Federal Lawsuit Can Still Fundamentally Change Tobacco Industry Despite Appeals Court Ruling on Disgorgement Issue

Statement of William V. Corr, Executive Director, Campaign for Tobacco-Free Kids

Feb. 4 2005

Washington, DC — We are disappointed that the U.S. Court of Appeals for the D.C. Circuit ruled today that the tobacco industry cannot be forced to disgorge billions in illegal profits if the federal government wins its civil racketeering lawsuit against the industry. This ruling eliminates one of many potential remedies in this case to hold the tobacco companies accountable for five decades of fraudulent business practices. However, it is vitally important to understand that the heart of the government's tobacco case still exists, and the trial judge still has the authority to impose other remedies that would fundamentally reform the tobacco industry's harmful practices and require the industry to pay billions of dollars to fund tobacco prevention and cessation programs. In fact, these remaining remedies hold the greatest potential for reducing the death and disease caused by tobacco use, the leading preventable cause of death in our country.

The tobacco industry and its allies may view today's ruling as an opportunity to seek a weak settlement of the case. The White House and the Department of Justice should resist such efforts and aggressively pursue the case with the goals of correcting the harm caused by the tobacco industry's wrongful actions and fundamentally changing the industry's harmful practices to protect the health of America's children and families in the future. Today's ruling should not be an excuse to let the tobacco industry off the hook for the wrongful practices that are the basis of this lawsuit, including marketing to children and concealing the health risks and addictiveness of its products. This ruling is not about the merits of the government's case, but about one of the many potential remedies that could be imposed if the government wins the case.

If the government wins the case, the civil racketeering statute grants the trial judge broad authority to fashion a judgment and remedies that fit the defendants' violation of the law. Among other things, the tobacco industry could be required to fund programs to keep kids from starting to smoke and help smokers quit. In a Louisiana case last year, a jury ordered tobacco companies to pay nearly $600 million to fund smoking cessation programs for that state's smokers. Effective, nationwide tobacco prevention and cessation programs would cost tens if not hundreds of billions of dollars.

The judge could also provide injunctive relief that can bring about fundamental reform in the industry's harmful practices. Non-financial remedies the government has indicated it could seek include additional restrictions on tobacco advertising, sponsorships, promotions and other marketing; elimination of deceptive terms like “light” and “low-tar” that have misled smokers into believing some cigarettes are safer than others; and disclosure of industry documents related to research, marketing, and other issues.

While disgorgement is important, it is by no means the only significant or even the most significant remedy available in the case. Today's ruling does not reduce the potential of the case to fundamentally change how the tobacco industry does business and require the industry to fund some of the most far-reaching tobacco prevention and cessation programs ever established in this country.

 

Media Contacts