Litigation Update WLF
Washington Legal Foundation
Advocate for freedom and justice®
2009 Massachusetts Avenue, NW
Washington, DC 20036
202.588.0302
May 29, 2009
COURT UPHOLDS GOVERNMENT EFFORTS
TO PUNISH CORPORATE SPEECH
(United States v. Philip Morris USA Inc.)
The U.S. Court of Appeals for the District of Columbia Circuit this week upheld
a tort judgment obtained by the federal government against the major cigarette
manufacturers. The judgment was based on a district court finding that the companies
had violated RICO (the federal anti-racketeering law) by engaging in a pattern of mail
and wire fraud for the purpose of deceiving American consumers.
The decision was a setback for the Washington Legal Foundation (WLF), which
filed a brief in the case, United States v. Philip Morris USA Inc., urging that the
judgment be reversed. WLF argued that much of the activity that formed the basis of
the government's suit consisted of speech that is fully protected by the First
Amendment.
"The appeals court decision sets a troubling precedent that may well dissuade
businesses from expressing their views on controversial issues," said WLF Chief
Counsel Richard Samp in response to the appeals court's decision. "Testifying before
Congress in a manner that displeases government officials should never be lumped into
the same category as making false statements in consumer advertising in an effort to
convince consumers to buy one's product," Samp said.
The ruling came in a suit filed by the federal government in the waning days of
the Clinton Administration. At one point, attorneys for the federal government were
seeking hundreds of billions of dollars in penalties, an amount that would have driven
all the cigarette manufacturers out of business. However, the appeals court in 2005
issued a ruling that significantly restricted the manufacturers' potential liability. After
conducting a trial, the district court found that the defendants violated RICO, and it
issued an injunction that will cost the defendants billions of dollars to comply with.
The appeals court upheld virtually all of the district court's rulings.
WLF's brief focused exclusively on First Amendment issues. WLF noted that
much of the government's case focused not on advertisements but on press releases,
newspaper articles, academic literature, and television appearances that discussed issues
of on-going scientific debate, including the addictiveness of cigarettes and the extent to
which smoking and second-hand smoke are responsible for disease. Much of the
speech was in direct response to criticism of the tobacco industry, WLF noted. WLF
argued that such speech is fully protected by the First Amendment, even if the great
majority of scientists may deem the speech false. The appeals court rejected the First
Amendment defense, on the grounds that the district court had found not only that the
statements at issue were false but that the defendants knew them to be false. The
appeals court rejected challenges to the knowing-falsity finding, stating that the district
court's findings were entitled to deference.
The appeals court also rejected WLF's First Amendment-based objections to the
district court's injunctive relief. The district court ordered the defendants to
disseminate a massive number of "corrective statements" concerning the topics about
which they had previously misled consumers. The appeals court rejected WLF's
argument that any such mandatory corrective statements are subject to strict scrutiny
under the First Amendment. Instead, the court held, those statements should be
examined under the more relaxed standard applicable to government regulation of
commercial speech. WLF had argued that corrective statements cannot be categorized
as commercial speech because they are not made for the purpose of selling a product.
The appeals court declined to address whether the corrective statements can pass First
Amendment scrutiny, noting that the district court had not yet determined the precise
content of those statements.
The defendants have not yet determined whether they will appeal this week's
decision. Their alternatives are to ask the appeals court to re-hear the case en banc
(that is, before all nine members of the appeals court) or to seek review in the U.S.
Supreme Court. WLF has pledged to continue its support of the defendants' First
Amendment rights, should the defendants decide to take a further appeal.
WLF is a public interest law and policy center with supporters in all 50 States.
WLF regularly litigates in support of civil justice reform. WLF's brief in this case was
drafted with the pro bono assistance of Andrew G. McBride, William S. Consovoy,
Thomas R. McCarthy, and Sean C. Day of the Washington, DC law firm of Wiley
Rein LLP.
***
For further information, contact WLF Chief Counsel Richard Samp, (202) 588-0302.
A copy of WLF’s brief is posted on its web site, www.wlf.org.