Tobacco industry avoids huge penalty
WASHINGTON – After eight months of courtroom argument, Justice Department lawyers upset a landmark civil racketeering case against the tobacco industry Tuesday by asking for less than 8 percent of the expected penalty.
As he concluded closing arguments in the 6-year-old lawsuit, Justice Department lawyer Stephen Brody shocked tobacco company representatives and anti-tobacco activists by announcing the government would not seek the $130 billion a government expert had testified was necessary to fund smoking cessation programs. Instead, Brody said, the Justice Department would ask tobacco companies to pay $10 billion over five years to help millions of Americans quit smoking.
Before it was cut, the cessation program was the most significant financial penalty still available to the government as part of its litigation, which had been the largest civil racketeering and conspiracy case in U.S. history. The government contended that six tobacco companies engaged in a 50-year conspiracy to defraud and addict smokers, then conceal the dangers of cigarettes.
“We were very surprised,” said Dan Webb, attorney for the Altria Group’s Philip Morris USA and coordinating attorney in the case. “They’ve gone down from $130 billion to $10 billion with absolutely no explanation. It’s clear the government hasn’t thought through what it’s doing.”
The Justice Department offered little explanation for the figure. Associate Attorney General Robert D. McCallum Jr. and members of the trial team declined to answer questions as the court session ended. In 2001, then-Attorney General John Ashcroft tried to settle or shelve the government’s racketeering case against the industry before a public outcry forced its revival.
“It feels like a political decision to take into consideration the tobacco’s company’s financial interest rather than health interests of 45 million addicted smokers,” said William Corr, director of Campaign for Tobacco-Free Kids. “The government proved its case, but the levels of funding are a shadow of the cessation treatment program that the government’s own expert witness recommended.”
Sources and government officials close to the case said the trial lawyers wanted to request $130 billion for smoking cessation programs, but were pressured by leaders in the attorney general’s office, particularly McCallum, to make the cut. Arguments in the Justice Department continued behind the scenes through Tuesday morning, according to the sources.
When the case began in 2004, the government sought to force the tobacco industry to pay $280 billion in allegedly ill-gotten profits. But in February, a federal appeals court ruled the administration could not seek that penalty.
The strength of the government’s case hinged on internal tobacco company documents. The government began its case by showing on a projection screen the written memos of tobacco executives and scientists as they described their plans to keep customers in the dark about whether their habit was addictive or dangerous and to encourage young people to smoke.
Facing those documents in another suit, the tobacco industry in 1998 agreed to pay $246 billion to settle a suit filed by states to recover costs for smokers’ medical treatment.