Skip to main content

Big Tobacco Challenges Payments

WASHINGTON -- The tobacco industry asked a federal appeals court to rule that the Justice Department can't seek $280 billion from cigarette-makers for allegedly misleading the public about the dangers of smoking, reported the Associated Press.

The government brought the case, now being heard in U.S. District Court, under a 1970 civil racketeering statute originally designed to prosecute mobsters.

"This section of the statute does not allow the government to recover money from the companies," said Philip Morris USA lawyer William Ohlemeyer. Had the government wanted to go after money, it should have filed the suit under criminal RICO laws, which require a higher burden of proof and allow the government to go after money, Ohlemeyer added.

The government says the statute doesn't preclude the government from seeking the $280 billion. U.S. District Judge Gladys Kessler agreed with the government but said the industry could appeal her ruling even as the case proceeds in lower court. That trial has been under way since September and is expected to last several more months.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit will consider the industry's interim appeal Wednesday.

The industry says going after profits that it earned years earlier would not do anything to prevent and restrain future wrongdoing, something the law requires of remedies imposed.
Justice lawyers say taking illegal earnings away from the companies would prevent them from committing fraud in the future.

The government has described the $280 billion as an estimate of money the companies earned illegally through fraudulent activities such as marketing to children and denying doing so. The industry, meanwhile, says the government failed to distinguish between money earned legally and illegally. Kessler has said she would like to sort that out in trial.

If the appeals court rules that the government cannot go after the industry's earnings, Kessler could still impose restrictions on the tobacco companies, such as limiting marketing or requiring the industry to fund public health campaigns or smoking cessation programs. There is some expectation, however, that both sides might seek a settlement if the appeals court rules the government can't go after money.
This ad will auto-close in 10 seconds