” that they established to maintain their “united front.” Philip Morris, 449 F. Supp. 2d at 119–20; see also Philip Morris, 566 F.3d

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at 1133 (observing that these organizations allow defendants to engage in “joint activities or participation in an enterprise”). Many of these were still in existence at the time of trial, including, for example, the Center for Cooperation in Scientific Research Relative to Tobacco—a “nonprofit making association with objectives to enhance the scientific cooperation for research on tobacco”—which defendants “perceived as ‘unique and very valuable’ because it enjoys the perception of ‘being objective, technical and independent.’” 566 F.3d at 1133. Nor do defendants contend that the Tobacco Control Act has any bearing on the provisions of the remedial order barring them from reconstituting the form or functions of CTR, TI, and CIAR (449 F. Supp. 2d at 938, 945), entities that formed a key part of defendants’ unlawful RICO enterprise (566 F.3d at 1107, 1108).

Indeed, the district court noted the existence of an array of other organizations that present opportunities for future collusion. For instance, defendants continued to jointly participate in the Tobacco Documentation Centre (TDC) at the time of trial. 449 F. Supp. 2d at 871. Defendants never challenged the district court’s finding that TDC—known in its previous incarnations as the International Committee on Smoking Issues (ICOSI) and then as the International Tobacco Information Center (INFOTAB)—was formed for the express purpose of allowing defendants and other tobacco companies to “meet discreetly to develop a defensive smoking and health strategy” for major markets including the United States. Id. at 129. Defendants also

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established a group called Indoor Air International (IAI), which is now named the International Society of the Built Environment (ISBE), which they positioned as a purportedly “independent and accepted source of ideas and research regarding [indoor air quality] to the public.” Id. at 763. Despite the fact that IAI was funded by Phillip Morris and BATCo, the defendants went to great pains to hide their connection to IAI, including by having the billing processed through a law firm “to avoid any direct connection to the industry.” Id. at 763. As the district court found, the ISBE “is still in existence today, . . . and is still run by industry . . . consultants.” Id. at 764.

Contrary to defendants’ claim (Def. Br. 40), the remedial order’s requirement that defendants maintain document depositories does not in any way conflict with the Act. 449 F. Supp. 2d at 941–44. That remedy ensures public transparency, by requiring the tobacco companies to ensure, on an ongoing basis, public access to all documents produced in tobacco-related litigation, including deposition transcripts and other exhibits. Id. at 942; see United States v. Philip Morris USA, Inc., 396 F.3d 1190, 1203 (D.C. Cir. 2006) (Williams, J., concurring) (RICO authorizes courts to “impose transparency requirements so that future violations will be quickly and easily identified”). The public document depository requirement plays a different role and encompasses a different set of documents than the provisions of the Act on which defendants rely (Def. Br. 40), which requires the disclosure of specified internal

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tobacco company documents. FFDCA § 904(a), (b), 123 Stat. 1790, codified at 21 U.S.C. § 387d.

2. Defendants misconstrue several decisions from which they derive mistaken standards governing the mootness inquiry. For example, defendants repeatedly cite Los Angeles v. Lyons, 461 U.S. 95 (1983), for the proposition that a party arguing against mootness must demonstrate a “realistic threat” of violations in the “reasonably near future.” Def. Br. 3 (quoting Lyons, 461 U.S. at 107 n.7, 108); see also id. at 23 (same); id. at 27 (same). But the quoted portion of the Lyons opinion set out the standard for demonstrating standing, not mootness; there is no claim here that the government lacks standing to raise RICO claims. Ibid. Lyons itself recognized that mootness is judged on a different standard; it held that the suit was not moot because “[i]ntervening events”—the imposition of a temporary moratorium on the challenged practice—“ha[d] not ‘irrevocably eradicated the effects of the alleged violation.’” Id. at 101 (quoting County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979)). Defendants similarly misunderstand Camreta v. Greene, 131 S. Ct. 2020 (2011), which they characterize as “reaffirm[ing]” that a case is moot where wrongful behavior “‘could not reasonably be expected to occur.’” Def. Br. 36 (quoting Camreta, 131 S. Ct. at 2034 (emphasis in defendants’ brief)). The Supreme Court actually stated: “When subsequent events ‘ma[ke] it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur,’ we have no live controversy to

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review.” 131 S. Ct. at 2034 (emphasis added) (quoting United States v. Concentrated Phosphate Export Assn., Inc., 393 U.S. 199, 203 (1968)). Camreta thus confirms, contrary to defendants’ contention (Def. Br. 35–37), that the district court was correct in employing that standard. JA11 (quoting United States v. Concentrated Phosphate Exp. Assoc., 393 U.S. at 203).4

Defendants are likewise mistaken when they characterize Green v. Mansour, 474 U.S. 64 (1985), as “holding” that a plaintiff’s claim against “a federal agency’s regulation was rendered moot by intervening congressional legislation.” Id. at 30–31 & n.5. The Supreme Court in Green had no occasion to address a claim of mootness, an issue that was resolved by the lower courts. Defendants’ citation is to the Court’s discussion of the procedural history of the case. Id. at 30 (citing 474 U.S. at 66–67). The Supreme Court in Green addressed only the 11th Amendment implications of a request for “a declaration that a [state agency’s] prior conduct violated federal law.”

4 Defendants’ description of the holding in Camreta is also inaccurate. The plaintiff in Camreta claimed that state officials in Oregon had violated her child’s Fourth Amendment rights by interviewing her at school; the Supreme Court dismissed that claim as moot. 131 S. Ct. at 2026–27. Defendants here describe Camreta as having “held that the plaintiff’s . . . claim . . . was moot even though it was possible—although not probable—that her constitutional rights would be violated in the future.” Def. Br. 36. The Supreme Court actually held that plaintiff’s claim was moot because “the child ha[d] grown up and moved across the country, and so will never again be subject to the . . . practices whose constitutionality is at issue.” Id. at 2026 (emphasis added); see also id. at 2034 (“[W]e discovered that S.G. has moved to Florida, and has no intention of relocating back to Oregon.” (internal quotation marks, alterations, and citations omitted)).

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474 U.S. at 65–67. That issue has no relevance to the legal question presented here.

Defendants also note that this Court found the government’s claims for injunctive relief against the Tobacco Institute (TI) and the Council for Tobacco Research-USA (CTR) to be moot. Def. Br. 28–29. But those examples only confirm that the government’s claims against the manufacturer defendants are not moot. By the time of the appeal, those entities “no longer exist[ed].” 566 F.3d at 1135. On that basis, this Court properly concluded that the government’s claims against those entities were moot, because they “cannot possibly commit future RICO violations.” Ibid. (emphasis added). The manufacturer defendants, in contrast, quite clearly continue to exist, and as long as they remain “in the business of selling and marketing tobacco products, they will have countless opportunities and temptations to take similar unlawful actions in order to maximize their revenues, just as they have done for the past five decades.” 449 F. Supp. 2d at 909.

D. For similar reasons, there is no basis to vacate particular provisions of the remedial order.

In the alternative, defendants urge that the district court erred by not ordering the vacatur of three specific injunctive provisions—the ban on the use of health descriptors, the prohibition on making false statements, and the requirement that defendants issue corrective statements. These contentions, like defendants’ broader argument, are without merit.

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1. The district court’s remedial order bars defendants from “conveying any express or implied health message or health descriptor for any cigarette brand either in the brand name or on any packaging, advertising or other promotional, informational or other material.” 449 F. Supp. 2d at 938. The order explains that “[f]orbidden health descriptors” include “the words ‘low tar,’ ‘light,’ ‘ultra light,’ ‘mild,’ ‘natural,’ and any other words which reasonably could be expected to result in a consumer believing that smoking the cigarette brand using that descriptor may result in a lower risk of disease or be less hazardous to health than smoking other brands of cigarettes.” Ibid. The order also prohibits defendants “from representing directly, indirectly, or by implication, in advertising, promotional, informational or other material, public statements or by any other means, that low-tar, light, ultra light, mild, natural, or low-nicotine cigarettes may result in a lower risk of disease or are less hazardous to health than other brands of cigarettes.” Ibid.

Defendants urge that the Act’s requirements regarding the marketing and advertising of “modified risk tobacco product[s]” make the above injunctions unnecessary. Def. Br. 46–48 (citing FFDCA § 911(b)(2)(A)(i), (g)). Again, there is no reason to assume that defendants will comply with the Act’s requirements, given their long record of unlawful conduct. Moreover, as defendants acknowledge (Def. Br. 17 n.4), Reynolds and Lorillard in the Commonwealth Brands litigation have challenged several aspects of the modified risk tobacco product provisions, including the Act’s

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ban on marketing that “represents explicitly or implicitly that . . . the tobacco product presents a lower risk of tobacco-related disease or is less harmful than one or more other commercially marketed tobacco products,” FFDCA § 911(b)(2)(A)(i), codified at 21 U.S.C. § 387k. 5 Particularly while these core aspects of the modified risk provisions are the subject of litigation, there is no basis to vacate the health descriptor injunction.

2. The remedial order also prohibits defendants “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 marketing endeavor that is disseminated to the United States public and that misrepresents or suppresses information concerning cigarettes.” 449 F. Supp. 2d at 938. Citing the FDA’s new authority to determine whether cigarette “labeling” and “advertising” is false or misleading, defendants urge that the Act “renders the possibility of such future fraud extremely unlikely.” Def. Br. 48, 50 (citing FFDCA § 903(a)(1), (a)(7)(A), codified at 21 U.S.C. § 387c).

Once more, defendants fail to explain why the Court should assume compliance with this provision in light of their evasion of countless other provisions

5 As defendants note, Def. Br. 17 n.4, Reynolds and Lorillard have not challenged the Act’s ban on the use of specific health descriptors such as “light,” “mild,” or “low tar.” FFDCA § 911(b)(2)(A)(ii), codified at 21 U.S.C. § 387k.

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designed to preclude their fraudulent conduct. Moreover, because of the inventiveness and determination that defendants showed in carrying out their conspiracy, the portion of the remedial order that defendants challenge here as redundant was not limited to “labeling” and “advertising.” Cf. Philip Morris, 566 F.3d at 1123–24 (holding that defendants’ fraudulent statements outside the commercial context were unprotected by the First Amendment “because they were clearly and deliberately false”).

3. The remedial order also requires defendants to issue “corrective statements” on five topics. 449 F. Supp. 2d at 938–41. This Court upheld that remedy on appeal, explaining that “[r]equiring Defendants to reveal the previously hidden truth about their products will prevent and restrain them from disseminating false and misleading statements, thereby violating RICO, in the future.” 566 F.3d at
1140. The district court is currently considering the content of the corrective statements.

Defendants urge that the Tobacco Control Act’s new health warning requirements obviate the corrective statement requirements in their entirety. Def. Br. 48–50. But, as discussed above, defendants are challenging those warning requirements in several courts and seek to block the warnings from taking effect. See supra at 20–21. Moreover, the content of the corrective statements is still being addressed in district court, so defendants’ claim of redundancy is, at this point, purely

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speculative. In any event, the corrective statements required by the district court’s remedial order are different in kind that the health warnings mandated by the Act. This Court concluded that the corrective statements were necessary to prevent the defendants from engaging in fraud in the future. 566 F.3d at 1140; 449 F. Supp. 2d at
926. For that reason the statements are directed to the particular categories of fraud at issue in this case. For example, the corrective statements address topics not addressed by the Act’s mandated health warnings—defendants’ deceptions regarding health descriptors and their nicotine manipulation. 566 F.3d at 1138. Moreover, the remedial order requires defendants to affirmatively disseminate the statements to several specified media outlets, including newspapers and television. Ibid.; 449 F. Supp. 2d at 938–41. Rather than conflicting with the Act, the corrective statements will complement the new health warnings, when they come into effect, and other government efforts to ensure that the health risks of smoking are understood. Defendants proclaim the corrective statements unnecessary in light of FDA’s “plan[] to spend more than $45 million in fiscal year 2011 to develop and disseminate public education campaigns to decrease initiation of tobacco product use and increase . . . cessation.” Def. Br. 15 (internal quotation marks and citation omitted). Defendants, however, spend “billions of dollars” each year on their cigarette marketing, much of which is directed at “bring[ing] new, young and hopefully long-lived smokers into the market in order to replace those who die (largely from tobacco-caused illnesses) or

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quit.”

449 F. Supp. 2d at 691 (emphasis added).

II. The District Court Did Not Abuse its Discretion in Declining to Dismiss this Suit Based on the Primary Jurisdiction Doctrine.

A. Defendants assert that the district court should have vacated its remedial order and dismissed this case in deference to FDA’s primary jurisdiction over tobacco-related matters.6 Def. Br. 51–60. That argument rests on a basic misconception of the primary jurisdiction doctrine, which applies when a lawsuit that is otherwise properly before a court “requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” United States v. Western Pacific Railroad Co., 352 U.S. 59, 64 (1956); see also Reiter v. Cooper, 507 U.S. 258, 268 (1993) (doctrine is “specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency”).

Thus, as the district court correctly observed, the primary jurisdiction doctrine is employed in “circumstances in which an agency and a court had to make the same determination under the same statute or regulation.” JA20. For example, Israel v. Baxter Laboratories, Inc., 466 F.2d 272 (D.C. Cir. 1972) (cited at Def. Br. 59–60)

6 Defendants raised a version of this argument in pretrial proceedings, urging that the government’s RICO claims would undermine the FTC’s authority to enforce the Federal Trade Commission Act and the Federal Cigarette Labeling and Advertising Act. The district court rejected that argument and defendants did not appeal that ruling. See United States v. Philip Morris Inc., 263 F. Supp. 2d 72 (D.D.C. 2003).

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involved an antitrust claim brought by a drug manufacturer and other plaintiffs who alleged that defendants had engaged in joint efforts to “preclude . . . fair FDA consideration of the safety and efficacy of plaintiffs’ drug . . . for interstate sale.” Id. at 279. This Court reasoned that “enforcement of these claims involves a determination of the safety and efficacy [of plaintiffs’ drug]. . ., a function clearly within the ‘specific competence’ of the FDA.” Id. at 281. Because the manufacturer had abandoned or withdrawn each of its new drug applications, FDA had never passed on that key issue. Id. at 274. Thus, this Court ordered the district court to hold the antitrust lawsuit in abeyance while the manufacturer reactivated its drug application with FDA to permit the agency to consider the safety and efficacy question in the first instance, subject to later court review. Id. at 282–83.

Kappelman v. Delta Air Lines, Inc., 539 F.2d 165, 169 (D.C. Cir. 1976), discussed in Def. Br. 52–53, similarly involved a dispute that had been “placed within the special competence of an administrative body.” In Kappelman, plaintiff sought an injunction against the airline requiring it to provide an “adequate warning” to passengers about the presence of radioactive materials on the flight. Id. at 168. This Court noted that Congress had vested the Secretary of Transportation with “primary authority to regulate ‘any safety aspects of the transportation of hazardous materials,’” including issues regarding what would constitute an “adequate warning.” Id. at 170. Indeed, this Court noted that the Secretary was engaged in rulemaking in

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which he was considering the very subject of warnings. Ibid. The Court thus found, in those circumstances, that “rulemaking is a more appropriate means of resolving the problems presented than is adjudication.” Id. at 173. See also, e.g., Allnet Communication Service, Inc. v. Nat’l Exchange Carrier Ass’n, 965 F.2d 1118, 1123 (D.C. Cir. 1992) (cited in Def. Br. 58) (“Allnet’s core claim is that NECA’s tariff violates the [FCC’s] regulations, a matter squarely within its expertise.”); Himmelman v. MCI Communications Corp., 104 F. Supp. 2d 1, 5–6 (D.D.C. 2000) (cited in Def. Br. 57) (“The crux of the instant dispute is whether MCI has acted justly, reasonably and honestly in establishing procedures to effectuate the terms of its FCC directory-assistance tariff. . . . This is significant, because the FCC has primary jurisdiction over claims that tariffs and/or practices are not just and reasonable.” (internal quotation marks, alterations, and citations omitted)).

By contrast, the question of defendants’ liability under RICO, or the propriety of this Court’s remedial order, in no way “requires the resolution of issues” that have been “placed within the special competence of an administrative body.” Western Pacific Railroad Co., 352 U.S. at 64. As the district court explained, the courts, and not FDA, have exclusive jurisdiction to decide RICO claims, and the underlying mail and wire fraud violations on which they are premised in this case. JA19–20. None of the fact-findings or legal conclusions on which this RICO liability judgment and remedial order rest would be altered by referral of any issue to FDA, and defendants have

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identified no such issue. See Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 305–06 (1976) (noting that “[t]he standards to be applied in an action for fraudulent misrepresentation are within the conventional competence of the courts, and the judgment of a technically expert body is not likely to be helpful”); Dana Corp. v. Blue Cross & Blue Shield of N. Ohio, 900 F.2d 882, 889 (6th Cir. 1990) (declining to defer to the primary jurisdiction of a state administrative agency in a civil RICO suit).

B. As evidence of a supposed conflict between the Act and the injunction, defendants assert that the injunction barring health descriptors could impede “FDA’s authority to permit the use of such descriptors.” Def. Br. 55. The Tobacco Control Act authorizes the FDA to permit a “modified risk product[]” to be marketed, but only after making the statutorily required determinations. FFDCA § 911(g)(1), codified at 21 U.S.C. § 387k. As noted, defendants are challenging the FDA review scheme in Commonwealth Brands, and no defendant has even sought (much less received) an FDA order under this section for any product. Thus, as the district court recognized, the posited conflict is, at this point, “both premature and speculative.” JA24–25. Defendants further profess concern that it is “likely that the onserts displaying the district court’s prescribed corrective statements will partially conceal the public- health warnings required by the [Act] and implemented by the FDA.” Def. Br. 56. As explained, the mandated cigarette warnings have, on defendant Reynolds and Lorillards’ motion, been enjoined. Moreover, Defendants have not yet discussed

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with the government their ability to design and apply onserts; the substance of the corrective statements is still before the district court.

In any event, as the district court stressed, “should Defendants find that they are subject to conflicting requirements from this Court and the FDA, they have ample recourse through a Rule 60(b) motion.” JA25. Similarly, the court noted that “the Government may always file a motion to amend the judgment,” if FDA “issues regulations that . . . conflict with an order of this Court.” Ibid. Should FDA’s health warning requirements be upheld and implemented, the government will review the district court’s order and, if a need develops, apply for an appropriate modification of injunction at that time. At present, however, there are no grounds to vacate this requirement.

Finally, even if exercise of the court’s equitable jurisdiction were to implicate an issue requiring FDA resolution—which it does not—the Court would not vacate the remedial order but would, instead, refer the pertinent questions to FDA subject to further judicial review. See, e.g., Israel, 466 F.2d at 282–83. Although, in some cases, courts have dismissed suits while the agency considers the referral, this Court has stressed that dismissal is not an appropriate remedy where it would prejudice a plaintiff’s ability to obtain relief. See Am. Ass’n of Cruise Passengers v. Cunard Line, Ltd., 31 F.3d 1184, 1187 (D.C. Cir. 1994); compare Allnet Communication, 965 F.2d at 1123 (dismissal appropriate where there is “no present prejudice to either party from

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dismissal”). Plainly, outright dismissal of this suit at this juncture—after years of pretrial proceedings, a nine-month bench trial, a comprehensive decision spanning nearly an entire volume of the Federal Supplement 2d, and complete appellate review—would prejudice the government, not to mention the American public who have, for decades, been victim to defendants’ fraud.

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CONCLUSION

For the foregoing reasons, the order on review should be affirmed.

Respectfully submitted,

MICHAEL F. HERTZ

Deputy Assistant Attorney General

MARK B. STERN

ALISA B. KLEIN

/s/ Sarang V. Damle

SARANG VIJAY DAMLE

(202) 514-5735

sarang.damle@usdoj.gov

Attorneys, Appellate Staff

Civil Division, Room 7217

U.S. Department of Justice

950 Pennsylvania Ave., N.W.

Washington, DC 20530-0001

MARCH 2012

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CERTIFICATE OF COMPLIANCE

Pursuant to Rule 32(a)(7)(C) of the Federal Rules of Appellate Procedure, I hereby certify that this brief complies with the type-volume limitation in Rule 32(a)(7)(B). The foregoing brief was prepared in 14-point Garamond font using Corel WordPerfect X5. The brief, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), contains 9,619 words, as counted by Corel WordPerfect X5.

/s/ Sarang V. Damle

Sarang V. Damle

Counsel for Appellees

CERTIFICATE OF SERVICE

I hereby certify that on March 12, 2012, I filed the foregoing Final Brief For Appellee with the Clerk of the Court by causing a copy to be electronically filed via the appellate CM/ECF system. I also hereby certify that within two business days, I will cause 14 copies to be delivered to the Court via hand delivery. I also hereby certify that the participants in the case are registered CM/ECF users and will be served via the CM/ECF system.

/s/ Sarang V. Damle

Sarang V. Damle

Counsel for Appellees

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