Does Tobacco Companies’ RICO Loss Presage First Amendment Victory?

[Update: Yes.]

Tobacco lawyers looking for a silver lining in their double loss in the D.C. Circuit on Friday may find it in the first paragraph of Judge Brown’s opinion affirming the denial of their motion to vacate an order enjoining future false statements about the health effects of cigarettes and requiring the companies to issue “corrective statements.” [pdf]:

In this latest round in the Government’s heavyweight bout against the tobacco industry, the defendant cigarette manufacturers challenge the district court’s refusal to vacate injunctions imposed in 2009. Because the district court’s ruling survives our review, we give this round to the Government.

Does that last phrase hint that the tobacco companies will prevail in a future round–perhaps their closely watched First Amendment challenge to the FDA’s graphic labels for cigarette cartons?  Only time will tell.  But Judge Brown sat on the panel in that case too, and her questions at oral argument gave the impression that she favored the companies’ side of that dispute.  The court’s decision in R.J. Reynolds Tobacco Company v. FDA is likely to issue in August.

Judge Brown’s opinion in No. 11-5145 held that the 2009 Family Smoking Prevention and Tobacco Control Act did not moot the action and deprive the district court of jurisdiction because it did not eliminate the possibility of future RICO violations. And the FDA did not have primary jurisdiction over the enjoined conduct, because, despite the agency’s subject matter expertise and enforcement power, it lacked the district court’s decade-worth of insight into the companies’ likelihood of compliance.  The court noted that vacating the injunction in favor of FDA jurisdiction this late in the day “would turn the efficiency rationale for the primary jurisdiction doctrine on its head.”

On the merits, the court upheld the district court’s finding that the companies remained likely to commit future RICO violations despite the new enforcement provisions of the Tobacco Control Act. “If the defendants were not deterred by the possibility of RICO liability, the district court reasonably found the defendants were not likely to be deterred by the Tobacco Control Act either.”

In a related opinion by Chief Judge Sentelle that issued the same day, the court held it lacked jurisdiction to hear an interlocutory appeal of the district court’s clarification of an injunction requiring the tobacco companies to disclose marketing data to the Government [pdf]. The clarifying order incorporates a definition of “Disaggregated Marketing Data” that the court had already set out in a glossary to the injunction, and it specified that the DOJ could disclose the data to other federal agencies consistent with an existing protective order. The clarifying order did not count as a “modif[ication]” of the injunction for purposes of the jurisdictional statute, 28 U.S.C. § 1292(a), the court held, because it did not have the “practical effect” of “grant[ing] or den[ying] a specific request for injunctive relief.”

Although noting that it is not always easy to distinguish a mere clarification from a genuine “modification,” the D.C. Circuit adopted the functional approach of the First and Eleventh Circuits, holding that “an order modifies the original decree when it actually changes the legal relationship of the parties to the decree.” The district court’s clarifying order in this case did not effect such a change, and it was not so ” ‘blatantly or obviously wrong’ that it amounts to a modification.”  The court also noted the practical necessity of allowing the district court to clarify ambiguous injunctions without thereby opening the door to interlocutory appeals:

It would seem inescapable that in an injunction of the scope and length of the one before the district court in this case, the parties will at least be able to tease out some ambiguity. As we have observed with ironic applicability to the case before us, “some will find ambiguity even in a ‘No Smoking’ sign.” Given the length and breadth of the injunction in the present case, were we to hold that [the clarifying order] worked a modification activating interlocutory appealability, we might well expect a regular pummeling of our docket with other supposed modifications.

United States v. Phillip Morris USA, Inc., No. 11-5145 (July 27, 2012) (Brown, J., joined by Sentelle, C.J., & Silberman, S.J.)

United States v. Phillip Morris USA, Inc., No. 11-5146 (July 27, 2012) (Sentelle, C.J., joined by Brown, J., Silberman, S.J.)

R.J. Reynolds Tobacco Company v. FDA, No. 11-5332 (argued April 10, 2012) (Rogers & Brown, JJ., & Randolph, S.J.)

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