Big tobacco racketeering case finally gets its day in court

September 21, 2004|By Gail Gibson | Gail Gibson,SUN NATIONAL STAFF

When the Justice Department's massive lawsuit against the tobacco industry goes to trial today, the most striking aspect of the case might not be the whopping $280 billion in potential damages the government is seeking or its novel decision to pursue the cigarette makers under racketeering laws originally designed to bring down the Mafia.

Instead, what stands out to observers on both sides of the nation's long-running tobacco wars is that the case has made it to trial at all.

Brought late in President Bill Clinton's final term, the now five-year-old lawsuit was widely expected to face sudden death under a Republican administration.

One of President Bush's top advisers, Karl Rove, had worked as a consultant to Philip Morris, and the tobacco companies had been steady contributors to GOP candidates.

Bush raised doubts about the federal case during the 2000 campaign, saying at one point: "I think we've had enough suits." And by summer 2001, there were signs that the Justice Department under Attorney General John Ashcroft - who had opposed the lawsuit the previous year as a Republican senator - was pushing for a settlement.

However, the case did not die, a sign of how much has changed in tobacco politics.

Government lawyers are expected to deliver opening statements today in U.S. District Court in Washington, and industry lawyers will lay out their defense on Wednesday - kicking off a trial that marks the largest civil racketeering case in history and could threaten to bankrupt the industry.

The `payback'

"We were surprised and relieved, absolutely," said Richard A. Daynard, a long-time public health advocate who serves as president of the Tobacco Control Resource Center and is a law professor at Northeastern University in Boston. "I was there with all the other cynics when the new administration came in, thinking this was going to be their first payback."

The government has faced setbacks. When Justice Department lawyers brought the case under then-Attorney General Janet Reno in 1999, it was aimed at recovering the federal costs of treating sick smokers - just as the state attorneys general had done through the industry's landmark $206 billion settlement with 46 states in 1998.

U.S. District Judge Gladys Kessler dismissed that claim early in the case.

At issue now is whether the tobacco industry launched a criminal enterprise in the early 1950s when they formed jointly-funded research operations that government lawyers contend existed only to spread misinformation and confusion about the health risks from cigarettes and the addictive nature of smoking.

"What will come out in the case is how early the tobacco industry knew their product was addictive and harmful, and how much they tried to confuse the public," William V. Corr, executive director the Washington-based Campaign for Tobacco-Free Kids, said in an interview yesterday.

Justice Department lawyers are seeking to strip the companies of $280 billion in profits they contend were gained illegally through the alleged conspiracy.

That amount - more than half this year's projected budget deficit of $411 billion - would likely go to the general fund for Congress to allocate.

Government lawyers also want a judge to impose tougher controls on how the cigarette makers market their product, banning full-color advertising, for instance, or prohibiting retail promotions.

The case, which will be heard by Kessler without a jury, is a difficult one for U.S. lawyers who have spent five years and $135 million preparing for trial. Government lawyers have identified more than 200 witnesses, 20,000 exhibits and 500 transcripts of prior testimony from pre-trial jockeying that could be introduced.

A government win on all fronts could devastate the industry.

"There's no company in this country that has $280 billion in the bank," William S. Ohlemeyer, vice president and associate general counsel of Philip Morris USA's parent company, Altria Group Inc., told reporters yesterday.

However, the industry has launched an aggressive and confident defense.

It is appealing Kessler's ruling that would allow the government to seek the $280 billion, contending that seizing profits in such a way is not permitted under civil racketeering laws. An appeals court will hear arguments on that issue in November.

On defense

More broadly, defense lawyers contend in court records that the industry-sponsored research was legitimate and that government regulators knew about the companies' efforts from one of the very first meetings between the chief executives of the largest cigarette manufactures, at the Plaza Hotel in Manhattan in 1953.

The companies notified government officials in writing about the meetings, according to court filings, to ensure they did not violate anti-trust laws.

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