United States v. Philip Morris USA, Inc.
783 F. Supp. 2d 23
D.D.C.2011Background
- U.S. sued BATCo under RICO; motions to compel compliance with Final Order #1015 and for reconsideration
- Court previously held BATCo liable under RICO for participating in enterprise defrauding smokers
- Morrison v. National Australia Bank Ltd. raised extraterritoriality presumption and rejected 'effects' test
- BATCo argues Morrison invalidates the basis for its RICO liability; U.S. argues Morrison does not apply to RICO
- Court evaluates Rule 60(b)(5) and prospectivity of Order #1015 in light of Morrison
- Court concludes 1015’s prospective relief is no longer equitable and partially preserves costs obligation
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Morrison apply to RICO extraterritoriality? | BATCo relies on Morrison; Government argues Morrison limited to Exchange Act | Morrison governs all statutes lacking clear extraterritoriality indication | Morrison applies to RICO |
| Which rule governs reconsideration—Rule 60(b)(5) or Rule 54(b)? | 60(b)(5) appropriate for intervening law changes; 54(b) misapplied | Rule 54(b) should govern because not final adjudication of all claims | Rule 60(b)(5) governs |
| Is Order #1015's relief still equitable prospectively after Morrison? | Prospective relief remains valid under existing framework | Morrison undermines basis for extraterritorial liability and Order #1015 | Prospective relief no longer equitable |
| What is BATCo's continued obligation under Order #1015? | BATCo should continue to comply with costs allocation | Costs provision should be unaffected or limited by reconsideration | BATCo must contribute to costs; other provisions terminated |
Key Cases Cited
- Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (Supreme Court 2010) (presumption against extraterritoriality applies to all statutes)
- Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29 (2d Cir. 2010) (RICO extraterritorial reach not shown; substantial domestic effects not required)
- Cedeno v. Intech Group, Inc., 733 F. Supp. 2d 471 (S.D.N.Y. 2010) (extraterritorial reach not presumed; Morrison controls)
- Philip Morris v. United States, 477 F. Supp. 2d 191 (D.D.C. 2007) (RICO elements with international aspects recognized)
- Twelve John Does v. District of Columbia, 841 F.2d 1133 (D.C. Cir. 1988) (prospective application standard for Rule 60(b)(5))