Justices may wade into epic tobacco battle

On June 28, the first day of Elena Kagan’s Senate confirmation hearing, the Supreme Court may make its own headlines by agreeing to hear some or all of a titanic dispute over government efforts to punish the tobacco industry for decades of deception about the health effects of cigarettes.

The dispute, laid out in seven separate certiorari petitions and a welter of opposition and amicus curiae briefs, will be considered by the justices at their closed conference June 24, which means a likely – but not certain – announcement the following Monday of whether the Court is granting review for argument in the fall.

“Some law clerk at the Supreme Court is probably pulling his hair out as we speak,” said Jones Day partner Michael Carvin, who represents R.J. Reynolds Tobacco Company and Brown & Williamson Holdings, Inc. before the Supreme Court. “It’s like a jigsaw puzzle.”

On the other side, lawyer Howard Crystal calls the set of cases pending before the high court “incredibly important” as a way to redress the industry’s “long, long history” of defrauding the public and manipulating nicotine content to keep smokers addicted. Crystal is partner in D.C.’s Meyer Glitzenstein & Crystal, which represents Tobacco-Free Kids Action Fund and other health advocates in the cases.

The dispute contains echoes of the Court’s controversial Citizens United v. Federal Election Commission decision Jan. 21 giving corporations First Amendment protection for unlimited campaign expenditures.

Tobacco company briefs cite the Citizens United decision for the proposition that they too deserve First Amendment protection for statements they made about the health effects of tobacco, statements that helped form the basis of the government suit under the Racketeer Influenced and Corrupt Organizations (RICO) law. In many of the tobacco company briefs, the First Amendment argument is the leading issue.

Kagan’s championing of restrictions on corporate campaign expenditures as solicitor general in the Citizens United case will almost certainly be a hot topic of discussion at her Senate confirmation hearing. Papers released by the Clinton Library in recent weeks also indicate that Kagan, in a former role as a White House adviser to President Clinton, played a key role in crafting tobacco legislation in the 1990s. When that effort collapsed, the racketeering suit was filed in 1999, ultimately leading to the high court’s current review of the case.

But those Kagan connections do not explain why, if she is confirmed as a justice, she will almost certainly recuse from consideration of the tobacco cases, assuming the Court grants review in some or all of them. Her recusal is guaranteed because her name is on the government’s petition in one of the seven pending cases, United States v. Philip Morris, filed in February. All filings since she was nominated to the high court in May carry the name of Acting Solicitor General Neal Katyal, but that won’t likely save her from having to recuse. Miguel Estrada of Gibson, Dunn & Crutcher, represents Philip Morris.

The First Amendment issue raised by the tobacco industry was on the Court’s docket in 2003, in Nike v. Kasky. In that case, the shoe company claimed it could not be punished under fraud laws for statements it made in public debate over its labor practices. That case was dismissed without a decision for procedural reasons. Now tobacco companies press the same argument, raising the specter of the government, in future cases, punishing those who state contrarian views on climate change, for example, or the BP oil spill.

“This is an enormously powerful tool for the government,” said Carvin. “If you knock out corporations from public debate, that’s pretty frightening stuff.” Carvin also invoked the Noerr-Pennington doctrine, which protects some corporate speech in legislative and regulatory matters. The Washington Legal Foundation and the Chamber of Commerce of the United States have also filed briefs emphasizing the First Amendment issue among others.

But Crystal asserts that “you don’t have a First Amendment right to commit fraud.” Carvin replies that “yes, you can stop someone from saying that his cereal stops cancer,” but the kind of statements at issue in the tobacco cases amount to “classic public policy speech” that deserve First Amendment protection.

The other key issues before the Court in the various cases are whether corporations can ever be viewed as part of an “association-in-fact” enterprise under RICO, and whether the remedies allowed under RICO can include divestment and disgorgement of the companies’ ill-gotten gains. The U.S. Court of Appeals for the D.C. Circuit ruled those remedies are not available.

Lower courts are split on the disgorgement issue, says Crystal, but he argues that Supreme Court precedent clearly stands for courts’ “broad equitable authority” to order such remedies. Kagan’s brief in February said the government was seeking disgorgement of $280 billion from the industry for its fraudulent schemes. “Disgorgement would bankrupt the industry,” says the Washington Legal Foundation‘s Richard Samp.

Another issue that is being raised by only one tobacco company, British American Tobacco Limited, is the extraterritorial reach of the RICO statute. The company, represented by Alan Untereiner of Robbins, Russell, Englert, Orseck, Untereiner & Sauber, argues the D.C. Circuit improperly abandoned the presumption that U.S. laws do not apply to activity outside the United States. That argument has drawn the support of several amicus curiae briefs including one from KBR, the engineering and construction firm that is facing a RICO case involving foreign conduct. Stephen Kinnaird of Paul, Hastings, Janofsy & Walker, represents KBR.

Why did the companies file so many separate petitions before the Supreme Court? The lower court rulings in the tobacco cases, says Carvin, “provided such a target-rich environment in terms of mistakes that we couldn’t contain it all in one brief.” In addition, by filing separately, the companies could overcome the 9000-word limit on each petition. “Why not raise more issues if you can get five times 9,000 words instead of just 9,000 words,” says adversary Howard Crystal.

As another sign of the volume of words in the cases, the government sought and received permission to file one reply to the tobacco company briefs of up to 20,000 words, which ran 72 pages long.

Carvin said the companies did not formally coordinate their pleadings to avoid overlap, but he said “We chatted.” Asked who is the lead lawyer in the cases before the Court, Carvin said crisply, “We are all equals.”

Tony Mauro can be contacted at [email protected].

TOBACCO CASES BEFORE THE SUPREME COURT