6103 REYNOLDS’S MOTION FOR RELIEF FROM PROVISIONS OF ORDER #1015 THAT REQUIRE BROWN & WILLIAMSON TOBACCO CORPORATION TO PUBLISH CORRECTIVE STATEMENTS ON TELEVISION (6/11/14)

May 29, 2015 11:06 am by Gene Borio

The PDF is Here

EXCERPT:

Under these circumstances, requiring RJRT to publish the corrective statements on behalf of a tobacco company that no longer exists and cannot violate RICO serves no proper, “forward-looking” remedial purpose within the scope of 18 U.S.C. § 1964… It follows that this Court lacks jurisdiction to impose the corrective-statements remedy against B&W Tobacco or against RJRT on B&W Tobacco’s behalf. Moreover, even if this Court has jurisdiction to impose the corrective- statements remedy on B&W Tobacco, because such a requirement serves no rational purpose, the provisions should be stricken. RJRT is, therefore, entitled to relief from Order #1015 to the extent that the Order requires publication of the corrective statements by B&W Tobacco or by RJRT as B&W Tobacco’s successor. In this motion, as expressly anticipated in Order #51Remand, RJRT seeks relief on these grounds.

END EXCERPT

FULL TEXT:

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

PHILIP MORRIS USA, INC., et al.,

Defendants.

CIVIL ACTION NO. 99-2496(GK)

Next Scheduled Court Appearance:

none

DEFENDANT R.J. REYNOLDS TOBACCO COMPANY’S MOTION FOR RELIEF FROM PROVISIONS OF ORDER #1015 THAT REQUIRE BROWN & WILLIAMSON TOBACCO CORPORATION TO PUBLISH CORRECTIVE STATEMENTS ON TELEVISION

Defendant R.J. Reynolds Tobacco Company (“RJRT”), in its capacity as successor to Brown & Williamson Tobacco Corporation (“B&W Tobacco”), respectfully requests relief from those provisions of Section III.B1 of this Court’s Final Judgment and Remedial Order (“Order #1015”), as modified by this Court’s Consent Order Implementing the Corrective Statements Remedy (“Order #51-Remand), that require corrective statements on behalf of B&W Tobacco— a nonexistent entity—in addition to publication of the corrective statements by RJRT.2 B&W Tobacco ceased to exist nearly ten years ago as a result of the merger of B&W Tobacco and RJRT. Brown & Williamson Holdings, Inc. (“B&W Holdings”), the corporate entity that

1 Due to a typographical error, Section III is numbered “II.” Order #1015 at 2, Dkt. No. 5733 (Aug. 17, 2006); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1, 937-38 (D.D.C. 2006). There is no Section numbered “III” in Order #1015, but several provisions of Order #1015 reference Section III by its proper numbering. See Section III(B)(¶6), (¶7(a)), (¶7(b)), (¶7(c)), (¶7(d)), (¶10(b)), (¶11(a)), (¶11(b)), (¶11(c)), (¶13).

2 As explained below, this motion affects only publication of the corrective statements on television. B&W Tobacco has neither websites nor cigarette packages on which to affix onserts, and Order #51-Remand reflects the parties’ agreement that, regardless of the outcome of this motion, Defendants will publish all five corrective statements in full-page newspaper inserts. This motion does not address and will not affect this Court’s jurisdiction to enter the other provisions of Order #51-Remand, including the requirements for publication of the corrective statements in newspapers.

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survived the 2004 merger of B&W Tobacco with RJRT, was dismissed as a Defendant after the Court concluded that there was no basis to conclude it would commit future RICO violations.3 Since there is no remaining Brown & Williamson entity in this case, it stands to reason that B&W Tobacco cannot commit future RICO violations and, therefore, that corrective statements cannot deter such future RICO violations.

Under these circumstances, requiring RJRT to publish the corrective statements on behalf of a tobacco company that no longer exists and cannot violate RICO serves no proper, “forwardlooking” remedial purpose within the scope of 18 U.S.C. § 1964. United States v. Philip Morris USA, Inc., 396 F.3d 1190, 1192 (D.C. Cir. 2005). It follows that this Court lacks jurisdiction to impose the corrective-statements remedy against B&W Tobacco or against RJRT on B&W Tobacco’s behalf. Moreover, even if this Court has jurisdiction to impose the corrective- statements remedy on B&W Tobacco, because such a requirement serves no rational purpose, the provisions should be stricken. RJRT is, therefore, entitled to relief from Order #1015 to the extent that the Order requires publication of the corrective statements by B&W Tobacco or by RJRT as B&W Tobacco’s successor. In this motion, as expressly anticipated in Order #51Remand, RJRT seeks relief on these grounds.4

3 See Order #7-Remand at 1, Dkt. No. 5846 (Dec. 22, 2010) (“[B]y consent of the parties, Brown & Williamson Holdings is deemed not to be a defendant and is therefore not subject to Order #1015”). The D.C. Circuit had remanded the issue of whether B&W Holdings could commit future RICO violations. See United States

v. Philip Morris USA Inc., 566 F.3d 1095, 1135 (D.C. Cir. 2009) (per curiam) (“Because the district court failed to make any findings about the extent of BWH’s control over tobacco operations, we cannot know the company’s current capabilities. Therefore, we cannot determine whether a reasonable likelihood exists that BWH will commit future RICO violations. Accordingly, we remand this issue for further fact finding and clarification.”). 4 As required by Local Civil Rule 7(m), RJRT conferred with Plaintiffs prior to filing this motion. The United States and the Intervenors oppose RJRT’s request for relief.

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BACKGROUND

A. Order #1015’s Corrective-Statements Remedy

Order #1015 requires Defendants “to make separate corrective statements concerning each of the following: (a) the adverse health effects of smoking; (b) the addictiveness of smoking and nicotine; (c) the lack of any significant health benefit from smoking ‘low tar,’ ‘light,’ ‘ultra light,’ ‘mild,’ and ‘natural,’ cigarettes; (d) Defendants’ manipulation of cigarette design and composition to ensure optimum nicotine delivery; and (e) the adverse health effects of exposure to secondhand smoke (also known as environmental tobacco smoke, or ETS).” Order #1015 at 4 (Section III(B)(¶5)); United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1, 938-39 (D.D.C.
2006). On remand after appeal, this Court set forth the text of the corrective statements. See Order #34-Remand, Dkt. No. 5991 (Nov. 27, 2012). This Court subsequently modified Order #1015 by ordering compliance with the parties’ mediated agreement on implementation issues. See Order #51-Remand, Dkt. No. 6095 (June 2, 2014).

Order #1015 specifically requires Defendants to disseminate the corrective statements through several media. Defendants are required to publish the corrective statements:

. “in a prominent position on any publicly-accessible website” they maintain, on “any other web address that provides access to Defendants’ corporate website or any successor website thereto,” and on “the Internet Document Websites created or maintained pursuant” to the terms of Order #1015, “for the duration of this Final Judgment and Remedial Order”;

. on onserts “affix[ed] to cigarette packaging, either to the outside of or within the outer cellophane wrapping around the package,” periodically for two years;

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. “as a full page advertisement in the first section of the Sunday edition of each of” dozens of specified newspapers over a series of months; and

. “as an advertisement on one or more of the three major television networks, i.e., CBS, ABC, or NBC, . . . at least once per week between the hours of 7:00 p.m. and 10:00 p.m between Monday and Thursday” for a year.

Order #1015 at 4-9 (Section III(B)(¶¶6, 7(a), 7(c), 7(d)); Philip Morris USA, Inc., 449 F. Supp. 2d at 939-41.5 Order #51-Remand modifies these requirements in several respects—including by amending the list of specified newspapers, mandating publication on newspaper websites as well as in print editions, and providing the possibility of television dissemination on cable networks— and details how, when, and where the corrective statements will be published in each medium. See Order #51-Remand at 4-21, Dkt. No. 6095 (June 2, 2014).

Pursuant to this Court’s instructions, see Order #34-Remand at 4 & Appx. B, Dkt. Nos. 5991, 5991-2 (Nov. 27, 2012), the parties—Defendants, on the one hand, and the United States and the Intervenors (together, “Plaintiffs”), on the other—engaged for more than a year in a mediation process to resolve implementation issues related to the corrective statements. Through mediation, the parties reached agreement on implementation terms and reduced that agreement to the terms contained in Order #51-Remand. That Order provides detailed specifications for the execution of the corrective-statements remedy in each of the media required. See generally Order #51-Remand, Dkt. No. 6095 (June 2, 2014). It also expressly anticipates this motion. See id. at 22 (Section VI(¶4)).

5 Order #1015 initially required Defendants to ensure that all retailers that participate in their retail merchandising programs would also display the corrective statements at retail points of sale. See Order #1015 at 5-6 (Section III(B)(¶7(b)); Philip Morris USA, Inc., 449 F. Supp. 2d at 939-40. The D.C. Circuit vacated the retail pointof- sale requirement and remanded to this Court with instructions to reconsider. See Philip Morris USA Inc., 566 F.3d at 1142.

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All parties agree that B&W Tobacco is not obliged to disseminate the corrective statements through onserts (since it does not manufacture cigarettes) or on websites (since it does not maintain any publicly accessible websites).6 And the outcome of this motion will not change the content, number, or schedule of newspaper publications required by Order #51-Remand, which does not require that B&W Tobacco be listed as one of the Defendants in the corrective statements published in newspapers.7 The only question presented in this motion, therefore, is whether B&W Tobacco (or RJRT, on B&W Tobacco’s behalf) must publish the corrective statements on television.

B. Brown & Williamson Tobacco’s Merger with R.J. Reynolds Tobacco Company

On July 30, 2004—prior to trial in this case—B&W Tobacco merged all domestic tobacco operations with RJRT. See Reynolds Am. Inc., Quarterly Report (Form 10-Q) at 6 (Nov. 5, 2004), available at www.sec.gov/Archives/edga… g91554e10vq.htm (last visited June 10, 2014); see also Philip Morris USA, Inc., 449 F. Supp. 2d at 31 n.4 (identifying the 11 defendants named in the complaint, including “Brown & Williamson Tobacco Co., now part of Reynolds American”); see also, e.g., Trial Tr. 10707:21 10708:12 (Jan. 24, 2005) (testimony of Andrew Schindler, former Chairman and CEO of RJRT); Ivey Written Direct at 1:11-20 (testimony of Susan Ivey, then-President and CEO of Reynolds

6 While Order #1015 contemplates the corrective statements appearing on www.bw.com, see Order #1015 at 5 (Section III(B)(¶6(c)); Philip Morris USA, Inc., 449 F. Supp. 2d at 939, there is no website at that address. Accordingly, Order #51-Remand does not require dissemination of any corrective statements at that address. See Order #51-Remand at 3 (Section I(C)), 10-17 (Section IV), Dkt. No. 6095 (June 2, 2014); see also Ex. A to Joint Praecipe, Dkt. No. 6081-2 (Apr. 22, 2014).

7 Under the text of Order #1015, each Defendant was to run one full-page advertisement in each newspaper, and each of the advertisements was to contain all five corrective statements. See Order #1015 at 6-7 (Section III(B)(¶7(c)); Philip Morris USA, Inc., 449 F. Supp. 2d at 940. Order #51-Remand provides, however, that regardless of the outcome of this motion, there will be five sets of newspaper ads, and each individual corrective statement will be published in each newspaper once, rather than all five corrective statements being published in each newspaper repeatedly. See Order #51-Remand at 5 (Section II(¶3)), Dkt. No. 6095 (June 2, 2014). Order #1015 also scheduled publication based on the Defendant paying for each set of publications. See Order #1015 at 6-7 (Section III(B)(¶7(c)); Philip Morris USA, Inc., 449 F. Supp. 2d at 940. Order #51-Remand sets the schedule for publication of the corrective statements based on topic, so that the same corrective statement will run in all specified newspapers on the same weekend. See Order #51-Remand at 6 (Section II(¶¶6-7)), Dkt. No. 6095 (June 2, 2014).

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American Inc.). As a result of the merger, RJRT took over the design, manufacturing, distribution, marketing, and sales in the United States for all former B&W Tobacco cigarette brands.

B&W Holdings, B&W Tobacco’s remaining corporate entity, does not participate in the tobacco industry. The parties recognized as much, and this Court accepted that by dismissing B&W Holdings from this case. See Hr’g Tr. at 12:4-6, 11-13 (Dec. 20, 2010) (Ms. Ravel, on behalf of the United States: “We also have concluded that B and W [H]oldings should not be a defendant or subject to the injunction.”); Order #7-Remand at 1, Dkt. No. 5846 (Dec. 22, 2010) (“[B]y consent of the parties, Brown & Williamson Holdings is deemed not to be a defendant and is therefore not subject to Order #1015”).

C. R.J. Reynolds Tobacco Company’s Request for Relief in the Instant Motion

This motion presents the narrow question of whether RJRT should be required to promulgate corrective statements on television on behalf of an entity that no longer exists and hence cannot possibly engage in future RICO violations. Since B&W Tobacco no longer exists, it makes no sense to require B&W Tobacco to publish corrective statements on television. Nor does requiring RJRT to publish the statements twice—once on its own behalf and then again on B&W Tobacco’s behalf—constitute a forward-looking remedy authorized by 18 U.S.C. § 1964. It follows that this Court lacks jurisdiction to order B&W Tobacco—or RJRT on B&W Tobacco’s behalf—to disseminate the corrective statements and that, even if this Court has jurisdiction to impose remedies on B&W Tobacco, it should grant relief from such remedies because they do not serve “to prevent and restrain” future RICO violations in any way distinct from that provided by RJRT’s satisfaction of the remedial requirements on its own behalf.

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LEGAL STANDARD

“‘The power of a court of equity to modify a decree of injunctive relief … is long- established, broad, and flexible.’” United States v. W. Elec. Co., 46 F.3d 1198, 1202 (D.C. Cir.
1995) (quoting N.Y. State Ass’n for Retarded Children, Inc. v. Carey, 706 F.2d 956, 967 (2d Cir.
1983) (Friendly, J.)). That power is channeled by Federal Rule of Civil Procedure 60(b) for final judgments that conclude litigation.8 Rule 60(b) contains six grounds for relief. The relevant grounds here are the fourth and sixth, each of which independently entitles RJRT to relief.

A. Federal Rule of Civil Procedure 60(b)(4)

Rule 60(b)(4) authorizes a court to grant relief from a judgment that is “void.” Fed. R. Civ. P. 60(b)(4). A judgment is “void” for purposes of Rule 60(b)(4) “‘if the court lacked … subject-matter jurisdiction,’” Bell Helicopter Textron Inc. v. Islamic Republic of Iran, 892 F. Supp. 2d 219, 222 (D.D.C. 2012) (quoting Ramirez v. Dep’t of Justice, 680 F. Supp. 2d 208, 210 (D.D.C. 2010)), “‘[or] proceeded beyond the powers granted to it by law,’” David v. Dist. of Columbia, 252 F.R.D. 56, 59 (D.D.C. 2008) (quoting Muwekma Tribe v. Norton, 206 F. Supp. 2d 1, 3 (D.D.C. 2002)).

“‘If the judgment is void, relief is mandatory.’” Bell Helicopter Textron Inc., 892 F. Supp. 2d at 222 (quoting Combs v. Nick Garin Trucking, 825 F.2d 437, 441 (D.C. Cir. 1987)).

8 RJRT believes, as it has consistently maintained, that Order #1015 is not a final order because some of its provisions were vacated and remanded by the D.C. Circuit. See Certain Defs.’ Mem. of Points & Authorities in Support of Their Mot. to Modify Order #1015 to Remove the Minn. Depository Requirements at 2 n.1, Dkt. No. 5897-1 (Mar. 24, 2011); Certain Defs.’ Response to the United States & Intervenors’ Briefs regarding the Minn. Depository Requirements at 3 n.1, Dkt. No. 5912 (Apr. 5, 2011). If Order #1015 is not a final order, then Rule 54(b), which provides the governing standard for motions to amend orders that adjudicate fewer than all of the rights or claims of all of the parties, rather than Rule 60(b), controls here. RJRT relies upon Rule 54(b) and asserts that it is entitled to relief under that Rule for the same reasons as set forth in the arguments below with respect to Rule 60(b). See, e.g., Clark v. Feder, Semo & Bard, P.C., 736 F. Supp. 2d 222, 225 (D.D.C. 2010) (“Review under Rule 54(b) amounts to determining, within the Court’s discretion, whether reconsideration is necessary under the relevant circumstances.” (internal quotation marks omitted)). Recognizing, however, that this Court has previously held that the remaining provisions of Order #1015 are indeed final, see Mem. Op. at 5-6, Dkt. No. 5901 (Mar. 28, 2011); cf. Order #14-Remand at 2, Dkt. No. 5878 (Feb. 25, 2011), RJRT hereby preserves its Rule 54(b) arguments for appeal and argues this motion under the standards imposed by Rule 60(b)(4) and (6).

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Accord, e.g., Roeder v. Islamic Republic of Iran, 195 F. Supp. 2d 140, 159 (D.D.C. 2002), aff’d, 333 F.3d 228 (D.C. Cir. 2003) (“A judgment [that] is void for purposes of Rule 60(b)(4) … must be vacated by the court.”). This is true even where the jurisdictional question affects only part of the remedy imposed. See, e.g., S.E.C. v. Bolla, 550 F. Supp. 2d 54, 63 (D.D.C. 2008) (vacating portion of final order imposing monetary fine upon defendant found liable for aiding and abetting violations of the Investment Advisers Act of 1940, because the statute did not authorize the SEC to seek, or grant the court jurisdiction to impose, monetary penalties for such conduct).

“‘The objection that a federal court lacks subject-matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.’” Conservation Force v. Salazar, 915 F. Supp. 2d 1, 6 (D.D.C. 2013) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006)). For that reason, “a party may, at any time, seek relief from the court where the judgment or order is ‘void.’” Muwekma Tribe, 206 F. Supp. 2d at 3 (quoting Fed. R. Civ. P. 60(b)(4)); accord, e.g., David, 252 F.R.D. at 59 (delay “cannot serve as the basis for denying [a Rule 60(b)(4)] motion”); Killingham v. D.C. Ctr. for Indep. Living, Inc., No. 89-cv-2713 JGP, 1998 WL 1148899, at *4 (D.D.C. Sept. 30, 1998), aff’d, 203 F.3d 52 (D.C. Cir. 1999) (“A claim of lack of subject matter jurisdiction may be raised at any time, including in a motion pursuant to Rule 60(b).”); cf., e.g., United States v. Cotton, 535 U.S. 625, 630 (2002) (“[S]ubject-matter jurisdiction, because it involves a court’s power to hear a case, can never be forfeited or waived.”); Menominee Indian Tribe of Wisc. v. United States, 614 F.3d 519, 524 (D.C. Cir. 2010) (“litigants cannot by waiver or forfeiture confer jurisdiction where it is otherwise lacking”).

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B. Federal Rule of Civil Procedure 60(b)(6)

Rule 60(b)(6) “‘grants federal courts broad authority to relieve a party from a final judgment “upon such terms as are just,” provided that the motion is made within a reasonable time and is not premised on one of the grounds for relief enumerated in clauses (b)(1) through (b)(5).’” Bowyer v. Dist. of Columbia, 779 F. Supp. 2d 159, 162-63 (D.D.C. 2011) (quoting Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863 (1988)). This catch-all provision “vests power in courts adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice.” Klapprott v. United States, 335 U.S. 601, 615 (1949).

Rule 60(b)(6) “may not be used as a substitute for an appeal not taken.” Twelve John Does v. Dist. of Columbia, 841 F.2d 1133, 1141 (D.C. Cir. 1988). Nor do courts allow litigants to use Rule 60(b)(6) to remedy their failure to seek timely relief under other provisions of the Rule. To prevent abuse of the catch-all as an abrogation of the time restrictions that apply to most provisions in Rule 60(b), “the Supreme Court has held that it applies only to ‘extraordinary’ situations, and [the D.C. Circuit] has cautioned that it ‘should be only sparingly used.’” Id. (quoting Ackermann v. United States, 340 U.S. 193, 202 (1950); Good Luck Nursing Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980)).

However, where the argument for relief could not have been more properly raised under another provision of Rule 60(b) at an earlier time and “the movant clearly demonstrates some ‘other reason’ justifying relief outside of the earlier clauses in the rule, then the ‘extraordinary circumstances’ test is not invoked.” 11 Charles Alan Wright, et al., Federal Practice and Procedure: Civil § 2864 (3d ed.). “In long-running cases, where the non-moving party has not demonstrated that it would be prejudiced, it would ‘be an abuse of discretion to rule that a Rule 60(b)(6) motion is not filed within a reasonable time.’” Bowyer, 779 F. Supp. 2d at 163 (quoting Salazar ex rel. Salazar v. Dist. of Columbia, 633 F.3d 1110, 1119 (D.C. Cir. 2011)).

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ARGUMENT

RJRT is entitled to relief under Rule 60(b)(4) or, in the alternative, under Rule 60(b)(6). According to this Court, the corrective-statements remedy “is appropriate and necessary to prevent and restrain [Defendants] from making fraudulent public statements on smoking and health matters in the future,” Philip Morris USA, Inc., 449 F. Supp. 2d at 926, and “necessary to prevent current and future advertisements from becoming ‘themselves part of the continuing deception of the public,’” id. at 927 (quoting Warner-Lambert Co. v. FTC, 562 F.2d 749, 769 (D.C. Cir. 1977)). The D.C. Circuit, while affirming the propriety of a corrective-statements remedy as a general matter, noted that “Section 1964(a) authorizes only remedies that prevent and restrain future RICO violations, not all future effects of past RICO violations.” United States v. Philip Morris USA Inc., 566 F.3d 1095, 1140 (D.C. Cir. 2009) (per curiam). And in setting forth the text of the corrective statements, this Court explained that it had worded them in the way that, in its view, “will most effectively prevent and restrain future violations of RICO.” United States v. Philip Morris USA, Inc., 907 F. Supp. 2d 1, 8 (D.D.C. 2012). Requiring B&W Tobacco to publish the corrective statements on television cannot “prevent and restrain [it] from making fraudulent public statements on smoking and health matters in the future,” Philip Morris USA, Inc., 449 F. Supp. 2d at 926, because B&W Tobacco no longer exists, which means that it cannot participate in the cigarette industry and cannot make future statements of any kind. The provisions of Order #1015 that require B&W Tobacco to publish the corrective statements should therefore be vacated.

I.

RELIEF IS REQUIRED UNDER RULE 60(b)(4), BECAUSE ORDER #1015 CANNOT POSSIBLY IMPOSE UPON BROWN & WILLIAMSON TOBACCO FORWARD-LOOKING REMEDIES AIMED AT FUTURE VIOLATIONS .

Order #1015 provides in relevant part: “Each Defendant shall cause at least one of the corrective statements approved pursuant to Section III(B)(¶5) of this Final Judgment and

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Remedial Order to appear as an advertisement on one or more of the three major television networks, i.e., CBS, ABC, or NBC.” Order #1015 at 9 (Section III(B)(¶7(d)); Philip Morris USA, Inc., 449 F. Supp. 2d at 941. It therefore, on its face, imposes remedial obligations on B&W Tobacco, despite the fact that B&W Tobacco no longer exists.9 In doing so, Order #1015 exceeds the scope of 18 U.S.C. § 1964(a). Order #1015 has thus “‘proceeded beyond the powers granted to [this Court] by law,’” rendering the provisions applicable to B&W Tobacco “void” within the meaning of Rule 60(b)(4). David, 252 F.R.D. at 59 (quoting Muwekma Tribe, 206 F. Supp. 2d at 3). In such a case, “‘relief is mandatory,’” Bell Helicopter Textron Inc., 892 F. Supp. 2d at 222 (quoting Combs, 825 F.2d at 441), and the void judgment “must be vacated,” Roeder, 195 F. Supp. 2d at 159.

As the D.C. Circuit made clear earlier in this litigation, 18 U.S.C. § 1964(a) authorizes only forward-looking remedies. See Philip Morris USA, Inc., 396 F.3d at 1192 (ruling out disgorgement of profits from past RICO violations as a remedy in this case); see also Philip Morris USA Inc., 566 F.3d at 1140 (“Section 1964(a) authorizes only remedies that prevent and restrain future RICO violations, not all future effects of past RICO violations.”). The Court of Appeals held that, while “Section 1964(a) provides jurisdiction to issue a variety of orders to ‘prevent and restrain’ RICO violations,” the statutory “language indicates that the jurisdiction is limited to forward-looking remedies that are aimed at future violations.” 396 F.3d at 1198 (quoting 18 U.S.C. § 1964(a)). Plaintiffs pressed an alternative interpretation—one under which remedies premised on past violations were authorized—but the D.C. Circuit rejected their approach as one that “not only nullifies the plain meaning of the terms and violates our canon of

9 This Court’s intent that Order #1015 apply to B&W Tobacco is further illustrated in the provisions detailing the requirement that the corrective statements appear on Defendants’ publicly accessible websites and detailing the requirement that Defendants publish the corrective statements in print newspapers. See Order #1015 at 5 (Section III(B)(¶6(c)) (listing www.bw.com as one of the covered websites), 8 (Section III(B)(¶7(c)(3)) (listing B&W Tobacco in the schedule on which Defendants are required to publish the corrective statements in specified newspapers); Philip Morris USA, Inc., 449 F. Supp. 2d at 939-40.

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statutory construction that we should strive to give meaning to every word, but also neglects Supreme Court precedent.” Id. at 1199 (internal citation omitted).

Then, on appeal from this Court’s final opinion, the D.C. Circuit confronted another issue that shed further light on the applicability of the corrective-statements remedy to B&W Tobacco. The question presented was whether this Court’s judgment could apply to the Center for Tobacco Research–USA, Inc. (“CTR”) and the Tobacco Institute (“TI”), which were both entities that “only existed to wind up their respective affairs” at the time of trial in this case. Philip Morris USA Inc., 566 F.3d at 1135. The D.C. Circuit held that CTR and TI’s pending dissolution rendered the case moot with respect to them and ordered their dismissal on remand.10 See id. Because “CTR and TI no longer exist,” the Court concluded, “[t]hey cannot possibly commit future RICO violations.” Id.

This Court recognized and applied the strictures of the D.C. Circuit’s interpretation of 18 U.S.C. § 1964(a) when it denied Plaintiffs’ requests for several sweeping remedies “not specifically aimed at preventing and restraining future RICO violations,” including implementation of a national smoking cessation campaign, a plan to reduce youth smoking, and a national counter-marketing campaign. Philip Morris USA, Inc., 449 F. Supp. 2d at 933-34, 93637. The D.C. Circuit denied Plaintiffs’ cross-appeal from that ruling and confirmed that this Court had correctly held those remedies to be insufficiently focused on the statutorily mandated goal “to prevent and restrain future effects of past RICO violations, not future RICO violations,” thereby placing them “outside the district court’s authority under section 1964(a).” Philip Morris USA Inc., 566 F.3d at 1147; see also id. at 1149 (“the district court correctly concluded that an 10 Both CTR and TI were dismissed by this Court on remand at the same time that B&W Holdings was dismissed. See Order #7-Remand at 1, Dkt. No. 5846 (Dec. 22, 2010).

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injunction aimed solely at reducing youth smoking rates does not address the section 1964 goal of preventing and restraining the underlying RICO violation”).

Here, any remedy against B&W Tobacco is analogous to disgorgement in that it is inherently backward-looking. There is no logical way that remedies directed at B&W Tobacco can be “forward-looking remedies that are aimed at future violations.” Philip Morris USA, Inc., 396 F.3d at 1198. B&W Tobacco exists only as an historical entity. B&W Tobacco no longer designs, manufactures, distributes, markets, or sells cigarettes. B&W Tobacco does not make statements about cigarettes or any issues related to cigarettes. Like CTR and TI, B&W Tobacco “cannot possibly commit future RICO violations.” Philip Morris USA Inc., 566 F.3d at 1135. It logically follows that requiring the publication of corrective statements on television by B&W Tobacco—or by RJRT on B&W Tobacco’s behalf—cannot serve to prevent and restrain future RICO violations by B&W Tobacco. To the extent that Order #1015’s provisions require B&W Tobacco to publish the corrective statements, the Order exceeds the outer limits of the authority granted to this Court under 18 U.S.C. § 1964(a). Those provisions are therefore “void” under Rule 60(b)(4).

Considering the implications of Order #1015’s approach underscores its incompatibility with the D.C. Circuit’s interpretation of 18 U.S.C. § 1964(a). Applying the corrective-statements remedy to B&W Tobacco requires RJRT to shoulder a greater remedial burden than the other Defendants, to no clear end, because such an application does not advance the statutory goal of preventing and restraining future RICO violations. Where it makes sense for RJRT to shoulder a greater burden—by having to place onserts on all cigarette packages from all of its own brands, including B&W Tobacco legacy brands that are now RJRT brands, for example—the merger, of its own force, has placed that burden on RJRT. But where Order #1015 ordered each

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Defendant—without regard to size, market share, revenue, or relative culpability—to accept an equal obligation for publishing the corrective statements in newspapers and on television, there is no reason that the merger should increase RJRT’s burden.

The structure of Order #1015, moreover, makes clear that the Court sought to impose set remedial obligations upon each Defendant. This is a design feature of the Court’s chosen remedial scheme. Order #1015 does not attempt to tailor penalties to be proportional to a Defendant’s size or its degree of wrongdoing. Nor does it seek to identify an optimal amount of exposure for the corrective statements and then divide the burden of achieving that exposure among the Defendants. Instead, Order #1015 identifies a handful of media through which to disseminate the corrective statements and imposes on each Defendant the obligation to publish the corrective statements in every applicable medium.

The court’s treatment of Defendant British American Tobacco (Investments) Limited (“BATCo”) is illustrative. When the Court concluded that BATCo was not subject to prospective remedies under Order #1015, it did not increase each remaining Defendant’s obligations in an attempt to compensate for the “lost” dissemination BATCo was to have provided. See Order #16-Remand, Dkt. No. 5900 (Mar. 28, 2011). Instead, it released BATCo from the corrective- statements remedy, see Mem. Op. at 12-13, Dkt. No. 5901 (Mar. 28, 2011), and accepted that the remaining Defendants’ dissemination efforts would be sufficient to place the corrective statements into public circulation. The same principle applies to B&W Tobacco, but with even greater force. While BATCo’s dismissal resulted from a Supreme Court decision altering the controlling law nearly four years after Order #1015 was issued, B&W Tobacco’s merger with RJRT occurred before trial and well in advance of the Court’s work crafting the remedies contained in Order #1015. That history and the structure of Order #1015 militate against any

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argument by Plaintiffs that the corrective statements will somehow fall short of their designed goal if provisions requiring publication by B&W Tobacco are vacated.

The decision in Bolla, 550 F. Supp. 2d 54, is analogous and underscores the applicability of Rule 60(b)(4) under the circumstances of this case. In Bolla, the S.E.C. filed a civil complaint against four defendants. See id. at 55. Two defendants settled, but two others, the Washington Investment Network (“WIN”) and Robert Radano, proceeded to trial. See id. After a bench trial, Judge Kollar-Kotelly found WIN liable for violating the Investment Advisers Act of 1940 and Radano liable for aiding and abetting WIN’s violations. See id. at 55-56. The court enjoined WIN and Radano from future violations and imposed fines against both of them. See id. at 56. WIN and Radano both appealed to the D.C. Circuit, which affirmed both the trial court’s findings and the imposition of penalties but remanded for greater specificity in the injunctive portion of the judgment. See id. On remand, after the trial court revised the injunction, Radano filed a Rule 60(b)(4) motion seeking relief from the monetary penalty imposed by the court. See id. Radano argued that the Investment Advisers Act does not authorize monetary penalties for aiding and abetting violations of the statute and, therefore, that the trial court lacked authority to impose such penalties. See id. at 58.

Judge Kollar-Kotelly’s opinion granting Radano’s Rule 60(b)(4) motion underscores three key aspects of Rule 60(b)(4)’s applicability to this case. First, the opinion illustrates that a meritorious motion for relief under Rule 60(b)(4) cannot be waived, even after an appeal on the merits and significant proceedings on remand. Neither the fact that Radano had not previously raised his statutory argument before the district court nor the fact that years had passed between the court’s judgment and his request for relief under Rule 60(b)(4) rendered relief unavailable, because “‘the Rule places no time limit on an attack upon a void judgment, nor can such a

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judgment acquire validity because of laches on the part of him who applies for relief from it.’” Id. at 58 (quoting Austin v. Smith, 312 F.2d 337, 343 (D.C. Cir. 1962)). Second, the opinion makes clear that Rule 60(b)(4) applies not only to situations where constitutional prerequisites for jurisdiction are absent, but also with equal force to litigation based upon statutory provisions that limit the court’s authority. Judge Kollar-Kotelly granted relief because she concluded that “Section 209(e) of the Advisers Act does not authorize the SEC to seek, or grant this Court jurisdiction to impose, monetary penalties upon Defendant Radano for his aiding and abetting violations of that Act.” See id. at 63. Finally, the opinion shows that Rule 60(b)(4) need not apply to a judgment writ large but can be used surgically to grant relief from those individual provisions of an order that are void. In Bolla, the court “vacate[d] that portion of its … Order imposing a $15,000 civil monetary fine upon Defendant Radano,” while holding that “[t]he remainder of the Court’s … Order shall remain in effect.” Id.

All three aspects are on-point and underscore RJRT’s entitlement to relief. First, the Bolla opinion makes clear that the procedural history of this case is no obstacle to RJRT’s motion. In both this case and in Bolla, the D.C. Circuit affirmed findings of liability and most aspects of the remedial order, but vacated and remanded select portions of the injunction. And both this case and Bolla have involved extensive proceedings on remand. Just as in Bolla, none of that history affects the instant Rule 60(b)(4) motion. Second, like in Bolla, some aspects of this Court’s remedial order exceed the statutory basis for the Court’s jurisdiction in this suit and therefore are void. Section 1964(a)’s narrow authorization for “forward-looking remedies that are aimed at future violations,” Philip Morris USA, Inc., 396 F.3d at 1198, is analogous to the limited causes of action authorized by the Investment Advisers Act. Like the remedies exceeding the relevant limitation in Bolla, the remedies exceeding § 1964(a)’s scope are void under Rule

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60(b)(4). Finally, just as the Bolla court struck only those damages provisions that exceeded the court’s statutory authority while leaving the remainder of its order in effect, the same principle applies here. The instant motion seeks narrow relief from only those provisions of Order #1015 that require B&W Tobacco to disseminate the corrective statements on television. Nothing about this motion would affect any other aspect of Order #1015.

Ultimately, as Bolla teaches, RJRT is entitled to relief from null aspects of Order #1015 because “‘“there is no question of discretion on the part of the court when a motion is under Rule 60(b)(4).”’” Bolla, 550 F. Supp. 2d at 58 (quoting Combs, 825 F.2d at 441 (quoting Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980))). Accordingly, RJRT’s motion should be granted under Rule 60(b)(4).

II. ALTERNATIVELY, RELIEF IS PROPER UNDER RULE 60(b)(6), BECAUSE THERE IS NO RATIONALE FOR IMPOSING REMEDIES AGAINST BROWN & WILLIAMSON TOBACCO DISTINCT FROM REMEDIES AGAINST R.J. REYNOLDS TOBACCO COMPANY.

Alternatively, relief should be granted under Rule 60(b)(6) “to accomplish justice.” Klapprott, 335 U.S. at 615. As discussed above, applying the corrective-statements remedy to B&W Tobacco would require RJRT to shoulder a greater remedial burden than the other Defendants, without justification. There is no legal or evidentiary basis that would justify requiring RJRT to engage in multiple, repeated publications of the corrective statements—above and beyond the requirements applicable to other Defendants—as a means of achieving 18 U.S.C. § 1964(a)’s purpose “to prevent and restrain” future RICO violations. Nor is there any indication in Order #7-Remand or the status conference preceding its entry that the United States, the Intervenors, the Defendants, or this Court understood B&W Holdings’s dismissal to be contingent upon or related to an understanding that RJRT had assumed additional obligations to execute forward-looking remedies imposed as a result of the Court’s findings in this case

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because of its pre-trial merger with B&W Tobacco. Under these circumstances, relief is appropriate.

Nor is there any procedural basis for avoiding this issue. First, the motion is proper under Rule 60(b)(6) because, if the Court rejects RJRT’s Rule 60(b)(4) argument, the other five provisions of Rule 60(b) would not apply. See, e.g., Bowyer, 779 F. Supp. 2d at 162-63 (explaining that relief under Rule 60(b)(6) is available only where provisions (b)(1)-(5) are deemed not to apply). RJRT’s argument under Rule 60(b)(6) is presented in the alternative to the argument under Rule 60(b)(4), so that it proceeds only if the Court rejects the application of Rule 60(b)(4).

Second, RJRT has not strategically avoided this issue; rather, it has consistently maintained that B&W Tobacco is not subject to the corrective-statements remedy. Consequently, relief remains available under Rule 60(b)(6). See, e.g., Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 393 (1993) (“a party who failed to take timely action due to ‘excusable neglect’ may not seek relief more than a year after the judgment by resorting to subsection (6)”); Twelve John Does, 841 F.2d at 1141 (“Rule 60(b)(6) may not be used as a substitute for an appeal not taken.”). When Defendants appealed Order #1015 and this Court’s underlying factual findings, they argued that B&W Holdings—the only remnant of B&W Tobacco that had not been fully incorporated into RJRT—was no longer subject to this Court’s jurisdiction. See Br. for Defs.-Appellants at 58-59, United States v. Philip Morris USA Inc., No. 06-5627, Dkt. No. 99 (D.C. Cir. May 19, 2008). The D.C. Circuit remanded to this Court for factual findings about whether B&W Holdings “exercises plenary control over the tobacco operations of its subsidiaries.” Philip Morris USA Inc., 566 F.3d at 1135. On remand, this Court dismissed B&W Holdings, recognizing its complete separation from the tobacco industry. See

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Order #7-Remand, Dkt. No. 5846 (Dec. 22, 2010). At that point, RJRT did not consider B&W Tobacco still independently subject to the corrective-statements remedy. This was apparent at the first status conference on remand, for example, where the Court was seeking to ascertain who was represented at the hearing:

THE COURT: And Brown and Williamson — or Mr. Francisco, did you say you were representing Brown and Williamson as well? I don’t think so.

MR. FRANCISCO: R.J. Reynolds Tobacco Company.

THE COURT: Don’t we have anyone for the Brown and Williamson Tobacco Corporation?

MR. FRANCISCO: We were on behalf of Brown and Williamson to the extent that they were merged into our client.

THE COURT: That is what I want to clear up on the record. Thank you.

Hr’g Tr. at 6:1-11 (Dec. 20, 2010). RJRT did not seek relief earlier in the remand proceedings because, prior to the mediation, it was not clear that Plaintiffs considered RJRT bound to undertake additional publications of the corrective statements on B&W Tobacco’s behalf. The Consent Order recently entered by the Court now makes clear that Plaintiffs do believe that RJRT is so bound. See Order #51-Remand at 8-10 (Section III(¶¶1-3, 6)), 22 (Section VI(¶4)), Dkt. No. 6095 (June 2, 2014). This is not, therefore, a situation where RJRT can be considered to have sat on its rights or made a strategic decision to delay seeking relief. For that reason, cases disallowing Rule 60(b)(6) motions as needlessly dilatory or subjecting them to the extraordinary circumstances test because “the reasons for seeking relief could have been considered in an earlier motion under another subsection of” Rule 60(b) are inapposite. 11 Charles Alan Wright, et al., Federal Practice and Procedure: Civil § 2864 (3d ed.).

Third, there is no doubt that RJRT’s motion is timely, given that this case is indisputably “long-running and complex.” Bowyer, 779 F. Supp. 2d at 166 (citing Salazar, 633 F.3d at 1119).

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Rule 60(c)(1) requires that a motion under the catch-all provision “be made within a reasonable time.” Fed. R. Civ. P. 60(c)(1). “The D.C. Circuit has not identified a standard for assessing ‘reasonable time’ under Rule 60(b).” Bowyer, 779 F. Supp. 2d at 163 (internal quotation marks omitted). But, the D.C. Circuit has recognized that “Rule 60(b)’s concern with finality, embodied . . . in the ‘reasonable time’ requirement, does not carry the same significance in long-running equitable relief as it would in an action where the court’s role had ended and the litigants relied on the repose inherent in the end of litigation.” Salazar, 633 F.3d at 1116. For that reason, “[i]n a complex and long-running . . . case such as this, [] it would be an abuse of discretion to rule that a Rule 60(b)(6) motion is not filed within a reasonable time without finding that the movant’s delay has prejudiced the non-moving party.” Id. at 1119. Plaintiffs, moreover, can show no prejudice here. The parties addressed the applicability of the corrective-statements remedy to B&W Tobacco while mediating implementation terms for the corrective statements, and Order #51-Remand provides for RJRT seeking relief through this motion. See Order #51-Remand at 22 (Section VI(¶4)), Dkt. No. 6095 (June 2, 2014). This motion cannot therefore be construed as either an unfair surprise or an attempt to renege on the mediated implementation terms. And because there is no other basis for Plaintiffs to allege prejudice, there is no basis for finding RJRT’s motion untimely. See Bowyer, 779 F. Supp. 2d at 163 (quoting Salazar, 633 F.3d at
1119).

Accordingly, if the Court rejects RJRT’s argument under Rule 60(b)(4), it should grant relief under Rule 60(b)(6) to “accomplish justice”—treating RJRT and the other Defendants similarly—while ensuring that all remaining Defendants remain subject to the remedies designed by this Court.

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CONCLUSION

For the foregoing reasons, R.J. Reynolds Tobacco Company respectfully requests that this Court grant its motion and strike the provisions of Order #1015 that require RJRT to disseminate the corrective statements on B&W Tobacco’s behalf. Dated: June 11, 2014 Respectfully submitted,

/s/

Noel J. Francisco (D.C. Bar No. 464752)
Robert F. McDermott (D.C. Bar No. 261164)
Peter J. Biersteker (D.C. Bar No. 358108)

JONES DAY

51 Louisiana Avenue, N. W.

Washington, D.C. 20001-2113

Telephone: (202) 879-3939

Fax: (202) 626-1700
Geoffrey K. Beach
R. Michael Leonard

WOMBLE CARLYLE SANDRIDGE & RICE, PLLC

One West Fourth Street

Winston-Salem, NC 27101

Telephone: (336) 721-3600

Facsimile: (336) 733-8389

Attorneys for Defendant R.J. Reynolds Tobacco Company, individually and as successor to Brown & Williamson Tobacco Corporation

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