Bob Dole, Tobacco Racketeer
The news that former Sen. Bob Dole is a racketeer may come as a surprise to some, though perhaps not to Steve Forbes, who called him worse than that in the 1996 presidential campaign. Nonetheless, no other conclusion is possible, once you have read the Clinton Administration's lawsuit against the tobacco industry. It is, without a doubt, the most impressive legal document of our day, and not only because it reveals Bob Dole's life of crime.
In 1994, the state of Florida did the sort of thing that our civics teachers assured us can't happen in America. Fearing it might lose its lucrative suit against tobacco companies, the state passed a law ensuring that the defendants could raise no defense. The law said:
"Principles of common law and equity as to assignment, lien subrogation, comparative negligence, assumption of risk, and all other affirmative defenses normally available to a liable third party, are to be abrogated to the extent necessary to ensure full recovery by Medicaid from third-party resources."
The states being, in this case, laboratories of not-exactly-democracy, it was only a matter of time before Washington followed suit. Last year, the tobacco companies humiliated the Administration by defeating a ballyhooed anti-tobacco bill on Capitol Hill. "We did our best to work with them and with the Congress to resolve many of these matters legislatively," President Clinton said last week, "and they declined." Now it's payback time. In its own lawsuit, the Administration appears to have outdone Florida.
The tobacco companies, according to the Administration's legal filing, "have for many years sought to deceive the American public about the health effects of smoking." They denied that smoking causes disease, denied that tobacco is addictive, and "consistently stated" that they did not market to children. The alleged result is that many Americans—the Administration does not say how many, or which ones—became addicted to cigarettes. "As a consequence of defendants' tortious and unlawful conduct, the federal government spends more than $20 billion annually for the treatment of injuries and diseases caused by defendants' products."
So the government seeks compensation for those costs. Moreover, the government charges the companies with racketeering, which means it can demand "disgorgement of ill-gotten profits." "It's a mind-boggling sum of money," says Robert D. Luskin, a former Justice Department prosecutor who now practices law in Washington.
Examining this lawsuit is like watching a drunken driver who, before crashing into a church during high Mass, also manages to shred an ornamental garden, knock down two traffic lights, uproot a fire hydrant, and clip a police station. If, in this article, I mostly dwell on the grand finale, that isn't because I'm unimpressed with the fine points of law and sense that the Administration mows down along the way. For example:
* The government suffered no net damages. There is nothing to recover. Just the opposite. Washington's tobacco-related health spending is more than offset—to the tune of tens of billions of dollars a year—by the government's earnings from cigarette taxes and by its savings on health and pension benefits that smokers don't live to collect. Making a large net profit and then suing for compensation is cheeky, even by the standards of lawyers.
* In Lawsuit Land, smokers were naifs whom tobacco giants had fooled into thinking that smoking is harmless and easy to quit. In real life, opinion polls show that most people have known since at least the early 1950s that smoking is dangerous and hard to quit. Every pack of cigarettes and every ad has carried a warning since 1964. In standard legal theory, writes Richard A. Epstein, a University of Chicago law professor (who has consulted for Philip Morris, a tobacco company), where there was no actual deception, there can be no civil claim of fraud.
True, some individual smokers may have been deceived. But the Administration seeks to build its case on statistics rather than on identifying any injured people. Thus:
* Within any conventional understanding of the law, the Administration has no grounds to sue. The government claims it is owed compensation under the Medical Care Recovery Act of 1962 and the Medicare Secondary Payer Act of 1980, which were designed to apply to individual claims based on actual persons. "There's nothing in the law that allows for aggregating claims into a single suit," says Robert A. Levy, a senior fellow in constitutional studies at the Cato Institute.
Moreover, the government undertook to cover smoking-related illnesses under Medicare at a time when Washington was well aware of the unhealthfulness of tobacco. Ordinarily, Levy notes, that would mean that the government voluntarily assumed the costs it is now seeking to recover. For those reasons, among others, in 1997 the Clinton Justice Department determined that, in Attorney General Janet Reno's words, "the federal government does not have an independent cause of action."
But never mind. Switching sides and finding new uses for old laws are what creative lawyering is about. So tip your hat to the Administration's artistry and pass on to the grand finale, which is positively Wagnerian, a regular Gtterdammerung of legal bombast.
The lawsuit's appendix lists 116 counts of illegal racketeering. Of those, fully 25, by my count, consist of press releases issued by the tobacco companies. Thus, on or about May 16, 1988, the defendants, through their trade group, "did knowingly cause a press release to be sent and delivered by the United States mails to newspapers and news outlets. This press release contained statements disputing the addictiveness of cigarette smoking." By mailing the press release, the companies committed—I am not making this up—mail fraud, which is actionable under the racketeering laws.
Similarly, five counts of racketeering relate to issue advertisements in which the companies defended their positions. One company placed a newspaper ad titled "Can we have an open debate about smoking?" The newspaper was then delivered by mail to subscribers. Mail fraud. Ditto Count 18, when the companies delivered to the media, through the mail, reprints of an article published in True magazine.
Counts 109, 110, 111, 112, and 113 consist of the testimony given before Congress, in 1994, in which the chief executives of five tobacco giants denied that smoking is addictive and denied manipulating the amount of nicotine in cigarettes. The hearings were televised, so that is five counts of wire fraud.
"Racketeering Act No. 116," a suitably brassy coda, charges that Brown & Williamson posted on its Web site a document titled "Hot Topics: Smoking and Health Issues." The document conceded "that, by some definitions, including that of the Surgeon General in 1988, cigarette smoking would be classified as addictive." Unfortunately, Brown & Williamson went on to say: "The issue should be whether consumers are aware that smoking may be difficult to quit (they are) and whether there is anything in cigarette smoke that impairs smokers from reaching and implementing a decision to quit (which we believe there is not)." Wire fraud.
Never mind obstruction of justice; the President should have been impeached for wire fraud when, on national television, he denied having sex with Monica Lewinsky. And poor Bob Dole. As a presidential candidate in 1996, he was asked in a televised interview if he thought tobacco is addictive. He replied, "Some people who've tried it can quit easily, others don't quit. So I guess it's addictive to some and not to others." You can send your contributions to the Bob Dole Racketeering & Wire Fraud Defense Fund to me here at National Journal.
In its lawsuit against the tobacco industry, the Clinton Administration has redefined fraud and racketeering to mean, in effect, publicly disagreeing with the Clinton Administration. The Administration charges that the industry deliberately lied, which is not the same as honestly disagreeing; but charges like No. 116 show the distinction to be a flimsy one in the hands of government prosecutors.
On his entertaining and often startling Web site www.overlawyered.com, Manhattan Institute senior fellow Walter Olson notes that all sorts of businesses should pay close attention. In any heated public controversy, he notes, "there can scarcely be a better way to silence one side than to concoct a theory that exposes it to charges of 'racketeering' for disseminating views its opponents consider erroneous."
The effects of smoking are bad. The record of tobacco companies is bad. But the Administration has done a remarkable thing. It has given all Americans—beginning, of course, with Bob Dole, and not excluding tobacco-bashers—a vital stake in the defeat of this wretched lawsuit.