DOJ Appeal: FINAL BRIEF FOR THE PLAINTIFF-INTERVENORS TOBACCO-FREE KIDS ACTION FUND, et al. March 12, 2012

March 15, 2012 9:22 am by Gene Borio

The PDF is Here

EXCERPT:

SUMMARY OF ARGUMENT

Defendants’ latest efforts to avoid the findings and remedies in this case must fail.

1. The Tobacco Control Act does not render this lawsuit moot.

Defendants present no facts demonstrating that they have ceased their unlawful practices, which continue. To the contrary, the new statute expressly provides that it does not “affect” this case in any way, and it covers different conduct than what was at issue here. Moreover, because Defendants are challenging key provisions of the statute, and other provisions have not even gone into effect, there is no basis upon which Defendants can legitimately contend that the mere enactment of the statute ended their decades-long campaign of fraud and deceit against the American public. Defendants also fail to explain why this particular statute will fundamentally constrain their misconduct despite their failure to comply with prior purported constraints such as the MSA.

2. The primary jurisdiction doctrine also has no application here. This case has already been decided, and, in any event, the FDA has no role in monitoring Defendants’ compliance with RICO.

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,

TOBACCO FREE KIDS ACTION FUND, et al.,

Plaintiff-Intervenors-Appellees,

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 THE PLAINTIFF-INTERVENORS

TOBACCO-FREE KIDS ACTION FUND, et al.

Katherine A. Meyer

Howard M. Crystal

MEYER GLITZENSTEIN & CRYSTAL

1601 Connecticut Ave., N.W., Suite 700

Washington, D.C. 20009

Telephone: (202) 588-5206

Facsimile: (202) 588-5049

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CERTIFICATE AS TO PARTIES, RULINGS AND RELATED CASES

A. Parties And Amici

Appellants are R.J. Reynolds Tobacco Co (individually and as successor to Brown & Williamson Tobacco Corporation); Philip Morris USA Inc.; Altria Group, Inc; and Lorillard Tobacco Co. Appellee is the United States of America.

The Tobacco Free Kids Action Fund, American Cancer Society, American Heart Association, American Lung Association, Americans for Nonsmokers’ Rights, and National African American Tobacco Prevention Network intervened in the district court, and are also Appellees here. Washington Legal Foundation is amicus in this Court.

The following additional parties also 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.

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

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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, 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.

PLAINTIFF-INTERVENOR APPELLEES’ RULE 26.1

CORPORATE DISCLOSURE STATEMENT

The Tobacco Free Kids Action Fund, American Cancer Society, American Heart Association, American Lung Association, and Americans for Nonsmokers’ Rights, are non-profit education and advocacy organizations dedicated to a

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number of public health issues, including working to prevent and reduce tobacco use and its harms. The National African American Tobacco Prevention Network is a national non-profit organization dedicated to facilitating the development and implementation of comprehensive and community competent tobacco control programs to benefit communities and people of African descent.

None of the Public Health Intervenors has any parent companies or issues any stock or partnership shares.

B. Rulings Under Review

Reference to the ruling at issue appears in Appellants’ Certificate.

C. Related Cases

Aspects of this case have come before this Court in several previous appeals. See 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). Appellants have also filed a separate appeal in Case No. 11-5146. /s/ Howard M. Crystal

Howard M. Crystal

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TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES ………………………………….. iii

JURISDICTIONAL STATEMENT. ………………………………1

STATEMENT OF THE ISSUES. ………………………………..1

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

A. The District Court’s Previous Undisturbed Findings That Injunctive Relief Is Necessary To Protect The Public From Defendants’ Continuing Fraud And Deception. . . . . . . . . . . . . . . . . . 2

1. The District Court’s Findings of Liability……………..2

2. The District Court’s Remedies……………………..6

B. The Family Smoking And Prevention And Tobacco Control Act………………………………………. 8

C. Defendants’ Motion For Vacatur……………………….10

D. The Tobacco Industry Continues To Deceive The American Public………………………………….. 12

SUMMARY OF ARGUMENT…………………………………. 14

ARGUMENT……………………………………………… 15

I. THIS CASE IS NOT MOOT. ……………………………..15

II. THE DISTRICT COURT DID NOT ERR IN DECLINING TO VACATE CERTAIN REMEDIES.. …………………………25

A. The Ban On Health Descriptors Is Not Moot……………….25

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B. The District Court’s Corrective Statements Remedy Is Not Moot.. ……………………………………… 28

C.

The Injunction Prohibiting False, Misleading, And Deceptive Statements Is Not Moot……………………………… 31

III.

THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DECLINING TO VACATE ITS INJUNCTIONS IN DEFERENCE TO THE FDA’S AUTHORITY…………………………….. 32 CONCLUSION……………………………………………. 38

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TABLE OF AUTHORITIES

CASES PAGE

Allnet v. Communication Service, Inc.,

965 F.2d 1118 (D.C. Cir. 1992). ………………………………35

Brown v. Plata,

131 S. Ct. 1910 (2011). …………………………………….24

Bullfrog Films, Inc. v. Wick,

959 F.2d 778 (9th Cir. 1992)…….. ….. . ……. . ……………… 24

Chevron U.S.A. v. Natural Resources Defense Council,

467 U.S. 837 (1984). ………………………………………18

Common Cause v. Nuclear Regulatory Commission,

674 F.2d 921 (D.C. Cir. 1982). ……………………………….21

Commonwealth Brands, Inc. v. United States,

678 F. Supp. 2d 512 (W.D. Ky. 2010). ………………………..9, 28

Diffenderfer v. Gomez-Colon,

587 F.3d 445 (1st Cir. 2009)…….. ….. . ……. . ……………… 23

*Friends of the Earth, Inc. v. Laidlaw Environmental Servs., Inc.,

528 U.S. 167 (2000). …………………………………11, 15, 19

Green v. Mansour,

474 U.S. 64 (1985). ……………………………………….23

Herbert v. Nat’l Academy of Sciences,

974 F.2d 192 (D.C. Cir. 1992). ……………………………….25

* Authorities upon which we chiefly rely

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Log Cabin Republicans v. United States,

658 F.3d 1162 (9th Cir. 2011)……. ….. . ……. . ……………… 22

Martinez v. Wilson,

32 F.3d 1415 (9th Cir. 1994)…….. ….. . ……. . ……………… 23

N.L.R.B. v. Blevins Popcorn Company,

659 F.2d 1173 (D.C. Cir. 1981). ………………………………21

Nader v. Allegheny Airlines,

426 U.S. 290 (1976). ………………………………………35

Philip Morris USA, Inc. v. United States,

130 S.Ct. 3501 (2010)……………………………………… 10

Reiter v. Cooper,

507 U.S. 258 (1993). ………………………………………37

R.J. Reynolds Tobacco Co. v. FDA,

2011 WL 5307391 (D.D.C. Nov. 7, 2011) ….. . . . ….. . . . . . . . . . . . . . . 9, 30

SEC v. Savoy Indus. Inc.,

665 F.2d 1310 (D.C. Cir. 1981). ……………………………….7

SEC v. Savoy Indus., Inc.,

587 F.2d 1149 (D.C. Cir. 1978). ……………………………….4

Tamburello v. Comm-Tract Corp.,

67 F.3d 973 (1st Cir. 1995)……… ….. . ……. . ……………… 36

Texas and Pacific Railway Company v. Abilene Cotton Oil Co.,

204 U.S. 426 (1907). ………………………………………35

United States v. Concentrated Phosphate Exp. Assoc.,

393 U.S. 199 (1968). ………………………………………15

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

566 F.3d 1095 (D.C. Cir. 2009). . . . . . . . 1, 2, 3, 6, 7, 12, 21, 24, 25, 29, 32, 37

United States v. Philip Morris USA, Inc.,

449 F. Supp. 2d 1 (D.D.C. 2006). . . . . . . . 3-7, 13, 16, 17, 20, 26-29, 31, 32, 37

United States v. Turkette,

452 U.S. 576 (1981). ………………………………………34

*United States v. Western R.R.Co.,

352 U.S. 59 (1956). …………………………………….33, 34

STATUTES

18 U.S.C. § 1964……………………………………………. 4

21 U.S.C. § 387. . . . ……………. ….. . ……. . …………….. 8, 9

Tobacco Control Act, Pub. L. No. 111-31,

123 Stat. 1776 (June 22, 2009)……………… 8, 9, 17, 18, 26, 29, 30, 35

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GLOSSARY

FDA Food and Drug Administration

MRTPR Modified Risk Tobacco Product

MSA Master Settlement Agreement

NLRA National Labor Relations Act

RICO Racketeer Influenced and Corrupt

Organizations Act

Tobacco Control Act Family Smoking Prevention and Tobacco Control Act

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JURISDICTIONAL STATEMENT

The Public Health Intervenors adopt the jurisdictional statement of the United States.1

STATEMENT OF THE ISSUES

1. Whether the Defendants have met their burden to demonstrate that merely by virtue of enactment of the Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”) on June 22, 2009, it is absolutely clear that they could not reasonably be expected to continue to engage in any of the mail and wire fraud practices designed to acquire and keep smokers that the district court found – and this Court has already affirmed – have been their standard operating procedures for fifty years in order to sustain their extremely profitable industry, and hence that this case is now moot.

2. Whether the district court abused its discretion in declining to vacate its decision on the ground that the Tobacco Control Act grants the Food and Drug Administration authority to regulate some of the tobacco industry’s practices.

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1 The Public Health Intervenors are six national nonprofit public health organizations – Tobacco-Free Kids Action Fund, American Cancer Society, American Heart Association, American Lung Association, Americans for Nonsmokers’ Rights, and National African Tobacco Prevention Network. See United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1108 (D.C. Cir. 2009) (explaining the history of the intervention).

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STATEMENT OF THE CASE

A. The District Court’s Previous Undisturbed Findings That Injunctive Relief Is Necessary To Protect The Public From Defendants’ Continuing Fraud And Deception

1. The District Court’s Findings of Liability

On August 17, 2006, after seven years of litigation, including a bench trial that lasted nine months, the district court (Kessler, J.) entered judgment against the tobacco industry Defendant-Appellants under the Racketeer Influenced and Corrupt Organizations Act (“RICO), 18 U.S.C. §§1961-1968, based on extensive findings that the tobacco companies maintained an illegal racketeering scheme to defraud smokers and potential smokers by, as this Court summarized, “(1) falsely denying the adverse health effects of smoking”; (2) “falsely denying that nicotine and smoking are addictive”; (3) “falsely denying that they manipulated cigarette design and composition so as to assure nicotine delivery levels that create and sustain addiction”; (4) “falsely representing that ‘light’ and ‘low tar’ cigarettes deliver less nicotine and tar and therefore present fewer health risks than full flavor cigarettes”; (5) “falsely denying that they market to youth”; (6) “falsely denying that secondhand smoke causes disease”; and (7) “suppressing documents, information, and research to prevent the public from learning the truth about these subject and to avoid or limit liability in litigation.” Philip Morris, USA, Inc., 566

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F.3d at 1108. This Court upheld all of the district court’s findings. Id. at 1105, 1110-31.

As summarized by the trial court, the evidence established “overwhelmingly” that the tobacco companies devised a scheme to defraud consumers “to obtain, from smokers and potential smokers, money, i.e., the cost of cigarettes, to fill the coffers of the corporate Defendants,” and that:

over the course of more than 50 years, Defendants lied, misrepresented, and deceived the American public, including smokers and the young people they avidly sought as “replacement smokers,” about the devastating health effects of smoking and environmental tobacco smoke, they suppressed research, they destroyed documents, they manipulated the use of nicotine so as to increase and perpetuate addiction, they distorted the truth about low tar and light cigarettes so as to discourage smokers from quitting, and they abused the legal system in order to achieve their goal – to make money with little, if any, regard for individual illness and suffering, soaring health costs, or the integrity of the legal system.

United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1, 852 (D.D.C. 2006).

As the district court explained, the consequences of these unlawful activities are extremely dire:

[c]igarette smoking and exposure to secondhand smoke . . . kills nearly 440,000 Americans every year. The annual number of deaths due to cigarette smoking is substantially greater than the combined annual number of deaths due to illegal drug use, alcohol consumption, automobile accidents, fires, homicides, suicides, and AIDS. Approximately one out of every five

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deaths that occur in the United States is caused by cigarette smoking.

Id. at 146 (emphasis added).

In reaching its decision to impose injunctive remedies for these massive violations of law, the district court also found that the extensive trial evidence demonstrated that there was a “reasonable likelihood of further violation[s] in the future” – the standard governing the imposition of remedies under Section 1964 of RICO. See 449 F. Supp. 2d at 909, citing SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978); 18 U.S.C. § 1964 (limiting such remedies to those that the court finds are necessary to “prevent and restrain” further violations of the statute). Thus, the trial court judge found that, unless enjoined, the companies were “reasonably likely” to commit future RICO violations because (a) the evidence showed that they had engaged in these deceptive and fraudulent acts for more than a half-century; (b) their “numerous misstatements and acts of concealment and deception were made intentionally and deliberately . . . as part of a multi-faceted, sophisticated scheme to defraud”; (c) “as long as Defendants are 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”; and (d)

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they engage in these practices “in order to maximize [their] revenues by recruiting new smokers (the majority of whom are under the age of 18), preventing current smokers from quitting, and thereby sustaining the industry.” 449 F. Supp. 2d at 909-910 (internal citations omitted).

The district court also rejected Defendants’ contention that no injunction was necessary because a Master Settlement Agreement (“MSA”) reached with forty-six states and the District of Columbia already sufficiently restrained them from engaging in such practices. Id. at 912-915. Rather, the district court found that the manufacturers’ well established history of unlawful conduct, coupled with the fact that they continued to commit violations of the MSA well after it went into effect, amply demonstrated the “reasonable likelihood” that they would continue to engage in these practices in the future. Id.

For example, despite the fact that the MSA prohibited marketing to youth, the evidence established that “[d]efendants continue to track youth behavior and preferences and market to youth using imagery which appeals to the needs and desires of adolescents,” because “[d]efendants are well aware that over eighty percent of adult smokers began smoking before the age of 18, and therefore know that securing the youth market is critical to their survival.” Id. at 912. Thus, the district court found that “[t]here is . . . no reason, especially given their long

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history of denial and deceit, to trust [Defendants’] assurances that they will not continue committing RICO violations denying their marketing to youth.” Id.

In short, while acknowledging that the MSA “had made significant strides towards preventing Defendants’ fraudulent activities,” id. at 913, based on all of the evidence that was before it, the district court rejected the companies’ contention that they had “fundamentally altered their conduct since entering the MSA.” Id. at 914; see also id. at 910 (“[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”) (emphasis added). These findings were also upheld by this Court. See 566 F.3d at 1133 (upholding district court’s findings that “Defendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement”) (emphasis added).

2. The District Court’s Remedies

Based on all of this evidence of liability under RICO, the district court imposed several specific injunctive remedies against the Defendants-Appellants, ordering them to, inter alia, (1) refrain from any further acts of racketeering relating to the manufacturing, marketing, promotion, health consequences, or sale of cigarettes in this country; (2) refrain from making and disseminating in this

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country any material false, misleading, or deceptive representation concerning cigarettes; (3) cease using any express or implied health message or health descriptor for any cigarette brand, such as “light” or “low tar”; (4) make corrective disclosures about addiction, the health effects of smoking and secondhand smoke, their manipulation of nicotine delivery and light and low tar cigarettes; and (5) publicly disclose industry documents at a document depository and on websites, and disclose all their disaggregated marketing data and reports to the government. See 566 F.3d at 1109.

This Court also upheld most of this relief, including the injunctions barring the manufacturers from committing future acts of racketeering “‘relating in any way to the manufacturing, marketing, promotion, and health consequences or sale of cigarettes in the United States,’” and from making “‘any material false, misleading, or deceptive statement or representation . . . that misrepresents or suppresses information concerning cigarettes.’” Id. at 1136. Recognizing that these injunctions “may be broad,” this Court emphasized that this “breadth is warranted ‘to prevent further violations where[, as here,] a proclivity for unlawful conduct has been shown.’” Id. at 1137, quoting SEC v. Savoy Indus. Inc., 665 F.2d 1310, 1317 (D.C. Cir. 1981) (additional citations omitted) (emphasis added).

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B. The Family Smoking Prevention And Tobacco Control Act

In June 2009, Congress enacted the Tobacco Control Act, Pub. L. No. 11131, 123 Stat. 1776 (June 22, 2009), codified at 21 U.S.C. § 387 note. That statute does not purport to find that the tobacco companies are no longer engaged in deceptive and fraudulent marketing practices to acquire and keep smokers, or that they will not continue to engage in such activities in the future. Nor does the statute or its legislative history suggest that, with its passage, Congress intended to in any way supplant the district court’s RICO ruling and injunctions in this case.

On the contrary, the Act gives the Food and Drug Administration (“FDA”) new authority to regulate tobacco products, bans the sale of tobacco products marketed as reducing the risk of tobacco-related diseases, and imposes new labeling requirements on the industry. It also includes among its legislative “Findings” the district court’s evidentiary conclusions in this case that “the major United States cigarette companies continue to target and market to youth[,] . . . dramatically increased their advertising and promotional spending in ways that encourage youth to start smoking subsequent to the signing of the Master Settlement Agreement in 1998 [,] . . . [and] have designed their cigarettes to precisely control nicotine delivery levels . . . to create and sustain addiction while also concealing much of their nicotine-related research.” Id. §§ 2(47)-(49)

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(emphasis added). Further, the statute expressly provides that “[n]othing in this Act . . . shall be construed to . . . affect any action pending in Federal, State, or tribal court, or any agreement, consent decree, or contract of any kind.” Id. § 4(a) (emphasis added).

Many provisions of the Tobacco Control Act have not yet been implemented, while others implemented by recent FDA regulations are already the subject of litigation brought by the industry, including Appellants here. See Commonwealth Brands, Inc. v. U.S., 678 F. Supp. 2d 512 (W.D. Ky. 2010), cross appeals pending sub nom Discount Tobacco City & Lottery Inc. v. United States, Nos. 10-5234 & 10-5235 (6th Cir.); see also R.J. Reynolds Tobacco Co. v. U.S. Food and Drug Admin., 2011 WL 5307391 (D.D.C. Nov. 7, 2011), appeal pending, No. 11-5332 (D.C. Cir.).2

After the Tobacco Control Act was enacted, Defendants filed petitions for rehearing en banc of this Court’s decision affirming the trial court, on the ground

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2 Thus, as set out in the attached Addendum, see Add.-1, many provisions of the statute and implementing regulations either remain to be implemented by the FDA or are being challenged. It is also apparent that the industry intends to file additional actions challenging the FDA’s implementation of the statute. See, e.g., Exhibit 1 to United States Opposition To Defendants’ Motion For Vacatur (Apr. 4, 2011), at 5-6 (JA 91-93) (comments by defendants Altria and Philip Morris that aspects of FDA’s proposed mandated warnings for cigarette packages and advertisements are unconstitutional).

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that the new statute rendered the entire case moot. Some of the Defendants also filed a separate “Suggestion of Mootness and Motion for Partial Vacatur,” contending that the new statute’s ban on the sale of “modified risk tobacco products” rendered the district court’s ban on health descriptors such as “light” and “low tar” moot. The petitions and “Suggestion of Mootness” were denied, as were subsequent petitions for certiorari in the Supreme Court. United States v. Philip Morris USA, Inc., No. 06-5267 (D.C. Cir. Sept. 22, 2009); Philip Morris USA, Inc. v. United States, 130 S.Ct. 3501 (2010).

C. Defendants’ Motion For Vacatur

On March 3, 2011, Defendants filed a Motion for Vacatur in the district court, contending that the Tobacco Control Act rendered the entire controversy moot, and hence that the court lacked Article III jurisdiction to enforce its injunctions. Defendants alternatively argued that if the case is not moot, the district court should exercise its discretion not to enforce its injunctions, and instead defer to the FDA’s new regulatory authority under the doctrine of “primary jurisdiction.” See Def. Motion for Vacatur (Mar. 3, 2011) (JA 51). Both the federal government and the Public Health Intervenors opposed that motion. E.g. JA 94.

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On June 1, 2011, finding that the Defendants had failed to meet their “formidable burden” that it is “‘absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur’” – the standard governing the industry’s contention that its future compliance with the new legislation makes this case “moot” – the court denied the motion. JA 2-27 (“Mem. Op.”) at 10, quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 190 (2000); see also JA 1 (Order). In reaching that conclusion, the district court noted that the Defendants “offer[ed] no facts” in support of their position that despite extensive findings that (a) Defendant tobacco companies had engaged in a 50-year long concerted effort to deceive the American public about the hazards of smoking cigarettes, and (b) absent an injunction, would continue to do so in the future, they had suddenly stopped engaging in such practices, simply by virtue of enactment of the new Tobacco Control Act. See Mem. Op. at 10 (emphasis added).

Indeed, noting that the industry had made a similar argument when it contended that the mere existence of the MSA made it impossible to show that there was a “reasonable likelihood” of future violations of RICO – and hence that the court lacked jurisdiction to impose any injunctive relief – the district court stressed that this Court had agreed that “future violations remain likely notwithstanding the MSA” and had specifically affirmed the district court’s

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finding that “Defendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement.” Mem. Op. at 11, quoting Philip Morris, 566 F.3d at 1132-33. Thus, based on the entire history of the case, the district court concluded that it “cannot accept the Defendants’ contention that the Tobacco Control Act will produce their conformity to the law even though RICO and the MSA could not.” Mem. Op. at 11-12. The court also rejected Defendants’ primary jurisdiction arguments. Id. at 15-25.

D. The Tobacco Industry Continues To Deceive The American Public

Meanwhile, despite the district court’s injunctions against the marketing of cigarettes with implied health claims such as “light” and “low-tar,” the industry continues to communicate such messages. Thus, it appears that the tobacco companies have responded to this particular injunction by switching its “light” and “ultra light” brands to color-coded packs, such as “Marlboro Gold” and “Marlboro Silver,” to convey the same implicit health messages.3

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3 See JA 86-87 (Intervenor Reply On Corrective Statements (Mar. 6,
2011) at 18-19) (explaining that consumers who previously smoked Marlboro Lights or Ultra Lights are now being steered to purchase “Marlboro Golds” or “Marlboro Silvers”) citing Duff Wilson, “Coded to Obey Law, Lights Become Marlboro Gold,” N.Y. Times, Feb. 18, 2010 (reporting that “Marlboro Lights, the nation’s best-selling brand, from Philip Morris, will be renamed Marlboro Gold, according to a flier the company recently sent to distributors. Likewise, Marlboro Ultra Lights will change to Marlboro Silver”); see also JA 86-87, citing Duff Wilson, “F.D.A. Seeks Explanation of Marlboro Marketing,” N.Y. Times, June 17,

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Similarly, despite the district court’s injunction prohibiting defendants from continuing to make fraudulent statements about smoking and related health issues, Defendants’ own websites continue to spread misleading information about these matters. For example, in finding in 2006 that the Defendants “have not ceased engaging in unlawful activity,” the district court noted that Defendants “continue to deny the full extent to which [second-hand smoke] can harm nonsmokers and smokers,” by either flatly denying this fact, claiming it is still an “open question,” or, as in the case of Philip Morris and others, saying that “they don’t take a position and that the public should follow the recommendations of the public health authorities.” 449 F. Supp. 2d at 801 (emphasis added). Yet, on its recent website Philip Morris still states only that “Public health officials have concluded that secondhand smoke from cigarettes causes disease” – clearly implying that Philip Morris disagrees with this conclusion, despite the fact that, as the district court concluded, the company internally acknowledges these very health effects, 449 F. Supp. 2d at 708. See Intervenors’ Response To The Court’s November 17, 2010 (reporting that “notes [were] placed on the last packs of Marlboro Lights reading, ‘Your Marlboro Lights package is changing, but your cigarettes stay the same,” and that ‘[i]n the future, ask for Marlboro in the gold pack”) (emphasis added); JA 86-87 (demonstrating that other defendants have also substituted their “lights” brands for colored brands) (citations omitted); see also www.nytimes.com/imagepage… (graphic image of note inserted in packs) (last visited Feb. 8, 2012).

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2011 Order (Dec. 20, 2011), Attachment 1 (JA 151-53) (emphasis added); see also JA 144-45 (discussing other Defendant-Appellants’ recent websites).

SUMMARY OF ARGUMENT

Defendants’ latest efforts to avoid the findings and remedies in this case must fail.

1. The Tobacco Control Act does not render this lawsuit moot.

Defendants present no facts demonstrating that they have ceased their unlawful practices, which continue. To the contrary, the new statute expressly provides that it does not “affect” this case in any way, and it covers different conduct than what was at issue here. Moreover, because Defendants are challenging key provisions of the statute, and other provisions have not even gone into effect, there is no basis upon which Defendants can legitimately contend that the mere enactment of the statute ended their decades-long campaign of fraud and deceit against the American public. Defendants also fail to explain why this particular statute will fundamentally constrain their misconduct despite their failure to comply with prior purported constraints such as the MSA.

2. The primary jurisdiction doctrine also has no application here. This case has already been decided, and, in any event, the FDA has no role in monitoring Defendants’ compliance with RICO.

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ARGUMENT

I. THIS CASE IS NOT MOOT.

To demonstrate that this case and the district court’s injunctions have become moot, the defendants have the heavy burden of demonstrating that “subsequent events ma[ke] it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.” United States v. Concentrated Phosphate Exp. Assoc., 393 U.S. 199, 203 (1968) (emphasis added); accord, Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 190 (2000). Although Defendants argue that this standard only applies to the “voluntary compliance setting,” and that, here they need show only that “the allegedly wrongful behavior could not reasonably be expected to recur,” see Defendant- Appellants’ Brief (“Def. Br.”) at 36, it does not matter which of these standards the Court applies, because here Defendants have made neither showing. Moreover, as demonstrated below, because the industry relies – exclusively – on its future compliance with the new legislation as a basis for asserting that the court’s injunctions are moot, the district court was amply justified in applying the “absolutely clear” standard that applies to claims of “voluntary compliance” with the law, and correctly held that the Defendants fall far short of carrying this burden.

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Most glaringly, Defendants made no showing whatsoever that they are in fact no longer engaged in the practices that are encompassed by the court’s injunctions. Thus, as the district court stressed, “Defendants offer no facts which would warrant revisiting the findings of this Court – findings that were affirmed by the Court of Appeals.” Mem. Op. at 10 (emphasis added). Those findings include that “[o]ver the course of more than 50 years, the Defendants lied, misrepresented, and deceived the American public . . . about the devastating health effects of smoking,” “manipulated the use of nicotine [] to increase and perpetuate addiction,” “distorted the truth about low tar and light cigarettes [] to discourage smokers from quitting,” 449 F. Supp. 2d at 852, and that “[t]here is a reasonable likelihood that Defendants’ RICO violations will continue in most of the areas in which they have committed violations in the past.” 449 F. Supp. 2d at 911.4

Indeed, as the district court reiterated from the findings affirmed by this Court, “‘as long as Defendants are 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

——

4 Thus, Amici Washington Legal Foundation’s (“WLF”) repeated reference to Defendants’ “evidence” showing that they have ceased their unlawful activity is entirely baseless, as no such evidence has ever been presented. See, e.g. Brief of the WLF (Dec. 19, 2011) (“WLF Br.”) at 18-19.

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done for the past five decades.’” Mem. Op. at 8, quoting 449 F. Supp.2d at 909 (emphasis added). In any event, because they have made no showing that they have ceased violating RICO, Defendants simply cannot meet what even they contend is the proper standard for mootness here – i.e., that a case is moot when there is “no reasonable expectation that the wrong will be repeated.” See Def. Br. at 36 (other citations omitted). Here, the industry has not made any such showing.5

Instead of making any such evidentiary showing, Defendants summarily assert that the mere enactment of the Tobacco Control Act itself made this case moot. See Def. Br. at 3 (“the FDA’s comprehensive authority under the Act eliminates any reasonable likelihood that Defendants will repeat the past conduct on which the district court premised its forward-looking injunctive relief”). However, that argument is wrong for several reasons.

First, the statute itself provides that “[n]othing in this Act . . . shall be construed to . . . affect any action pending in Federal, State, or tribal court.” Pub.

——

5 Amici WLF’s further suggestion that Defendants would not continue to violate the law “in pursuit of marginal increases in profitability,” WLF Br. at 20, simply shows an unwillingness to accept the district court’s overwhelming findings that Defendants engage in these fraudulent practices precisely in order “to make money with little, if any, regard for individual illness and suffering, soaring health costs, or the integrity of the legal system.” 449 F. Supp. 2d at 852.

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L. No. 111-31, § 4(a) (emphasis added). Because this case was clearly “pending” on June 22, 2009 when the statute was passed – a fact that was well known to Congress, which relied on the district court’s decision in several legislative “findings,” id. § 2 – the plain language of the statute dictates that Defendants’ mootness argument must fail. See Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984) (“[i]f the intent of Congress is clear, that is the end of the matter; for the court . . . must give effect to the unambiguously expressed intent of Congress”).

Not surprisingly, Defendants urge this Court to ignore this extremely salient provision of the statute on the grounds that this provision “cannot . . . alter the jurisdictional requirements imposed by Article III.” Def. Br. at 4. Yet, again, the industry has made no independent showing that it has actually ceased engaging in any of the practices outlawed by the district court’s injunctions – rather, it relies exclusively on the enactment of the statute in insisting that it will necessarily no longer engage in those practices. Accordingly, Congress’ intent in passing that statute is critical to determining whether the legislation does in fact render the district court’s injunctions moot – and, because Congress made clear that it had no such intent, this should be “the end of the matter.” Chevron, 467 U.S. at 842.

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Second, as discussed, see supra at 9, n.2, numerous provisions of the

Tobacco Control Act have either not even been implemented yet, or are the subject of pending litigation and therefore may never be implemented. Thus, Defendants attempt to turn the facts and law upside down by asserting that the district court erred in relying on the pending challenges to the legislation and the FDA’s implementing regulations as a basis for concluding that this case is not moot because “subject matter jurisdiction must be evaluated based on present circumstances, not based on speculation about the outcome of ongoing litigation challenging an act of Congress.” Def. Br. at 42 (emphasis in original). As the district court has already extensively found – and this Court has affirmed – “present circumstances” overwhelmingly demonstrate the court’s exercise of subject matter jurisdiction here. It is Defendants who would have this Court rest a decision that the case is moot based on their completely unsubstantiated and self- serving speculation that they will fully comply with the Tobacco Control Act and all of its as-yet promulgated and implemented regulations at some point in the future, and that, hence, there is no longer any need for the district court’s injunctions.

It is this reasoning that led the district court to apply the standard for mootness articulated in Friends of the Earth, Inc., 528 U.S. at 190 – i.e., that a

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defendant claiming that a case is moot because of the defendant’s voluntary compliance with the governing law bears “the formidable burden of showing that it is absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.” Mem. Op. at 10. Indeed, the court’s use of that standard was actually quite generous, where here, rather than make any demonstration that they have in fact stopped the unlawful practices that are covered by the injunctions at issue in response to the Tobacco Control Act – or for any other reason – the Defendants instead summarily assert that the district court’s injunctions are moot because the companies will necessarily comply with this new law when it becomes fully implemented in the future. We know of no case – and defendants certainly have not cited any – standing for the proposition that a case has become moot based on the purported future voluntary compliance of the Defendant.

Third, as the district court correctly explained, the Tobacco Control Act and the injunctions issued by this court cover different conduct. See Mem. Op. at 11. Most notably, this court has enjoined the tobacco companies from “committing any act of racketeering as defined [by RICO], relating in any way to the manufacturing, marketing, promotion, health consequences or sale of cigarettes in the United States.” 449 F. Supp. 2d at 938. Nothing in the Tobacco Control Act

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similarly prohibits the manufacturers from engaging in mail or wire fraud in furtherance of their racketeering scheme to defraud the American public.

Indeed, if it can be shown by clear and convincing evidence that any of the Defendants is violating the court’s injunction, that Defendant can be held in contempt of court until it is brought into compliance. See N.L.R.B. v. Blevins Popcorn Co., 659 F.2d 1173, 1183 (D.C. Cir. 1981) (“[i]n civil contempt proceedings the clear and convincing evidence standard applies and the failure to comply with the court decree need not be intentional”); see also Common Cause v. Nuclear Regulatory Commission, 674 F.2d 921, 927 (D.C. Cir. 1982) (“[t]he judicial contempt power is a potent weapon”). This fact alone demonstrates the fallacy of Defendants’ mootness argument – having invested millions of taxpayer dollars in proving these extensive RICO violations and the likelihood that they will continue in the future, the public should not have to wait for another statutory scheme to be fully implemented, its legality completely resolved, and the outcome of future time-consuming enforcement proceedings under that statute, to receive the much needed protection from the fraud perpetrated by this predatory industry that has already been secured by virtue of the court’s RICO injunctions. Thus, as this Court has explained, a case becomes moot only where “it becomes impossible for the court to grant any effectual relief whatever to the prevailing party,” 566

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F.3d at 1135 (citation omitted; emphasis added) – a situation that certainly does not exist here, where both the United States and the Public Health Intervenors can seek to have any or all of the Defendants held in contempt of court for violating the district court’s injunctions.

Accordingly, contrary to the arguments set forth by the industry, Def. Br. at 21, the district court certainly did not err in failing to “analyz[e] any of the specific provisions of the Act or their effect on Defendants’ business,” to reach the conclusion that this new statute, which indisputably does not prevent and restrain RICO violations, does not moot its injunctions. Indeed, because the new legislation covers different conduct than is covered by the court’s injunctions, none of the cases relied on by Defendants helps their cause.

In Log Cabin Republicans v. United States, 658 F.3d 1162, 1166 (9th Cir.
2011), upon which defendants heavily rely, Def. Br. at 29, the Ninth Circuit held that a constitutional challenge to the military’s “Don’t Ask, Don’t Tell” statute became moot when the law was repealed. The mere passage of the Tobacco Control Act, by contrast, neither repealed RICO nor provided what the United States “hoped to achieve,” 658 F.3d at 1166 (citations omitted), by bringing its massive RICO case – i.e., relief that will prevent and restrain Defendants from

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continuing to deceive and defraud the American public about the grave consequences of smoking cigarettes.

Similarly, Green v. Mansour, 474 U.S. 64 (1985), upon which Defendants also rely, Def. Br. at 30, involved legislation rendering two class actions moot because it was “undisputed that respondents” had complied with the new legislation, which covered the precise conduct at issue. 474 U.S. at 65. Here, not only does the Tobacco Control Act not cover the same conduct covered by the district court’s injunctions, but it is certainly not “undisputed” that the tobacco companies are now in compliance with the court’s injunctions. Indeed, not only have the companies failed to offer a scintilla of evidence demonstrating such compliance, but, consistent with their past proclivities, it appears that they may already be engaged in actions intended to circumvent the court’s remedial order. See supra at 12-13.6

——

6 None of the other cases relied on by defendants, Def. Br. at 30 n.5, supports their mootness claim. In Diffenderfer v. Gomez-Colon, 587 F.3d 445 (1st Cir. 2009), the court held that litigation challenging a Puerto Rico decision to issue ballots for the Presidential election only in Spanish became moot when the legislature enacted a new law requiring the ballots to be in both Spanish and English – the precise relief requested by the plaintiffs. Similarly, in Martinez v. Wilson, 32 F.3d 1415, 1419-20 (9th Cir. 1994), the parties agreed that an injunction barring California from using certain factors in determining certain distributions of federal funds became moot when Congress amended the underlying statute in a way that eliminated the State’s ability to employ those factors. Moreover, in these cases, like the cases relied on by WLF, see WLF Br. at

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Defendants also fail to overcome the district court’s reliance on the history of their violations of the MSA as a basis for rejecting their mootness claim. While they would have this Court believe that this history is somehow irrelevant to the issue at hand because there are “important differences between the regulatory requirements and enforcement measures established under the Tobacco Control Act and the MSA,” Def. Br. at 44, this argument completely misses the point. As this Court affirmed, the district court found that, “Defendants began to evade and at times even violate the MSA’s prohibitions almost immediately after signing the agreement and, consequently, concluded the MSA did not limit the court’s ability to order ‘[a]ppropriate [r]emedies.’” 566 F.3d at 1133 (emphasis added).

Therefore, it does not matter that the MSA and the Tobacco Control Act differ in coverage and enforcement methods – the relevant point is that this industry has shown a “proclivity” for violating any and all laws aimed at curbing

——

17, the plaintiffs were challenging governmental conduct, and thus the courts could presume future compliance. See, e.g., Brown v. Plata, 131 S. Ct. 1910, 1965 (2011) (“[A] presumption of regularity attaches to the actions of Government agencies”) (other citations omitted).

Finally, in Bullfrog Films, Inc. v. Wick, 959 F.2d 778, 781 (9th Cir. 1992), the filmmakers’ challenge to regulations that denied certification of particular films based on their content became moot when Congress passed a statute that “supplanted’ the regulations at issue. Here, as demonstrated by the plain language of the statute itself, in enacting the Tobacco Control Act Congress did not by any stretch of the imagination intend to “supplant” the district court’s injunctions.

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their deceptive and illegal practices. See 566 F.3d at 1137. In light of these facts, and the absence of any showing to the contrary by Defendants in support of their motion for vacatur, the district court’s conclusion that it “cannot accept the Defendants’ contention that the Tobacco Control Act will produce their conformity to the law even though RICO and the MSA could not,” Mem. Op. at 11-12, is certainly not clearly erroneous. See also Herbert v. Natl Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992) (where the trial court decides a factual issue in determining subject matter jurisdiction the “clearly erroneous” standard applies to the appellate court’s review).

II. THE DISTRICT COURT DID NOT ERR IN DECLINING TO VACATE CERTAIN REMEDIES.

For all the same reasons, the district court also did not err in rejecting the Defendants’ argument that, at a minimum, it should have vacated certain portions of its injunctions.

A. The Ban On Health Descriptors Is Not Moot.

There is no basis for vacating the district court’s injunction prohibiting Defendants from “conveying any express or implied health message or health descriptor for any cigarette brand,” and from “representing directly, indirectly, or by implication . . . that low-tar, light, ultra light, mild, natural, or low-nicotine

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cigarettes may result in a lower risk of disease or are less hazardous to health then other brands of cigarettes.” 449 F. Supp. 2d at 938. It is true that the Tobacco Control Act prohibits the sale and distribution of any “modified risk tobacco product” without permission from the FDA, and that this term is defined to mean “any tobacco product that is sold or distributed for use to reduce harm,” including use of labels with descriptors such as “light,” “mild,” or “low,” or similar descriptors. §§ 911(a)-(b). However, those provisions do not guarantee that the companies will cease their decades-long deceptive and fraudulent practice of “extensively – and successfully – market[ing] and promot[ing] their low tar/light cigarettes as less harmful alternatives,” to “dramatically increase[] their sales of low tar/light cigarettes, assuage[] the fears of smokers about the health risks of smoking, and sustain[] corporate revenues in the face of mounting evidence about the health dangers of smoking.” 449 F. Supp. 2d at 560-61.

Indeed, as demonstrated, Defendants have already responded to the district court’s injunction by switching from “Marlboro Lights” and “Ultra-lights” to “Marlboro Golds” and “Marlboro Silvers,” because they know, as the district court found, that “many smokers [are] concerned and anxious about the health effects of smoking,” and that “a significant percentage of those smokers [are] willing to trade flavor for reassurance that their brands carried lower health risks,” 449 F.

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Supp.2d at 560 – the same “reassurance” the companies now apparently hope to convey through the use of color-coded packaging. See supra at 12-13 (manufacturers including notes in cigarette packages that “Your Marlboro Lights package is changing, but your cigarette stays the same,” and instructing consumers to “in the future, ask for Marlboro in the gold pack”) (emphasis added).

Significantly, Defendants contend that this new marketing technique does not violate either the district court’s injunction or the Tobacco Control Act, but simply “allow[s] . . consumers to distinguish products from each other or to distinguish cigarettes based on taste.” See Def. Reply on Corrective Statements (Mar. 22, 2011) at 10 (JA 90). However, if the district court were to find that there was clear and convincing evidence that these and similar innovative marketing techniques do in fact “convey [an] express or implied health message,” 449 F. Supp. 2d at 8, the companies could be required to immediately correct those practices – without the public having to wait for new and inevitably protracted enforcement proceedings to be brought by the FDA under the new statute.

Furthermore, Defendants R.J. Reynolds and Lorillard have already challenged the constitutionality of the new legislation’s “modified risk tobacco product” provisions on the grounds that they constitute “an unconstitutional prior

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restraint; an unconstitutional restriction on Plaintiffs’ commercial speech; an unconstitutional restriction on Plaintiffs’ core speech; and [are] unconstitutionally vague.” See Commonwealth Brands, 678 F. Supp. 2d at 532. Although rejected by the district court, id. at 534-35, these arguments are being pressed in the pending appeal. See Principal Brief Of Plaintiffs-Appellants/Cross-Appellees, No. 10-5234 (6th Cir.) at 16 (asserting that the “MRTPR suffers from numerous constitutional defects, both on its face and as applied to Plaintiffs’ speech”). While the industry is free to make such arguments in its effort to strike down the new legislation, the public certainly cannot be deprived of the protection that has already been secured on its behalf through the district court’s RICO injunctions while the courts reach a final resolution of the tobacco companies’ various litigation challenges to the Tobacco Control Act.

B. The District Court’s Corrective Statements Remedy Is Not Moot.

Nor is there any basis for finding moot the district court’s requirement that the tobacco companies include “corrective statements” in various media about, inter alia, the adverse health effects and addictiveness of smoking and nicotine. 449 F. Supp. 2d at 938-941. See Def. Br. at 48-50. In affirming this remedy in the earlier appeal this Court explained that, as “the Intervenors here argue, requiring Defendants to issue corrective statements will prevent and restrain them from

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making fraudulent public statements on smoking and health matters in the future,” because they “will be impaired in making false and misleading assurances about, for instance, smoking-related diseases or the addictiveness of nicotine . . . if they must at the same time communicate the opposite, truthful message about these matters to consumers.” 566 F.3d at 1140.

Defendants’ argument that these requirements are rendered moot by the public-health warnings required by the Tobacco Control Act are misplaced for several reasons. First, the public warnings required under the new statute do not cover all of the same subjects and fora that are included in the district court’s corrective statements injunction. Compare 449 F. Supp. 2d at 938-941 with Tobacco Control Act, § 201.7

Second, the two sets of requirements are aimed at different conduct – thus, while the district court’s injunction is designed to “prevent and restrain” mail and

7 Thus, in contrast to the corrective statement requirements in the district court’s injunction – which must include a host of statements about the dangers of tobacco and second-hand smoke, Defendants’ manipulation of design and composition, and the lack of any significant health benefits from smoking “low tar,” “light,” ultra light,” “mild,” and “natural” cigarettes, and must be included not only on cigarette packages and in advertising, but also on the industries’ websites, in retail establishments, and in particular newspapers and broadcast media – the Tobacco Control Act requires that only one of several warnings be included at any one time on the cigarette packaging and in advertising. See § 201.

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wire fraud by Defendants – i.e., by impairing their ability to make contradictory fraudulent statements – the Tobacco Control Act’s public warning requirements are directed at the behavior of consumers, with the goal of educating smokers and prospective smokers about the devastating consequences of using these deadly products. See Tobacco Control Act, § 3(9) (explaining Act’s purpose “to promote cessation to reduce disease risk and the social costs associated with tobacco- related diseases”); see also Def. Resp. on Corrective Statements at 15 (JA 84) (acknowledging that the new Act establishes measures for “encouraging consumers to quit smoking or to stay quit”).

Third, as with other provisions of the Tobacco Control Act that Defendants argue render moot the district court’s injunctions moot, the public warning labeling requirements are currently under attack by the industry as a violation of the First Amendment. Indeed, the industry has already been granted a preliminary injunction with respect to some of those requirements, and that matter is currently on appeal. R.J. Reynolds Tobacco Co. v. U.S. Food and Drug Admin., 2011 WL 5307391 (D.D.C. Nov. 7, 2011), appeal pending, No. 11-5332 (D.C. Cir.). Especially because aspects of these particular labeling requirements are currently enjoined, there is no basis for finding that they will adequately address the

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unlawful conduct that is targeted by the district court’s already affirmed corrective statements remedy.

C. The Injunction Prohibiting False, Misleading, And Deceptive Statements Is Not Moot.

There also is no basis for Defendants’ contention that the Tobacco Control Act renders moot the district court’s injunction prohibiting “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. The mere fact that the Act grants the FDA new authority to “monitor Defendants’ labeling and advertising of cigarettes” and to “initiate enforcement proceedings against manufacturers whose labeling or advertising is ‘false or misleading,’” Def. Br. at 50, does not mean that Defendants have suddenly stopped engaging in these unlawful representations, nor, again, have Defendants made any attempt to demonstrate that they have in fact ceased all such conduct.

In fact, as demonstrated, see supra at 13, Defendant Philip Morris still includes language on its website that minimizes the dangers of second-hand smoke by stating that “Public health officials have concluded that secondhand smoke

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from cigarettes causes disease” – implying that the industry disagrees with this conclusion and that this is still an “open question,” despite the fact that the district court concluded that these very kinds of statements mislead the public into believing that second-hand smoke is not dangerous. See 449 F. Supp. 2d at 801.

Moreover, as with the corrective statements remedy, this particular remedy goes well beyond what is covered by the Act, which is limited only to statements made in “labeling and advertising.”

Finally, the mere fact that the FDA has been given new authority to “monitor” the industry’s statements and to bring future enforcement actions, Def. Br. at 50, does not eliminate the public’s right to be protected under the current injunctions, which this Court has already ruled are “warranted” because of this industry’s well documented “proclivity for unlawful conduct,” 566 F.3d at 1137 – a proclivity that has already contributed to millions of people dying from tobacco- related diseases.

III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION IN DECLINING TO VACATE ITS INJUNCTIONS IN DEFERENCE TO THE FDA’S AUTHORITY.

In yet another effort to avoid the district court’s injunctions, Defendants assert that the district court abused its discretion in refusing to put aside the eleven years of litigation over which it has presided, as well as its over four thousand

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findings of fact and carefully crafted injunctions that have been affirmed by this Court, and instead defer to the FDA’s future implementation of the new Act as the means for curtailing Defendants’ RICO violations. Def. Br. at 51-60. However, in view of all of the foregoing, as well as the district court’s detailed explanation for declining to do so, the district court surely did not abuse its discretion. See Def. Br. at 25 (admitting that the abuse of discretion standard applies to this claim).

As an initial matter, the primary jurisdiction doctrine comes into play whenever pursuit of a claim in court “requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its view.” United States v. Western Pac. R.R. Co., 352 U.S. 59, 64 (1956) (emphasis added). Here, however, this case has already reached a final judgment, after an extensive trial and the resolution of exhaustive appeals. Accordingly, there is no “judicial process” to “suspend,” and the doctrine has no application to the present situation. Indeed, as the district court noted, the tobacco companies have not cited a single case where the doctrine was applied “to vacate a district court decision on the merits that has already been resolved on appeal.” Mem. Op. at 20, n.4 (other citations omitted).

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Moreover, the issues that formed the basis for the district court’s injunctions – i.e., defendants’ massive RICO violations – certainly have not been “placed within the special competence” of the FDA. Western Pac. R.R. Co., 352 U.S. at
64. To the contrary, Congress enacted the Tobacco Control Act to extend the FDA’s traditional authority over “adulterated” and “misbranded” drugs and devices to now cover tobacco products – authority that is very different in kind than the district court’s authority to prevent and restrain mail and wire fraud under RICO. Indeed, accepting Defendants’ argument that the district court’s injunctions should be disregarded because the FDA now has “primary Federal regulatory authority with respect to the manufacturing, marketing, and distribution of tobacco products,” Def. Br. 53, citing Tobacco Control Act, would mean that no court could issue RICO injunctions against individuals engaged in racketeering activities involving illegal drugs, simply because the Drug Enforcement Administration has enforcement authority over these matters – even though such activities were the primary focus of RICO. See, e.g., United States v. Turkette, 452 U.S. 576, 588 (1981) (recounting purpose of RICO to curb “the importation and distribution of narcotics and other dangerous drugs”).

Moreover, again, by including a specific provision in the legislation that “[n]othing in this [Act] . . . shall be construed to . . . affect any action pending in

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Federal . . . court,” Pub. L. No. 111-31, § 4(a), Congress made clear that it was not supplanting the district court’s RICO remedies – already well in place and affirmed by this Court when the statute was passed – with its own regulatory scheme. See, e.g., Nader v. Allegheny Airlines, 426 U.S. 290, 298 (1976) (relying on statutory language that “[n]othing contained in this chapter shall in any way abridge or alter the remedies now existing under common law or by statute,” as a basis for rejecting the argument that the court should have invoked primary jurisdiction to decide whether the airline was liable for fraudulent representations).8

——

8 The cases cited by Defendants, Def. Br. at 58-59, are not to the contrary. The statute involved in Allnet v. Commc’n Serv., Inc., 965 F.2d 1118 (D.C. Cir. 1992), expressly provided that while a plaintiff could seek relief before a district court, the court may “withhold[ ] decision until the Commission has spoken on technical or policy questions that would determine the outcome.” Id. at
1122. Here, not only does the statute at issue expressly provide that it shall not “affect” this court’s RICO injunctions, but it also simply does not address the same conduct covered by those injunctions. Similarly unavailing is Texas & Pac. Railway Co. v. Abilene Cotton Oil Co., 204 U.S. 426 (1907), which foreclosed a common law action based on an alleged unreasonable freight rate charge when a statute had already dictated the lawfulness of the rate, even though the statute also preserved all applicable common law remedies. In sharp contrast to Congress’s expressed intent that the new regulatory scheme at issue here “shall not be construed to affect” pending litigation, the Court in Texas & Pac. Ry. noted that it was “not open to controversy” that one of the “purposes” of the act was to “plac[e] upon all carriers the positive duty to establish schedules of reasonable rates which should have a uniform application to all, and which should not be departed from so long as the established schedule remained unaltered in the manner provided by law.” Id. at 355 (emphasis added).

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Moreover, as the district court explained, to the extent that Defendants believe that there are any inconsistencies between the court’s injunctions and any future regulatory requirements imposed by the FDA, see Def. Br. at 59-60, the defendants “have ample recourse through a Rule 60(b) motion” to resolve such problems. See Mem. Op. at 24. Defendants’ protest that requiring them to resort to this procedure “would generate needless inefficiency that could substantially impair the attainment of the FDA’s regulatory objectives” is an objection best left to the FDA, who apparently has no such concerns, since the Department of Justice also represents the FDA.

Finally, as the district court correctly noted, Mem. Op. at 25, the Supreme Court has explained that under the primary jurisdiction doctrine, “[r]eferral of the issue to the administrative agency does not deprive the court of jurisdiction; it has discretion either to retain jurisdiction or, if the parties would not be unfairly

Defendants’ reliance on Tamburello v. Comm-Tract Corp., 67 F.3d 973 (1st Cir. 1995), Def. Br. at 57-58, is similarly misplaced. There, the Court affirmed the district court’s dismissal of an employee’s RICO case against his employer on primary jurisdiction grounds because it was “beyond dispute” that the allegations that formed the basis for the lawsuit – i.e., that the employer had harassed, threatened, and intimidated him after he became a union steward – if found to be true “would constitute a violation of the NLRA [National Labor Relations Act].” Id. (emphasis added). Here, by contrast, again, there is nothing in the Tobacco Control Act that prohibits the manufacturers from engaging in myriad illegal acts that formed the basis of this RICO case.

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disadvantaged, to dismiss the case.” Reiter v. Cooper, 507 U.S. 258, 268 (1993) (emphasis added). Here, as the district court properly concluded, “[i]t has been well over eleven years since this case was filed and nearly five years since this Court found the Defendants ‘knowingly and intentionally engaged in a scheme to defraud smokers and potential smokers, for purposes of financial gain, by making false and fraudulent statements, representations, and promises,’” Mem. Op. at 2526, quoting 449 F. Supp. 2d at 852 – a conclusion that was soundly affirmed by this Court. 566 F.3d at 1111-31. Accordingly, the American public – and especially its children who have not yet fallen victim to Defendants’ scheme to “avidly pursue” them as “replacement smokers” who will become addicted to this fatally dangerous product, see 449 F. Supp. at 852 – would be severely disadvantaged if the district court were required to dismiss this case or otherwise curtail its carefully crafted injunctions.

37

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 48 of 53

CONCLUSION

For all of the foregoing reasons, the decision of the district court should be affirmed.

Respectfully submitted,

/s/ Katherine A. Meyer

Katherine A. Meyer

Howard M. Crystal

MEYER GLITZENSTEIN & CRYSTAL

1601 Connecticut Ave., N.W., Suite 700

Washington, D.C. 20009

Telephone: (202) 588-5206

Facsimile: (202) 588-5049

Counsel for the Public Health Intervenors

38

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 49 of 53

CERTIFICATE OF COMPLIANCE

PURSUANT TO FED. R. APP. P. 32(a)(7)(C)

I hereby certify that the foregoing Final Brief for the Public Health Intervenors contains 8,597 words. The brief therefore complies with the 8,750 word limit set by this Court’s November 1, 2011 Order.

/s/ Howard M. Crystal

Howard M. Crystal

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 50 of 53

CERTIFICATE OF SERVICE

I hereby certify that on March 12, 2012, I electronically filed the foregoing Intervener Final Brief with the Clerk of the D.C. Circuit, by using the CM/ECF system. All participants in this appeal are CM/ECF users, and will be served by the CM/ECF system.

/s/ Howard M. Crystal

Howard M. Crystal

Counsel for the

Public Health Intervenors

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 51 of 53

ADDENDUM

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 52 of 53

Key Provisions of the Tobacco Control Act Not Yet Implemented or In Effect

Section Description

21 U.S.C. § 387d(e) Requiring FDA to establish and periodically revise a list of harmful and potentially harmful tobacco constituents

21 U.S.C. § 387f(d)(4) Requiring FDA to promulgate regulations for remote marketing and promotion of tobacco products

21 U.S.C. § 387f(e)(1) Requiring FDA to promulgate regulations requiring compliance with

certain good manufacturing practices

21 U.S.C. § 387k(l)(1) Requiring FDA to issue regulations or guidance on scientific

evidence required for review of modified risk tobacco products

21 U.S.C. § 387k(l)(4) Requiring FDA to publish regulations or guidance permitting the

filing of a single application for a new tobacco product that the

applicant seeks to market as a modified risk tobacco product

21 U.S.C. § 387o Requiring FDA to publish regulations that mandate testing and

reporting of tobacco product constituents by brand and sub-brand

Pub. L. No. 111-31,

123 Stat. 1842-45, §

201 (amending 15

U.S.C. § 1333)

Requiring the use of certain information on cigarette packages and

advertisements

21 U.S.C. § 387g(a)(4) Authorizing FDA to establish tobacco product standards applicable

to nicotine yields, reduction or elimination of constituents or

harmful components, or other product requirements

21 U.S.C. § 387g(e) Authorizing FDA to take regulatory action regarding use of menthol

in cigarettes

Add.-1

USCA Case #11-5145 Document #1363127 Filed: 03/12/2012 Page 53 of 53

Key Provisions of the Tobacco Control Act

and Implementing Regulations In Litigation

Section Description

Pub. L. No. 111-31,

123 Stat. 1842-45, §

201; 76 Fed. Reg.

36,628 (June 22, 2011)

Act’s provisions and implementing regulations mandating use of certain information on cigarette packages and advertisements

21 U.S.C. § 387a1(

a)(2); 21 C.F.R. §

1140.32(a)

Act’s provision requiring republication of FDA rules promulgated in 1996 baning color and graphics in cigarette labeling and advertising

21 U.S.C. § 331(tt)(4) Act’s provision banning claims implying that a tobacco product is safer because of FDA regulation

21 U.S.C. §

387a-1(a)(2); 21 C.F.R.

§ 1140.34(c)

Act’s provision requiring republication of FDA rules promulgated in 1996 banning sponsorship of athletic, social, and cultural events in the brand name of a tobacco product

21 U.S.C. § 387a-1(a)(2); 21 C.F.R. § 1140.34(a)

Act’s provision requiring republication of FDA rules promulgated in 1996 banning distribution of non-tobacco items bearing the name or logo of a tobacco brand

21 U.S.C. § 387p(a)(1) Act’s provision preserving authority of other federal agencies, state and local governments, and Indian tribes to enact more stringent tobacco regulations

21 U.S.C. § 387k Act’s provision regulating modified risk tobacco products

21 U.S.C. §

387a-1(a)(2)(G); 21

C.F.R. § 1140.16(d)

Act’s provision requiring promulgation of rules banning distribution of free samples of tobacco products

21 U.S.C. § 321(rr)(4) Act’s definition of the term “tobacco product” which prohibits marketing of tobacco product in combination with any other article or product regulated by FDA

Add.-2

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