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Akron Univ. School of Law

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Tuesday, October 14, 2008

Appeals Court Considers Overturning Tobacco Case

The Washington Post reports that a federal appeals court appeared skeptical Tuesday that a landmark tobacco judgment could be supported under racketeering laws, questioning whether cigarette makers had conspired to hide the dangers of smoking and would continue deceiving the public.  Hope Yen writes,

Gavel4During the three-hour oral argument, all three judges on the appeals panel queried whether the 2006 ruling by U.S. District Judge Gladys Kessler had fully laid out the evidence showing a group conspiracy as required under RICO, a law designed to combat mobsters and other organized criminals.

On several occasions, government attorneys seeking to convince the Court of Appeals for the D.C. Circuit to sign off on billions in financial penalties against the industry allowed that Kessler's 1,653-page ruling might not have spelled out the racketeering violations, or the remedies, as clearly as it should.

"We're asking the judge's order be enforced based on what the court meant," Justice Department lawyer Mark Stern said at one point. He spoke after attorneys for the tobacco industry criticized Kessler's ruling as "cobbling" together statements by cigarette makers that failed to "connect the dots" showing fraud.

"So you want us to enforce the decree not based on what it says but what it 'meant,'" responded a bemused Judge David S. Tatel, a Clinton appointee who has sided with the government in tobacco cases.

Chief Judge David B. Sentelle, a Reagan appointee, was critical of Kessler's finding that the tobacco industry had committed fraud by describing cigarettes as "light," "mild," or "low tar" and by suggesting they were safer than regular cigarettes.

Studies show such cigarettes are not safer because smokers tend to puff harder. Still, cigarette makers were simply following a Federal Trade Commission rule that allowed them to make factual statements about tar and nicotine content based on a specialized test, he said.

"They are basically making factually correct statements," Sentelle said.

Tatel noted that the Supreme Court was reviewing a separate tobacco case that also asks whether advertising of "light" cigarettes might be considered fraud in light of the FTC rule. He suggested the appeals court might want to wait for that decision before acting on at least portions of the current appeal.

The appeal could have wide implications for the tobacco industry, which is facing dozens of lawsuits around the country. A decision to uphold Kessler's landmark judgment could give plaintiffs fresh ammunition and spur new lawsuits by smokers and ex-smokers claiming they were fooled by deceptive marketing.

Kessler's ruling found cigarette makers liable for deception but said she lacked the authority to order them to pay financial penalties. The tobacco industry wants the judgment overturned, while the government and health groups such as the Campaign for Tobacco-Free Kids would like to see billions in fines levied against the industry to pay for a smoking cessation program and related efforts.

The ruling bars tobacco companies from labeling cigarettes as "low tar," "light," "ultra light" or "mild"; it also orders the companies to publish in newspapers and on their Web sites "corrective statements" on the adverse health effects and addictiveness of smoking and nicotine. Both those orders have been stayed pending the appeal.

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