From Eric Lindblom, TobaccoFreeKids elindblom@TobaccoFreeKids.org
Media reports follow
As you may know, two weeks ago the U.S.
Department of Justice, in closing
arguments in its lawsuit against the tobacco companies,
cut $120 billion from the cessation remedy it had requested.
Several newspapers subsequently reported that political appointees in
the Justice Department ordered the tobacco legal team to take this action
despite their objections that it would be viewed as political interference.
Below
is an update on the latest information around the case, as well as a brief
summary of the events of the last two weeks.
We have also included a series of clips at the very end of this email.
In
the latest development, Judge Kessler earlier today (June 20th)
called the Department of Justice attorneys, as well as the tobacco industry
attorneys and CEOs into her office for a closed meeting.
While we do not know the details of the conversation, Judge Kessler
wrote in an order that "...the
Court scheduled a routine, informal discussion with the parties urging them,
once again, to consider the advantages of settling this case rather than the
risks of litigating it. No legal decisions were made and no legal argument was
presented."
In
response to today's developments, the Campaign for Tobacco-Free Kids issued
the following statement:
"Whether
or not a settlement in the U.S. Department of Justice lawsuit against the
tobacco companies might be appropriate at the right time and under terms that
protect the American public, the Justice Department should not settle this
case now while it is under a cloud of political interference or under the weak
terms proposed by the government in its closing argument.
The government has presented a very strong case against the tobacco
companies and should not back away from the strong remedies recommended by its
own expert witnesses."
While
the primary attention these last two weeks has been the cessation remedy, we
remain steadfast in urging the Administration to continue to insist on the
strong remedies recommended by its own expert witnesses, including fundamental
reform of the industry's harmful marketing practices; the establishment of
well-funded, sustained, nationwide programs to prevent kids from smoking and
help smokers quit; and financial penalties against the tobacco companies
should they continue to addict our children.
What
You Can Do
There
should be no political interference in this trial, and the government should
seek the strongest possible remedies, including the full $130 billion
cessation program recommended by its expert witness.
Background
Nearly
six years after first filing the case and nearly nine months after the trial
started, on June 7th, the U.S. Department of Justice presented
closing arguments in its racketeering lawsuit against the tobacco companies.
The
government presented a strong case that the major tobacco companies have
engaged in a 50-year scheme to mislead the public about the health risks and
addictiveness of smoking and market to children.
The government also listed remedies it is seeking, including additional
marketing restrictions, industry funding of national prevention and cessation
programs, public disclosure of scientific data, extension of existing document
disclosure requirements, prohibition on brand descriptors like
"light" and "low-tar," financial penalties should the
industry fail to achieve established targets for reducing youth smoking rates,
and the appointment of monitors to ensure industry compliance with any
remedies.
However,
in a troubling move, in its closing arguments, the government sought just a
fraction of the funding its own expert witness had recommended for smoking
cessation, and it failed to state how much funding it is seeking for a
prevention public education campaign. The
expert cessation witness, Dr. Michael Fiore of the University of Wisconsin,
recommended a 25-year, $130 billion cessation program, but the government
asked for only a 5-year, $10 billion program.
In addition, the government was not specific about some of its other
remedies.
Writers from the Washington Post, the NY Times, and the LA Times have published stories over the last 10 days showing what a muddled mess the government's smoking cessation remedy has become because of political interference in the case. The Washington Post, the New York Times, and a number of newspapers across the country have run strong editorials criticizing the Department of Justice for gutting the smoking cessation remedy it is seeking.
Last Week's Developments
1)
The Department of Justice Office of Professional Responsibility announced that
it would investigate whether improper political interference was involved in
the Justice Department's decision to reduce its proposed tobacco cessation
remedy from $130 billion over 25 years to $10 billion over five years.
2) The Washington Post reported on June 15th that the Justice Department argued in a May 12 court filing that its full $130 billion smoking cessation plan was allowed under a February appeals court ruling restricting what kinds of remedies are available in the case. In the May 12 filing, the Justice Department argued, "The court should find that the remedy is not only forward-looking and aimed at future violations, but will act directly to prevent and restrain ongoing wrongful conduct of decades-long duration." It was not until June 7 that the government reversed course and called for the smaller smoking cessation remedy and not until June 9 that it argued it had to change its smoking cessation remedy to comply with the February ruling. The government has not given any reason for the change from May 12 to June 7.
3)
Also on June 15th, 50 U.S. Senators and Representatives signed a
letter to Attorney General Alberto Gonzales urging him "not to enter into
a settlement at this time based on the unreasonably weak demands made by the
government last week." The
letter also urges the Justice Department to appeal to the U.S. Supreme Court
the February appeals court ruling that limited the remedies the government
could seek, including the ability to force the industry to give up $280
billion in illegal profits.
4)
The New York Times reported on June 16th that the Justice Department's tobacco
trial team urged the department's political leadership not to reduce the
cessation penalty and warned that such a move would be seen as politically
motivated. The New York Times story follows the Washington Post story below.
5)
On June 20th, The Washington Post reported that the Justice
Department had sought to weaken the testimony of a third remedies witness,
Harvard Business Professor Max Bazerman.
This story appears at the very end of this email.
The
good news is that Judge Gladys Kessler is not bound by the government's
recommendations for remedies should she find the tobacco companies liable in
the case. To provide guidance to
the judge, the Campaign for Tobacco-Free Kids and our public health partners
are planning to file an amicus (friend of the court) brief outlining the
strong remedies we believe are needed and the scientific evidence and legal
arguments to support them. We'll
keep everyone updated on our progress and future developments in the case.
What's
Next
Now
that the trial is over, Judge Kessler has submitted a schedule for post-trial
filings.
June
27 - this is the deadline for the government to file a "detailed proposed
Remedies order." For the
first time, the government will have to detail in writing the remedies it
wants the judge to impose if she finds the industry liable.
This will provide important detail on the watered-down cessation
program the government proposed this week and give a clearer picture of the
other remedies the government is seeking.
August
8 - both sides have to file "post-trial proposed findings of fact" -
what they want the judge to conclude as a result of the evidence presented in
the case. These could be as long
as 2,500 pages for each side.
August
24-October 9 - various other filings are due, indicating that the judge will
not rule until some time after that.
Another
important deadline to remember is July 20, when the government must decide
whether to appeal to the U.S. Supreme Court the U.S. Court of Appeals ruling
that disgorgement, or forfeiture, of profits is not an allowable remedy under
the civil racketeering (RICO) law. This
ruling took off the table the $280 billion in alleged illegal profits the
government was seeking as one of its remedies.
For more on the U.S. Trial against the major U.S. cigarette companies, see the Campaign's website at: http://tobaccofreekids.org/reports/doj.
Key Articles on the DOJ Lawsuit
June
8, 2005
Tobacco
Escapes Huge Penalty; U.S. Seeks $10 Billion Instead of $130 Billion
Carol
D. Leonnig
Washington Post Staff Writer
Copyright 2005, The Washington Post Co. All Rights Reserved
After
eight months of courtroom argument, Justice Department lawyers abruptly upset
a landmark civil racketeering case against the tobacco industry yesterday by
asking for less than 8 percent of the expected penalty.
As
he concluded closing arguments in the six-year-old lawsuit, Justice Department
lawyer Stephen D. Brody shocked tobacco company representatives and
anti-tobacco activists by announcing that the government will not seek the
$130 billion that a government expert had testified was necessary to fund
smoking-cessation programs. Instead, Brody said, the Justice Department will
ask tobacco companies to pay $10 billion over five years to help millions of
Americans quit smoking.
Before
it was cut, the cessation program was the most significant financial penalty
still available to the government as part of its litigation, which had been
the largest civil racketeering and conspiracy case in U.S. history. The
government contended that six tobacco companies engaged in a 50-year
conspiracy to defraud and addict smokers and then conceal the dangers of
cigarettes.
"We
were very surprised," said Dan Webb, lawyer for Altria Group's Philip
Morris USA and the coordinating attorney in the case. "They've gone down
from $130 billion to $10 billion with absolutely no explanation. It's clear
the government hasn't thought through what it's doing."
The
Justice Department offered little explanation for the figure. Associate
Attorney General Robert D. McCallum Jr. and members of the trial team declined
to answer questions as the court session ended. In 2001, then-Attorney General
John D. Ashcroft tried to settle or shelve the government's racketeering case
against the industry before a public outcry forced its revival.
"It
feels like a political decision to take into consideration the tobacco
companies' financial interest rather than health interests of 45 million
addicted smokers," said William V. Corr, director of the Campaign for
Tobacco-Free Kids. "The government proved its case, but the levels of
funding are a shadow of the cessation treatment program that the government's
own expert witness recommended."
Sources
and government officials close to the case said the trial lawyers wanted to
request $130 billion for smoking-cessation programs but were pressured by
leaders in the attorney general's office, particularly McCallum, to make the
cut. Arguments within the Justice Department continued behind the scenes
through yesterday morning, according to the sources, who spoke on the
condition of anonymity because of the controversy over the matter.
When
the case began in 2004, the government sought to force the tobacco industry to
pay $280 billion in allegedly ill-gotten profits. But in February, a federal
appeals court ruled that the administration could not seek that penalty.
Michael
Fiore, the government expert who recommended $130 billion for cessation
programs, is a medical professor and director of a tobacco research center who
chaired the subcommittee on tobacco cessation in the Department of Health and
Human Services' Interagency Committee on Smoking and Health.
His
testimony was widely considered to represent the sum the government was
seeking for a cessation program, though Justice Department lawyers had made no
formal demand until yesterday.
The
strength of the government's case hinged on a large collection of internal
tobacco company documents, many of which were never before made public. The
government began its case in September by showing on an oversized projection
screen the written memos of tobacco executives and scientists as they
described their plans to keep customers in the dark about whether their habit
was addictive or dangerous and to encourage young people to smoke.
Facing
those same internal documents in another suit, the tobacco industry in 1998
agreed to pay $246 billion to settle a lawsuit filed by states to recover
their costs for the medical treatment of smokers.
Justice
Department spokeswoman Cynthia Magnuson said the department could ask the
court to force the industry to pay more in future years for cessation
programs, which include a staffed help line for smokers, treatment programs
and possibly free medications. She suggested the penalty was designed to
comply with the recent appeals court ruling that such penalties could not be
used to punish past fraud. Sources close to the case said the cessation
program is either a valid penalty or it's not; the dollar figure should not
change that.
"This
proposal has been designed to be a forward-looking remedy to prevent and
restrain future wrongful conduct consistent with the recent Circuit Court
opinion in this case," she said.
U.S.
District Judge Gladys Kessler, who is presiding over the case, is expected to
decide in the next few months whether the government proved its case of an
industry-wide conspiracy and whether to order any penalties against the
companies. Among the other remedies the government is still seeking are an
industry-funded anti-smoking educational campaign and a court injunction to
stop the companies from targeting youth in their marketing.
The
government also wants the judge to appoint a court monitor to watch over
industry practices and ensure that tobacco companies do not commit fraud in
the future. Kessler has repeatedly expressed concern about how such proposals
would work.
Defendants
in the case include Philip Morris USA; R.J. Reynolds Tobacco Co. and Brown
& Williamson, which have merged to form Reynolds American Inc.; British
American Tobacco; the Lorillard Tobacco unit of Loew's Corp.; and Vector Group
Ltd.'s Liggett Group Inc. They began their closing arguments today.
Anti-smoking
advocates assailed the decision as a self-inflicted blow that would help the
tobacco companies' bottom line and miss a well-earned chance to help American
smokers.
William
B. Schultz, a former Justice Department official who oversaw the lawsuit under
the Clinton administration, said that "it's disappointing, to say the
least, that at the final stages of this litigation they have pulled their
punches in such a significant way. This is the loss of a significant
opportunity to advance public health. Smoking is the number one preventable
disease. It kills 400,000 people a year."
Lead
government attorney Sharon Eubanks had summed up the trial early yesterday,
saying the government had proved the industry engaged in a "decades-long
pattern of . . . misrepresentations, half-truths, deceptions and lies that
continue to this day."
June 16, 2005
Lawyers
Fought U.S. Move to Curb Tobacco Penalty
By Eric Lichtblau
The New York Times
WASHINGTON, June 15 - Senior Justice Department officials overrode the objections of career lawyers running the government's tobacco racketeering trial and ordered them to reduce the penalties sought at the close of the nine-month trial by $120 billion, internal documents and interviews show.
The trial team argued that the move would be seen as politically motivated and legally groundless.
"We do not want politics to be perceived as the underlying motivation, and that is certainly a risk if we make adjustments in our remedies presentation that are not based on evidence," the two top lawyers for the trial team, Sharon Y. Eubanks and Stephen D. Brody, wrote in a memorandum on May 30 to Associate Attorney General Robert D. McCallum that was reviewed by The New York Times.
The two lawyers said the lower penalty recommendation ordered by Mr. McCallum would weaken the department's position in any possible settlement with the industry and "create an incentive for defendants to engage in future misconduct by making the misconduct profitable."
At the close of a major trial that dozens of Justice Department lawyers spent more than five years preparing, the department stunned a federal courtroom last week by reducing the penalties sought against the industry, from $130 billion to $10 billion, over accusations of fraud and racketeering.
The decision generated protests from health advocates and Democratic lawmakers, who accused the Bush administration of political motives, and it prompted an internal departmental inquiry. But details of the behind-the-scenes debate over the issue had remained a mystery.
The department has vigorously defended the decision, denying political motives and saying the $10 billion reflected an effort to arrive at a figure that would comply with an adverse decision from an appellate court this year that some officials said sharply limited the types of sanctions the department could seek. The department did not dispute the authenticity of the memorandum but declined to make Mr. McCallum or other lawyers available to discuss it.
A spokesman for the department, Kevin Madden, said political considerations were never factored into the decision to reduce the penalty.
"This was a decision that was made on the merits of the case and that strictly followed the law," Mr. Madden said.
In light of the appellate court ruling, he said, "a decision was made by the department that the best argument for the government to make was one that would preserve credibility in the government's case with the trial judge, would result in a favorable decision from the trial judge and would result in a trial court decision sustainable upon appeal."
The newly disclosed documents make clear that the decision was made after weeks of tumult in the department and accusations from lawyers on the tobacco team that Mr. McCallum and other political appointees had effectively undermined their case. Mr. McCallum, No. 3 at the department, is a close friend of President Bush from their days as Skull & Bones members at Yale, and he was also a partner at an Atlanta law firm, Alston & Bird, that has done legal work for R.J. Reynolds Tobacco, part of Reynolds American, a defendant in the case.
"Everyone is asking, 'Why now?' " said a Justice Department employee involved in the case who insisted on anonymity for fear of retaliation. "Why would you throw the case down the toilet at the very last hour, after five years?"
Ultimately, Mr. McCallum overruled the objections from the trial team, and the documents and interviews suggest that his senior aides took the unusual step of writing parts of the closing argument that Ms. Eubanks delivered last week in federal court in seeking the reduction in penalties.
Officials who insisted on anonymity said the change on the penalties provoked such strong objections from the trial team that some lawyers threatened to quit. Department officials have now proposed that a lower-level lawyer who has outlined the reasons for reduced penalties take over crucial parts of the remainder of the trial.
In another memorandum sent on Tuesday that was also reviewed by The Times, a senior official in the criminal division of the department recommended that the lower-level lawyer on the team, Frank Marine, who has supported the $10 billion penalty internally and publicly, "be in charge of preparing" the final briefs and the proposed order on penalties.
That work would normally go to Ms. Eubanks, director of the team. Department officials said Wednesday that there had been no decision to replace Ms. Eubanks.
Mr. McCallum, in an op-ed article last week in USA Today, said the new decision on the penalties had been driven by an appellate decision in February that found any damages had to be "forward looking" to prevent future wrongful acts.
"The trial court and the government are bound by this decision," he wrote, and that led the department to propose the $10 billion penalty to pay for a stop-smoking program.
A judge will make the final decision on the penalty.
The explanations have not quieted complaints from Democrats. A group of 50 lawmakers sent a letter to Attorney General Alberto R. Gonzales on Wednesday urging him not to agree to an accord with the tobacco industry "based on the unreasonably weak demands made by the government last week."
This week, in response to Democrats' protests, the department disclosed that its Office of Professional Responsibility, which handles ethics complaints, planned to investigate accusations, largely by Democrats, of interference in the case.
Although Ms. Eubanks and Mr. Brody said in their May 30 memorandum that the lower penalty could create a perception of interference, they gave no direct evidence to show that the decision was politically motivated. Still, the disclosure that career lawyers strongly objected is highly likely to provoke further accusations by antismoking advocates and Congressional Democrats.
In saying the decision was politically motivated, critics have pointed not only to Mr. McCallum's role at a law firm tied to the industry, a role that a Justice Department ethics office ruled did not prevent him from overseeing the case, but also to the industry's political contributions to the Republican Party. The industry gave $2.7 million to Republicans last year and $938,000 to Democrats.
In their seven-page memorandum, Ms. Eubanks and Mr. Brody offered a point-by-point rebuttal to what they characterized as Mr. McCallum's "watered down approach." They said the higher penalty, as outlined by a health expert last month, was in keeping with the appellate court's "forward looking" approach and would help millions of people quit smoking in the next 25 years.
The trial team lawyers also suggested that resistance to the $130 billion plan by senior Justice Department officials grew out of "sticker shock" over the costs that the industry would pay for the stop-smoking program.
The lawyers also expressed some frustration that Mr. McCallum had already reached a preliminary decision to reduce the proposed penalty "without reviewing the evidence that supports our factual and legal arguments." They said "it is regrettable that no one would even review" their rationale "and tell us where it went wrong."
The memorandum also questioned the handling of some government witnesses who were asked to alter their written testimony to reflect the department's concerns.
One witness, Matthew Myers, president of the Campaign for Tobacco-Free Kids, said in an interview Wednesday that Ms. Eubanks called him last month, hours before his final written testimony was due to be filed, and told him that Mr. McCallum and other senior officials wanted him to eliminate part of the testimony. The part the department wanted to omit, Mr. Myers said, centered on antismoking steps that he believed were wrongly omitted from the tobacco settlement in 1997, including limits on advertising.
"Eubanks was the good trouper, and she didn't let on at all what she thought of the request" to omit part of his testimony, Mr. Myers said. "But I said: 'No, I won't change it. It is what it is.' "
In the end, the only change he agreed to was an additional line that he did not know the steps the department would seek in the current case. Mr. Myers said he remained troubled by the case.
"To have the lawyers work on a case this long," he said, "and then just have the department basically throw it out seems despicable to me."
By Carol D. Leonnig
Washington Post Staff Writer
Monday, June 20, 2005; A03
A top Justice Department official threatened to remove a government expert from its witness list if he did not water down his recommended penalties for the tobacco industry, the witness said in an interview yesterday.
Harvard University business professor Max H. Bazerman said a career trial lawyer told him senior Justice officials wanted him to change his recommendation that the court appoint a monitor to review whether it was appropriate to remove senior tobacco company management. Bazerman said the lawyer was passing along the "strong request" the week before Bazerman was to take the witness stand on May 4 in the government's landmark racketeering case against the industry.
The government says the tobacco industry engaged in a 50-year conspiracy to defraud the public about the dangers and addictiveness of smoking.
Bazerman said the lawyer told him the change -- opposed by the career lawyers on the case -- had come from Justice Department senior litigation counsel Frank J. Marine and Associate Attorney General Robert D. McCallum Jr.
Bazerman declined to name the lawyer, saying he was concerned the person could face retaliation from Justice Department superiors. Bazerman said the lawyer told him that McCallum had threatened removing Bazerman from the government's witness list and prohibiting him from testifying if Bazerman did not change his testimony. In the proposed change, Bazerman said he was expected to say that appointing a monitor to consider removing senior management would likely be legally inappropriate under certain circumstances. Bazerman said he refused to make the change and was ultimately allowed to testify May 4.
"I would have felt I was lying under oath, and I couldn't do that," Bazerman said. "I thought then, and I believe now, that it was inappropriate influence to weaken the government's case against the tobacco industry."
Bazerman testified that a court monitor should be appointed by the judge to study whether future violations could be prevented by removing longtime senior management. Bazerman said he does not know why the government allowed him to testify.
In the six-year lawsuit, the Justice Department has argued that the United States' six largest tobacco companies lied about the dangers of smoking. The Justice Department stunned anti-smoking activists and members of Congress two weeks ago by announcing in the closing days of the eight-month trial that the government would cut its demand for an industry-funded smoking-cessation program from $130 billion to $10 billion.
Bazerman said in an interview yesterday that he is coming forward now because of recent reports in The Washington Post and the Los Angeles Times that the career trial team had pressured senior political appointees at Justice to weaken their case and urged other witnesses to soften their testimony against the industry.
"I want the government to behave appropriately. I can't think of an honest, plausible reason other than political interference for what they're doing," he said of political appointees at Justice.
Justice Department spokesman Charles Miller said yesterday that Bazerman's interpretation of the government's motives was inaccurate, but he declined to give details of the government's reasons.
"The issues discussed with Dr. Bazerman regarding his testimony were focused on ensuring that the department's proposals in this case complied with the long-standing department policies that apply to all racketeering cases the government brings, policies that substantially predate this administration," Miller said.
Bazerman describes a career trial team, lead by lawyer Sharon Eubanks and her deputy, Stephen Brody, increasingly under assault from all sides in the final months of the racketeering trial.
"It was clear they were fighting on multiple fronts, not just with the tobacco industry but with their own government," he said. "They were asking me to do things and it was obvious their heart wasn't in it."
Allegations of last-minute interference center on McCallum and Marine, who has had a limited role in the government's case. As senior Justice officials pressured the trial team to reduce the smoking-cessation program it wants the tobacco industry to fund, officials proposed that Marine oversee the drafting of the government's closing statement, said sources involved in the case.
Louis Clark, president of the Government Accountability Project, which is representing Bazerman, said the professor's account should prompt the government to conduct a probe independent from the Justice Department.
"In our 28 years of experience, we've learned when there's this much smoke, there's definitely fire, and we as Americans need to find out where it's coming from," Clark said.
Today, U.S. District Judge Gladys Kessler, who is set to decide whether the industry engaged in a conspiracy and whether to impose penalties upon the companies, is to meet in a closed-door session with government and tobacco lawyers.
Sources close to the case say that they expect Kessler will question lawyers about the government's last-minute reversal of its recommended penalties. Numerous members of Congress have called for an investigation of political interference into the case, and on Friday, four senators demanded that McCallum be removed from the case or future settlement talks. The Justice Department's Office of Professional Responsibility has begun investigating the allegations.
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