Supreme Court Rejects Government's Appeal In Tobacco Industry Case
Associated Press
October 17, 2005 11:54 a.m.
WASHINGTON -- The Supreme Court refused Monday to allow the Bush administration to pursue a $280 billion penalty from tobacco companies on claims they misled the public about the dangers of smoking.
Separately, the court cleared the way for a Missouri prison inmate to terminate her pregnancy, in an abortion case of relatively narrow scope.
The tobacco decision, a major victory for cigarette makers, wasn't unexpected because the government's case is still pending. A federal judge held a nine-month trial and has yet to decide whether tobacco companies are guilty of wrongdoing.
Shares of Altria Group Inc., parent of U.S. cigarette giant Philip Morris USA, climbed $4.34, or 6.1%, to $75 in morning trading on the New York Stock Exchange.
The fight at the high court was over the amount of money the companies would have to pay, if the judge rules that they violated a federal antiracketeering law known as RICO. "The government's suit, by any measure, is the most important civil RICO action that the government has ever brought," justices had been told by Bush administration lawyer Edwin Kneedler. The lawsuit was filed by the Clinton administration, and Mr. Kneedler argued that if the court didn't step in now to deal with this issue, the case may drag on several more years.
The tobacco companies' lawyer, Michael Carvin of Washington, said the court should give U.S. District Judge Gladys Kessler time to decide the case. He also argued that the government had a weak case "far removed from the heartland of RICO."
The Supreme Court is already hearing a case involving the Racketeer Influenced and Corrupt Organizations Act, and whether the law can be used against antiabortion protesters. The law, aimed primarily at fighting mobsters, has both criminal and civil provisions.
The $280 billion is the most ever sought in a civil racketeering trial. The government has described that as an estimate of money that companies including Philip Morris and R.J. Reynolds earned illegally through fraudulent activities.
An appeals court said the law didn't authorize the recovery of past proceeds and was designed instead to prevent future corruption. The Supreme Court has never decided that issue. Without that option the government would instead pursue its other request, that the companies be ordered to spend $10 billion for a stop-smoking program and $4 billion for education on the dangers of smoking. The government had been harshly criticized for not asking for more. An expert had recommended a $130 billion stop-smoking program.
The government has spent $140 million since 1999 litigating the case, and the Justice Department also is trying to force tobacco companies to pay those costs.
The federal case is independent of settlements valued at $246 billion that states reached with the industry in the late 1990s to recoup the cost of treating sick smokers.
The defendants in the lawsuit include Philip Morris USA; R.J. Reynolds Tobacco Holdings Inc. and Brown & Williamson, which have merged to form Reynolds American Inc.; British American Tobacco PLC; Vector Group Ltd.'s Liggett Group Inc.; Loews Corp.'s Lorillard Inc.; Counsel for Tobacco Research-U.S.A.; and the Tobacco Institute.
The Supreme Court didn't note any recusals in its short order rejecting the appeal. A three-member panel of the D.C. Circuit Court of Appeals rejected the penalty request 2-to-1 in February. When asked to reconsider the ruling, the full D.C. Circuit deadlocked on whether to rehear the issue. Chief Justice John Roberts, who was on the D.C. Circuit at the time, recused himself from that vote.
Investors have been closely following developments in the tobacco industry lawsuit. The timing of its resolution could play a role in Altria's decisions on its expected breakup. In the past, Altria management has said it would like to split the company into two or three parts once outstanding legal issues, including the government suit, are resolved. (U.S. v. Philip Morris)
Missouri Inmate Abortion Case
In the abortion case, the Supreme Court's decision wasn't a sweeping rendering on the issue of abortion, per se, but rather a holding that Missouri corrections officials must drive the woman to a clinic to have the procedure. It was unclear how soon that would be done. Late Friday, Justice Clarence Thomas had granted a temporary stay to the state, which prevented the woman from having an abortion Saturday. But Monday's high court decision was unanimous.
Missouri's law forbids spending tax dollars to facilitate an abortion, but U.S. District Judge Dean Whipple took the position that the prison system in Missouri was blocking the inmate from exercising her right. The department said it would follow the court's order that the procedure be allowed but didn't yet know the practical details of when or how that might occur.
The woman hasn't been identified. In court papers, she said she discovered she was pregnant shortly after being arrested in California in July on a Missouri parole violation. She said she tried to get an abortion in California but was transferred back to Missouri before it could be performed. Her attorney, James Felakos of the American Civil Liberties Union, said in court papers that she is running out of time because she is 16 weeks to 17 weeks pregnant, and Missouri bars abortions after 22 weeks.
The inmate has said she will borrow money for the abortion from friends and family but can't afford transportation to a clinic to have it done. The court fight was over those costs, estimated at $350 plus fuel for two guards to accompany the woman on the 80-mile trip from her cell in Vandalia to a St. Louis clinic.
Under a policy adopted over the summer, Missouri's prison system doesn't provide transportation or security for inmates seeking abortions. State officials argued that the policy is reasonable because of the costs and security risks of transporting inmates outside for procedures the officials said aren't medically necessary.
The Supreme Court's action came in a brief order that didn't address the merits of the case. Justices are hearing arguments later this fall in an abortion case, involving a challenge to a parental-notification law. (Crawford v. Roe) |
