The real last legal hurdle for Altria (MO) ought to be finally settled this fall /spring.
U.S. v. Philip Morris: Topping the list is United States v. Philip Morris, an appeal of the decade-long civil racketeering case against the tobacco industry. Philip Morris, now known as Altria Group, is challenging the 2006 verdict which found that it and six other Big Tobacco defendants conspired for years to deceive the public about the health risks of tobacco. In addition to upholding the lower-court verdict, the government is asking the court to order the tobacco industry to pay more than $12 billion to fund a smoking cessation program and to fund an educational, counter-marketing campaign. Miguel Estrada of Gibson Dunn and Michael Carvin of Jones Day plan to argue the case on behalf of Altria.
What happened?
After several years of pretrial activity, during which all of the government’s theories except for the civil RICO claims were dismissed, a federal judge began hearing trial testimony in September 2004. During trial, the U.S. Court of Appeals issued a major ruling disallowing much of the relief (disgorgement of profits) sought by the government.
On August 17, 2006, U.S. District Court Judge Gladys Kessler ruled that PM USA, Altria Group and the other cigarette companies violated civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO). The court refused to order the companies to pay $10 billion for a smoking cessation program or $4 billion for a “counter-marketing” youth advertising program sought by the government but found, among other things, the companies must remove descriptors such as “light” or “ultra light” from cigarette packages and publish statements concerning smoking and health issues.
On October 31, 2006, the U.S. Circuit Court of Appeals for the District of Columbia stayed implementation of Judge Kessler’s remedies order until the companies are able to appeal the merits of the case. In the interim, all remedies ordered in the case have been stayed. The defendants are now asking the appeals court to set aside the ruling in its entirety. The Government is asking for the $12 billion in damages they sought to be reinstated.
What will happen?
When you consider in 1997 Attorney General Janet Reno declared at a Congressional hearing that “the federal government does not have an independent cause of action” against the tobacco industry for violations of Medicare or Medicaid statutes, one has to wonder why we are even at this point.
Expect the decision to be upheld, the gov’t is grasping desperately at straws on this one.
Disclosure (“none” means no position):Long MO
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