Public Health

Appeals Court Says Cigarette Makers Are Racketeers

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Today the U.S. Court of Appeals for the D.C. Circuit upheld the main thrust of a 2006 ruling in which U.S. District Judge Gladys Kessler found the leading American tobacco companies guilty of a conspiracy to mislead the public about the hazards of cigarettes. The case, brought by the Justice Department during the Clinton administration, accuses the cigarette manufacturers of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act through a pattern of mail and wire fraud, consisting of public statements aimed at minimizing the risks involved in smoking. A three-judge panel of the D.C. Circuit upheld most of the remedies ordered by Kessler, including a prohibition on future false statements, a ban on descriptors (such as "low-tar" and "light") that imply reduced health risk, and "corrective statements" on cigarette labels and in TV and print ads regarding the health hazards of smoking, the failure of "low-yield" cigarettes to substantaily reduce those hazards, the addictiveness of nicotine, and the dangers of secondhand smoke.

Although there is strong evidence that the tobacco companies lied, or at least omitted material facts, on those first three topics, Kessler erred in portraying the debate about secondhand smoke as a fake controversy invented by cigarette manufacturers. Because nonsmoking bystanders are exposed to much lower doses of toxins and carcinogens than smokers are, measuring the hazards of secondhand smoke pushes the limits of epidemiology. There is a substantial, irreducible amount of uncertainty about the meaning of studies that find an association between secondhand smoke and lung cancer or heart disease. Many people (including me) have expressed honest doubts about whether these associations, which are weak and usually not statistically significant, signify causal relationships. Tobacco company officials say they too have criticized the case against secondhand smoke in good faith, and the evidence to the contrary cited by the appeals court is pretty weak:

In 1980 a Philip Morris scientist reviewed a paper concluding that secondhand smoke caused "significant damage to airway function" in exposed nonsmokers, and found "little to criticize," deeming the paper "an excellent piece of work which could be very damaging" to the industry….In 1982, a Philip Morris-sponsored research facility concluded that the "side stream" smoke composing the bulk of secondhand smoke is "more irritating and/or toxic" than the "main stream" smoke inhaled by smokers….And several TI [Tobacco Institute] advertisements and press releases claimed that an independent 1981 study showing "a significant correlation between lung cancer and secondhand smoke" suffered from a statistical flaw, yet the district court found that industry consultants told TI, Reynolds, and Brown & Williamson that TI knew at the time not only that the statistical error did not exist, but also that the study was in fact correct.

None of this shows that tobacco company executives privately conceded secondhand smoke causes lung cancer or heart disease. Forcing people to remedy an unproven fraud by saying something they do not believe raises clear First Amendment problems, no matter how many times the D.C. Circuit inserts the word commercial before speech. A mandatory "corrective statement" regarding secondhand smoke is akin to forcing an oil or car company that raises questions about the impact of global warming to announce that Al Gore is right, or telling a chemical company that suggests you shouldn't worry too much about pesticide residues in fruits and vegetables that it has to start running ads promoting organic produce. If advertising and public relations become racketeering once a judge declares that a scientific controversy has ended, any company that comments on alleged risks associated with its product could be violating RICO without realizing it.

Despite the compelled speech provisions, Kessler's injunctions fall far short of the $289 billion in disgorged profits the DOJ originally sought (nixed by a D.C. Circuit ruling that said civil RICO remedies have to be forward-looking and corrective, not backward-looking and punitive) or even the scaled-back demand for $14 billion toward a "counter-marketing campaign, national smoking cessation program, youth smoking reduction plan, and monitoring scheme." It's also significant that none of Kessler's racketeering findings required a showing that anyone actually was injured by relying on false or misleading statements by tobacco companies—something that is tough to prove, given all the countervailing information about the hazards of smoking and the difficulty of quitting that was available to consumers from the government, the media, private health organizations, and medical professionals. As I've said before, it is impossible to conceal matters of common knowledge, which is why smokers and their relatives historically had a hard time recovering damages from tobacco companies. Lately they've had more success, but it's not because they've been able to demonstrate that Big Tobacco fooled them into believing smoking was safe. I think it's mainly because the industry has acquired such a reputation for bald-faced dishonesty (precisely because of its long history of contradicting common knowledge) that jurors have started to overlook the fact that smokers voluntarily assume the risks associated with their habit.

The entire D.C. Circuit ruling is here (PDF). Previous coverage of the DOJ case here, here, and here.

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  1. one of Kessler’s racketeering findings required a showing that anyone actually was injured by relying on false or misleading statements by tobacco companies

    See, I’m one of those old-fashioned types who think you can’t commit an actionable legal wrong (civil or criminal) unless someone is actually, you know, harmed.

    I wonder what the prospects are for a SCOTUS appeal. Although, with Obama’s new justice on the bench, I guess the only suspense would be whether the empathy-based ruling would 5-4 against Big Tobacco, or more.

  2. The US government owes the tobacco companies money for getting rid of citizens who would have cost the government lots of money in social security and health care costs.

    If I owned a tobacco company, I would hire mercenaries (or lawyers) to seek that money.

  3. The US government owes the tobacco companies money for getting rid of citizens who would have cost the government lots of money in social security and health care costs.

    Back during the AG litigation, there was a white paper circulating that netted out the savings for the government due to lower Medicare, Soc Sec, etc. of early deaths from smoking. Big T made the decision not to introduce it as mitigation of damages; a mistake. My recollection is that somewhere around 80% of the damages claimed by the AGs were offset.

  4. RC Dean,

    He’s replacing Souter, not Thomas. I don’t see how the court can get any more liberal with this appointment.

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  6. I’ve mentioned this before, but if you still smoke – and don’t want to quit – you might consider growing your own damn tobacco.

  7. What of the following groups receive the most money from the sale of a pack of cigarettes.

    a) The tobacco farmers
    b) The cigarette manufacturers
    c) The local stores that retail them
    d) Government

    [dons cardigan} Can you say co-conspirators boys and girls? I knew you could.

  8. BP, i’m seriously looking into doing that. I’m not a smoker, but i suspect that baccyleggin’ might start becoming a lucrative field, and i want to get in on the ground floor.

    As far as the health risks of cigarettes go, well, my grandparents and all their friends were calling them “coffin nails” back in the ’40s. Cigarettes being bad for you is not a new discovery.

  9. The cigarette habit is the toughest to quit! i wish everyone luck who is trying to quit. there is a new safer alternative to smoking and they are called electronic cigarettes. for more info about electronic cigarettes you can go here and click “More Information About Electronic Cigarettes”
    http://www.invisismoke.com

    Happy Memorial Day

  10. I think it’s mainly because the industry has acquired such a reputation for bald-faced dishonesty (precisely because of its long history of contradicting common knowledge) that jurors have started to overlook the fact that smokers voluntarily assume the risks associated with their habit.

    As dumb as it is, it seems more like an informed consent issue than overlooking risk. Smokers know or should know there’s risk, but the question is do they know what risk? Do they have an accurate understanding of the risk, especially in light of “light” and “low tar” cigarettes, etc… that’s the question.

    I am torn on this issue. I’m pro-legalization for all drugs and I realize all this “sue the tobacco company” crap is just being done because it’s politically viable – the tobacco companies are the last legal boogieman out there, and the government wants their money. At the same time, however, I absolutely despise all marketing, as there is no such thing as an honest advertisement. All ads lie – the only legitimate form of advertisement is word of mouth – passive advertisement (make a good product at a fair price and people will buy it and tell their friends about it). I cannot side with marketers as they are always immoral and always in the wrong.

    So I think of this as the Government going after cigarette advertising, not cigarettes as a product. As such, while a bit conflicted, I will side with the government on this one. Commercial speech should not be allowed beyond the showing of a simple logo (with size, time, and place restrictions).

  11. At the same time, however, I absolutely despise all marketing, as there is no such thing as an honest advertisement.

    That is simply not true. You may assert that many advertisements are dishonest and I’ll agree. You can even assert that most advertisements are dishonest and I’ll give you a “if you say so” pass.

    “Mens Levi 501 jeans $25 at Joe’s Denim Warehouse this weekend” is not in the least dishonest if they are indeed selling 501 jeans for 25 bucks.

  12. Xeones – When I was going through a shortage of funds a couple years ago, I’d played with the idea about making a trip from NC or VA up to NYC. Then I found out about the penalties for tax evasion in NY. Ugh.

    Someone here mentioned on another ciggy thread that pot dealers in NYC have recently added bootleg smokes to their inventory. If you know any weed dealers in NY, maybe you could become a supplier.

    I was 16 when I started smoking, and well aware of the risks, which is why I quit 9 years later. However disingenuous the tobacco companies have been, it doesn’t compare to the lawyers and politicians going after them.

  13. Penguin, i had a similar idea after a Sopranos marathon a couple years back (i live in Virginia, so it’s gravy). However, i, too, am too pretty to go to prison.

    I DO know someone who knows someone in NYC, though. Hmm…

  14. J sub D: yes but they’ll have attractive people wearing the jeans, smiling and having fun hugging and fondling each other.

    The implication is if you buy these jeans, you’ll be happy and attractive like them. It’s false and misleading. Any attractive people (above average, let alone ‘perfect’ looking) in ads is per se misleading and fraudulent and should be prohibited. Sex sells, and it’s a lie that shouldn’t be permitted.

    A black screen with white letters saying X product on sale for $Y price, without more, and assuming it’s not a bait and switch, is okay. But when was the last time you saw such an ad?

  15. Any attractive people (above average, let alone ‘perfect’ looking) in ads is per se misleading and fraudulent and should be prohibited. Sex sells, and it’s a lie that shouldn’t be permitted.

    That is what social engineering on an acid and bourbon binge sounds like.

  16. make a good product at a fair price and people will buy it and tell their friends about it

    While true, it’s still not often an efficient way to advertise a new product or service. Friends usually don’t have enough incentive to get word out quickly enough to all the people who could benefit by purchasing. If you’d ever tried to promote an invention or many types of new business, you’d know that.

    About the only type of sales for which word of mouth — customer peer communication — is efficient advertising are local businesses with no easy way to expand.

  17. That is what social engineering on an acid and bourbon binge sounds like.

    I’d imagine it would read like Hunter Thompson.

  18. Racketeers?

    Is that the right term?

    What’s the term for someone who offers you something to consume, knowing that same something is poisonous, but tells you it’s perfectly safe?

    I don’t think the correct word is “racketeer.”

    Mind you, if YOU know it’s poison, and YOU want to take it into your body, I’m with you. That’s what we radicals call “informed consent.”

    But cigarette makers knowingly sold poison as safe for decades. “Racketeer” isn’t the right word.

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