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Tobacco Companies Won't Have to Disclose Past Deceit, Court Rules

Tobacco companies won't have to include disclosures stating that a federal court has ruled they deliberately deceived the American public, the D.C. Circuit ruled last week. While statements about the health consequences and addictiveness of cigarettes can be required, forcing the companies to announce the court's findings is too backwards looking to be allowed under the Racketeer Influenced and Corrupt Organizations Act.

The case is the fifth appeal in a suit that was filed 15 years ago, when the U.S. sued Philip Morris and eight other "Big Tobacco" companies. According to the government, the companies engaged in illegal RICO violations through an "ongoing conspiracy to deceive the American public" about cigarettes' addictiveness and health consequences. The court agreed and imposed strict civil remedies to prevent future violations.

Corrective Disclosures to Prevent Future Violations

At trial, the district court found that tobacco companies had colluded to maximize profits and promoted false and fraudulent statements about smoking. Not only were the racketeering, the tobacco companies were likely to continue unless enjoined.

The companies were forced to make "corrective disclosures" about the health effects and addictiveness of cigarettes and the manufacturers manipulation of cigarette design to increase addiction. The D.C. Circuit upheld those requirements, finding that they were supported under RICO's authority to "prevent or restrain" future violations and did not violate the companies' First Amendment Rights. But at that time, the disclosures were theoretical -- no actual text had been produced.

RICO's Civil Remedies Must be Forward Looking

On remand the district court drafted corrective disclosures which included statements that"a Federal Court has ruled that" the tobacco companies "deliberately deceived the American public" regarding the health effects and addictiveness of smoking. That preamble was repeated, with small variations, five times before five different disclosures.

The tobacco companies claimed those preambles went beyond what RICO permitted. They were focused on past violations, not future prevention. RICO's civil-remedy provision grants courts jurisdiction in preventing future violations, but, the D.C. Circuit noted, those remedies must be "forward-looking."

Remedies that seek to punish past conduct are not appropriate. Even if they were the best possible way to correct past misconceptions, they aren't allowed under the civil suit provision. Only the Federal Trade Commission can pursue remedies to "dissipate future effects" of past conduct under RICO.

None of the tobacco companies' objections to the actual content of the disclosures were successful, however, since the companies had failed to object to the content earlier. So smokers, next time you buy a pack, get ready for a reminder that your cigarettes were designed to keep you addicted.

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