U.S. v. Philip Morris U.S. Inc., Civil Action No. 99–2496 (GK).

CourtUnited States District Courts. United States District Court (Columbia)
Citation787 F.Supp.2d 68
Docket NumberCivil Action No. 99–2496 (GK).
PartiesUNITED STATES of America, Plaintiff,v.PHILIP MORRIS USA, INC., et al., Defendants.
Decision Date01 June 2011

787 F.Supp.2d 68

UNITED STATES of America, Plaintiff,
PHILIP MORRIS USA, INC., et al., Defendants.

Civil Action No. 99–2496 (GK).

United States District Court, District of Columbia.

June 1, 2011.

[787 F.Supp.2d 70]

Daniel K. Crane-Hirsch, U.S. Department of Justice Office of Consumer Litigation, Ann M. Ravel, U.S. Department of Justice, Civil Division, Linda Margaret McMahon, U.S. Department of Justice, Renee Brooker, U.S. Department of Justice, Civil Division, Commercial Litigation Branch-Civil Fraud, Washington, DC, for Plaintiff.Alfred McDonnell, Amy Elizabeth Ralph-Mudge, Amy L. Rohe, Duane J. Mauney, Floyd E. Boone, Jr., James Miller Rosenthal, Jonathan Louis Stern, Kevin M. Green, Leslie Wharton, Michael R. Geske, Ryan David Guilds, Sharon L. Taylor, Arnold & Porter LLP, Christopher J. Cullen, Jay L. Levine, Matthew A. Campbell, Robert M. Rader, Anastasia G. Weis, Timothy M. Broas, Winston & Strawn LLP, Beth A. Wilkinson, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Murray R. Garnick, Altria Corporate Services, Inc., Noel John Francisco, Geoffrey Kres Beach, Patrick Lee Hubbard, Paul Sommer Ryerson, Peter Biersteker, Robert Francis McDermott, Jr., Jones Day, Thomas M. Stimson, Cadwalader, Wickersham & Taft, Miguel A. Estrada, Gibson, Dunn & Crutcher, LLP, Dawn D. Marchant, John Kevin Dolan Crisham, Karen McCartan DeSantis, Kirkland & Ellis LLP, Paul Lamont McDonald, Paul, Hastings, Janofsky & Walker LLP, William Charles Hendricks, III, King & Spalding, Michael Asher Schlanger, Clausen Jr. Ely, James Alexander Goold, Joseph Andrew Kresse, Keith Allen Teel, Covington & Burling LLP, Arnon D. Siegel, Dechert, LLP, Lawrence Saul Robbins, Roy T. Englert, Jr., Alan Untereiner, Benjamin C. Rubinstein, Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, Bruce G. Merritt, Kevin C. Lombardi, Steven Klugman, Debevoise & Plimpton LLP, Judah Best, Steven S. Michaels, Leboeuf, Lamb, Greene & Macrae LLP, Jessica L. Zellner, William M. Bailey, William S. D'Amico, Washington, DC, Dan K. Webb, Elizabeth D. Jensen, Jeffrey Wagner, Kevin J. Narko, Ricardo E. Ugarte, Thomas J. Frederick, Winston & Strawn, Renee D. Honigberg, David M. Bernick, Douglas G. Smith, Michelle H. Browdy, Steven D. McCormick, Andrew P. Bautista, Kirkland & Ellis, LLP, Chicago, IL, Ashley Cummings, Hunton & Williams, Dan H. Willoughby, Leign Ann Dowden, King & Spalding, Atlanta, GA, Ben M. Germana,

[787 F.Supp.2d 71]

Herbert M. Wachtell, Jeffrey M. Wintner, Steven M. Barna, Wachtell, Lipton, Rosen & Katz, Bradley E. Lerman, Lauren J. Bernstein, David E. Mollon, Winston & Strawn, James Lewis Brochin, Theodore V. Wells, Jr., Paul, Weiss, Rifkind, Wharton & Garrison, LLP, Demetra Frawley, Mary Elizabeth McGarry, Michael V. Corrigan, Simpson Thacher & Bartlett, David Runtz, Joseph P. Moodhe, Debevoise & Plimpton, Dennis H. Hranitzky, Dechert, LLP, Guy Miller Struve, Davis Polk & Wardwell LLP, Harold K. Gordon, Jones, Day, Reavis & Pogue, Lawrence Edward Savell, C. Ian Anderson, Bruce G. Sheffler, David L. Wallace, Garyowen P. Morrisroe, Timothy M. Hughes, New York, NY, Cindy L. Gantnier, Christy L. Henderson, Michele B. Scarponi, Jason T. Jacoby, Patricia M. Schwarzschild, Richard H. Burton, Andrew Maher, Allens Arthur Robinson, Hunton & Williams, Richmond, VA, Daniel C. Jordan, Hunton & Williams, Peter Thomas Grossi, Jr., Arnold & Porter, McLean, VA, Jeanna Maria Beck, Arnold & Porter, LLP, Los Angeles, CA, Seth Barrett Tillman Wilkes Barre, PA, Michael B. Minton, Bruce D. Ryder, J. William Newbold, James M. Cox, Ann Elizabeth Blackwell, Thompson Coburn LLP, Melissa Marglous Merlin, Husch Blackwell Sanders LLP, St. Louis, MO, Elizabeth P. Kessler, Ivan C. Smith, Scott C. Walker, Jones, Day, Reavis & Pogue, Columbus, OH, Lisa M. Sheppard, R. Michael Leonard, Womble, Carlyle, Sandridge & Rice, PLLC, Winston-Salem, NC, Nicholas N. Nierengarten, Gray, Plant, Mooty, Mooty & Bennett, PA, Minneapolis, MN, Paul Crist, Randal S. Baringer, Robert C. Weber, David B. Alden, Jones, Day, Reavis & Pogue, Cleveland, OH, Paige Q. Szajnuk, Thomas A. Duncan, Shook, Hardy & Bacon, Kansas City, MO, F. John Nyhan, Fredericks Peebles & Morgan LLP, Sacramento, CA, for Defendants.
GLADYS KESSLER, District Judge.

This civil action brought by the United States under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–1968, is now before the Court on Defendant's Motion for Vacatur [Dkt. No. 5880]. Upon consideration of the Motion, Oppositions, Reply, and the entire record herein, and for the reasons stated below, Defendants' Motion for Vacatur is denied.


On August 17, 2006, this Court issued a lengthy opinion finding that all Defendants “(1) have conspired together to violate the substantive provisions of RICO, pursuant to 18 U.S.C. § 1962(d), and (2) have in fact violated those provisions of the statute, pursuant to 18 U.S.C. § 1962(c).” U.S. v. Philip Morris USA, Inc., et al., 449 F.Supp.2d 1, 26 (D.D.C.2006). In particular, the Court held that Defendants “knowingly and intentionally engaged in a scheme to defraud smokers and potential smokers, for purposes of financial gain, by making false and fraudulent statements, representations, and promises.” Id. at 852.1

The resulting injunctive relief rested on a finding that there was a reasonable likelihood that Defendants would continue to violate RICO in the future. Philip Morris, 449 F.Supp.2d at 908–919. After a nine-month bench trial, and based on a considerable factual record, this Court found that the “evidence in this case clearly

[787 F.Supp.2d 72]

establishes that Defendants,” with the exception of several parties who have since been dismissed, “have not ceased engaging in unlawful activity.” Id. at 910. Further, “[e]ven after the Complaint in this action was filed in September 1999, Defendants continued to engage in conduct that is materially indistinguishable from their previous actions, activity that continues to this day.” Id.

Accordingly, the Court imposed an array of injunctive measures in order to prevent future violations of RICO. Id. at 937–945. On May 22, 2009, the Court of Appeals for the District of Columbia Circuit affirmed this Court's judgment of liability and affirmed major provisions in its remedial order. U.S. v. Philip Morris USA, Inc., et al., 566 F.3d 1095, 1150 (D.C.Cir.2009), cert. denied, ––– U.S. ––––, 130 S.Ct. 3501, 177 L.Ed.2d 1090 (2010). The specifics of the remanded portions of injunctive relief continue to be litigated in this Court.

On June 22, 2009, President Barack Obama signed the Family Smoking Prevention and Tobacco Control Act (the “Tobacco Control Act” or the “Act”) into law. Pub.L. No. 111–31, 123 Stat. 1776 (2009). Congress found that “[t]he use of tobacco products by the Nation's children is a pediatric disease of considerable proportions that results in new generations of tobacco-dependent children and adults” and that “Federal and State public health officials, the public health community, and the public at large recognize that the tobacco industry should be subject to ongoing oversight.” Pub.L. No. 111–31, §§ 2(1), (8), 123 Stat. at 1777, codified at 21 U.S.C. § 387 note. Accordingly, Congress amended the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., in order “to provide the authority to the Food and Drug Administration to regulate tobacco products.” Pub.L. No. 111–31, § 3(1), 123 Stat. at 1781, codified at 21 U.S.C. § 387 note. Notably, Congress expressly provided that “[n]othing” in the Tobacco Control Act “shall be construed to ... affect any action pending in Federal, State, or tribal court.” Pub.L. No. 111–31, § 4(a), 123 Stat. at 1782, codified at 21 U.S.C. § 387 note.

After the Tobacco Control Act was passed into law, Defendants petitioned for rehearing en banc by the Court of Appeals on the ground that the Act extinguished jurisdiction for prospective relief. Defendants filed a separate “Suggestion of Mootness and Motion for Partial Vacatur” before that court, contending that the Act rendered the case moot. In opposing those motions, the Government argued, in part, that Defendants should properly bring their arguments before this Court first. The Court of Appeals denied the motions, and the Supreme Court denied Defendants' subsequent petition for writ of certiorari. United States v. Philip Morris USA, Inc., No. 06–5267 (D.C.Cir. Sept. 22, 2009); Philip Morris USA, Inc. v. United States, ––– U.S. ––––, 130 S.Ct. 3501, 177 L.Ed.2d 1090 (2010).

On September 15, 2010, this Court held the first of several scheduling conferences intended to establish a briefing schedule for resolving the four discrete remedial issues remanded by the Court of Appeals.2

[787 F.Supp.2d 73]

On March 3, 2011, Defendants filed a Motion for Vacatur, contending that the Tobacco Control Act in whole or in significant part extinguished this Court's jurisdiction or, in the alternative, that this Court should decline to move forward with any injunctive remedy in deference to the FDA's new regulatory authority. On April 4, 2011, the Government (“Gov.'s Opp'n”) [Dkt. No. 5907] and the Public Health Intervenors (“PHI's Opp'n”) [Dkt. No. 5908] filed separate Oppositions. On April 15, 2011, Defendants filed their Reply [Dkt. No. 5920].II. STANDARD OF REVIEW

Defendants contest this Court's subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(h)(3), which instructs that “[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” Although Defendants do not cite Rule 12(b)(1), Defendants' Rule 12(h)(3) motion must be treated as a challenge to subject matter jurisdiction under Rule 12(b)(1), which “may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.” Arbaugh v. Y & H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235,...

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