When a federal appeals court said the Justice Department cannot force cigarette manufacturers to turn over $280 billion in allegedly ill-gotten gains, it was not just a victory for the tobacco industry. It was also a victory for freedom of speech.
On its face, the ruling had nothing to do with free speech. The question before the U.S. Court of Appeals for the D.C. Circuit was whether the Racketeer Influenced and Corrupt Organizations Act (RICO) allows the government to file a lawsuit demanding "disgorgement" of profits tied to a "pattern of racketeering activity"—in this case, an alleged conspiracy to mislead the public about the hazards of smoking.
The relevant section of the law (which was intended as a weapon against organized crime but has been applied much more broadly) gives federal courts jurisdiction "to prevent and restrain violations of [RICO] by issuing appropriate orders." The appeals court concluded that disgorgement, "a quintessentially backward-looking remedy," does not qualify.
The Justice Department can still seek an order aimed at restricting the tobacco companies' future conduct. But unless the D.C. Circuit's decision is overturned, the companies no longer have to worry about coughing up a sum that exceeds their combined net worth.
Without the possibility of disgorgement, the Justice Department, which already has spent more than $130 million on this case, will think twice before filing similar lawsuits against other businesses. That's a good thing, because the tobacco case defines racketeering so broadly that any company selling a controversial product could be sued under RICO unless it took a vow of silence.
Although the tobacco companies' lack of candor on the subject of smoking is legendary, it's highly debatable whether they fooled anyone into believing that cigarettes were safe, given the ubiquitous warnings to the contrary. In any case, we should not let the industry's well-deserved reputation for dishonesty blind us to the dangers of letting the Justice Department treat RICO as a license to police corporate speech, turning ordinary advertisements and deviations from a government-certified consensus into acts of racketeering.
The "racketeering acts" listed by the Justice Department consist largely of advertisements, press releases, and televised statements, which it considers instances of mail or wire fraud. The fraudulent aspect of this speech is often obscure. One "racketeering act," for instance, involved placing a magazine ad that "depicted Joe Camel wearing sunglasses, a tee shirt, and blue jeans, with a pack of cigarettes rolled up in his sleeve and a lit cigarette hanging from his mouth, and casually leaning against a convertible automobile."
Even the messages closer to the heart of the Justice Department's case are not clear-cut examples of fraud. When the cigarette manufacturers criticized early studies linking smoking to lung cancer, for example, were they deliberately misleading the public, or were they doing what any company does when its product is impugned—i.e., pointing out weaknesses in the evidence against it?
The question is of more than historical interest. Given the logic of the Justice Department's case, oil companies that question global warming projections, automakers that defend the safety of their SUVs, fast food chains that say they're not responsible for increases in obesity, pharmaceutical companies that criticize research indicating possible side effects from their drugs, and any other business that stands up for itself in the face of attack could be the target of a future RICO lawsuit.
With its sweeping definitions of fraud and racketeering, the Justice Department has put itself in the position of determining when dissent is no longer permissible. If I weren't already persuaded that it's not wise to let a government agency assume this role, the discovery that the Justice Department includes me in its description of the tobacco industry's racketeering would have done the trick.
In 1994, you see, Philip Morris took out newspaper ads in which it reprinted an article I had written for Forbes MediaCritic about press coverage of the controversy over secondhand smoke. (I did not approve the reprint or get paid for it.) Although the evidence that secondhand smoke causes fatal diseases is far weaker and more ambiguous than the evidence concerning the health effects of smoking, the Justice Department has decided the issue is settled beyond any reasonable doubt—indeed, that it was settled a decade ago.
According to the government's lawyers, anyone who remains skeptical about claims that secondhand smoke kills is perpetrating a fraud. I guess that makes me an accessory to racketeering.