Skip to main content.

What A Recent RICO Court Order Means for Big Tobacco and the FDA

What A Recent RICO Court Order Means for Big Tobacco and the FDA

Picture of Stanton Glantz

On November 27, 2012, Federal Judge Gladys Kessler took another step in implementing the "remedies" in the landmark case the US Department of Justice brought against the major US cigarette manufacturers under the Racketeer Influenced and Corrupt Organizations (RICO) Act for creating an illegal "enterprise" to defraud the public about a wide range of issues related to smoking (including secondhand smoke) and health.

Sharon Eubanks, the lawyer who led the DOJ effort through the trial, and I wrote a book, Bad Acts, that gives the political and legal history of the case, which started in 1999 when Bill Clinton was president.

Judge Kessler ordered the tobacco company defendants – Altria, BATco, Brown & Williamson, Lorillard, Philip Morris and R.J. Reynolds – to publish "corrective statements" informing the public that the companies lied about the dangers of smoking, secondhand smoke, nicotine addiction, and the fact that "light" and "mild" cigarettes are just as dangerous as "regular" cigarettes and providing truthful information about these issues.

This is potentially a major development, particularly since the cigarette companies have tied the FDA’s efforts to improve cigarette warning labels up in court, a situation that is likely to persist for at least two more years.

These statements (listed below in full) are to be published on cigarette packages, on television and the company web sites. They have the potential to have important benefits in terms of public understanding, both of the truth about tobacco and, more important, the fact that the tobacco companies cannot be trusted.

At the same time, the tobacco companies are nothing if not well-practiced at skirting the law and pushing the system to its limits. As a result, their implementation of this order needs to be monitored carefully and aggressively.

Cigarette Packages

The fact that these corrective statements must be included on "onserts" affixed to the packages shipped for retail distribution during the first two weeks of every February, June and October (installments) for two years is probably the most important part of Judge Kessler’s order. During the course of the two years, each cigarette company must include each of the five corrective statements at least once.

Industry workaround:  Schedule production to reduce shipping of packages to be lower in the months that the outsets must be on the packages, produce the outsets using tiny hard-to-read type or are that are folded in a way that obscures the key messages.

Television Advertisements

Judge Kessler ordered each defendant company to produce one 15-second or longer television advertisement for each of the five corrective statements. The ads are to appear on one or more of the major television networks for one year at least once a week between 7:00PM and 10:00PM Monday through Thursday. Each of the five corrective statements ads must be run at least ten times during the one-year period.

Industry workaround:  Produce ads with low production values that are boring to look at with a monotone announcer and the messages in the kind of hard-to-read type that ensures that people will not look at it. Include distracting music or colors that shift the emotional message (like drug companies do when reciting the side effects in direct-to-consumer drug ads).

Company Websites

The corrective statements have to be posted on company websites until the Court concludes that the companies are no longer at risk of continuing to deceive the public, a date which has not yet been specified.

Industry workaround:  Bury the content deep in the website using hard to read type (like dark gray type on a light gray background).

Newspaper Advertisements 

Each of the defendants must purchase a one-time full page advertisement in the first section of the Sunday edition of thirty three specified newspapers, including several with national circulations like the Wall Street Journal and USA Today. In the several Spanish language publications, the ad must be in Spanish. The ads must contain the text of all five of the Corrective Statements and identify the defendant making the corrective statements. The court set out a publication schedule for each individual defendant so that there is no overlap in such ads.

Industry workaround:  Prepare ads that are boring and hard to read. The fact that these newspaper ads are only required to be run once is also a severe limitation given the ubiquitous presence of cigarette advertising.

Retail Point of Sale

The original Final Judgment and Remedial Order also included retail point-of-sale display requirements for the corrective statements which could prove to be very important. The part of the Final Judgment and Remedial Order was vacated by the Court of Appeals out of concern that it would hurt retailers who were "innocent third parties." Given the ubiquity of point-of-purchase pro-tobacco advertising, requiring corrective statements to be posted at the point of sale is important for seeing that smokers and potential smokers are provided adequate information. The Court of Appeals sent this part of the order back to Judge Kessler (remanded it) "for the district court to evaluate and ‘make due provisions for the rights of innocent persons,’ either by abandoning this part of the remedial order or by crafting a new versions reflecting the rights of third parties." The issue has been fully briefed and should be resolved in the near future.

It is important that some kind of meaningful point-of-purchase corrective statements be maintained, perhaps with Judge Kessler ordering the defendant cigarette companies to reimburse sellers for the space that the corrective statements occupy (something that the companies do for point-of-sale advertising now) and perhaps even the resulting lost sales.

Dealing with Implementation Issues

Judge Kessler recognized that the media listed above that were selected in 2006 in her original Final Judgment and Remedial Order may no longer meet the criteria adopted then of structuring "a remedy which uses the same vehicles which cigarette companies themselves historically used to promulgate false smoking and health messages" because "the types of media in which Defendants convey commercial messages of this nature have changed dramatically." Judge Kessler ordered the cigarette companies to meet with the Department of Justice and try to agree on that and a number of other implementation issues of the details of the presentation of the Corrective Statements aurally and visually. If the parties are unable to agree, Judge Kessler will make the decisions for them.

Given that no one knows better how to design effective – and, so ineffective – advertising than the cigarette companies, it is important that the Department of Justice, as well as the public health interveners, build a strong record to justify clear and effective corrective statements.

Implications for the FDA

These warnings, which are well-supported by a massive litigation record that has been upheld on appeal, are strong and comprehensive. Indeed, in her carefully prepared ruling Judge Kessler provided detailed citations to support every one of these statements. The FDA would do well to initiate a new second generation set of warnings based on Judge Kessler’s corrective statements. These statements have already withstood legal scrutiny and should be put to broader use.

The FDA’s lawyers will probably resist such an idea on the grounds that they are still defending the FDA’s current set of warnings, but, given the reality that developing and defending each set of warnings takes years to develop, pass through the rule making process, then defend in court, it is not too early to start developing the next generation of warnings regardless of how the litigation against the current warning turns out over the next year or two. If the FDA prevails in the current litigation, the new labels would be in process in time to be available when the current labels wear out. If the FDA loses, there will be another set of labels ready to enter the industry’s legal gauntlet.

Political Implications

The cigarette companies remain aggressive and wealthy political players, who have a history of generous campaign contributions, including $3.7 million in the 2012 election just at the federal level. This money includes $89,000 to House Speaker John Boehner in 2012 (the largest Congressional recipient) and even $26,612 to Barack Obama. (Given the tobacco companies’ long history of staying out of sight, one can only guess how much "dark money" is being funneled through "public welfare" groups empowered by Citizens United.)

It will be interesting to see if the higher profile that the companies are forced to take as racketeers will make politicians at all levels less willing to carry their water at the expense of public health.

The Ruling

The documents associated with this ruling are Decision and Order, Text of Statements as Ordered, Implementation Details, and Text of Statements with Full Citations. Other key filings and rulings associated with this case are available here.

One Factual Error

Judge Kessler ordered the companies to publicize the statement that "Secondhand smoke kills over 3,000 Americans each year." The 3,000 number is for lung cancer only. Secondhand smoke kills another 50,000 from heart disease. Hopefully the DOJ can work with Judge Kessler to correct this number.

CORRECTIVE STATEMENTS

A. Adverse Health Effects of Smoking

A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about the health effects of smoking, and has ordered those companies to make this statement. Here is the truth:

  • Smoking kills, on average, 1200 Americans. Every day.
  • More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined.
  • Smoking causes heart disease, emphysema, acute myeloid leukemia, and cancer of the mouth, esophagus, larynx, lung, stomach, kidney, bladder, and pancreas.
  • Smoking also causes reduced fertility, low birth weight in newborns, and cancer of the cervix and uterus.

 

B. Addictiveness of Smoking and Nicotine 

A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about the addictiveness of smoking and nicotine, and has ordered those companies to make this statement. Here is the truth:

  • Smoking is highly addictive. Nicotine is the addictive drug in tobacco.
  • Cigarette companies intentionally designed cigarettes with enough nicotine to create and sustain addiction.
  • It's not easy to quit.
  • When you smoke, the nicotine actually changes the brain - that's why quitting is so hard.

 

C. Lack of Significant Health Benefit From Smoking "Low Tar," "Light," "Ultra Light," "Mild," and "Natural" Cigarettes

A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public by falsely selling and advertising low tar and light cigarettes as less harmful than regular cigarettes, and has ordered those companies to make this statement. Here is the truth:               

  • Many smokers switch to low tar and light cigarettes rather than quitting because they think low tar and light cigarettes are less harmful. They are not.
  • "Low tar" and filtered cigarette smokers inhale essentially the same amount of tar and nicotine as they would from regular cigarettes.
  • All cigarettes cause cancer, lung disease, heart attacks, and premature death - lights, low tar, ultra lights, and naturals. There is no safe cigarette.

 

D. Manipulation of Cigarette Design and Composition to Ensure Optimum Nicotine Delivery

A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about designing cigarettes to enhance the delivery of nicotine, and has ordered those companies to make this statement. Here is the truth:

  • Defendant tobacco companies intentionally designed cigarettes to make them more addictive.
  • Cigarette companies control the impact and delivery of nicotine in many ways, including designing filters and selecting cigarette paper to maximize the ingestion of nicotine, adding ammonia to make the cigarette taste less harsh, and controlling the physical and chemical make-up of the tobacco blend.
  • When you smoke, the nicotine actually changes the brain – that’s why quitting is so hard.

 

E. Adverse Health Effects of Exposure to Secondhand Smoke

A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about the health effects of secondhand smoke, and has ordered those companies to make this statement. Here is the truth:

  • Secondhand smoke kills over 3,000 Americans each year.
  • Secondhand smoke causes lung cancer and coronary heart disease in adults who do not smoke.
  • Children exposed to secondhand smoke are at an increased risk for sudden infant death syndrome (SIDS), acute respiratory infections, ear problems, severe asthma, and reduced lung function.
  • There is no safe level of exposure to secondhand smoke.

Richard Barnes assisted in the production of this article.

Stanton Glantz is the American Legacy Foundation Distinguished Professor of Tobacco Control at the University of California-San Francisco. Read his blog here.

Photo Credit: Matt Trostle via Flickr

Related Posts: 

Tobacco Industry's Growing Power: Bad Acts, Lessons Learned, and New Tricks

Blowing Smoke: What's Happening with Tobacco Control Programs in Your State?

Blowing Smoke: Slashing Tobacco Prevention Money in Your State

Covering Tobacco: Q&A with the AP's Michael Felberbaum

Photo Credit: Matt Trostle via Flickr

Taking a Chance with Chantix

Leave A Comment

Announcements

Do the competing bills put forward by House Speaker Nancy Pelosi and Sens. Charles Grassley and Ron Wyden have a chance of becoming law? This webinar will give an overview of the proposals and weigh in on the future of the battle to curb soaring drug prices. Sign-up here!

CONNECT WITH THE COMMUNITY

Follow Us

Facebook


Twitter

CHJ Icon
ReportingHealth