164 F. Supp. 3d 121
D.D.C.2016Background
- The United States brought a RICO action against major cigarette manufacturers; after a 9-month bench trial the district court (2006) found defendants ran an illegal racketeering enterprise and ordered remedial "corrective statements."
- The D.C. Circuit affirmed most of the remedial order in 2009, endorsing corrective statements as commercial speech permissible under the First Amendment to prevent future deception, but vacated retail-display publication and later limited one preamble sentence.
- The district court drafted five corrective statements (topics: health effects, addictiveness/nicotine, "low tar/light" claims, design/manipulation for nicotine delivery, and secondhand smoke) and revised preambles after appellate guidance.
- Defendants challenged the revised preambles, the corrective-statement wording, and proposed modifications to the parties' Consent Order governing implementation (notably the "Trigger Date").
- The court concluded the Government's and Intervenors' revised preambles complied with the D.C. Circuit's remand, rejected defendants' attempts to reopen substantive wording, and adopted the Government's corrective statements and limited changes to implementation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the corrective statements and revised preambles comply with the D.C. Circuit remand and First Amendment | Government/Intervenors: revised preambles remove references to past deception, state why statements are being made, and are factual commercial speech allowed under Zauderer | Defendants: preambles still convey past deception; wording exceeds RICO remedial authority and violates First Amendment | Court: Adopted Government/Intervenors' revisions; preambles now comply with appellate guidance and Zauderer standard; defendants' First Amendment objections largely waived or foreclosed |
| Whether defendants may relitigate or substantially rewrite corrective-statement content approved on appeal | Government: appellate rulings accepted the five topics; parties should not reopen settled content | Defendants: seek wholesale revisions and re-litigation of the statements | Court: Rejected defendants' attempt to return to "drawing board"; preserved statements approved by D.C. Circuit except as remanded |
| Whether the Consent Order implementing relief can be unilaterally modified now (esp. "Trigger Date") | Government: requests limited modifications (including making Trigger Date the date of this Order) to permit prompt implementation | Defendants: modifications inconsistent with negotiated Consent Order that forbids unilateral changes; Trigger Date should await exhaustion of all appeals | Court: Emphasized Consent Order prohibits unilateral changes; neither party may unilaterally alter it now; court will not adopt defendants' proposed unilateral changes |
| Whether other cited First Amendment precedents (e.g., American Meat) control here | Government: distinguishes American Meat as involving purely factual product-trait information, whereas corrective statements here aim to prevent future RICO violations by revealing "previously hidden truth" | Defendants: rely on American Meat to challenge content/standard | Court: Distinguished American Meat and applied Zauderer as appropriate standard for commercial corrective disclosures in this RICO remedial context |
Key Cases Cited
- Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985) (standard for compelled commercial disclosures of factual, uncontroversial information)
- U.S. v. Philip Morris USA, Inc., 449 F. Supp. 2d 1 (D.D.C. 2006) (district court findings that defendants operated an illegal RICO enterprise)
- U.S. v. Philip Morris USA, Inc., 566 F.3d 1095 (D.C. Cir. 2009) (affirming remedial approach and holding corrective statements qualify as commercial speech to prevent future deception)
- U.S. v. Philip Morris USA, Inc., 801 F.3d 250 (D.C. Cir. 2015) (review of corrective statements; remand for revision of one preamble sentence)
- American Meat Inst. v. U.S. Dept. of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (disclosure cases discussing informational, product-trait disclosures; distinguished here)
- United States v. W. Elec. Co., 894 F.2d 430 (D.C. Cir. 1990) (court may alter consent orders to conform to changed circumstances)
- Local No. 93, Int'l Ass'n of Firefighters v. City of Cleveland, 478 U.S. 501 (1986) (court may not enter a consent decree imposing obligations on a party that did not consent)
- Pigford v. Veneman, 292 F.3d 918 (D.C. Cir. 2002) (modifications to judgments or consent decrees must be suitably tailored and preserve the parties' bargain)