Tobacco Companies Attack Government Suit
WASHINGTON--(BUSINESS WIRE)--Dec. 27, 1999--The nation's major tobacco companies today asked a federal judge to dismiss the Clinton Administration's lawsuit, arguing that the government has no legal basis to sue and is attempting to ignore the force and s
The Justice Department is asking the court for extensive equitable relief -- injunctions against an incredible range of industry conduct, but the department never once tells the court in its lawsuit that such injunctions and restrictions are already in place. The tobacco industry of today is much, much different from the one portrayed in the government's lawsuit. The settlements with the states in 1997 and 1998 established a comprehensive regulatory framework that the Justice Department is simply ignoring.
In the motion filed today, the companies said the Justice Department is using the lawsuit to invite the court to ignore well-settled principles of law merely because the industry is an unpopular one.
Incredibly, the government's claims under the Racketeer-Influenced Corrupt Organizations Act (RICO) are based on factual allegations the department found insufficient to support a criminal case.
``These claims are based on precisely the same allegations that the government has determined do not permit it to maintain a criminal RICO action,'' the companies said in the motion. ``On the very day the government filed this lawsuit, it acknowledged that its widely publicized, highly touted, five-year series of grand jury investigations would have to be abandoned without so much as a single indictment against any of these defendants.''
Asking the court to dismiss the RICO claims, the companies said the government's suit contains two crucial weaknesses that illustrate it has no legal claim. First, the government alleges essentially no wrongful conduct by the companies after 1995, and second, the government only once acknowledges the companies' settlements in 1997 and 1998 with all of the states -- and then only obliquely.
The government's omissions are crucial, the companies maintain, because a granting of equitable relief requires the government to allege a reasonable likelihood that RICO violations will be repeated in the future. The motion sets out in detail many provisions of the Master Settlement Agreement (MSA) which enjoin or prohibit any continuation of all of the allegedly wrongful conduct set forth in the complaint.
``...(W)hat is most notable about (the government's) complaint is what they do not say: their almost complete silence as to the existence -- let alone the substance -- of the 1998 Master Settlement Agreement that the tobacco industry entered into with the states, which provides for broad-scale injunctive relief barring any continuation of the violations alleged in the (government's) complaint.''
Among other things, the MSA vests continuing jurisdiction in the state courts and contains a specific grant of authority to the states to seek injunctive relief, as well as contempt and criminal sanctions, for failure to comply with an enforcement order.
The companies also moved to dismiss the government's claims to recover Medicare and other health costs on the grounds the government does not have a legal basis for its claims.
``The government is asserting causes of action for Medicare recovery that have never been recognized by any court before, that it has never asserted before, that it has publicly stated it does not have, and that it has to this date never asserted against anyone other than this group of defendants which it has chosen to target in this selectively filed lawsuit,'' the companies said in their motion.
The motion sets out comments made by Attorney General Janet Reno and her spokesperson, Joe Krovisky, acknowledging that the government lacks the legal authority to maintain this lawsuit. The two made the comments on the same day in April 1997, before President Clinton directed the department to proceed with the lawsuit.
The government's response is due Feb. 25. The companies may file a reply by March 27. The court has scheduled arguments on this motion for May 15.