United States v. Philip Morris USA Inc.
855 F.3d 321
D.C. Cir.2017Background
- In 2006 the district court found major cigarette manufacturers violated RICO by conspiring to mislead the public about smoking’s health effects and ordered corrective statements on five topics.
- This court in 2009 upheld a corrective-statement remedy under RICO and Zauderer but limited statements to purely factual, uncontroversial disclosures aimed at preventing future deception.
- On remand the district court drafted preambles that said a federal court had ruled the companies “deliberately deceived the American public,” which this court vacated in 2015 as exceeding RICO because the preambles disclosed past misconduct.
- The district court then proposed revised preambles: "A Federal Court has ordered [Defendants] to make this statement about [topic]." and included topic descriptions for Statements C and D.
- Defendants challenged the revised preambles as still impermissibly backward-looking and as violating the First Amendment; the district court approved them and this appeal followed.
- The D.C. Circuit affirmed the revised preambles in part (with a minor modification removing “Here is the truth”), held most topic descriptions permissible, but reversed as to the Statement C topic wording that explicitly described prior conduct and remanded for limited revision and entry of the corrective-statement order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether preambles exceed RICO’s remedial (forward-looking) authority | Government: preambles attribute statements to a court and introduce the topic, which helps prevent future deception | Defendants: phrases like “Here is the truth” and “A Federal Court has ordered” imply past deception and punishment, exceeding RICO | Remove “Here is the truth”; the modified preamble (“A Federal Court has ordered…to make this statement about [topic].”) complies with RICO |
| Whether the modified preambles violate the First Amendment | Government: Zauderer disclosure standard applies; the preambles are factual, uncontroversial and reasonably related to preventing consumer deception | Defendants: preambles are expressive, stigmatizing, and deserve heightened (Central Hudson) scrutiny | Zauderer governs; modified preambles are reasonably related to the government’s interest and are not unduly burdensome, so constitutional |
| Whether differentiation for ITG Entities makes preambles punitive/retroactive | Government: tailoring to reflect ITG was not a defendant preserves accuracy and is necessary | Defendants: different wording proves preambles are intended to taint defendants with past wrongdoing | Differentiation is permissible to preserve accuracy and does not render preambles backward-looking |
| Whether topic descriptions for Statements C and D exceed RICO | Government: topics describe attributes to prevent future deception; Statement D waived; Statement C phrasing is acceptable | Defendants: topic wording that references past sale/advertising is backward-looking and exceeds remedial scope | Statement D topic ok (waived challenge); Statement C wording implying past conduct impermissible — must be rephrased to focus on the product trait (e.g., harmfulness of low-tar/light cigarettes) |
Key Cases Cited
- Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) (disclosure mandates of factual, uncontroversial information reviewed under a relaxed First Amendment standard)
- Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980) (commercial-speech intermediate scrutiny test)
- United States v. Philip Morris USA Inc., 566 F.3d 1095 (D.C. Cir. 2009) (upholding corrective-statement remedy under RICO and Zauderer)
- United States v. Philip Morris USA Inc., 801 F.3d 250 (D.C. Cir. 2015) (vacating preambles that disclosed prior deception as beyond RICO remedial authority)
- United States v. Philip Morris USA Inc., 396 F.3d 1190 (D.C. Cir. 2005) (RICO civil remedies must be forward-looking)
- American Meat Inst. v. Department of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (discussing Zauderer scope and evidentiary requirements)
- National Ass'n of Manufacturers v. SEC, 800 F.3d 518 (D.C. Cir. 2015) (analysis of required governmental fit and burden under commercial-speech jurisprudence)
- Warner-Lambert Co. v. FTC, 562 F.2d 749 (D.C. Cir. 1977) (noting corrective notices can either attract attention or humiliate advertisers)