WASHINGTON—The US Justice Department's lawsuit against the major tobacco companies ended with more of a whimper than a bang. A federal judge found that the companies engaged in a decades-long conspiracy to deceive Americans about the dangers of smoking cigarettes but said that a 2005 ruling by a federal appeals court severely limited the penalties she could impose.
As a result, although the companies were enjoined from committing any future racketeering acts in the United States related to cigarettes, they were neither fined nor required to fund smoking cessation programs. And while their legal defeat may cost them tens of millions of dollars, the decision did not run into the billions sought by the Justice Department. One financial analyst called the decision a complete win "from a business perspective" for the defendants.
However, legal action in the case, and even the possibility of stronger penalties, has not ended. Appeals could overturn the district court's decision, handing the companies a more favorable outcome. Likewise, a higher court could reverse the decision cited by Judge Gladys Kessler of the US District Court for the District of Columbia in refusing to grant the Justice Department's request for $14 billion in remedies. Should the latter occur, the tobacco companies could face far more expensive penalties.
In her opinion, Judge Kessler wrote that "overwhelming evidence" showed the companies "marketed and sold their lethal products with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success extracted." However, she noted, the 2005 appeals court ruling held that the federal Racketeer Influenced and Corrupt Organizations Act (RICO) only allowed forward-looking penalties aimed at preventing future illegal acts by the cigarette makers and did not provide for remedies such as the forfeiture of ill-gotten profits.
In the remedies handed down by Judge Kessler, all but one of the companies was ordered to:
- Affix to each cigarette pack a statement on the adverse health effects of smoking and the addictive properties of cigarettes.
