Justices turn down U.S. tobacco appeal

Push for billions in damages is set back

October 18, 2005|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- In the latest setback to the federal government's case against the tobacco industry, the Supreme Court refused yesterday to hear an appeal of a decision that sharply limited the monetary damages the industry can be required to pay if the government prevails in its legal theory that the industry has been run as a "racketeering enterprise" that falsely promoted its product as harmless.

A nine-month trial of the government's civil lawsuit ended in June in federal district court here. Judge Gladys Kessler is expected to rule in the coming months on the tobacco companies' liability and, if she finds them liable, on the remedy to which the government is entitled.

It was the remedy question that was before the Supreme Court yesterday. The government filed its lawsuit in 1999, seeking to recoup what it considered to be the tobacco industry's ill-gotten gains, estimated at $280 billion.

But in February of this year, a panel of the federal appeals court here ruled that the Racketeer Influenced and Corrupt Organizations Act, the law known as RICO that is the basis for the lawsuit, does not permit the "backward-looking remedy" of disgorging illegally obtained proceeds. Rather, the appeals court said, Congress had intended only "forward-looking orders" that would prevent continuing or future violations of the law.

In its Supreme Court appeal, the solicitor general's office said the appeals court had "incorrectly decided an issue of surpassing importance in an exceptionally important case."

As is their custom, the justices gave no indication of why they rejected the appeal, United States v. Philip Morris USA Inc. But the tobacco industry had argued that it would be a waste of judicial resources to decide the remedy issue in advance of an actual verdict on liability.

The government can bring the issue back to the Supreme Court on appeal after a final judgment in the case. And because the case is civil rather than criminal, the government can appeal on liability as well if Kessler rules in favor of the industry.

In its Supreme Court brief, the tobacco industry was dismissive of what it called a "dressed-up product liability dispute." Seeking to minimize the importance of the issue, the industry said that the government had sought this type of remedy only a few times in the 35 years since the RICO statute became law.

The government's legal theory is that the tobacco industry has used mail fraud and wire fraud to perpetrate a deception lasting decades about the nature of its products.

The solicitor general's office told the Supreme Court that the usual caution against deciding an appeal before a case had concluded should not apply in this instance. Immediate review was important, the government's brief said, because as the case goes forward without it, Kessler will be required "to fashion a remedy based on fundamentally mistaken principles of law."

In other developments at the court yesterday:

The full court vacated an order that Justice Clarence Thomas had issued late Friday that had prevented a Missouri prison inmate from obtaining an abortion, to which a federal district judge had found she had a constitutional right.

In a brief unsigned opinion, the court said there is no constitutional right to a jury trial to determine whether a murder defendant is retarded and therefore ineligible for the death penalty.

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