A federal appeals court today rejected the government’s attempt to force tobacco companies to forfeit $280 billion in profits.
The ruling came in response to a request by the tobacco industry to eliminate the past-profit claim from the ongoing Department of Justice case against the industry, which is currently being heard before Judge Gladys Kessler of the U.S. Court of Appeals for the District of Columbia.
The lawsuit had sought the $280 billion penalty under the civil Racketeer Influenced and Corrupt Organizations Act (RICO) for what the government termed a past conspiracy by the major tobacco manufacturers to cover up the health risks associated with cigarette smoking.
The district court case will still proceed, but the major premises have been undermined. RICO statutes require that the government prove companies engaged in fraudulent behavior in the past and that such behavior is likely to continue in the future.
We, along with most observers, had expected this appeal to succeed. We consider the remainder of the Department of Justice case to also be at risk since, with the signing of the Master Settlement Agreement in 1998, the tobacco industry had agreed to strong restrictions on marketing cigarettes and has taken other actions to educate the public on the harmful effects of smoking. The Department of Justice case has been underway since September 2004 and is expected to continue through the spring.
