The Associated Press
WASHINGTON - A federal judge yesterday dismissed half of the claims in the Clinton administration's massive lawsuit against cigarette makers but still let the government seek billions from the industry for allegedly concealing the dangers of smoking.
In a ruling praised by both sides, U.S. District Judge Gladys Kessler decided the government could pursue racketeering claims seeking to force the industry to hand over profits dating back to the 1950s. But she also said the government could not invoke two federal laws to recover the Medicare cost of treating ill smokers.
"A significant portion of the government's case ... will go forward," Kessler wrote. "The extent of (the tobacco companies') potential liability remains, in the estimation of both parties, in the billions of dollars."
President Clinton said after the ruling, "This remains a very important opportunity for the American people to have their day in court against Big Tobacco and its marketing practices."
William Ohlemeyer, vice president of cigarette maker Philip Morris, called the ruling "an important first step in the ultimate dismissal of the case."
The industry can try again later to convince Kessler to dismiss the racketeering claims before trial. If the case does go to trial, R.J. Reynolds lawyer Thomas McKim said, "We are confident in the final analysis that we will prevail."
The Justice Department suit, filed in September 1999, accused the industry of putting profits before health by concealing data that showed nicotine is addictive and smoking causes disease. Government lawyers also contended the industry targeted its advertising toward children as potential new smokers.
The two claims dismissed by Kessler sought to recover $20 billion a year spent by Medicare and other federal health plans to treat smoking-related illnesses. The judge said that if the government wanted to recover expenses dating to the 1950s, it should have acted sooner.
"Congress' total inaction for over three decades precludes an interpretation ... that would permit the government to recover Medicare" and other expenses, Kessler ruled.
The claims Kessler allowed to go forward, filed under civil provisions of the Racketeer Influenced and Corrupt Organizations Act, seek to force the industry to give up profits dating back to the 1950s for what the government called "unlawful activity."
Notre Dame University law professor G. Robert Blakey, a former congressional aide who drafted the RICO law as well as two state lawsuits against the industry, said the ruling was a victory for the government. He added that he believed the government could recover more damages under RICO than through reimbursement of Medicare costs.
The American Lung Association, in a statement, said the ruling was "another victory in the effort to hold the tobacco industry accountable."
Kessler wrote: "Based on the sweeping nature of the government's allegations and the fact that the parties have barely begun ... to test the validity of these allegations, it would be premature for the court to rule" on the RICO claims.
"At a very minimum the government has stated a claim for injunctive relief: whether the government can prove it remains to be seen," she wrote.
The tobacco companies had asked Kessler to dismiss the entire lawsuit.
At the Justice Department, Assistant Attorney General David W. Ogden said, "We are pleased the court has ruled that we can go forward with this important case. We look forward to proceeding to trial and holding the tobacco companies accountable for the fraudulent conduct alleged in this lawsuit."
Republicans and members of Congress from tobacco states have tried to deny the Justice Department money to pursue the lawsuit. In June, they suffered a bipartisan defeat when the House voted 215-183 to allow Justice to get $4 million each next year from the departments of Defense, Veterans Affairs and Health and Human Services, which are the client agencies in the case.
The Senate Appropriations Committee, however, has approved a bill that would block the transfers. The government estimates the lawsuit will cost a total of $40 million this year and next year.
Company officials fought the lawsuit rather than settle, as they did in 1998 by agreeing to pay the states $246 billion over 25 years to cover the cost of treating sick smokers in the Medicaid program, which serves the poor and disabled.
One tobacco company, Liggett Group, argued separately that it could not be sued under the racketeering provision because it broke with the other companies four years ago, settled with five states and agreed to help the states pursue the other companies. Kessler rejected that request yesterday.
The lawsuit names Philip Morris Inc.; Philip Morris Cos.; Liggett Group Inc.; R.J. Reynolds Tobacco Co.; British American Tobacco Co.; Brown & Williamson Tobacco Corp.; Lorillard Tobacco Co.; American Tobacco Co.; the Council for Tobacco Research and the Tobacco Institute.