The Work
October 15, 2008 6:01 PM
Tobacco Litigation Means Work for Gibson Dunn, Jones Day, Others
Posted by Zach Lowe
It's been ten years since the tobacco industry agreed to pay nearly $250 billion to 46 states to settle litigation over the companies' marketing practices and the costs associated with the health consequences of smoking.
The settlement has protected companies from most civil lawsuits brought by the 46 states and their residents, but it has left room for some types of litigation. And those cases have reached the nation's highest courts, which means more work for Gibson, Dunn & Crutcher, Jones Day, and other firms that rep the nation's largest tobacco companies.
On Tuesday, the companies and the Justice Department argued in federal appeals court over whether they can be found in violation of RICO laws for allegedly lying to the public about the health effects of smoking. A federal judge ruled in 2006--in a 1,700-page decision--that the RICO law applies, and that the companies should be held in violation for their history of lying to the public. That judge, Gladys Kessler, did not fine the companies. The Justice Department wants money, and the companies want the ruling reversed.
A star-studded team led by Gibson Dunn's Miguel Estrada (for Philip Morris) and Jones Day's Michael Carvin (for R.J. Reynolds) told a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit that the RICO argument fails. To prove a RICO violation, the government must show the tobacco companies are likely to continue their fraudulent marketing, they said. That's unlikely, because the 1998 settlement agreement already prohibits those practices, and the tobacco companies have changed the way they do business, Estrada said in an interview with the Am Law Daily.
"This is a case that should never have been brought under RICO," Estrada says. The government disagreed, claiming it can prove the companies continue to lie in marketing campaigns.
The bulk of the argument centered on the marketing of light and low tar cigarettes, an issue that wasn't fully decided by the master settlement agreement. Kessler found such marketing to be fraudulent because smokers, comforted by the low tar amounts, smoke more and inhale more deeply. She ordered the companies to pull all "light" and "low tar" marketing materials and put out statements telling the public those initial promises were wrong.
The companies appealed, and Kessler's order was stayed pending the outcome of the current case.
Carvin argued the Federal Trade Commission, which regulates tobacco, has approved light cigarettes for decades--thus preempting any state-level lawsuits.
That pre-emption argument is hot this year. Estrada's partner at Gibson Dunn, former Solicitor General Theodore Olson, made the same argument before the U.S. Supreme Court last week in another case in which plaintiffs are charging tobacco companies with fraudulently marketing light and low tar cigarettes.
Media reports on both both cases concluded that the judges seem to be leaning toward the tobacco companies, in part because of the preemption argument. Justice Samuel Alito told a government lawyer, "You've created this whole problem by passively approving" the light cigarettes."
It is unclear when either ruling might come.
Other firms in on the tobacco action at the appeals level include: Winston & Strawn for Philip Morris; Shook, Hardy & Bacon for Lorillard Tobacco Co.; Kasowitz, Benson, Torres & Friedman for the Liggett Group; Covington & Burling for the Tobacco Institute; and Womble Carlyle Sandridge & Rice for the Council for Tobacco Research.
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"Kessler found such marketing to be fraudulent because smokers, comforted by the low tar amounts..."
On the one hand, tobacco companies paid mega-$$$ because they marketed their products without publicly disclosing harmful effects of using their products.
On the other hand, tobacco companies are supposed to fork over MORE mega-$$$ because they market altered products to give their customers the impression that the altered ("light") products were LESS harmful, indicating that their customers always knew the products were harmful.
Every time the price of tobacco products rises, the tobacco consumers pay more for their product--and, therefore, less on other things in society. (Ten dollars less in a person pocket means ten dollars less that is spent in the general economy.) This must be the stupidest legislation in the history of the US in terms of both common sense and economy.
Also, in the early 1900s, many states repealed their tobacco prohibition laws. How could those states have claimed any MSA money less than 100 years later in the MSA? Besides, doesn't the MSA violate the Compact Clause of the US Constitution? And, after all the havoc created by all this, where IS that MSA money? Have states frittered it away already and now try to go back to milk the same cash cow even in these economically unstable times? Beyond stupid.
Comment By SStahl - October 15, 2008 at 8:45 PM
"Kessler found such marketing to be fraudulent because smokers, comforted by the low tar amounts..."
On the one hand, tobacco companies paid mega-$$$ because they marketed their products without publicly disclosing harmful effects of using their products.
On the other hand, tobacco companies are supposed to fork over MORE mega-$$$ because they market altered products to give their customers the impression that the altered ("light") products were LESS harmful, indicating that their customers always knew the products were harmful.
Every time the price of tobacco products rises, the tobacco consumers pay more for their product--and, therefore, less on other things in society. (Ten dollars less in a person pocket means ten dollars less that is spent in the general economy.) This must be the stupidest legislation in the history of the US in terms of both common sense and economy.
Also, in the early 1900s, many states repealed their tobacco prohibition laws. How could those states have claimed any MSA money less than 100 years later in the MSA? Besides, doesn't the MSA violate the Compact Clause of the US Constitution? And, after all the havoc created by all this, where IS that MSA money? Have states frittered it away already and now try to go back to milk the same cash cow even in these economically unstable times? Beyond stupid.
Comment By SStahl - October 15, 2008 at 8:45 PM
When are we going to see a RICO conviction of the "non" profit foundation that paid over $400,000,000 in supposed grants to ACS, AHA, etc. and helped them find "matching funds" to lobby for laws (smoking bans) from which THEY profit from their stock in JnJ (which profits from sales of Nicoderm and Nicorette)? THERE'S a pattern of criminal activity, it's interstate and there's coersion in forcing people to use their products because "their" laws don't allow you to smoke anywhere. Talk about suppression. What about the fact that the best success rate for quitting long term smoking is COLD TURKEY, yet the ACS and all the other antis beholding to this "non" profit foundation push the drugs, patches and gum. THERE'S a RICO case.
Comment By Pam - October 15, 2008 at 8:51 PM
If the Tobacco Companies are found guilty of lying to the public, then the RWJF/Johnson @ Johnson/ ACS/ALA and the rest of our Health agencies should be held to the same standards in their lying to the public about the Health threat/ cost/ deaths caused by SHS/ETS. NOT ONE DEATH HAS BEEN PROVEN TO HAVE BEEN CAUSED BY SHS/ETS.
Smoking Bans passed by using fraudulent misinformation is nothing less than lying to the public for profit in the sale of smoking cessation products.
Comment By Virgil Kleinhelter - October 15, 2008 at 10:06 PM
HOUSE COMMITTEE ON ENERGY AND COMMERCE HEALTH AND ENVIRONMENT SUBCOMMITTEE STATEMENT OF HON. THOMAS J. BLILEY, JR. JULY 21, 1993 Mr. Chairman, I am testifying today in order to report to the Subcommittee the results of my extensive investigation of the EPA's handling of the controversy surrounding environmental tobacco smoke or "ETS". As you know, in the past the Oversight and Investigations Subcommittee of this Committee has conducted hearings on EPA's abuses of government contracting requirements. So pervasive is the level of abuse that Chairman Dingell has characterized EPA's pattern of contract mismanagement as a "cesspool". EPA's Inspector General recently has confirmed that such abuses also have taken place in connection with a number of EPA contracts involving ETS, and the O and I Subcommittee's own investigation is continuing. In addition to various contractual improprieties, however, my own investigation suggests that in its consideration of ETS, the Agency has deliberately abused and manipulated the scientific data in order to reach a predetermined, politically motivated result. EPA's risk assessment on ETS released in January of this year claims that ETS exposure is responsible for approximately 3,000 lung cancer cases per year in the United States. Analysis of the risk assessment reveals, however, that EPA was able to reach that conclusion only by ignoring or discounting major studies, and by deviating from generally accepted scientific standards. EPA's willingness to distort the science in order to justify its classification of ETS as a "Group A" or "known human" carcinogen seems to stem from the Agency's determination early on to advocate smoking bans and restrictions as a socially desirable goal. EPA began promoting such policies in the mid-to late 1980s, ostensibly as part of its efforts to provide information to the public on indoor air quality issues. The Agency then decided to develop the ETS risk assessment to provide a scientific justification for smoking bans. The risk assessment thus was never intended to be a neutral review and analysis of the ETS science. Rather, it was intended from the start to function as a prop for the Agency's predetermined policy.
Not surprisingly, therefore, the process at every turn has been characterized by both scientific and procedural irregularities. In addition to the contracting violations mentioned at the outset, those irregularities include conflicts of interest by both Agency staff involved in preparation of the risk assessment and the members of the Science Advisory Board panel selected to provide a supposedly independent evaluation of the document. I will not itemize each and every one of these improprieties. Instead, I ask consent that a memorandum providing full details of the history of EPA's handling of ETS be included in the record. The memorandum summarizes the results thus far of my investigation into the Agency's handling of ETS and is based on publicly available documents, extensive correspondence between myself and former Administrator Reilly, and interviews conducted by my staff with the responsible EPA officials. there is more... http://www.pipes.org/Articles/Bliley.html
- tired of anti smoking lies
Comment By Virgil Kleinhelter - October 15, 2008 at 10:10 PM
What I find amazing is that if one tracks 'the money' from the no-smoke organizations and various people connected to them and also various studies, the funds to do so and operate all track to the RWJF, the foundation funded by JnJ. The smoke issue and bans very strongly appears to be a corporate scam on 'we the people' for corporate greed while they manage to squash research that does not agree with their no-smoke AGENDA.
After reading various studies concerning the GOOD nicotine does for people and knowing that nicotine is in various foods (potato and tomato for starters) that are in the same FOOD GROUP as tobacco, it strongly suggests that the pharmaceutical industry wants to own nicotine for their own medications (sales).
Look out world if they ever figure how to take WATER off of the market for their own ownership. When you track back to the same foundation funding M.A.D.D., Tobacco Free Kids and the obese issue, you have to wonder what will be the next ban to pad their pockets.
Comment By History Buff - October 16, 2008 at 12:20 AM
The bandwagon of local smoking bans now steamrolling across the nation -
from sea to sea- has nothing to do with protecting people from the supposed
threat of "second-hand" smoke.
Indeed, the bans themselves are symptoms of a far more grievous threat; a
cancer that has been spreading for decades and has now metastasized
throughout the body politic, spreading even to the tiniest organs of local
government. This cancer is the only real hazard involved - the cancer of
unlimited government power.
The issue is not whether second-hand smoke is a real danger or a phantom
menace, as a study published recently in the British Medical Journal
indicates. The issue is: if it were harmful, what would be the proper
reaction? Should anti-tobacco activists satisfy themselves with educating
people about the potential danger and allowing them to make
their own decisions, or should they seize the power of government and force
people to make the "right" decision?
Supporters of local tobacco bans have made their choice. Rather than
attempting to protect people from an unwanted intrusion on their health, the
tobacco bans are the unwanted intrusion.
Loudly billed as measures that only affect "public places," they have
actually targeted private places: restaurants, bars, nightclubs, shops, and
offices - places whose owners are free to set anti-smoking rules or whose
customers are free to go elsewhere if they don't like the smoke. Some local
bans even harass smokers in places where their effect on others is obviously
negligible, such as outdoor public parks.
The decision to smoke, or to avoid "second-hand" smoke, is a question to be
answered by each individual based on his own values and his own assessment
of the risks. This is the same kind of decision free people make regarding
every aspect of their lives: how much to spend or invest, whom to befriend
or sleep with, whether to go to college or get a job, whether to get married
or divorced, and so on.
All of these decisions involve risks; some have demonstrably harmful
consequences; most are controversial and invite disapproval from the
neighbours. But the individual must be free to make these decisions. He must
be free, because his life belongs to him, not to his neighbours, and only
his own judgment can guide him through it.
Yet when it comes to smoking, this freedom is under attack. Cigarette
smokers are a numerical minority, practicing a habit considered annoying and
unpleasant to the majority. So the majority has simply commandeered the
power of government and used it to dictate their behaviour.
That is why these bans are far more threatening than the prospect of
inhaling a few stray whiffs of tobacco while waiting for a table at your
favourite restaurant. The anti-tobacco crusaders point in exaggerated alarm
at those wisps of smoke while they unleash the systematic and unlimited
intrusion of government into our lives.
We do not elect officials to control and manipulate our behaviour.
Thomas Laprade
480 Rupert St.
Thunder Bay, Ont.
Comment By Tom - October 16, 2008 at 3:08 AM