6177: UNITED STATES’ REPLY BRIEF IN SUPPORT OF UNITED STATES PROPOSED CORRECTIVE STATEMENTS; OPPOSITION TO TOBACCO COMPANIES’ PROPOSALS, Nov. 18, 2015

November 18, 2015 5:59 pm by Gene Borio

The PDF is Here

EXCERPT:

But rather than focus on the replacement language that is needed, the tobacco companies urge the Court to begin anew. Not content with seeking new introductions and new conclusions, the tobacco companies ask this Court to rewrite specific bullet points that the Court of Appeals reviewed and left undisturbed. The Court should reject the tobacco companies’ invitation to start anew, and instead adopt the United States’ proposals, which make the alterations required by the D.C. Circuit but otherwise leave undisturbed the text and implementation details the Defendants have already had a chance to challenge.

ARGUMENT

Defendants’ proposed revisions seek to reopen matters that have long since been closed in this long-running litigation. Rather than follow the directive of the Court of Appeals, Defendants seek a second—and in some cases a third—bite at the apple. The United States’ current proposals adhere to the Court of Appeals’ ruling, eliminating any potential that they can be deemed “backward looking.” Defendants recycle the same First Amendment and RICO arguments the Court has already seen; and put forward lightweight proposals that would do little to prevent and restrain future violations. As such, the United States’ current proposal should be adopted.

END EXCERPT

FULL TEXT:

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

and

TOBACCO-FREE KIDS ACTION FUND, et al.,

Intervenor-Plaintiffs,

v.

PHILIP MORRIS USA INC., et al.,

Defendants,

and

ITG BRANDS LLC, et al.,

Post-Judgment Intervenors as to Remedies.

Civil No. 99-CV-02496 (GK)

Next scheduled court appearance: None

UNITED STATES’ REPLY BRIEF IN SUPPORT OF UNITED STATES PROPOSED CORRECTIVE STATEMENTS; OPPOSITION TO TOBACCO COMPANIES’ PROPOSALS

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

INTRODUCTION…………………………………………………………………………………………………………. 1

ARGUMENT ………………………………………………………………………………………………………………… 1

I. Statement introductions: “A Federal Court has ordered,” company names, and

“Here is the truth” ……………………………………………………………………………………………………….. 2

A. The United States’ proposals comply with RICO………………………………………………….. 3

i. The proposed statements do not communicate past deceit, and do not

communicate that Defendants are being punished …………………………………………………….. 3

ii. RICO and its “prevent and restrain” language do not protect wrongdoers;

what matters is that the statements will prevent and restrain future violations ……………… 6

B. Attributions and lead-ins: “A Federal Court has ordered,” followed by the

company names, is appropriate and necessary……………………………………………………………… 7

i. The companies are estopped from asserting, or have waived, any objections

to beginning the statements with “A Federal Court has ordered,” followed by the

company names ……………………………………………………………………………………………………. 7

ii. The tobacco companies’ proposed introductory language does not solve the

problem they claim needs to be solved ……………………………………………………………………. 9

(a) Defendants’ proposed “funding footers” for newspapers and TV spots are no

substitute for statements that explain up front who is speaking and why ………………… 11

(b) Defendants’ names (and the fact that the Court has ordered the statements)

should be mandatory on all media channels, not just newspapers and TV spots ……… 12

C. “Here is the truth” is appropriate and necessary ………………………………………………….. 14

D. The United States’ proposals comply with the First Amendment ………………………….. 16

i. The law of the case has determined that the tobacco companies’ First

Amendment arguments under Warner-Lambert are inadequate ………………………………… 16

ii. The United States’ proposed statements easily withstand review under any

First Amendment standard …………………………………………………………………………………… 17

II. The United States’ proposals for specific statements should be adopted ……………………. 18

A. Statement C: Ban on light, low-tar, and other descriptors …………………………………….. 18

B. Statement D: Nicotine manipulation ………………………………………………………………….. 20

III. The companies’ procedural and implementation objections are meritless ………………….. 22

A. The Court should order the companies to begin disseminating the statements

eight weeks after the Court’s order, not eight weeks after the exhaustion of whatever

appeal the companies may take ………………………………………………………………………………… 22

B. The Court should adopt the United States’ proposed TV spots ……………………………… 27

CONCLUSION …………………………………………………………………………………………………………… 28

LIST OF EXHIBITS ……………………………………………………………………………………………………. 30

TABLE OF AUTHORITIES

FEDERAL CASES

3D Global Solutions, Inc. v. MVM, Inc., 754 F.3d 1053, 1055 (D.C. Cir. 2014) ……………………………………………………………………………8

Abbott Labs. v. Gardner,

387 U.S. 136 (1967) ………………………………………………………………………………………………… 25

American Meat Institute v. USDA,

760 F.3d 18 (D.C. Cir. 2014) (en banc) ………………………………………………………………………. 17

Boyle v. United States,

556 U.S. 938 (2009) ………………………………………………………………………………………………. 6, 7

Central Hudson Gas & Elec. Corp. v. Public Service Commission of New York,

447 U.S. 557 (1980) ………………………………………………………………………………………………… 17

Jones v. United States,

527 U.S. 373 (1999) …………………………………………………………………………………………….. 4, 15

Lorain Journal Co. v. United States,

342 U.S. 143 (1951) ………………………………………………………………………………………………….. 5

Moldea v. New York Times Co.,

22 F.3d 310 (D.C. Cir. 1994) ………………………………………………………………………………………. 4

Parkwood Developmental Center Inc.,

347 N.L.R.B. 974 (2006), pet. for rev. denied, 521 F.3d 404 (D.C. Cir. 2008) …………………… 4

Roth v. United States,

354 U.S. 476 (1957) ………………………………………………………………………………………………….. 4

Samantar v. Yousuf,

560 U.S. 305 (2010) ………………………………………………………………………………………………….. 4

Sedima, S.P.R.L. v. Imrex Co.,

473 U.S. 479 (1985) ………………………………………………………………………………………………….. 6

United States v. Ford Motor Co.,

574 F.2d 534 (D.C. Cir. 1978) …………………………………………………………………………………….. 5

United States v. General Motors Corp.,

565 F.2d 754 (D.C. Cir. 1977) …………………………………………………………………………………… 25

United States v. General Motors Corp.,

561 F.2d 923 (D.C. Cir. 1977) (per curiam) ………………………………………………………………….. 5

United States v. National Society of Professional Engineers,

555 F.2d 978 (D.C. Cir. 1977), aff’d on other grounds, 435 U.S. 679 (1978)…………………….. 5

United States v. National Society of Professional Engineers, Civ. A. No. 2412-72, 1978 WL 1395 (D.D.C. Aug. 3, 1978) …………………………………………. 5

United States v. Olano,

507 U.S. 725 (1993) ………………………………………………………………………………………………… 22

United States v. Philip Morris USA, Inc.,

396 F.3d 1190 (D.C. Cir. 2005) (“Disgorgement Opinion”) ……………………………………………. 2

United States v. Philip Morris USA, Inc.,

449 F. Supp. 2d 1 (D.D.C. 2006) (“Original Opinion”) ………………………………………. 17, 19, 26

United States v. Philip Morris USA, Inc.,

566 F.3d 1095 (D.C. Cir. 2009) (“Affirmance Opinion”) ………………………………………… passim

United States v. Philip Morris USA Inc.,

686 F.3d 832 (D.C. Cir. 2012) (“Vacatur Opinion”) …………………………………………………. 6, 20

United States v. Philip Morris USA, Inc.,

907 F. Supp. 2d 1 (D.D.C. 2012) (“Corrective Statement Opinion I”) ……………………… passim

United States v. Philip Morris USA, Inc.,

No. 99-cv-2496, 2014 WL 2506611 (D.D.C. June 2, 2014) (“Corrective Statement Consent Order”) ……………………………………………………………….. 11, 23

United States v. Philip Morris USA, Inc.,

801 F.3d 250 (D.C. Cir. 2015) (“Corrective Statement Opinion II”) ………………………… passim

United States v. Polaris Indus., L.P.,

No. 87-cv-3525, 1987 WL 33507 (D.D.C. Dec. 30, 1987) ……………………………………………… 5

United States v. Ritz,

No. 1:07-CV-1167-WTL-DML, 2011 WL 1743740 (S.D. Ind. May 3, 2011), appeal dismissed, 721 F.3d 825 (7th Cir. 2012) …………………………………………………………….. 5

Warner-Lambert Co. v. FTC,

562 F.2d 749 (D.C. Cir. 1977) ……………………………………………………………………………… 16, 17

Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc.,

559 F.2d 841 (D.C. Cir. 1977) ……………………………………………………………………………… 23, 25

Weisgram v. Marley Co.,

528 U.S. 440 (2000) ………………………………………………………………………………………………… 16

Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio,

471 U.S. 626 (1985) ………………………………………………………………………………………………… 17

FEDERAL STATUTES

15 U.S.C. § 2061(b) ………………………………………………………………………………………………………… 5

15 U.S.C. § 2064(c)(1)(B)–(c)(1)(F) …………………………………………………………………………………. 5

15 U.S.C. § 2064(c)(2)(C) ……………………………………………………………………………………………….. 5

18 U.S.C. § 1964 …………………………………………………………………………………………………………….. 6

18 U.S.C. § 1964(a) …………………………………………………………………………………………………… 2, 15

21 U.S.C. § 350l(b)(1)(B) ………………………………………………………………………………………………… 5

21 U.S.C. § 360h(a) ………………………………………………………………………………………………………… 5

28 U.S.C. § 2106 …………………………………………………………………………………………………………… 15

42 U.S.C. § 300g-3(c) ……………………………………………………………………………………………………… 5

FEDERAL REGULATIONS

47 C.F.R. § 73.1212 ………………………………………………………………………………………………………. 11

FEDERAL RULES

Fed. R. App. P. 8 …………………………………………………………………………………………………………… 25

Fed. R. Civ. P. 62(c) ……………………………………………………………………………………………………… 25

LOCAL RULES

LCvR 84.9(a)(1) …………………………………………………………………………………………………………….27

HISTORY

Title IX of the Organized Crime Control Act of 1970, § 904(a), 84 Stat. 941, 947, codified at note following 18 U.S.C. § 1961 ………………………………………………………………………………….6

INTRODUCTION

As this Court previously observed, the Court of Appeals remanded solely for “replacement language of the phrase singled out by the Court of Appeals,” i.e., “the phrase ‘deliberately deceived the American public’ adopted by this Court in its Opinion.” Order #59-Remand 1, 2 (Dkt. No. 6164; issued Aug. 20, 2015) (quoting Corrective Statement Opinion I, 907 F. Supp. 2d at 8). The United States’ proposals track the Court’s 2012 language as closely as possible following the Court of Appeals’ most recent decision. But rather than focus on the replacement language that is needed, the tobacco companies urge the Court to begin anew. Not content with seeking new introductions and new conclusions, the tobacco companies ask this Court to rewrite specific bullet points that the Court of Appeals reviewed and left undisturbed. The Court should reject the tobacco companies’ invitation to start anew, and instead adopt the United States’ proposals, which make the alterations required by the D.C. Circuit but otherwise leave undisturbed the text and implementation details the Defendants have already had a chance to challenge.

ARGUMENT

Defendants’ proposed revisions seek to reopen matters that have long since been closed in this long-running litigation. Rather than follow the directive of the Court of Appeals, Defendants seek a second—and in some cases a third—bite at the apple. The United States’ current proposals adhere to the Court of Appeals’ ruling, eliminating any potential that they can be deemed “backward looking.” Defendants recycle the same First Amendment and RICO arguments the Court has already seen; and put forward lightweight proposals that would do little to prevent and restrain future violations. As such, the United States’ current proposal should be adopted.

I. Statement introductions: “A Federal Court has ordered,” company names, and “Here is the truth”

Under RICO, this Court may issue an injunction “to prevent and restrain” future violations. 18 U.S.C. § 1964(a). The D.C. Circuit construes this language to allow only “forward-looking remedies that are aimed at future violations.” United States v. Philip Morris USA Inc., 396 F.3d 1190, 1198 (D.C. Cir. 2005) (“Disgorgement Opinion”). In 2009, the court held that the tobacco companies would be “impaired in making false and misleading assurances” “if they must at the same time communicate the opposite, truthful message about these matters to consumers.” United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1140 (D.C. Cir. 2009) (“Affirmance Opinion”). In its most recent decision, the Court of Appeals held that statements proclaiming the defendants’ past fraudulent conduct would “not prevent and restrain defendants from again violating RICO,” because such proclamations “reveal nothing about cigarettes; instead, they disclose defendants’ prior deceptive conduct.” United States v. Philip Morris USA, Inc., 801 F.3d 250, 261 (D.C. Cir. 2015) (“Corrective Statement Opinion II”).

The United States’ proposals track the corrective-statement language this Court ordered in 2012, with only the minor changes needed to adhere to the D.C. Circuit’s recent decision. The introductions the Court ordered in 2012 (amended to supply the names of the Defendant tobacco companies, per the parties’ 2014 Consent Decree) read thus:

A Federal Court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public about [specific topic], and has ordered those companies to make this statement. Here is the truth:

The United States’ current proposal removes the proclamation of the companies’ deliberate deception:

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about [specific topic].

Here is the truth:1

1 This copy shows “Here is the truth” laid out as a running subhead. The tobacco companies oppose the copy, but do not object to subheads per se. Defs. Br. at 19 n.5.

The proposals easily pass muster under both RICO and the First Amendment.

A. The United States’ proposals comply with RICO

i. The proposed statements do not communicate past deceit, and do not communicate that Defendants are being punished

RICO requires that the statements prevent and restrain future violations. The tobacco companies ask the Court to find otherwise, on grounds that language in the United States’ proposed introductions would “unambiguously communicate” that the companies have “deceived the public” and are now being ordered to disseminate the statements as a “punishment.” Defs. Br. at 2. Setting aside the companies’ rote hyperbole, they make no argument that anything that reflects negatively on them must be impermissibly “backward- looking” or somehow unable to prevent and restrain misconduct. In any event, the companies do not show that the statements in fact communicate past deception, much less that they communicate that the companies were ordered to disseminate the statements as punishment.

The language the Court of Appeals overruled—“A Federal Court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public”—did “unambiguously communicate” that the companies “deceived the public.” Defs. Br. 2. The United States’ current proposals, however, do no such thing. Nor do the current proposals indicate that the companies are being ordered to disseminate the statements “as punishment for that past misconduct.” Id. Any analysis about what the proposed statements communicate must consider them as a whole, rather than as individual words or clauses in

isolation. See, e.g., Samantar v. Yousuf, 560 U.S. 305, 319 (2010) (statutes); Jones v. United States, 527 U.S. 373, 391 (1999) (jury instructions); Moldea v. New York Times Co., 22 F.3d 310, 313 (D.C. Cir. 1994) (defamation); Roth v. United States, 354 U.S. 476, 490 (1957) (obscenity). Taken as a whole, the proposed statements have short introductions to explain what each statement is about, why they are being made, and who is making them. This is followed by a line that endorses the truth of the factual bullets about the tobacco companies’ products. Finally, the body of each statement provides either three or four factual bullets about the companies’ products—all based on the Court’s findings of fact at the conclusion of trial.

Despite the tobacco companies’ claim that the United States’ proposals “unambiguously communicate” that they engaged in past deception (and further unambiguously communicate that the companies are being ordered to make the statements as punishment), there is simply no support for their contention that, “After all, 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.” Defs. Br. at 21. To the contrary, the typical—and logical— reason for such orders is to disseminate important information about people’s rights,2 competitive opportunities and obligations,3 and goods and services.4 The tobacco companies

2 Labor-law violations appear the most common basis for compelled disclosure orders, at least at the federal level. These orders require employers to post a notice that begins: “NOTICE TO EMPLOYEES / POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD / An Agency of the United States Government: The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice.” E.g., Parkwood Developmental Ctr., Inc., 347 NLRB 974, 977-78 (2006), pet. for rev. denied, 521 F.3d 404 (D.C. Cir. 2008). The Court quoted and discussed this and other NLRB decisions in its 2012 decision. Corrective Statement Opinion I, 907 F. Supp. 2d at 19; see also U.S. 2011 Reply at 2-3, 8, 11 (Dkt. No. 5891; filed 3/16/2011). Thousands more such orders can be found in Westlaw and Lexis by searching administrative-decision databases for “posted by order.”

3 The antitrust laws are also a source of court-ordered disclosures. The D.C. Circuit recommended that a professional society whose professional ethics code prohibited competitive

bidding (“classic price-fixing, and hence illegal ‘per se’ ”) be ordered “to publish an advice that its prior ruling has been rescinded in light of the court’s decree that it was an unlawful interference . . . under the antitrust laws.” United States v. Nat’l Soc’y of Prof’l Eng’rs, 555 F.2d 978, 983, 984 (D.C. Cir. 1977), aff’d on other grounds, 435 U.S. 679 (1978). On remand, the district court did just that. United States v. Nat’l Soc’y of Prof’l Eng’rs, Civ. A. No. 2412- 72, 1978 WL 1395, at *2 (D.D.C. Aug. 3, 1978) (in revised judgment, ordering Society to state that the section “of the NSPE Code of Ethics prohibiting competitive bidding” had been “rescinded as unlawful[]”).

The Supreme Court approved a decree under the Sherman Act, ordering a newspaper to publish a compelled notice in its pages once a week for 25 weeks, notifying readers that the newspaper was prohibited from rejecting or discriminating against any advertiser because the advertiser also placed ads with competing media. Lorain Journal Co. v. United States, 342 U.S. 143, 155-56, 158 (1951).

4 Outside the labor and antitrust contexts, federal agencies and courts can and do order companies to make statements about their goods and services. By all appearances, Such orders are issued for, among others, automobile safety defects, United States v. Ford Motor Co., 574 F.2d 534, 543 (D.C. Cir. 1978); United States v. Gen. Motors Corp., 561 F.2d 923 (D.C. Cir.
1977) (per curiam); hazardous consumer products, 15 U.S.C. §§ 2061(b), 2064(c)(1)(B) – (c)(1)(F); see, e.g., United States v. Polaris Indus., L.P., No. 87-cv-3525, 1987 WL 33507 (D.D.C. Dec. 30, 1987) (contested litigation leading to preliminary consent decree); unreasonably dangerous medical devices, 21 U.S.C. § 360h(a); adulterated food that will cause serious adverse health consequences to humans or animals, 21 U.S.C. § 350l(b)(1)(B); and numerous violations by public water systems, from less grave up to and including violations that have the potential to have serious adverse effects on human health, 42 U.S.C. § 300g-3(c) & (c)(2)(C); see, e.g., United States v. Ritz, No. 1:07-CV-1167-WTL-DML, 2011 WL 1743740, at
*6 (S.D. Ind. May 3, 2011) (contested judgment ordering campground owner to notify general public and people staying at campground of positive tests for fecal coliform and total coliform bacteria), appeal dismissed, 721 F.3d 825 (7th Cir. 2012).

wholly fail to show that the current proposals communicate that they engaged in past deception, and much less that they communicate that they were ordered as punishment. On the contrary, the very crux of the United States’ changes to this Court’s 2012 wording is to remove the “deliberately deceived the American public” language proclaiming Defendants’ past conduct that the D.C. Circuit found impermissible, while hewing to the Court of Appeals’ earlier directions to reveal the previously hidden truth about the companies’ products. Affirmance

Opinion, 566 F.3d at 1140. And as shown in the next section, defendants make no claim that the proposals are not directed at preventing and restraining future violations.

ii. RICO and its “prevent and restrain” language do not protect wrongdoers; what matters is that the statements will prevent and restrain future violations

The tobacco companies’ objection to the proposed statements’ assertedly communicating that the defendants engaged in past deceit stems from an unfounded belief that the RICO statute would preclude such a result. Put briefly, they ask the Court to apply a supposed rule that, under RICO’s remedial provisions, 18 U.S.C. § 1964, any corrective statements must protect the fact of racketeers’ past misconduct. There is no such rule. As the Supreme Court has observed, “the RICO statute provides that its terms are to be ‘liberally construed to effectuate its remedial purposes.’ ” Boyle v. United States, 556 U.S. 938, 944 (2009) (quoting Title IX of the Organized Crime Control Act of 1970, § 904(a), 84 Stat. 941, 947, codified at note following 18 U.S.C. § 1961); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 483, 491 n.10 (1985) (characterizing Section 1964 as a “far-reaching civil enforcement scheme”; adding that “if Congress’ liberal-construction mandate is to be applied anywhere, it is in § 1964, where RICO’s remedial purposes are most evident”).

In denying the tobacco companies’ bid to vacate this Court’s liability findings and remedies, the D.C. Circuit observed that “the district court has spent over a decade with the case, and has issued expansive injunctions that this Court has largely affirmed.” United States v. Philip Morris USA Inc., 686 F.3d 832, 838 (D.C. Cir. 2012) (“Vacatur Opinion”). The only reason cited by the D.C. Circuit in its most recent decision for striking down a direct proclamation of defendants’ deliberately fraudulent conduct was that the proclamation would not “prevent and restrain defendants from again violating RICO.” Corrective Statement Opinion

II, 801 F.3d at 261. The tobacco companies attempt to extrapolate from this holding a rule that corrective statements ordered under RICO must entirely shield any suggestion that the racketeer’s engaged in past misconduct is baseless. Indeed, any such rule, far from “effectuat[ing RICO’s] remedial purposes,” Boyle, 556 U.S. at 944, would undermine Congress’s remedial purposes.

B. Attributions and lead-ins: “A Federal Court has ordered,” followed by the company names, is appropriate and necessary

As noted above, the introductions the Court ordered in 2012 (amended to supply the names of the Defendant tobacco companies, per the parties’ 2014 Consent Decree) read thus:

A Federal Court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public about [specific topic], and has ordered those companies to make this statement. Here is the truth:

The United States’ current proposal removes the proclamation of the companies’ deliberate deception:

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about [specific topic].

Here is the truth:

i. The companies are estopped from asserting, or have waived, any objections to beginning the statements with “A Federal Court has ordered,” followed by the company names

This United States’ proposed language tracks this Court’s 2012 language as closely as possible in light of the D.C. Circuit’s recent ruling, and thus now begins with the phrase “A Federal Court has ordered,” followed by the company names. The United States’ opening brief observed that this was quite similar to the tobacco companies’ proposals in 2006:

This message is furnished by [Defendant] pursuant to a Court Order . . .

Certain Jt. Defs.’ [R.J. Reynolds and B&W] Prop. Corr. Stmts. 3-7 (Dkt. No. 5780; filed 10/16/2006) (brackets around “Defendant” in original), quoted in U.S. Opening Br. at 17 n.4.

The following statement is made by Lorillard Tobacco Company pursuant to a Court Order . . .

Lorillard Prop. Corr. Stmts. 2-5 (Dkt. No. 5781; filed 10/16/2006) (footnote omitted), quoted in U.S. Opening Br. at 17 n.4.5

5 BATCo proposed: “Pursuant to Order #1015, § II.B, ¶ 5, British American Tobacco (Investments) Limited (‘BATCo’) makes the following submission.” Submission of BATCo Pursuant to Order #1015, § II.B, ¶ 5, at 2, quoted in U.S. Opening Br. at 17 n.4.

Because of these wording proposals, R.J. Reynolds and ITG Brands (successor to certain R.J. Reynolds and Lorillard cigarette brands) are estopped from protesting the beginning of the United States’ current proposal. Their only argument to the contrary is to quote their “pursuant to” language from 2006, and to ignore that those “pursuant to” clauses modified and explained the immediately prior language in those same proposals: A specifically-named company was making a specific statement (pursuant to a court order). Defs. Br. at 24 (“the language proposed by those Defendants—which disclosed that the statements were being made ‘ “ ‘pursuant to a Court order’ ” ’ or ‘ “ ‘Pursuant to Order #1015, § II.B, ¶ 5’ ” ’—is substantively distinct from the Government’s formulation”). R.J. Reynolds and ITG are thus estopped from protesting the United States’ proposed introductory beginnings:

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement . . .

See 3D Global Solutions, Inc. v. MVM, Inc., 754 F.3d 1053, 1055 (D.C. Cir. 2014).

Altria and Philip Morris USA are not estopped on this point, but rather, are subject to waiver. The Court ordered all statements to “identify the Defendant making the corrective statements,” Original Opinion, 449 F. Supp. 2d at 940, and no company appealed from that requirement. Nonetheless, when the Court ordered all parties to propose compliant statements, Philip Morris USA and Altria ignored that specification. U.S. Opening Br. at 17-18. Philip

Morris USA and Altria have thus waived any objections to whatever language this Court orders to “identify the Defendant making the corrective statements.” These companies’ only response is that they asked for permission to attribute any statements they disliked to the Court. Defs. Br. at 24 n.6. Attributing a statement to the Court does not identify the Defendant making the statement. Philip Morris USA and Altria have waived any objection to statements that begin, “A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement . . .”

ii. The tobacco companies’ proposed introductory language does not solve the problem they claim needs to be solved

The tobacco companies contend that beginning the statements this way would convey that “Defendants previously deceived the American public on each of the referenced topics and are being ordered by a court to make the corrective statements as a sanction for their prior wrongdoing.” Defs. Br. at 13. To avoid this alleged problem, they would have the introductions remove any mention of a Federal Court ordering anyone or anything; remove their names; and instead suggest that a federal court (now demoted to lower case) has decided to set public- health education standards. Their replacement language would read:

A federal court has determined that you should know the following about [specific topic]:

Defs. Prop. Order at 2-4 (Dkt. No. 6175; filed 11/11/2015). The companies assert that substituting a statement that a federal court has set education standards for the public, in place of a statement that they are under Federal Court compulsion to make statements, will do just as good a job at preventing and restraining them from engaging in future fraud about their products. Defs. Br. at 16.

The companies’ reasoning is unpersuasive. In the first instance, they propose adding a footer to newspapers and TV spots (although not onserts, websites, or social media) stating, “Under court order, paid for by for by Philip Morris USA, R.J. Reynolds Tobacco, Lorillard, and Altria.” Defs. Prop. Order § II(3) at 8; § III(6) at 12. Whatever problem the companies are seeking to solve with their proposed introductions, it is obviously not the problems that they claim to be solving, which come from mentioning a court order in close proximity to their names.

Nor do the tobacco companies give any reason to think that making them issue statements saying that a federal court has determined what people should know about various topics is an effective way to prevent and restrain them from engaging in future fraud and deception about their products. What the Court of Appeals said on the subject is that “Defendants will be impaired in making false and misleading assurances . . . if they must at the same time communicate the opposite, truthful message about these matters to consumers.” Affirmance Opinion, 566 F.3d at 1140 (emphases added). The tobacco companies’ introductions would not have them communicating with consumers, or communicating anything to consumers; all they would do is provide media space for messages that a federal court had decided to set various education standards.

If their aim was actually to develop language that would communicate “truthful message[s] about these matters to consumers,” id., while avoiding the alleged evil of disclosing that a Federal Court ordered the companies to make the statements, the companies and their marketing agencies would have done a far better job. To compare their proposals against other possibilities:

Smoking has adverse health effects. Here is the truth:

Smoking and nicotine are addictive. Here are the facts:

Smoking low tar and light cigarettes is just as harmful as smoking regular cigarettes. Here is the truth:

Your cigarettes are designed to enhance the delivery of nicotine. Here are the facts:

Smoking hurts the people around you. Here is the truth:

By all appearances, the companies’ proposed introductions have little to do with avoiding the alleged evils of having a court order mentioned in the same line as Defendants’ names, and even less to do with communicating clear messages about their products to consumers. They certainly are not the corrective statements the Court of Appeals called for, which will require “Defendants to reveal the previously hidden truth about their products [in order to] prevent and restrain them from disseminating false and misleading statements, thereby violating RICO, in the future.” Affirmance Opinion, 556 F.3d at 1140 (emphases added).

(a) Defendants’ proposed “funding footers” for newspapers and TV spots are no substitute for statements that explain up front who is speaking and why

The tobacco companies and Plaintiffs previously agreed on TV spots that would include, as a final line, “Under court order, paid for by Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA.” Corrective Statement Consent Order, § III(6). This line ensured that the TV spots complied with Federal Communication Commission requirements for broadcast stations to identify their sponsors. 47 C.F.R. § 73.1212 (“Sponsorship identification; list retention; related requirements”).

12

The tobacco companies’ proposal adopts, without change, the prior Consent Decree’s funding disclosure language for TV spots. Defs. Redline Prop. Order, § III(6) at 13.6 They propose adding the same funding disclosure language for newspapers, Defs. Prop. Order § II(3) at 8. According to the tobacco companies, these TV and newspaper funding disclosures are sufficient to “further this Court’s objective of ‘prevent[ing] and restrain[ing] future RICO violations.’ ” Defs. Br. at 10 (quoting Affirmance Opinion, 566 F.3d at 1140). But other than their bare assertion, the companies give no reason to think that identifying the sponsor of a newspaper ad or a TV spot has anything to do with ensuring that the statement will prevent and restrain future fraud. Since precisely the same funding disclosure for TV spots was part of the parties’ prior Consent Order, the companies can make no claim that, by proposing to continue that disclosure now, they seek to ameliorate removing “A Federal Court has ordered,” followed by the company names, from the introductions.

In sum, there is no reason to accept the tobacco companies’ claims that their proposed introductions will solve the problems that they are allegedly meant to solve, or that they will be as effective at preventing and restraining them from engaging in future fraud.

(b) Defendants’ names (and the fact that the Court has ordered the statements) should be mandatory on all media channels, not just newspapers and TV spots

The tobacco companies urge that Defendants’ names should not be required for package onserts, brand websites, company websites, or social media sites. This is because, in their view, “the identity of the tobacco company funding the statements will be clear in those formats.”

6 The companies’ redline shows that the tobacco companies propose deleting the next sentence of the parties’ prior consent order, which called for the sequence of Defendants’ names to change from one TV spot to another. The United States agrees that requirement is not necessary, and has likewise deleted the same sentence from the attached revised proposed order.

Case 1:99-cv-02496-GK Document 6177 Filed 11/18/15 Page 17 of 35 13

Defs. Br. at 10.7 Because they consider Defendants’ names superfluous for those media channels, the companies propose having no funding footers on onserts, websites, and social media.8

This proposal would violate the Court’s requirement that the statements must “identify the Defendant making the corrective statements,” Original Opinion, 449 F. Supp. 2d at 940. Moreover, the companies neglect to mention that their proposal would keep statements in these media channels from disclosing, in any form at all, that they had been ordered by a court: In the tobacco companies’ onsert, website, and social media proposals, not a single word of “Under court order, paid for by” would appear, in contrast to their proposed newspaper and TV

7 Even on its own terms, this doesn’t get matters quite right: The brand that a package onsert is adhered to will be clear, but not what company owns the brand. Likewise, brand websites, such as the Marlboro and Kool websites, give brand names, but may require even an industrious consumer to do some work to find out what company owns the brand. The associations between particular companies and their brands are not known to all consumers; indeed, the tobacco companies’ brief acknowledges that “many viewers are unlikely to recognize” their company names. Defs. Br. at 9.

8 To bolster this proposal, the companies’ brief appears to retreat some distance from ITG’s earlier assurances that no complications would arise due to its acquiring R.J. Reynolds and Lorillard cigarette brands. Mem.-Op. Accompanying Order #56-Remand (Dkt. No. 6152; issued 6/8/2015) (discussing the Court’s close questioning of counsel at the May 19, 2015 status conference). The companies now argue that an additional reason not to have statements in these media channels name the Defendants is that doing so would impose “needless complications because it would be necessary to formulate modified language for ITG Brands.” Defs. Br. at 7 n.1; see also id. at 11 (similar argument to avoid naming Defendants in a bullet in the nicotine manipulation topic, since otherwise “additional clarifying language on statements disseminated by ITG Brands” would be needed).

But complications about how ITG should be handled in the corrective statements’ lists of Defendants’ names are not a reason to avoid naming Defendants in any media channel, and haven’t been since the Court authorized ITG to join the case: The order specifies that the list of Defendants’ names would conclude, as appropriate, with “R.J. Reynolds Tobacco, the previous maker of [Winston, Salem, or Kool],” or “Lorillard, the previous maker of Maverick.” Order #56-Remand ¶¶ 9(a), 9(b)(ii), 9(c), at 7-8, 9-10, 12 (social media) (Dkt. No. 6151; issued 6/8/2015). (The United States’ proposed order reflects this language.)

Case 1:99-cv-02496-GK Document 6177 Filed 11/18/15 Page 18 of 35 executions.9 The only hint about who was disseminating the statements or why would be the companies’ proposed introductions: “A federal court has determined that you should know the following about [specific topic]:” For onserts, websites, and social media, the Court’s corrective statements would thus become diluted to bland statements that a federal court had, oddly, decided to set education standards on various topics. The companies can even less persuasively contend that such a statement would effectively prevent and restrain future violations.

9 This contrast might—apparently—be seen by comparing the tobacco companies’ mockups of their proposals; their brief advises that they had prepared such mockups “and will submit them to the Court upon request.” Defs. Br at 32. But Plaintiffs cannot demonstrate the contrast in this brief, because we were rebuffed when we requested a set of the proffered exhibits. Ex. 2 (email dated 11/13/2015, Tayrani to Crystal) (declining to provide the exhibits unless the Court asked for them first).

C. “Here is the truth” is appropriate and necessary

In 2012, this Court ordered “Here is the truth” as a unifying bridge between each introduction and the statement bullets. The tobacco companies challenged the “Here is the truth” line on appeal, but gained no traction before the D.C. Circuit. The United States’ current proposals include the Court’s 2012 “Here is the truth” language. We explained in our opening brief the close connection between preventing and restraining future violations and telling the truth. U.S. Opening Br. at 21-23. The tobacco companies now repeat their arguments that this line is impermissible, on grounds that having the statements endorse the truth of their factual bullets means that the tobacco companies lied in the past, which in turn means that the statements focus on past misconduct rather than the companies’ products. Defs. Br. at 15.

The companies’ arguments are meritless. What is introduced as being “the truth” are either three or four bullet points of factual information about the companies’ products. The proposed statements must be considered as a whole, and the meanings of individual words and

clauses in the proposed statements must be analyzed in relation to the entirety, not in isolation. See, e.g., Jones, 527 U.S. at 391 (jury instructions). The statements as wholes are manifestly about the companies’ products, and the truth that “Here is the truth” endorses is palpably the truth of the bulleted lines about the companies’ products. This is precisely what the Court of Appeals requires: corrective statements are meant to oblige the companies “to reveal the previously hidden truth about their products.” Affirmance Opinion, 566 F.3d at 1140.

Even if the “Here is the truth” line did prompt someone to wonder about the tobacco companies’ past truthfulness, the touchstone under RICO is whether the statements will prevent and restrain future misconduct. Robust statements with a strong tagline to introduce the factual bullets and unify the statements into a single campaign are far more likely to prevent and restrain misconduct than the companies’ preferred introductions.

Nonetheless, as shown in Part 3 at the end of the attached revised proposed order, the United States urges the Court to state that, in the event that the Court of Appeals determines that the phrase “Here is the truth” cannot be sustained (as unacceptably “backward-looking,” or on any other grounds), this Court anticipates that, in its place, it would order the phrase “Here are the facts” as a subhead and tagline. Making such a conditional ruling would enable the Court of Appeals to consider the tobacco companies’ objections to both phrases in a single appeal, and thus reduce the need for additional rounds of litigation, appeals, and remands to settle on language for the statements. Indeed, if the Court of Appeals found “Here is the truth” unacceptable, but “Here are the facts” permissible, it would have the authority to make the change in this Court’s order, rather than oblige this Court (and the parties) to await issuance of the mandate. 28 U.S.C. § 2106. It is this Court’s prerogative and obligation in the first instance to determine an appropriate injunction. 18 U.S.C. § 1964(a) (“[t]he district courts of the United

States shall have jurisdiction to prevent and restrain . . .”); Affirmance Opinion, 566 F.3d at 1110 (“[t]o the extent it is not based on legal error, we review the district court’s decision to issue an injunction for abuse of discretion”). Such a conditional ruling would “avoid protracting the proceedings by obviating the need for multiple appeals.” Weisgram v. Marley Co., 528 US 440, 452 n.9 (2000) (discussing value of conditional rulings under another context).

D. The United States’ proposals comply with the First Amendment

This Court’s 2012 decision considered at length which First Amendment standards govern the corrective statements in this case and how those standards applied to the Court’s statements; and concluded, based upon the Court’s extended analysis, that those statements amply satisfied both the relevant standard and a more stringent standard. Corrective Statement Opinion I, 907 F. Supp. 2d at 10-26. The tobacco companies do not discuss this Court’s prior analysis, and give no reason to disturb its reasoning or conclusions.

i. The law of the case has determined that the tobacco companies’ First Amendment arguments under Warner-Lambert are inadequate

As they have before, the tobacco companies emphasize that in 1977, the D.C. Circuit found it unnecessary for corrective statements, in a case that expressly found no bad faith and no deliberate deception, to begin with a “contrary to prior advertising” preface. Warner- Lambert Co. v. FTC, 562 F.2d 749, 763 (D.C. Cir. 1977); see, e.g., Defs. Br. 21 (“disclosing that a ‘Federal Court has ordered’ each Defendant to make the corrective statements . . . is not compatible with Zauderer or any other standard of First Amendment scrutiny. See Warner- Lambert Co., 562 F.2d at 763.”). But the tobacco companies do not acknowledge that the Court previously considered the same argument, and found it “not persuasive.” Corrective Statement Opinion I, 907 F. Supp. 2d at 22; see generally id. at 22-23. The Court of Appeal’s only response to the tobacco companies’ making similar arguments about Warner-Lambert was to

cite it, once, in order to distinguish it. Corrective Statement Opinion II, 801 F.3d at 262. This Court’s prior rejection of the companies’ Warner-Lambert First Amendment arguments is the law of the case. The companies give the Court no reason to revisit its prior analysis and holding.

ii. The United States’ proposed statements easily withstand review under any First Amendment standard

In its 2012 decision, this Court gave an extended analysis of the Supreme Court’s leading case on compelled commercial disclosures, Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985); and on its more stringent standard for commercial speech restrictions, Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 565 (1980), and concluded that Zauderer was the correct standard to apply. Corrective Statement Opinion I, 907 F. Supp. 2d at 11-14. The tobacco companies’ current brief does not acknowledge, much less challenge the reasoning of the Court’s earlier analysis.

The tobacco companies do discuss a more recent First Amendment decision, relying upon a gloss in the en banc D.C. Circuit’s American Meat Institute decision for the proposition that Zauderer addresses “compelled commercial disclosures that provide accurate, evenhanded information about a ‘good or service offered by the regulated party.’ ” Defs. Br. at 15-16 (quoting Am. Meat Inst. v. U.S. Dep’t of Agric., 760 F.3d 18, 26 (D.C. Cir. 2014) (en banc)). But the tobacco companies leave out that American Meat Institute was discussing disclosures intended “to achieve a goal of informing consumers about a particular product trait,” by “making the ‘purely factual and uncontroversial information’ accessible to the recipients.” Id. The D.C. Circuit’s most recent decision in this case squarely renounces any such purpose here, holding that the goal for compelled disclosures under RICO cannot permissibly be “curing

consumer misconception,” “preventing consumer deception going forward,” “[c]orrecting consumer misinformation,” or “safeguarding consumers against RICO violations.” Corrective Statements Opinion II, 801 F.3d at 262 (emphasis omitted). The D.C. Circuit saw no mismatch between Zauderer and the purpose of the disclosures in this case—to prevent and restrain the companies from continued fraud and deception—and held long ago that it will prevent and restrain violations to compel the companies to disclose what they consider “past conduct” (such as truthful information about cigarettes, including Defendants’ deliberately designing them to cause addiction). Affirmance Opinion, 566 F.3d at 1138, 1140. The Court should have no hesitation in applying its earlier First Amendment analysis.

II. The United States’ proposals for specific statements should be adopted

A. Statement C: Ban on light, low-tar, and other descriptors

The Statement C introductions the Court ordered in 2012 (amended to supply the names of the Defendant tobacco companies, per the parties’ 2014 Consent Decree) read thus:

A Federal Court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public by falsely selling and advertising low tar and light cigarettes as less harmful than regular cigarettes, and has ordered those companies to make this statement. Here is the truth:

The United States’ proposed modification, to accord with the Court of Appeals’ recent ruling, reads thus:

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about selling and advertising low tar and light cigarettes as less harmful than regular cigarettes.

Here is the truth:

U.S. Opening Br. at 11. The companies do not deny, nor could they, the findings of fact, affirmed on appeal, about orchestrating “ ‘highly sophisticated marketing and promotional campaigns to portray their light brands as less harmful than regular cigarettes’ ” and making “ ‘blatantly

false’ ” public statements about marketing light and low-tar cigarettes. Affirmance Opinion, 566 F.3d at 1124, 1125 (quoting Original Opinion, 449 F. Supp. 2d at 860, 861). Instead of contesting the truthfulness of the United States’ proposal, the tobacco companies fault it as allegedly being “backward looking,” Defs. Br. at 26, on grounds that they no longer sell “light” and “low-tar” cigarettes. To avoid that supposed problem, they propose watering the language down, to remove both the word “selling,” and the information that light and low-tar cigarettes are no less harmful than regular cigarettes:

A federal court has determined that you should know the following about low tar and light cigarettes:

Defs. Prop. Order at 3 (Dkt. No. 6175-4; filed 11/11/2015).

The tobacco companies give no reason for leaving out the information that light and low- tar cigarettes are no less harmful than regular cigarettes.

Their purported objection is that the word “selling” is a present participle, but selling “light” and “low tar” cigarettes is a thing of the past. This Court’s and the Court of Appeals’ rejection of this argument is the law of the case. The companies argued on appeal (as they previously had to this Court, in exactly the same words) that the Tobacco Control Act prohibited, and therefore made conceptually impossible, “using descriptors such as ‘low tar’ and ‘light’ (in the absence of FDA approval).” Appellants’ Opening Br. 55, Corrective Statement Opinion II, 801 F.3d 250 (Nos. 13-5028 & 14-5161), 2014 WL 4827112; Defs.’ Resp. to U.S. Prop. Corr. Stmts. at 24 (Dkt. No. 5881; filed 3/3/2011) (same argument made verbatim). The Court of Appeals flatly rejected the argument, observing that in rejecting the tobacco companies’ bid to vacate this Court’s liability findings and remedies alike, it had concluded that “the manufacturers were ‘not likely to comply with’ the new law.’ ” Corrective

20

Statement Opinion II, 801 F.3d at 260 (quoting Vacatur Appeal, 686 F.3d at 835).10 The Court of Appeals noted in its most recent decision that “consumers know that cigarettes once dubbed ‘light’ and ‘low-tar’ remain on the market. The manufacturers made sure of this.” Corrective Statement Opinion II, 801 F.3d at 260. As a result, the court continued, “Statement C therefore prevents and restrains defendants from making false health assurances about these cigarettes, whatever their new look.” Id.

The law of the case precludes the tobacco companies’ “backward looking” objections to the United States’ proposed introduction to Statement C.

B. Statement D: Nicotine manipulation

The Statement D introductions the Court ordered in 2012 (amended to supply the names of the Defendant tobacco companies, per the parties’ 2014 Consent Decree) read thus:

10 Subsequent events have confirmed that the Tobacco Control Act has not fully dissuaded the companies from making express or implied health claims. In August this year, the U.S. Food and Drug Administration determined that Winston cigarettes—one of the brands R.J. Reynolds Tobacco transferred to ITG in June, under Order #56-Remand (Dkt. No. 6151; issued 6/8/2015), with ITG agreeing to accept this Court’s authority—was being marketed with “No Additive” descriptors, in violation of the Tobacco Control Act. (This Court had not yet reinstated its own descriptor ban, which had been vacated on appeal in 2009 for lack of a mandatory domestic nexus. Order #60-Remand (Dkt. No. 6169; issued 9/21/2015).)

Until recently, Winston cigarettes were manufactured and marketed by defendant R.J. Reynolds Tobacco Co.; in June 2015, the Court authorized Winston and other brands to be transferred to ITG Brands LLC. The FDA’s warning letter was thus sent to ITG Brands, with a cc to R.J. Reynolds Tobacco. It reads:

Your product labeling for Winston cigarettes, which uses the descriptor “Additive Free,” represents explicitly and/or implicitly that the products or their smoke do not contain or are free of a substance and/or that the products present a lower risk of tobacco-related disease or are less harmful than one or more other commercially marketed tobacco products.

Ltr. dated 8/27/2015, Ann Simoneau to David Taylor, available at www.fda.gov/ICECI/ EnforcementActions/WarningLetters/2015/ucm459779.htm (copy attached as Ex. 1).

Case 1:99-cv-02496-GK Document 6177 Filed 11/18/15 Page 25 of 35 A Federal Court has ruled that Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA deliberately deceived the American public about designing cigarettes to enhance the delivery of nicotine, and has ordered those companies to make this statement. Here is the truth:

The United States’ proposed modification, to accord with the Court of Appeals’ recent ruling, reads thus:

A Federal Court has ordered Altria, R.J. Reynolds Tobacco, Lorillard, and Philip Morris USA to make this statement about designing cigarettes to enhance the delivery of nicotine.

Here is the truth

U.S. Opening Br. at 12. The tobacco companies do not deny that they sell cigarettes that they intentionally designed to addict new smokers, and to keep new smokers addicted. Original Opinion, 449 F. Supp. 2d at 219, 309, aff’d, 566 F.3d at 1107. Nonetheless, they protest that letting people know that cigarettes are designed to enhance the delivery of nicotine “improperly focuses on Defendants’ conduct, rather than their products.” Defs. Br. at 11; see also id. at 26-29. To avoid this alleged improper focus, they ask the Court to water the introduction down, so that it will neither mention them, nor that cigarettes have intentionally enhanced nicotine delivery:

A federal court has determined that you should know the following about the way your cigarettes are made:

Defs. Prop. Order at 3 (Dkt. No. 6175-4).

The D.C. Circuit has upheld—twice—this Court’s determination that corrective statements addressing the tobacco companies’ manipulating nicotine delivery will prevent and restrain future violations. On appeal, the companies did not contest this Court’s 2006 finding on this point, and the Court of Appeals concluded that disclosures on the designated topics, “including ‘the manufacturers’ manipulation of cigarette design and composition to ensure optimum nicotine delivery[,]’ . . . would ‘prevent and restrain [defendants] from disseminating false and misleading statements, thereby violating RICO, in the future.’ ” Corrective Statement

Opinion II, 801 F.3d at 258 (quoting Affirmance Opinion, 566 F.3d at 1138, 1140) (ellipses and first set of brackets added). Accordingly, the Court of Appeals held: “Having thus decided the issue in the earlier appeal, we will not revisit it here.” Id.

The tobacco companies nonetheless continue to advance the argument that they failed to raise on appeal and that the Court of Appeals has decided against them both on the merits and on waiver grounds. The companies’ only argument to the contrary now is that they made an “earlier strategic decision” not to present it in a timely appeal. Defs. Br. at 28. But waiver is defined as “the intentional relinquishment or abandonment of a known right.” United States v. Olano, 507 U.S. 725, 733 (1993) (internal quotation marks omitted). The argument is waived; why they chose to waive it is immaterial.

III. The companies’ procedural and implementation objections are meritless

The tobacco companies raise two final objections to the United States’ proposed order. First, they argue that, as a procedural matter, the date they are to begin disseminating corrective statements should not be eight weeks after the Court issues its injunction, or even eight weeks after a three-judge panel decision on appeal to the D.C. Circuit, but eight weeks after they finish exhausting all opportunities for further review on appeal. Second, the tobacco companies do not care for the voiceover narration in the United States’ proposed TV spots. Neither objection has merit.

A. The Court should order the companies to begin disseminating the statements eight weeks after the Court’s order, not eight weeks after the exhaustion of whatever appeal the companies may take

It goes without saying that a district court’s permanent injunction is normally binding and effective immediately upon entry, unless the injunction itself sets a later time or a court grants a stay. See, e.g., Fed R. Civ. P. 62(c) (authority for district court to grant stay of injunction

pending appeal); Fed. R. App. P. 8(a) (procedure for seeking stays in the district court and the appellate court); Worldwide Moving & Storage, Inc. v. District of Columbia, 445 F.3d 422, 425 (D.C. Cir. 2006) (noting permanent injunction was granted but motion for stay denied); Wash. Metro. Area Transit Comm’n v. Holiday Tours, Inc. 559 F.2d 841, 842-43, 845 (D.C. Cir. 1977) (noting district court stayed permanent injunction pending appeal and reviewing decision to enter stay for abuse of discretion).

The parties’ (and the Court’s) prior agreement modified this background principle, by setting a much later time for the injunction to take effect. This was because the parties agreed and consented to the tobacco companies’ continuing their previously-noticed appeal from the wording that the consent order contemplated (and indeed, that the companies could add an appeal from all provisions of that self-same agreed-upon consent order other than its specific implementation executions). Corrective Statement Consent Order § VI(5) at 23-24 (Dkt. No.
6095). The parties also agreed, however, that, “[s]hould the language of the Corrective Statements be changed as a result of further litigation, the parties reserve the right to seek different requirements than those stated herein.” Id. at 24.11

11 During a status conference before this Court, the tobacco companies’ lawyers readily acknowledged that these terms were bargained for: “I believe that is set forth in the agreement – that we’ve preserved our right to appeal the content of the corrective statements.” Tr. 1/22/2014 Status Conf. at 27:13-30 (Philip Morris USA and Altria counsel speaking for all defendants). The tobacco companies considered “preserving our right to appeal the constitutionality of those corrective statements” “certainly important” and among their “core considerations.” Id. at 44:5-9 (Lorillard counsel).

The mechanism the prior agreement used to delay the immediate effect of the injunction was by giving the companies necessary preparation time after a “Trigger Date.” Specifically, provisions under three of the four media channels that the agreement covered—newspapers, TV spots, and company websites—called for the companies to begin disseminating the statements

with the contemplated wording eight weeks after the “Trigger Date,” id. §§ II(5) at 6 (newspapers), III(7) (TV spots), IV(2) (websites); cf. id. at § V(3) (package onserts to begin 30 weeks after Trigger Date), which was in turn defined as the exhaustion of all appeals from the wording that the parties were then contemplating. Id. § I(L) at 3-4.12

12 In a somewhat similar way, the parties’ prior agreement called for the number of TV spots per week to conform to the results on appeal from R.J. Reynolds’ then-contemplated motion not to be required to disseminate TV spots in its capacity as successor to Brown & Williamson. Id. § VI(4) at 22. By inadvertence, that language was carried into the United States’ proposed order, as the tobacco companies highlight. Defs. Br. at 37 n.7. This has been corrected in the United States’ attached revised proposed order.

The companies have never claimed that the injunction’s effective date should be postponed until the results of R.J. Reynolds’ appeal, nor has R.J. Reynolds acted with any exigency. (This Court issued its decision nearly six months ago, and R.J. Reynolds waited until the end of the time allowed in government-party lawsuits to notice its appeal. Order #55- Remand (issued May 28, 2015), appeal docketed, No. 15-5210 (D.C. Cir. July 27, 2015). The Court of Appeals’ Clerk’s Office has not yet issued a scheduling order in the appeal, and R.J. Reynolds has not asked the Court of Appeals to expedite its appeal.)

In the current posture, however, such a delayed Trigger Date for dissemination is neither necessary nor appropriate. Because the language of the Corrective Statements is being changed as a result of the contemplated further litigation, both parties now have “the right to seek different requirements than those stated” in the prior consent order, id. § VI(5) at 24 – including procedural requirements governing the deadline by which defendants should be expected to come into compliance with the Court’s Order. But defendants’ objections to this proposed procedural modification to the Court’s order is no better founded than their many objections to the proposed statements.

On the contrary, the companies offer no valid reason why, instead of a Trigger Date stemming from the exhaustion of all appeals, as the parties previously bargained for and agreed upon, the Court’s forthcoming Order should not adhere to the usual blackletter rule that

25

injunctions take effect when they are issued.13 Although the district court has discretion to stay its injunction, see Holiday Tours, Inc. 559 F.2d at 842-43, the standards for a stay pending appeal are stringent. See Fed. R. Civ. P. 62(c) (stay of injunction pending appeal); Fed. R. App. P. 8 (“Stay or Injunction Pending Appeal”); Wash. Metro. Area Transit Comm’n, 559 F.2d at
843. Manufacturers are not guaranteed that a compelled public notification order will be stayed pending appeal. United States v. Gen. Motors Corp., 565 F.2d 754, 756 n.2 (D.C. Cir. 1977) (after district court granted summary judgment in United States’ favor and issued injunction ordering manufacturer to notify consumers of automobile safety defect, manufacturer failed to obtain a stay pending appeal and thus made the required disclosures; the Court of Appeals went on to consider the merits of the appeal with no suggestion of mootness). And indeed, there is caselaw suggesting that a court should refuse to postpone the effective date if delay would be detrimental to the public health or safety. Abbott Labs. v. Gardner, 387 U.S. 136, 156 (1967) (review of agency regulation).

Unlike the last time around, when the parties bargained for an agreement on a stay pending appeal (and the tobacco companies received the benefit of their bargain), matters this time are different. The parties did not reach agreement on terms acceptable to all parties. Instead, the parties are now before the Court in a contested posture. Thus, while defendants are free to seek a

13 The tobacco companies make much of the United States’ explanation in its opening brief that, in order to reduce the scope of the issues being litigated, the United States was proposing statements with “ ‘the same font, typesize, and layout that the Court previously approved, with the tobacco companies’ consent.’ ” Defs. Br. at 33 (quoting U.S. Opening Br. at 8; emphasis added by Defs. Br.). But the companies do not dispute the United States’ observation (in a footnote at the end of the sentence they quote) that “the United States and the Public-Health Intervenors would be entitled to propose wholly new implementation specifications, because the prior text was changed on the appeal.” U.S. Opening Br. at 9 n.2. Nor do the companies explain why the government’s choice to propose the prior fonts, typesizes, and layout for the statements has anything to do with the procedural matter of when this Court’s order should take effect.

Case 1:99-cv-02496-GK Document 6177 Filed 11/18/15 Page 30 of 35 stay from this Court or the court of appeals upon a proper showing, they did not negotiate for and are not entitled to an automatic (and indefinite) stay pending appeal.

Nor is such a stay reasonably necessary. As discussed in the United States’ opening brief, the only changes the United States proposes to the language this Court ordered in 2012 are those specifically required by D.C. Circuit’s most recent opinion—changes made at the Defendants’ own behest. Defendants have had ample opportunity to challenge the other aspects of the order, and any challenges to those aspects are now foreclosed. Given the very limited changes this Court needs to make, Defendants’ suggestion that immediate implementation of the order would improperly deprive them of their appeal rights are misplaced.

Defendants fare no better with their claim that various preparatory steps will be needed before they can begin disseminating the required statements. In particular, the companies contend that it will take many weeks to make the necessary preparations; and that they cannot even begin the required preparations before knowing the statements’ exact wording.14 But the United States’ proposal already addresses this: For newspaper, TV, and website statements, it provides the same eight weeks of lead-up time after the Trigger Date that the parties previously agreed upon, and that the tobacco companies themselves propose now; and for onserts, it provides the same thirty weeks that the parties previously agreed upon, and that the tobacco companies themselves propose now.

14 The preparation times asserted in the companies’ filings are exceedingly generous, and conflate several steps of developing and executing a media buy.

The date that an injunction should take effect, as observed above, is committed to the District Court’s sound discretion. This Court found more than nine years ago that disseminating corrective statements is necessary to prevent and restrain the tobacco companies. Original

Opinion, 449 F. Supp. 2d at 926. No further delay is necessary or required, and none should be countenanced.

B. The Court should adopt the United States’ proposed TV spots

The tobacco companies’ complaints about the United States’ proposed TV spots warrant little attention. While presumably recognizing that new TV spots are needed, in order to change the corrective-statement wording as required by their own appeal to the D.C. Circuit, the companies nevertheless object that the United States’ TV spot proposals, in the companies’ estimation, do not have the same look and feel as the TV spots that the parties agreed to and that the Court ordered as part of the 2014 Consent Order: The United States’ proposed TV spots have a male rather than female voiceover, and the tobacco companies don’t like the way he delivers the statements. Defs. Br. at 38. To cure these alleged problems, the tobacco companies contend that “[t]he Court should not depart from the parties’ binding agreement and compel Defendants to run TV spots that the Government created without their input or approval.” Id. at
39.

Tellingly, however, the tobacco companies make no claim that the United States’ proposed spots somehow fail to pass muster under RICO, nor do they offer any persuasive reason in law or in fact for favoring their own proposed spots over the government’s, which, aside from minor wording changes necessitated by the D.C. Circuit’s decision, are identical in content to the spots previously ordered by the Court.15 Indeed, the United States has taken pains

15 The tobacco companies also seek to support their desired TV spots by breaking mediation confidentiality for the 2013 and 2014 negotiations. Suffice to say that the United States rejects the approach the tobacco companies have chosen, cf. LCvR 84.9(a)(a) (D.D.C.
2014) (confidentiality requirements for mediation proceedings formally conducted through the District Court’s Mediation Program); rejects as materially incomplete the tobacco companies’ description of how the parties developed TV spots and other exemplars during their (ostensibly

confidential) negotiations; and encourages the Court to view the United States’ TV proposals, which—if the proposed order is adopted—will become the actual television spots the tobacco companies disseminate.

to alter the statement wording only as required by the D.C. Circuit’s decision, and to otherwise leave undisturbed the text and implementation details previously entered by the Court and affirmed on appeal, thus obviating the need for further litigation or delay. The TV spots are no exception: Their wording has been changed to accord with the Court of Appeals’ decision, and any changes in the tone or delivery of the voiceover are incidental and immaterial. Any claim that the Court is bound to approve only spots that the Defendants themselves create or agree to, or that have a female narrator, or a particular type of delivery, should be rejected out of hand.

CONCLUSION

For the foregoing reasons, the Court should adopt the United States’ proposed wording and implementation details.

DATED: November 18, 2015

Respectfully submitted,

BENJAMIN MIZER

Principal Deputy Assistant Attorney General

JONATHAN F. OLIN

Deputy Assistant Attorney General

MICHAEL S. BLUME, Director

ANDREW CLARK, Assistant Director Consumer Protection Branch

/s/ Daniel K. Crane-Hirsch

DANIEL K. CRANE-HIRSCH

Trial Attorneys Consumer Protection Branch

U.S. Department of Justice

P.O. Box 386

Washington, DC 20044

(202) 616-8242

daniel.crane-hirsch@usdoj…

/s/ Linda McMahon

LINDA McMAHON

Trial Attorney Commercial Fraud Section

U.S. Department of Justice

Washington, DC 20044

(202) 307-0448

linda.mcmahon2@usdoj.gov

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

and

TOBACCO-FREE KIDS ACTION FUND, et al.,

Intervenor-Plaintiffs,

v.

PHILIP MORRIS USA INC., et al.,

Defendants,

and

ITG BRANDS LLC, et al.,

Post-Judgment Intervenors as to Remedies.

Civil No. 99-CV-02496 (GK)

Next scheduled court appearance: None

UNITED STATES’ REPLY BRIEF IN SUPPORT OF UNITED STATES’ PROPOSED CORRECTIVE STATEMENTS; OPPOSITION TO TOBACCO COMPANIES’ PROPOSALS

LIST OF EXHIBITS

Exhibit

Description

1

Ltr. dated 8/27/2015, Ann Simoneau to David Taylor, available at www.fda.gov/ICECI/Enforce… (

2

Email dated 11/13/2015, Tayrani to Crystal

3

Redline: U.S. opening brief proposed order vs. U.S. revised proposed order

4

U.S. revised proposed order

Leave a Reply

The primary purpose of this site is to provide information in a timely manner. Postings should be informative. The usual rules apply: No libel, no profanity, no personal abuse, keep it on topic, and short.

If you are scheduled as a court witness, CHECK with your lawyer before posting anything here!