Supreme Court Appeal Puts Disgorgement of Profits Back on Table in Tobacco Lawsuit

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

Jul. 18 2005

Washington, DC — Today's decision by the Department of Justice to appeal a key ruling in its tobacco lawsuit to the U.S. Supreme Court puts the disgorgement of illegal tobacco industry profits back on the table as a possible remedy in the case. As the government argues in its petition to the Supreme Court, the ruling by the U.S. Court of Appeals for the D.C. Circuit that barred disgorgement of past profits “frustrates one of the chief aims of RICO's civil remedies - deterring future RICO violations by depriving the RICO enterprise of the economic benefits of its unlawful conduct” (p. 21). The government had been seeking up to $280 billion in illegal industry profits in order to deter future industry wrongdoing. Today's appeal also makes it even more inappropriate for the government to reach a weak settlement of the case until it knows the full range of remedies available.

This appeal is a welcome step toward overturning an appeals court decision that, as the government argues, would gut enforcement of the civil racketeering (RICO) law not only against the tobacco companies but against other wrongdoers as well. As the dissenting judge in the 2-1 appeals court and the Justice Department have argued, the appeals court ruling conflicted with Supreme Court precedents, rulings in other federal court circuits and Congressional intent. In its petition to the Supreme Court, the government argues that under the Appeals Court decision, “the government faces the prospects that it cannot effectively compel RICO violators to address the consequences of their statutory violations and that those violators may retain the profits of their unlawful activity no matter how destructive the consequences for the American public as a whole” (p. 23).

After weakening its own case by reducing its proposed cessation remedy during closing arguments, we are pleased that the government in its Supreme Court filing recognized that the tobacco lawsuit is an “extraordinarily important case” (p. 3). The Justice Department has presented a compelling case that the tobacco industry engaged in a decades-long scheme to defraud the American people by concealing the health risks and addictiveness of their products and their marketing to children, and that this wrongdoing continues today. Our nation has paid a terrible price in health, lives and money because of this wrongdoing. The Justice Department should seek the strongest possible remedies to hold the tobacco companies accountable and prevent future wrongdoing, including disgorgement of profits if allowed by the Supreme Court. Regardless of the outcome of this appeal, we believe the government and the judge still have a wide range of remedies available to them, including properly funded tobacco cessation and public education programs, stiff fines if the tobacco companies continue to addict children, restrictions on tobacco marketing, greater disclosure of internal industry documents, and strict monitoring of future industry behavior to keep its wrongdoing from continuing.

 

Media Contacts