Justice Dept. Sues Tobacco Cos.
WASHINGTON (AP) - The Justice Department sued the tobacco industry today to recover billions of dollars taxpayers have spent on smoking-related health care, accusing cigarette-makers of a ``coordinated campaign of fraud and deceit.''
Attorney General Janet Reno (Yahoo News)The lawsuit filed in U.S. District Court here alleges the cigarette companies conspired since the 1950s to defraud and mislead the American public and to conceal information about the effects of smoking.
``Smoking is the nation's largest preventable cause of death and disease, and American taxpayers should not have to bear the responsibility for the staggering costs,'' Attorney General Janet Reno said. ``For more than 45 years, the cigarette companies conducted their business without regard to the truth, the law, or the health of the American people.''
The suit names Philip Morris Inc.; Philip Morris Companies; R.J. Reynolds Tobacco Co.; American Tobacco Co.; Brown & Williamson Tobacco Corp.; British-American Tobacco P.L.C.; British-American Tobacco (Investments) Ltd.; Lorillard Tobacco Co. Inc.; Liggett and Myers Inc.; The Council for Tobacco Research U.S.A. Inc.; and the Tobacco Institute Inc.
In the complaint, the U.S. government alleges that ``for the past 43 years, the companies that manufacture and sell tobacco have waged an intentional, coordinated campaign of fraud and deceit.'' The long-anticipated lawsuit alleges the companies engaged in a conspiracy in violation of the federal law against civil racketeering.
President Clinton issued a written statement declaring that ``the Justice Department is taking the right course of action. It is time for America's taxpayers to have their day in court.''
Reno announced the department is formally closing, without charges, a nearly 5-year-old criminal investigation of whether tobacco companies lied to Congress or regulatory agencies about the addictive nature of tobacco.
``We are moving forward,'' Reno, joined by acting Assistant Attorney General David Ogden, told a news conference today.
``We filed a (civil) lawsuit that seeks to recover from the tobacco companies the billions of dollars that American taxpayers spend each year on tobacco-related illnesses,'' she said. ``On behalf of the taxpayers, we are asking the tobacco companies to pay their fair share.''
``As our complaint also asserts,'' Reno said, ``the cigarette-makers have also realized since 1953 that the truth represents a mortal threat to their business. ... At every turn, they denied that smoking causes disease and denied that it is addictive.''
Citing internal company documents, Odgen traced the alleged conspiracy to a meeting of cigarette company chief executives at the Plaza Hotel in New York in January 1954. They ``agreed there to wage a long-term public relations campaign based on fraud and based on deception,'' Ogden said.
``For decades, they repeatedly and consistently denied that smoking cigarettes causes disease despite their knowledge that it does, ... denied that cigarettes are addictive even though they have long known and deliberately exploited the addictive properties of nicotine,'' Ogden said.
Ogden said the government spends more than $20 billion a year treating smoking-related illness, but could not estimate how much money the lawsuit might recover. He said they could only recover amounts they could prove resulted from illegal conduct but that there is no limit under the federal civil racketeering statute on how far back in time they could go to try to force the companies to disgorge any ill-gotten gains.
``The federal government now spends an estimated $22 billion each year on smoking-related illnesses,'' the association said. ``More than half of it is paid by Medicare. For too long, these costs have been unfairly borne by U.S. taxpayers. Tobacco companies must be held accountable for the death, disease and economic burdens caused by their products.''
Stocks of the leading cigarette producers were down in trading this morning on the New York Stock Exchange. Philip Morris Cos. was off 4 percent, or by $1.561/4, at $34.061/4 a share and RJR Reynolds Tobacco Holdings was off 2 percent, or by 561/4 cents, at $27.933/4 a share.
Tobacco industry spokesmen have questioned whether the government has authority to bring such a lawsuit, particularly given more than three decades of federal government warning to the public about the health dangers of smoking.
``From a legal standpoint, it's just pure politics,'' said Michael York, a lawyer for Philip Morris, the nation's largest cigarette-maker. ``When we look back we'll find the best legal minds in the Justice Department thought the facts and law didn't support it. It's hypocrisy to think the tobacco companies misled the federal government about the risks of smoking.''
The idea of suing the tobacco companies to recover an estimated $25 billion spent by federal civilian and military health insurance programs on smoking-related illnesses was a surprise element in Clinton's State of the Union speech last January.
It followed an expensive settlement by the cigarette-makers with most state governments last year, based on their outlays for health insurance. The industry agreed to pay the states more than $240 billion over 25 years.
The settlement with the states followed the collapse of an effort to write federal legislation that would have substantially increased the cost of cigarettes through taxes and would have restricted the marketing of tobacco. Congressional Republicans blocked that bill.
The civil lawsuit follows a stalled Justice Department criminal investigation that the department began scaling back this spring. This summer, several deadlines for filing criminal charges passed without action.
Department officials have been debating whether any of the evidence gathered during the criminal investigation could be used by the task force preparing the civil lawsuit. One official said department lawyers have decided to try to use that data in the civil suit but believed they needed permission from the U.S. District Court which supervises the grand jury which obtained it. It was not clear whether that permission has been obtained.