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Litigation Against Tobacco Companies


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The Complaint
· On September 22, 1999, the United States filed a lawsuit against the major cigarette manufacturers and two industry affiliated organizations. The case is before U.S. District Judge Gladys Kessler of the U.S. District Court for the District of Columbia. In February 2001, the United States filed an Amended Complaint, which did not change any paragraph numbers from the initial September 1999 Complaint or the September 1999 Appendix identifying racketeering acts.

· In two Memorandum Opinions filed September 28, 2000, the Court ruled upon defendants’ motions to dismiss the federal government’s lawsuit. In the first Opinion, Judge Kessler ruled that Counts Three and Four of the United States’ Complaint properly stated claims for relief under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), but dismissed Counts One and Two of the Complaint, which sought to recover certain of the federal government’s past medical expenditures. (116 F. Supp. 2d 131 (D.D.C. 2000).) In a separate Opinion, the Court granted a motion to dismiss for lack of personal jurisdiction as against B.A.T. Industries. (116 F. Supp. 2d 116 (D.D.C. 2000).)

Discovery

· By Order #41 (dated December 22, 2000), the Court appointed a Special Master to assist in resolving case management and discovery disputes.

· The Tenth Case Management Order, Order #230 (dated October 1, 2002), set a new schedule for the completion of discovery and other pretrial matters, and advised that trial was set to commence in September 2004.

· By Order #600 (dated July 21, 2004), the Court granted in part and denied in part the United States’ motion for sanctions against Philip Morris for spoliation of evidence, finding that eleven Philip Morris executives and officers “at the highest corporate level” violated the Court’s document preservation order and Philip Morris’s policies. The Court precluded the eleven Philip Morris executives from testifying at trial and imposed sanctions against Philip Morris of $250,000 per violator, for a total monetary sanction of $2.75 million. (327 F. Supp. 2d 21 (D.D.C. 2004).)

Australian and English Proceedings

· In October 2002, the Court issued a Letter of Request for International Judicial Assistance to the Australian court to take the testimony of Nicholas Cannar, who was BATCo’s in-house legal head from 1985 to 1991 and then director of legal services from 1996 to 1999 for BATCo’s Australian subsidiary, then called W.D. & H.O. Wills and now called BATAS. In October 2003, Justice Bell of the New South Wales Supreme Court, Australia, issued a decision denying motions to quash Mr. Cannar’s subpoena filed by BATCo, by Mr. Cannar, and by BATAS. ([2003] NSWSC 802 (8 October 2003).) In May 2004, Chief Justice Spigelman of the New South Wales Supreme Court - Court of Appeal authored a unanimous decision, denying BATCo and BATAS leave to appeal, and dismissing Mr. Cannar’s appeal. ([2004] NSWCA 158 (18 May 2004).) BATCo has filed an application for special leave to appeal to the Australia High Court. (No. S217 of 2004.)

The United States took Mr. Cannar’s testimony in closed court in Sydney, Australia in June 2004.

· The Court also issued Letters of Request for International Judicial Assistance for presentation to the English courts to take the testimony of Andrew Foyle and Martin Broughton.


Final Pretrial Proposed Findings of Fact and Conclusions of Law

· In July 2004, the United States filed its Final Proposed Findings of Fact (2,543 pages; 15.5 MB) which detailed the defendants’ conduct over the past 50 years. The United States’ Final Proposed Findings of Fact begin with an Executive Summary (27 pages). The United States also filed its Final Proposed Conclusions of Law (Volume I) (175 pages), which set forth the legal grounds upon which the lawsuit is based, and its Final Proposed Conclusions of Law (Volume II) Regarding Defendants’ Affirmative Defenses (134 pages).

· In July 2004, defendants similarly filed final proposed findings of fact and conclusions of law.

Pretrial Motions

· By Order #182 (dated July 1, 2002), the Court denied Defendants’ Motion to Enforce Jury Demand. As a result the trial will be a bench trial, with Judge Kessler as the fact-finder, rather than a jury trial. (273 F. Supp. 2d 3 (D.D.C. 2002).)

· Summary Judgment: Sixteen motions for summary judgment in whole or in part (plus one cross-motion) have been filed and decided. Defendants filed ten summary judgment motions, all of which were denied, and the United States filed six Summary Judgment motions, several of which were granted in whole or in part. One motion and cross-motion were filed in 2002 and decided in May 2003. The remainder were filed in the summer and fall of 2003, and decided from February through August 2004.

· By Order #356, reconsideration denied by Order #399 (dated May 23, 2003), the Court denied Defendants’ Motion for Partial Summary Judgment on Advertising, Marketing, Promotion, and Warning Claims and granted, in part, the United States’ Cross-Motion for Partial Summary Judgment on Affirmative Defenses and dismissed a number of each defendant’s affirmative defenses. The Court held that the Federal Trade Commission did not have exclusive jurisdiction over advertising or marketing conduct and that the Federal Trade Commission Act and the Federal Cigarette Labeling and Advertising Act did not preclude the United States’ RICO claims. (263 F. Supp. 2d 72 (D.D.C. 2003).)

· By Order #501 (dated February 24, 2004), the Court denied Defendants’ Motion for Partial Summary Judgment on Claims that Defendants Advertised, Marketed, and Promoted Cigarettes to Youth and Fraudulently Denied Such Conduct. (304 F. Supp. 2d 60 (D.D.C. 2004).)

· By Order #509 (dated March 10, 2004), the Court granted in part and denied in part the United States’ Motion for Partial Summary Judgment Regarding Defendants’ Affirmative Defenses Asserting Violations of the Eighth Amendment (denied without prejudice) and the Ex Post Facto Clause (granted) of the United States Constitution and that the Decision in United States v. Carson Controls the Scope of Disgorgement in this Case (denied without prejudice). (310 F. Supp. 2d 58 (D.D.C. 2004).)

· By Order #510 (dated March 17, 2004), the Court denied Defendants’ Motion for Summary Judgment on the Grounds that the Government’s RICO Claims Violate Separation of Powers. (310 F. Supp. 2d 68 (D.D.C. 2004).)

· By Order #523 (dated April 7, 2004), the Court denied defendant Liggett Group, Inc.’s Motion for Summary Judgment (based on its alleged withdrawal from the RICO conspiracy). (316 F. Supp. 2d 1 (D.D.C. 2004).)

· By Order #540 (dated May 6, 2004), the Court denied the United States’ Motion for Partial Summary Judgment on Element that Defendants Have Caused Mailings and Wire Transmissions. (316 F. Supp. 2d 13 (D.D.C. 2004).)

· By Order #538 (dated May 6, 2004), the Court granted the United States’ Motion for Partial Summary Judgment Regarding Defendants’ Affirmative Defenses that the RICO Claims and Sought Relief are Prohibited by the Tenth Amendment and Separation of Powers and that Defendants are not Jointly and Severally Liable for any Disgorgement Ordered by the Court. (316 F. Supp. 2d 19 (D.D.C. 2004).)

· By Order #537 (dated May 6, 2004), the Court denied Defendants’ Motion for Summary Judgment on the Grounds that there is No Reasonable Likelihood of Future RICO Violations, finding that the existence of the Master Settlement Agreement (“MSA”) did not in itself eliminate reasonable likelihood of future RICO violations. (316 F. Supp. 2d 6 (D.D.C. 2004).)

· By Order #549 (dated May 21, 2004), the Court denied the Joint Motion of Defendants the Counsel for Tobacco Research (“CTR”) - U.S.A., Inc. and the Tobacco Institute (“TI”) for Summary Judgment. (319 F. Supp. 2d 9 (D.D.C. 2004).)

· By Order #550 (dated May 21, 2004), the Court denied Defendants’ Motion for Partial Summary Judgment Dismissing the Government’s Disgorgement Claim. (319 F. Supp. 2d 72 (D.D.C. 2004), appeal filed, No. 04-5252 (D.C. Cir.).) Defendants have filed an interlocutory appeal on the issue related to United States v. Carson. Oral argument in the U.S. Court of Appeals for the District of Columbia Circuit is scheduled for November 17, 2004.

· By Order #556 (dated May 28, 2004), the Court denied defendant British American Tobacco (Investments) Limited’s Motion for Summary Judgment. (321 F. Supp. 2d 82 (D.D.C. 2004).)

· By Order #586 (dated July 7, 2004), the Court granted the United States’ Motion for Partial Summary Judgment Dismissing Defendants’ Affirmative Defenses Asserting Res Judicata, Collateral Estoppel, Release, Accord and Satisfaction, and Mootness (based on the Master Settlement Agreement (“MSA”)). (327 F. Supp. 2d 1 (D.D.C. 2004).)

· By Order #588, amended by Order #624 (dated July 8, 2004; amended August 10, 2004), the Court denied Defendants’ Motion for Partial Summary Judgment with Respect to Government’s Nicotine Manipulation and Addiction Allegations. (___ F. Supp. 2d ___, 2004 WL 1948738 (D.D.C. July 8, 2004, amended Aug. 10, 2004).)

· By Order #589 (dated July 9, 2004), the Court denied Defendants’ Motion for Partial Summary Judgment on Claims That Defendants Suppressed the Development of Potentially Less Hazardous Cigarettes. (327 F. Supp. 2d 8 (D.D.C. 2004).)

· By Order #591 (dated July 15, 2004), the Court granted in part and denied in part the United States’ Motion for Partial Summary Judgment That Each Defendant is Distinct from the RICO Enterprise (granted), That a Defendant's Liability for RICO Conspiracy Does Not Require That Defendant To Participate in the Operation or Management of the Enterprise (granted), and That RICO Liability Extends to Aiders and Abettors (denied without prejudice to developing argument during trial). (327 F. Supp. 2d 13 (D.D.C. 2004).

Trial

· Trial commenced on September 21, 2004.

· On January 16, 2004, the Court issued a detailed Trial Procedure Order, Order #471, which, among other things, mandated procedures for written direct testimony, written testimony of adverse witnesses, and guidelines for the admission of prior testimony.

· On June 15, 2004, the United States filed a brief Trial Outline.

· In August 2004, the United States filed a detailed Factual Memorandum providing background information on anticipated U.S. trial witnesses, other individuals likely to be mentioned during the trial, cigarette brands and manufacturers, and organizations likely to be mentioned during the trial.

· Defendants filed a Trial Outline in July 2004 and Factual Memorandum in August 2004.

Direct Testimony

The written direct testimony of United States witnesses is posted below. The proposed written testimony of adverse witnesses called by the United States is not posted on this website, pursuant to procedural changes ordered by the Court, in Order #471A, dated October 1, 2004 and Order #680, dated October 7, 2004.

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Week 9
No non-adverse direct testimony filed this week.

Week 10

Week 11

Week 12

Week 13
No non-adverse direct testimony filed this week

Week 14

Week 15

Week 16

Week 17

Week 18

Week 19

Week 20
No non-adverse direct testimony filed this week

Week 21

Between weeks 22 and 26, Defendants presented their case.

Week 27

Week 28

Week 29

Post Trial

            The United States petitioned the United States Supreme Court for a writ of certiorari to review the judgment (396 F.3d 1190) of the U.S. Court of Appeals for the District of Columbia Circuit in this case.   The Question Presented in the cert petition is "whether the district court's equitable jurisdiction to issue 'appropriate orders' to 'prevent and restrain' violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964(a) encompasses the remedial authority to order disgorgement of illegally-obtained proceeds."

Petition for CertiorariAppendix to the Petition Reply in Support of Petition for Cert.

On June 27, 2005, the United States filed its post-trial Proposed Remedies Order. On August 15, 2005, the United States filed its post-trial Proposed Findings of Fact, which detail the trial evidence concerning defendants’ conduct over the past 50 years. The Executive Summary is 37 pages (and with full table of contents totals 68 pages, 463 KB). The full document totals 2,454 pages and has Adobe Acrobat bookmarks (redacted for public viewing, and incorporating errata as of August 16, 2005, the full document in non-Section 508 compliant form is 15.6 MB; the full document in Section 508 accessible form is 41.4 MB.)

The United States filed its post-trial legal brief August 24, 2005 (270 pages of text; full document 301 pages), with Adobe Acrobat bookmarks, 2.13 MB. The United States' post-trial reply brief was filed September 19, 2005, and is 100 pages, with Adobe Acrobat bookmarks, 814 KB.

  The Trial Court Decision

On August 17, 2006, the United States District Court for the District of Columbia issued its Final Opinion (Appendix I, Appendix II, Appendix III and Appendix IV) and Order. The legal citation is United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1 (D.D.C. 2006), aff’d in part & vacated in part, 566 F.3d 1095 (D.C. Cir. 2009) (per curiam), cert. denied, 561 U.S. ___, 130 S. Ct. 3501 (2010).

For helpful summaries of key aspects of Judge Kessler’s 2006 Final Decision, see The Verdict Is In: Findings From United States v. Philip Morris Collection (Public Health Law Center, William Mitchell College of Law).

The Appeal

Defendants and the United States filed notices of appeal.  On October 31, 2006, the U.S. Court of Appeals for the D.C. Circuit issued an order staying the judgment pending appeal.

On August 10, 2007, Joint Defendants/Appellants filed their Opening Brief. Defendant-Appellant Altria Group, Inc. filed a separate brief. Defendant-Appellant British American Tobacco (Investments) Limited also filed a separate brief. The United States’ opening brief was filed November 19, 2007.


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