6176: PUBLIC HEALTH INTERVENORS’ OPPOSITION TO DEFENDANTS’ REVISED CORRECTIVE STATEMENTS PROPOSALS AND REPLY IN SUPPORT OF THE UNITED STATES’ PROPOSALS Nov. 18, 2015

November 18, 2015 11:27 pm by Gene Borio

The PDF is Here

EXCERPT:

Once again seeking to re-litigate long-resolved issues, mischaracterizing the Court of Appeal’s rulings, and otherwise striving to further delay and complicate the relatively straightforward and narrow issue remaining before the Court, the Defendants have filed a forty page brief asserting that this Court must wholly re-write the preambles that begin each of the corrective statements. Claiming that the United States’ proposals, which suggest simply removing the only phrase the Court of Appeals found objectionable in this Court’s corrective statements (i.e., the preamble statement that the manufacturers “deliberately deceived” the American public) would force Defendants to “humiliate themselves by publicly declaring they are liars,” Defendants’ Opening Brief (“Def. Br.”) (DN 6175) at 15, Defendants demand the Court instead adopt Defendants’ corrective statements preambles, which they claim will be “equally effective” at preventing and restraining further fraud. Id. at 22.

In light of the massive evidentiary record in this case, there are obviously grounds for great skepticism that “effectiveness” was the paramount driver for Defendants’ newly minted corrective statements preambles. More importantly, however, there simply is no reason the Court should go back to the drawing board and develop entirely new preambles, given the extensive litigation that has already occurred over the preambles the Court imposed in 2012, and this Court’s explicit instruction that the parties focus their revisions on “the one fragment of a sentence that the Court of Appeals wants changed.” Trans. of Oct. 1, 2015 Status Hearing at 4. Certainly, Defendants’ threat that only their proposals will “facilitate the prompt dissemination” of the corrective statements, Def. Br. at 3, 12 – because otherwise Defendants will continue to litigate appeals to obtain further delays – is irrelevant. Nor is there any other basis for rewriting the corrective statements preambles. Rather, the Court should follow the D.C. Circuit’s ruling by simply removing from the preambles the words “deliberately deceived” and maintaining the original preambles as proposed by the United States, and as already reviewed by the Court of Appeals.

Moreover, contrary to Defendants’ arguments, it is evident that their new proposed preambles do not adequately satisfy the purposes of corrective statements as set forth by the D.C. Circuit.

. . .

Accordingly, because Defendants provide no grounds for the Court to deviate from the United States’ proposal on revised corrective statements language, which provides minimal changes to the Court’s original language (but deletes the one phrase the Court of Appeals found objectionable), and no basis for rejecting the United States’ minor implementation changes, which are similarly faithful to the original version, the Public Health Intervenors urge the Court to adopt the United States’ Proposed Order directing the publication of the revised corrective statements in short order.

END EXCERPT

FULL TEXT:

Case 1:99-cv-02496-GK Document 6176 Filed 11/18/15 Page 1 of 21

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
Plaintiff,

TOBACCO-FREE KIDS ACTION FUND, et al.,

Plaintiff-Intervenors, v.

PHILIP MORRIS USA INC., et al.,

Defendants.

Civil Action No. 99-2496

Next Scheduled Court Date: None
__________________________________________

PUBLIC HEALTH INTERVENORS’ OPPOSITION TO DEFENDANTS’ REVISED CORRECTIVE STATEMENTS PROPOSALS AND REPLY IN SUPPORT OF THE UNITED STATES’ PROPOSALS

INTRODUCTION

Once again seeking to re-litigate long-resolved issues, mischaracterizing the Court of Appeal’s rulings, and otherwise striving to further delay and complicate the relatively straightforward and narrow issue remaining before the Court, the Defendants have filed a forty page brief asserting that this Court must wholly re-write the preambles that begin each of the corrective statements. Claiming that the United States’ proposals, which suggest simply removing the only phrase the Court of Appeals found objectionable in this Court’s corrective statements (i.e., the preamble statement that the manufacturers “deliberately deceived” the American public) would force Defendants to “humiliate themselves by publicly declaring they are liars,” Defendants’ Opening Brief (“Def. Br.”) (DN 6175) at 15, Defendants demand the

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Court instead adopt Defendants’ corrective statements preambles, which they claim will be “equally effective” at preventing and restraining further fraud. Id. at 22.

In light of the massive evidentiary record in this case, there are obviously grounds for great skepticism that “effectiveness” was the paramount driver for Defendants’ newly minted corrective statements preambles. More importantly, however, there simply is no reason the Court should go back to the drawing board and develop entirely new preambles, given the extensive litigation that has already occurred over the preambles the Court imposed in 2012, and this Court’s explicit instruction that the parties focus their revisions on “the one fragment of a sentence that the Court of Appeals wants changed.” Trans. of Oct. 1, 2015 Status Hearing at 4. Certainly, Defendants’ threat that only their proposals will “facilitate the prompt dissemination” of the corrective statements, Def. Br. at 3, 12 – because otherwise Defendants will continue to litigate appeals to obtain further delays – is irrelevant. Nor is there any other basis for rewriting the corrective statements preambles. Rather, the Court should follow the D.C. Circuit’s ruling by simply removing from the preambles the words “deliberately deceived” and maintaining the original preambles as proposed by the United States, and as already reviewed by the Court of Appeals.

Moreover, contrary to Defendants’ arguments, it is evident that their new proposed preambles do not adequately satisfy the purposes of corrective statements as set forth by the D.C. Circuit. It is vital that the preambles inform the public that the truth about cigarettes is coming from the companies themselves, under court order, to prevent and restrain Defendants from undermining the impact of these statements through further fraud – as the record shows they have consistently done in the past in response to official public health disclosures. Merely informing the public that some federal judge wants it to know something will simply not have

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the same effect on Defendants’ future behavior as requiring the manufacturers themselves to so inform consumers.

It is similarly important for the statements to tell the public “[h]ere is the truth,” in order to effectively prevent and restrain Defendants’ misconduct, and the other language changes sought by Defendants would likewise fatally undermine their effectiveness.1

As regards implementation details, there are no grounds for Defendants’ objection that the Court may not consider the United States’ revised television ads because Defendants did not approve them. Def. Br. at 38. The parties already tried to negotiate a resolution of the corrective statements remedy after the D.C. Circuit remand, and it was in light of their failure to reach agreement that the Court specifically ordered the parties to propose the specific changes they seek to both the corrective statements language and the Implementation Order. Order #61Remand at 2 (Oct. 1, 2015).

To the extent Defendants have any objection to the United States’ proposals, including any of the elements to which they had earlier agreed as part of the Consent Order On Implementation (Order #51-Remand, Docket No. 6095 (June 2, 2014)), they had the opportunity

1 As explained in more detail below, the major flaw in Defendants’ arguments is their presumption that effective corrective statements are prohibited because they might give a reader a negative impression of the companies. This ignores that the rationale for corrective statements, as twice affirmed by the D.C. Circuit, is that they are appropriate because Defendants are likely to engage in future misconduct, and the remedy will prevent and restrain that ongoing fraud. Thus, while the statements may not address Defendants’ past misconduct, they can – indeed must – bear on such continuing and future misconduct by telling the public the truth. Defendants new preambles would remove that element by turning the statements into another public health campaign they can call into question and from which they can simply disassociate themselves. See infra at 9-11. Moreover, Defendants’ proposals constitute the very kind of public health effort that this Court and the Court of Appeals previously ruled would not satisfy RICO Section 1964. United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1148 (D.C. Cir.
2009) (“Affirmance Opinion”); see also United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1, 936 (D.D.C. 2006) (rejecting “public education and counter-marketing campaign” remedy).

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to raise those objections in their brief. However, given both the Court’s direction that implementation issues be resolved in the contested litigation now underway (rather than in a new round after the revised language is resolved, as Defendants urged), and the specific provision in the Consent Order providing that parties may seek changes to implementation details in the event the language changes as a result of further appeals, id. at 23, the Court certainly may enter the United States’ Proposed Order, including the United States’ revised television ads.

Accordingly, because Defendants provide no grounds for the Court to deviate from the United States’ proposal on revised corrective statements language, which provides minimal changes to the Court’s original language (but deletes the one phrase the Court of Appeals found objectionable), and no basis for rejecting the United States’ minor implementation changes, which are similarly faithful to the original version, the Public Health Intervenors urge the Court to adopt the United States’ Proposed Order directing the publication of the revised corrective statements in short order.2

ARGUMENT

A. The Court Should Adopt The United States’ Corrective Statements Preambles And Reject Defendants’ Newly Minted Preambles Proposals.

Defendants assert that the United States’ revised preambles – which simply state that “A federal court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement . . . [h]ere is the truth” – are “no different in substance or effect” than the original preambles, which stated the companies had “deliberately deceived” the public. Def. Br.

2

In another transparent effort to further delay these matters, Defendants refer to having prepared mock-ups for their revised corrective statements proposals, Def. Br. at 9, but have refused to share them with Plaintiffs. See Attachment 1 (Defense counsel email declining to provide mock-ups). In the event the Court chooses to review any such mock-ups, Plaintiffs must be given an appropriate opportunity to review them and apprise the Court of any concerns.

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at 2 (emphasis added). Thus, Defendants believe that the revised statements force them to “confess publicly that they are liars” and “atone for their transgressions.” Id.3

This hyperbole of course ignores that the original statements actually said the companies had “deliberately deceived” the public, while the revised preambles say no such thing. Defendants’ ipse dixit arguments that the revised language somehow communicates past misconduct does not become persuasive simply by virtue of repetition throughout Defendants’ brief. On the other hand, Defendants’ new preambles, which completely rewrite the Court’s corrective statements, are entirely inappropriate and unnecessary, and would eviscerate the effectiveness of the corrective statements remedy.

1. The Preambles Should Begin With The Language “A Federal Court Has Ordered.”

Each of the Court’s original corrective statements informed the public that the Court “has ordered” the following statements be made, Nov. 27, 2012 Mem. Op. (Docket No. 5992), thereby informing the public of the reason the statements are being disseminated and otherwise serving the vital purpose of communicating that these are corrective statements. Defendants’ objections to this language – which the Court of Appeals did not address – should be rejected.

First and foremost, Defendants’ self-serving assertion that stating “A Federal Court has ordered” is a “public shaming,” Def. Br. at 21, is simply irreconcilable with their own proposal that many of the statements include the phrase “Under Court order, paid for by Philip Morris USA, R.J. Reynolds Tobacco, Lorillard, and Altria.” Id. (emphasis added). There simply is no coherent argument that telling the public that a Court has ordered Defendants to pay for the

3

See also, e.g., id. at 13 (revised language “conveys the clear an unequival message that Defendants previously deceived the American public”); 15 (revised language forces “Defendants to humiliate themselves by publicly declaring they are liars”); 29 (revised statements are “punishment for past transgressions” and are “self-accusatory”).

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statements is forward-looking, but telling the public that the Court ordered Defendants to make the statements is shaming, punitive and backward-looking. To the contrary, neither approach implicates Defendants prior conduct – they simply inform the public of the origins of the new disclosures.4

Moreover, as between the two formulations, the Court should certainly choose the United States’ proposal. Indeed, the Court has already made clear that it intends only to make the changes to the original version of the corrective statements that were dictated by the Court of Appeals. Defendants’ paradigm, by contrast, whereby the Court should select Defendants’ complete revision of the statement unless it can find a “discernible RICO-based benefit” to the United States’ proposal, Def. Br. at 23, ignores that the Court is not writing on a clean slate. In short, there simply is no reason to accept Defendants’ invitation to wholly rewrite the preambles by removing the introduction and replacing it with different language at the end of some the statements.5

Defendants also baldly mischaracterize the D.C. Circuit ruling, claiming that the Court of Appeals somehow prohibited informing the public that the court has “ordered” the manufacturers to make the statement when it discussed the original language of the preambles and then decided that they improperly “disclose defendants’ prior deceptive conduct.” Def. Br. at 20 (quoting

4 Indeed, even as far back as 2006 Lorillard proposed that the statements begin by stating: “The following statement is made by Lorillard Tobacco Company pursuant to a Court Order . . . .” Lorillard Proposed Corr. Stmts. at 2-5 (Docket No. 5781, filed Oct. 16, 2006) (emphasis added).

5 Defendants are also proposing that even their “Under court order” formulation, at the end of the corrective statements, be limited to newspaper and television ads because, they assert, it will be clear who is paying for the statements on websites and cigarette packs. Def. Br. at 21. This misses the point entirely, for Defendants have not suggested – nor could they – that knowledge of who is paying for the statements is relevant to their effectiveness at preventing and restraining fraud. Rather, it is the fact that they are Court-ordered that serves that purpose by letting the public know these are corrective statements.

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United States v. Philip Morris USA, Inc., 801 F.3d 250, 261 (D.C. Cir. 2015) (“Corrective Statements Opinion”). To the contrary, the Court of Appeals made clear that the only language in the preambles that was objectionable was the wording that required Defendants to “disclose [their] prior deceptive conduct.” Id. (emphasis in original). The only words in the original preambles that run afoul of that finding are those that would have instructed the public that the Court has ruled Defendants “deliberately deceived” the American public – the very words that the United States is proposing be removed. Nothing in the D.C. Circuit decision suggests that stating that the corrective statements are “court ordered” even remotely touches on Defendants’ past misconduct.6

At bottom, Defendants’ complaints against the United States’ revised preambles’ introductions are nothing more than veiled complaints against the entire corrective statements remedy, for, as Defendants explain, “courts do not typically order manufacturers to disseminate information about their products unless the companies have been found to have deceived the public in the past.” Def. Br. at 21 (emphasis added). However, given that the D.C. Circuit has upheld this precise remedy despite multiple appeals – Affirmance Opinion, 566 F.3d at 1138-41; United States v. Philip Morris USA, Inc., 686 F.3d 832 (D.C. Cir. 2012); Corrective Statements Opinion, 801 F.3d 250 – there is no basis for the Court to dilute the remedy any further in order to try to keep the reasons for the corrective statements a secret from the public, as Defendants urge.

6

As explained below, see infra at 20, for the same reasons there also is no basis for Defendants’ argument that the Court must change the wording that will appear as a hyperlink on Defendants’ websites in eleven years from “Court Ordered Corrective Statements” to “Corrective Statements.” Def. Br. at 32.

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Indeed, this is not a “typical[ ]” case, but rather one where the Court found, based on massive findings of fraud, that Defendants’ fraud is likely to continue, and where the Court of Appeals has upheld a corrective statements remedy to prevent and restrain that fraud. Nothing in the D.C. Circuit’s opinion – which simply provided that the statements may not specifically call out defendants’ prior misconduct – suggests that the statements must be rewritten to ensure that they have absolutely no bearing on Defendants’ reputations.7

2. The Court Should Require The Companies To Be Identified By Name In Both The Preambles And In The First Bullet In Statement D.

The Court should also reject Defendants’ effort to dissociate themselves from the corrective statements by no longer being identified by name. Once again, the pertinent question is the degree to which the Court must alter its own corrective statements to comply with the D.C. Circuit ruling, not whether to consider a new version that Defendants claim will be “equally effective” or will facilitate “prompt dissemination” because Defendants prefer them. Def. Br.at

12.

As with the phrase “a federal court has ordered,” Defendants have no coherent explanation as to why it is consistent with RICO and the First Amendment to be identified in certain media, at the bottom of the statement, Def. Br. at 21, but not in all media, as part of the preamble itself. Rather, it is evident that the companies seek to avoid being named because they believe this will make it easier to suggest that the statements are just another public health

7

The Court should also reject Defendants’ circular argument that removing from all company websites and onserts any reference to the statements being made by Defendants under a Court order will “avoid needless complications” concerning the appropriate language on ITG websites and onserts. Def. Br. at 7 n.1. Any such purported “complications” all arise from Defendants’ own proposal, since these issues were already extensively negotiated for the original corrective statements language, and the United States’ Proposed Order simply carries them over into the revised preambles with language to which ITG Brands LLC has raised no specific objections. See United States’ Proposed Order at 24-30 (Docket No. 6171-4, Oct. 21, 2015).

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message – this time coming from a single federal district court judge – that they can dispute, rather than factual information that they have been required to disseminate to the public.

Indeed, a central element of the “open question” strategy the Defendants perpetuated for decades was to question or deny the truth about cigarettes that they are now required to communicate in the corrective statements. Thus, for example, as this Court found, Defendants “discounted” Surgeon General statements on smoking (449 F. Supp. 2d at 58 (Finding of Fact (“FF”) 94)), “attack[ed]” Surgeon General assessments (id. at 67 (FF 137)), “discredit[ed] scientists and public health officials” who informed the public of the truth about cigarettes (id. at 70 (FF 151)), and generally sought to “creat[e] doubt about the health charge” posed by the scientific community. Id. at 73 (FF 155). By suggesting that the statements should merely inform the public that a federal court wants it to know certain information, Defendants seek once again to perpetuate this “open question” strategy. Hence, if their version of the statements is accepted, they will have every reason to simply convey to the public that this is merely the opinion of one federal judge, rather than the actual undeniable truth about cigarettes.

In short, it is by telling the public that a federal court has ordered these specific companies to make these truthful statements about cigarettes that the statements will prevent and restrain further fraud. By contrast, Defendants’ newly minted preambles – stating that the information is just something “a federal court has determined” the public should know – will allow Defendants to attack the corrective statements the same way they have spent decades attacking scientists and public health officials, continuing to perpetuate their fraud by calling the statements’ accuracy into question.

Defendants’ assertions that being identified by name somehow runs afoul of RICO Section 1964 and the First Amendment are also simply irreconcilable with the fact that they

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agreed to this modification in the Consent Order. Indeed, even on appeal, not only did Defendants not specifically contest whether they could be identified by name, they characterized the specific portion of the Consent Order where the parties had agreed to substitute the words “Defendant Tobacco Companies” with “Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA” as “minor textual modifications.” See Def. Appeal Br. in No. 13-5028 (Sept. 29,
2014) at 12-13 (citing JA 437, which contained page 2 of the Implementation Consent Order) (emphasis added). In short, Defendants’ assertion that being identified by name somehow shames and humiliates them rings hollow given their prior acquiescence to being so identified.8

Moreover, Defendants’ proposed formulation – i.e., that the preambles should state that “a federal court has determined that you should know the following,” Def. Br. at 8 – is not even accurate. The Court did not, as the proposed language states, make an abstract “determination” that the public “should know” certain information. Rather, the Court made detailed findings that specific companies have engaged in fraud that is likely to continue, and, therefore, ordered the companies to make certain corrective statements to prevent and restrain fraud from those companies.

The Court should therefore reject Defendants’ new preambles, which would turn the corrective statements into nothing more than a new set of public health messages – the very kind

8 For similar reasons the Court should reject Defendants’ argument based on the language in the Order authorizing the brand transfers. See Def. Br. at 14 (claiming that onserts which state “R. J. Reynolds Tobacco [previous maker of [insert brand]]” somehow “communicate that the companies identified by name in the statements engaged in past wrongdoing”). That language comes from Order #56-Remand, which allowed the transfer of certain brands to ITG Brands, LLC, and was necessary for R.J. Reynolds and Lorillard to obtain approval of their proposed merger before the Federal Trade Commission. Given that this was Defendants’ and ITG Brands LLC’s proposed language, which Plaintiffs simply did not oppose (see Unopposed Motion For Transfer Of Certain Cigarette Brands (Docket No. 6142, Apr. 30,
2015)), it can hardly be a basis to obtain a weakening of the corrective statements language now.

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of messages the Court expressly found to be not only insufficient to prevent and restrain Defendants’ fraud, but the very target of that fraud. See supra at 9. To put it bluntly, there is every reason to expect that rather than prevent and restrain further fraud, the tobacco companies’ corrective statements would cause Defendants to redouble their efforts to sow doubt and confusion about the accuracy of the information “a federal court has determined that [the public] should know . . . .” Def. Br. at 8.

There also is no basis to even consider Defendants’ argument that the Court should rewrite the first bulleted line in Statement D (“designing cigarettes to enhance delivery of nicotine”) to remove the list of company names from this bullet. Def. Br. at 11 and n.2. The Court of Appeals rejected all of Defendants’ arguments regarding the bulleted lines, including this line in particular. Thus, there simply is no rationale for the Court to reconsider whether to rewrite this bullet to remove the names of the companies any more than any of the others. Moreover, once again, Defendants did not separately argue on appeal that being identified by name in this bullet was inappropriate.9

9 According to Defendants, not only must the Court remove the references to the companies in this bullet, it may not even use the word “Defendant,” but rather must confine itself to “Cigarette companies,” Def. Br.at 11, so the public gets the impression that all cigarette companies bear equal responsibility. But the D.C. Circuit already upheld reference to the companies in this bullet. Corrective Statements Opinion, 801 F.3d at 259. Indeed, in rejecting all the challenges to the nicotine manipulation bullets on appeal, the D.C. Circuit specifically noted that, in its original 2006 Opinion the Court had “warned defendants that they would be required to make just such corrective statements about their ‘manipulation of cigarette design and composition to ensure optimum nicotine delivery” – “statements, in other words, revealing that they ‘do manipulate (the) design of cigarettes in order to enhance the delivery of nicotine.’” Id. at 258 (emphasis added). The Court further noted this Court’s findings that “Defendants have designed their cigarettes to precisely control nicotine delivery levels and provide doses of nicotine sufficient to create and sustain addiction.” Id. Accordingly the Court should not permit Defendants to continue to re-litigate this issue.

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3. The Statements Should Also Say “Here Is The Truth.”

There also is no basis for Defendants’ repeated claim that the inclusion of the words “Here is the truth” in the corrective statements “plainly communicates” that Defendants previously denied the truth. Def. Br. at 14. The phrase does not at all convey the same message as “contrary to prior advertising.” Id. at 14 (quoting Warner Lambert Co. v. FTC, 562 F.2d 749, 763 (D.C. Cir. 1977)). The latter phrase refers to what the defendant did, while “[h]ere is the truth” simply conveys the accuracy of the bulleted information that follows. Once again, Defendants’ actual complaint is with being forced to make corrective statements at all, because, as they elsewhere note, readers of Defendants’ corrective statements may wonder why Defendants have been directed to make any such statements. Def. Br. at 21.

In making this argument, Defendants ignore that the “deliberately deceived” phrase has been removed, leaving the phrase “here is the truth” to convey nothing more than what it says: that following is a list of truthful assertions about cigarettes. Defendants’ repeated claim that telling the public that the bulleted statements are the truth somehow forces Defendants to “humiliate themselves publicly by declaring that they are liars,” Def. Br. at 15, simply makes no sense logically or legally.

Indeed, the D.C. Circuit repeatedly stressed that the corrective statements should reveal the “previously hidden truth” about cigarettes. Corrective Statements Opinion, 801 F.3d at 261; Affirmance Opinion, 566 F.3d at 1140 Accordingly, while the statements may not tell the public that Defendants previously deceived consumers, they certainly may – and should – tell the public that the bulleted statements detail the truth about cigarettes. Only by having the public be told that the information is the truth, being provided by Defendants under Court Order, will Defendants be prevented and restrained “from making fraudulent public statements on smoking

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and health matters in the future.” 449 F. Supp. 2d at 926; Affirmance Opinion, 566 F.3d at 1140 (“Defendants will be impaired in making false and misleading assurances about, for instance, smoking-related diseases or the addictiveness of nicotine – as the district court found they continue to do – if they must at the same time communicate the opposite, truthful messages about these matters to consumers”).

Finally, while Defendants assert that the D.C. Circuit’s most recent opinion somehow forecloses the “here is the truth” phrase, Def. Br. at 18, they acknowledge – as they must – that the D.C. Circuit did not even mention that phrase in discussing the preamble. Corrective Statements Opinion, 801 F.3d at 261. They also have no rejoinder to the particularly salient fact that although they specifically urged the Court to strike the phrase, the Court declined to do so.

Rather, the Court of Appeals made clear that the only objectionable language in the preambles was that which “disclose[d] defendants’ prior deceptive conduct,” id. – i.e., the words “deliberately deceived.” Id. at 261-263. At the same time, the Court contrasted that language with the language that is permissible – terms which inform the public of the “truth” about cigarettes. Id. at 261. Accordingly, nothing in the Court’s opinion suggests that telling the public that the bulleted facts are the “truth” is prohibited here. Only by ordering corrective statements that tell the public that the specific companies have been ordered to tell the truth about cigarettes will the Court’s remedial objective be achieved, and nothing in the D.C. Circuit’s opinion constrains the Court’s authority to do so by ordering the revised corrective statements proposed by the United States.

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4. The Court Should Reject Defendants’ Effort To Water Down The Language Introducing The Lights And Nicotine Manipulation Topics.

The Court should also reject Defendants’ efforts to revisit two of the “about” phrases introducing the corrective statements. Def. Br. at 26-29. The preamble to Statement D explains that the statement is “about designing cigarettes to enhance the delivery of nicotine.” Gov’t Br. at 12. Like Defendants’ objection to the bullet discussing their nicotine manipulation, the D.C. Circuit found the challenges to this language waived, since the Court had decided in 2009 that Defendants could be required to issue a corrective statement addressing their “manipulation of cigarette design and composition to ensure optimum nicotine delivery.” Corrective Statements Opinion, 801 F.3d at 258-59. Once again, Defendants’ effort to continue to re-litigate a settled issue should not be tolerated.10

In any event, Defendants’ objections to this phrase and the phrase in the Statement C preamble referring to Defendants’ “selling and advertising low tar and light cigarettes as less harmful than regular cigarettes” overlook that these statements do not at all refer to Defendants’ “prior” conduct, Def. Br. at 27, but rather refer to Defendants’ continuing conduct. This is critical, for, contrary to Defendants’ arguments, the D.C. Circuit’s concern with the original corrective statements did not turn on whether they referred to Defendants’ conduct in general, but rather whether they referred to “backward-looking” conduct – i.e., conduct that occurred in the past. Corrective Statements Opinion, 801 F.3d at 261-262.

10

Of course, Defendants’ alternative formulation – “about the way your cigarettes are made” – also touches on Defendants’ conduct, and thus references to conduct cannot be what distinguishes Defendants’ newly proposed replacement for the Statement D preamble language the D.C. Circuit has already approved. Rather, it is evident that, once again, Defendants are simply taking yet another opportunity to try to water down the corrective statements so the public does not learn the “‘previously hidden truth.’” Corrective Statements Opinion, 801 F.3d at 261 (quoting Affirmance Opinion, 566 F.3d at 1140)).

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This vital distinction is evident from the Court’s approval of the bullet in statements D stating that the companies “control the impact and delivery of nicotine in many ways, including adding ammonia . . . .” Id. at 261. In approving this bullet, the Court was concerned not with the fact that it refers to what Defendants do, but rather with whether there were sufficient findings that the companies continue to engage in such conduct. Thus, while the Court noted that Lorillard may not be adding ammonia at present, the Court approved the bullet on the grounds that other companies do, and that Lorillard could also “resume the practice in the future.” Id. (emphasis added). Similarly, in finding that Defendants may no longer challenge whether the statements inform the public of Defendants’ nicotine manipulation, in addition to finding that the issue has been waived the Court relied on the district court’s findings that this is something Defendants continue to do. Corrective Statements Opinion, 801 F.3d at 258.

This reasoning also supports maintaining the introduction to Statement C about “selling and advertising light and low tar cigarettes as less harmful than regular cigarettes.” Def. Br. at 26-27 (urging rejection of this introduction). In the most recent appeal Defendants objected to Statement C altogether on the grounds that the Smoking Prevention and Tobacco Control Act made sale of such cigarettes unlawful. Id. at 259. However, the D.C. Circuit rejected the argument on the grounds that Defendants have continued to sell these same cigarettes with a “new look.” Id. at 260 (discussing how “Altria Group placed notes on the last packages of Marlboro Lights informing purchasers that ‘Your Marlboro Lights package is changing, but your cigarette remains the same’ – just ‘ask for Marlboro in the gold pack.’”). Accordingly, there is no problem with the Court’s original phrase introducing Statements C and D.

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B. The United States’ Revised Corrective Statements Are Consistent with Zauderer And The D.C. Circuit’s First Amendment Rulings In This Case.

Defendants’ cursory arguments that the revised corrective statements are impermissible under the First Amendment, Def. Br. at 15-16 and 21, also must fail.11

First, Defendants claim that the phrase “Here is the truth” does not meet the standard for a compelled disclosure under Zauderer and its progeny. Id. at 15 (referencing Zauderer v. Office of Disciplinary Counsel of the Supreme Court, 471 U.S. 626, 651 (1985)). Of course, if in fact these words forced “Defendants to humiliate themselves publicly by declaring that they are ‘liars’ who deceived the American people” – as contended by Defendants, Def. Br. at 15 – the argument might have some force. However, because the phrase “Here is the truth” says absolutely nothing about Defendants’ past conduct, it has no First Amendment implications.12

Second, Defendants’ argument that the statements are not “purely factual” because Defendants no longer mischaracterize the health effects and addictiveness of smoking must also fail. Def. Br. at 16 n.3. As noted, see supra at 7, Defendants have argued at every turn that their good conduct warrants dispensation from the Court’s Remedial Order, including the corrective statements, and there is no reason to accept this belabored self-serving argument this time around. Moreover, Defendants have continued to engage in misrepresentations in “the areas in which they have committed violations in the past.’” 686 F.3d at 834 (quoting 449 F. Supp. 2d at

11 Defendants make only a brief First Amendment argument, and should not be permitted to make a more extensive First Amendment arguments in their Reply brief

12 It also makes no sense to compare the innocuous phrase “[h]ere is the truth” with the graphic warning labels deemed to violate the First Amendment in R.J. Reynolds Tobacco Co.

v. FDA, 696 F.3d 1205 (D.C. Cir. 2012), which the Court found neither “purely factual” nor “accurate,” id. at 1216-17, or with the disclosure at issue in National Ass’n of Mfrs. v. SEC, which the Court there found requires companies to “confess blood on [their] hands.” 800 F.3d 518, 530 (D.C. Cir. 2015).

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909-12) (emphasis added). Thus, for example, Philip Morris continues to “omit material information,” 449 F. Supp. 2d at 925-26, from its website, as do other companies.13

Third, while there certainly is no reason the Central Hudson standard would apply here, as Defendants argue, Def. Br. at 16-17 (citing Central Hudson Gas & Electric Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980)), even if it did, Defendants once again shamelessly mischaracterize the applicable standard in suggesting that the Court has no choice but to choose Defendants’ corrective statements because they are “less burdensome.” Def. Br. at 16. There is no “least restrictive means” test under Central Hudson, which simply requires a reasonable “fit” between the objective and the means chosen to achieve it. See, e.g., Bd. Of Trs. Of State Univ. of

N.Y. v. Fox, 492 U.S. 469, 477-78 (1982). The United States’ revised corrective statements amply meet that test, even if it applied.

Finally, as is the case with respect to Defendants’ argument regarding “[h]ere is the truth,” the fallacy of Defendants’ argument that having the statements simply say “a Federal Court has ordered” is incompatible with Zauderer is that those words do not force Defendants to “confess past wrongdoing,” address “prior transgressions,” or otherwise provide the “public shaming” with which Defendants purport to be concerned. Def. Br. at 21. Once again, if mere

13 See Altria/Philip Morris USA website (continuing to state that “Public health officials have concluded that secondhand smoke from cigarettes causes disease,” rather than acknowledging that this is the truth), available at www.altria.com/ourcompani… philipmorrisusa/smoking-and-health-issues/secondhand-smoke/Pages/default.aspx (emphasis added) (last visited Nov. 17, 2015); R.J. Reynolds website (referring to “the significant differences in the comparative risks of different tobacco and nicotine-based products” and limiting secondhand smoke concerns to minors, stating that “[a]dults who smoke should avoid exposing minors to secondhand smoke”), available at www.rjrt.com/transforming… guiding-principles-and-beliefs/ (emphasis added) (last visited Nov. 17, 2015); see also Pl. Supp. Br. In Support of Corr. Stmts. (Docket No. 5986, Sept. 24, 2012) at 9 (noting similar issues); Corrective Statements Opinion, 801 F.3d at 260 (relying on the fact that Defendants made sure the public knew how they could continue to purchase “light” cigarettes as a basis for rejecting Defendants’ argument against the “lights” corrective statement).

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reference to a federal court were so incredibly incendiary, it is impossible to understand why Defendants not only proposed similar language in 2006, but continue to recommend that some of the corrective statements’ executions nevertheless identify the Defendants by name and inform the public that the statements are provided “[u]nder court order.” Def. Br. at 7.14

C. The Court Should Adopt The United States’ Implementation Proposals, And Reject The Proposals Offered By Defendants.

For reasons that are difficult to discern, Defendants claim that the Court has no authority to impose the changes in the parties’ Consent Order on Implementation proposed by the United States, which largely conform the Implementation Order to the revised corrective statements language, but that the Court somehow does have the authority unilaterally to impose the changes proposed by Defendants – which would weaken the corrective statements in multiple respects. Defendants cannot have it both ways, and, in fact, the Court has broad authority to adjust the language in the Implementation Order to take account of the D.C. Circuit ruling.

It is well-established that, after hearing from the parties, a Court may alter a Consent Order in conformance with the terms of a consent decree and changed circumstances. See, e.g, United States v. W. Elec. Co., 894 F.2d 430, 434 (D.C. Cir. 1990); United States v. Am. Cyanimid Co., 719 F.2d 558, 564 (2d Cir. 1983). In this case, the parties expressly anticipated the very changed circumstances that give rise to the need to change the Order: the parties agreed that, in the event Defendants prevailed on any of their appeal on the language of the statements, either party could obtain changes to the Implementation Order. See Implementation Order at 23 (Docket No. 6095, June 2, 2014) (“Should the language of the Corrective Statements be changed

14

Defendants’ references to applying strict scrutiny to the corrective statements, Def. Br. at 17 n.4, fail for the same reason – the statements simply do not communicate the punitive message Defendants strive so mightily to glean from them.

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as a result of the appeal, the parties reserve the right to seek different requirements than those stated herein.”). Accordingly, there is no basis for Defendants’ assertion that the implementation elements may not change.

Defendants’ only substantive objection to the United States’ proposed executions of the revised corrective statements is to the United States’ new television ads, as to which they complain they were not consulted. Def. Br. at 38-39.15 This is a curious objection, for of course the parties are no longer in mediation and the Court rejected Defendants’ argument that implementation of the revised statement should be addressed only after the final revised language is decided, see Oct. 1, 2015 Transc. at 10-11, specifically directing Plaintiffs to file any proposed implementation changes with their opening brief. Order #61-Remand (Oct. 1, 2015) at

In any event, it is not at all clear on what basis Defendants object to Plaintiffs’ revised ads, which as they note, use a male voice. Since Defendants have not suggested that the voiceover is somehow impermissible under either RICO Section 1964 or the First Amendment, there is no reason for the Court to further delay the proceeding by giving Defendants an

15 The Court also should not be distracted by Defendants’ extended arguments regarding the “trigger date” for the corrective statements. Def. Br. at 34-37. That issue is simply premature until the Court issues an Order on the new statements and executions, at which time Defendants will be free to seek more time if necessary to begin publishing the statements in light of the Court’s decision on what they must say and how they must look. The only argument ripe at this time is whether Defendants are somehow entitled to an automatic stay of carrying out the corrective statements remedy because Plaintiffs agreed to such a provision in the earlier Implementation Order. As to that argument, for the reasons discussed above, Defendants are no longer entitled to such a stay given the change in circumstances and reservations contained in the Implementation Order concerning changes that may be sought after a remand.

16 It is particularly inappropriate for Defendants to make representations regarding the details of the parties’ confidential mediation in furtherance of this argument. Def. Br. at 38 (discussing mediation process). However, it must be noted that their representations are – as usual – inaccurate, for, in fact, during the original mediation, Plaintiffs also prepared and shared with Defendants their own television ads (and executions for other media).

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opportunity to prepare new ads that conform to the Court’s revised corrective statements language.17

There also are no grounds for Defendant’ revision to the Phase 3 website execution, Def. Br. at 32, which allows Defendants, after eleven years, only to put the words “Court Ordered Corrective Statements” on their homepage, in a hyperlink which can be clicked to reach the text of all the statements. Order #51-Remand at 16-17. Defendants request that the Court replace the phrase “Court Ordered Corrective Statements” with “Corrective Statements” as the only words that will appear on the website homepages. Def. Br. at 32. However, as a threshold matter, the words used to identify the corrective statements on Defendants’ websites during Phase 3 are “implementation executions” that Defendants agreed not to challenge on appeal, Order #51Remand at 23, and thus should not be open to revision now. In any event, since, for all the reasons explained above, see supra at 5-8, it is perfectly appropriate for the statements to inform the public that they are “court ordered,” there is no reason to further diminish the prominence of the corrective statements in Phase 3, which will extend for as long as the Court’s Remedial Order remains in effect. See Order #51-Remand at 16 (providing that Phase 3 extends from year 11 through the duration of the Order).

Accordingly, the Court should adopt the United States’ implementation details, and reject those offered by Defendants, which simply seek to diminish the effectiveness of the corrective statements.

17

The Court need only listen to the United States’ revised television ads to hear that there is no basis to Defendants’ further claim that the voiceover inappropriately emphasizes certain words. Def. Br. at 38.

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CONCLUSION

For the foregoing reasons the Public Health Intervenors respectfully urge the Court to

approve the United States’ proposed revised corrective statements and Implementation Order and

reject Defendants’ new proposals.

November 18, 2015 Respectfully submitted,

/s/ Howard M. Crystal

Howard M. Crystal (D.C. Bar No. 446189)

Katherine A. Meyer (D.C. Bar No. 244301)
MEYER GLITZENSTEIN & EUBANKS LLC

4115 Wisconsin Ave., N.W. Suite 210

Washington, DC 20016

202-588-5206

hcrystal@meyerglitz.com
Attorneys for the Public Health Intervenors

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