U.S. Racketeering Verdict

In a landmark 2006 judgment, U.S. District Judge Gladys Kessler found the major U.S. tobacco companies had violated civil racketeering laws (RICO) and engaged in a decades-long conspiracy to deceive the American public about the health effects of smoking and their marketing to children. Among her remedies, Judge Kessler ordered the tobacco companies to publish “corrective statements” that tell the American public the truth about the deadly consequences of smoking and secondhand smoke.

Tobacco companies fought for more than 11 years to delay and weaken the corrective statements, but finally began to publish the court-ordered statements through newspaper and television advertisements in November 2017. The newspaper ads ended in March 2018, and the TV ads continue until November 2018. The tobacco companies must also publish the statements on their websites starting on June 18, 2018, and on cigarette packs starting on November 21, 2018.

To prevent continued deception, Judge Kessler ordered the tobacco companies to publish the corrective statements on five topics about which they had deliberately deceived the public (view the full text of the corrective statements):

• the adverse health effects of smoking
• the addictiveness of smoking and nicotine
• the lack of significant health benefits from smoking “low tar,” “light, “ultra light,” “mild” and “natural” cigarettes (which have been deceptively marketed as less harmful than regular cigarettes)
• the manipulation of cigarette design and composition to ensure optimum nicotine delivery
• the adverse health effects of exposure to secondhand smoke.

There is ongoing litigation whether the tobacco companies must post the corrective statements at retail point-of-sale displays.

Case History

In 1999, the U.S. Department of Justice sued the major cigarette manufacturers, charging they had violated the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO) and other laws.

Although there were originally nine defendants, because of tobacco industry mergers and other changes, the remaining defendants are Altria Group, Philip Morris USA (a division of Altria) and R.J. Reynolds (a division of British American Tobacco).

The racketeering trial lasted from September 2004 to June 2005. In July 2005, Judge Kessler granted a motion by several public health groups to intervene in the case in order to argue for strong remedies. These groups are the Tobacco-Free Kids Action Fund (a 501(c)(4) affiliate of the Campaign for Tobacco-Free Kids), American Cancer Society, American Heart Association, American Lung Association, Americans for Nonsmokers' Rights and National African American Tobacco Prevention Network.

On August 17, 2006, Judge Kessler issued her verdict against the major U.S. tobacco companies. In a 1,683-page opinion, Judge Kessler detailed how the tobacco companies “have marketed and sold their lethal products with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted.”

Importantly, Judge Kessler concluded, “The evidence in this case clearly establishes that Defendants have not ceased engaging in unlawful activity…. Their continuing misconduct misleads consumers in order to maximize Defendants’ revenues by recruiting new smokers (the majority of whom are under the age of 18), preventing current smokers from quitting, and thereby sustaining the industry.”

In May 2009, a three-judge panel of the U.S. Court of Appeals for the District of Columbia unanimously upheld Judge Kessler’s judgment and almost all of her remedies, including the corrective statements. In 2010, the U.S. Supreme Court declined to hear appeals in the case.

Remedies

Despite the overwhelming wrongdoing she found, Judge Kessler was constrained in the remedies she could impose on the tobacco industry because of a controversial appeals court ruling that restricted financial remedies under the civil RICO law. In addition to the corrective statements, Judge Kessler imposed remedies that:

• Prohibit the tobacco companies from committing acts of racketeering in the future or making false, misleading or deceptive statements concerning cigarettes and their health risks.
• Ban terms including “low tar,” “light,” “ultra light,” “mild” and “natural that that have been used to mislead consumers about the health risks of smoking.
• Extend and expand existing requirements that the tobacco companies make public their internal documents produced in litigation.
• Require the tobacco companies to report marketing data annually to the government.

This case and the corrective statements are a reminder that tobacco’s horrific toll is no accident. It stems directly from the tobacco industry’s deceptive and even illegal practices. As tobacco companies now seek to portray themselves as responsible corporate citizens working to curb smoking, this case reflects that they are the root cause of the problem.

Last updated May 2, 2018