U.S. v. Philip Morris Inc.
| Decision Date | 23 January 2004 |
| Docket Number | No. CIV.A. 99-2496(GK).,CIV.A. 99-2496(GK). |
| Citation | 300 F.Supp.2d 61 |
| Parties | UNITED STATES of America, Plaintiff, v. PHILIP MORRIS INCORPORATED, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Sharon Y. Eubanks, Stephen D. Brody, Frank J. Marine, Andrew N. Goldfarb, U.S. Department of Justice, Washington, DC, for Plaintiff.
Alfred McDonnell, Arnold & Porter, Denver, CO, Amy L. McGinnis, Amy Elizabeth Ralph, Anne McBride Walker, Floyd E. Boone, Jr., James Miller Rosenthal, Jeanna Maria Beck, Jonathan Louis Stern, Kendall Millard, Kevin M. Green, Leslie Wharton, Melissa L. Marglous, Michael R Geske, Murray R. Garnick, Nick Malhotra, Peter Thomas Grossi, Jr., Ryan David Guilds, Sharma Jnatel Simmons, Sharon L. Taylor, Stacy J. Pollock, Susan Louise Lyndrup, Brian K. Esser, Arnold & Porter, Washington, DC, Ashley Cummings, Hunton & Williams, Atlanta, GA, Ben M. Germana, Herbert M. Wachtell, Jeffrey M. Wintner, Steven M. Barna, Wachtell, Lipton, Rosen & Katz, New York City, Bradley E. Lerman, Dan K. Webb, Elizabeth D. Jensen, Jeffrey Wagner, Kevin J. Narko, Lauren J. Bernstein, Luke A. Palese, Ricardo E. Ugarte, Thomas J. Frederick, Winston & Strawn, Chicago, IL, C. Ian Anderson, Davis, Polk & Wardwell, New York City, Cindy L. Gantnier, Cynthia S. Cecil, Erik D. Nadolink, Patricia M. Schwarzschild, Richard H. Burton, Hunton & Williams, Richmond, VA, Daniel C. Jordan, Hunton & Williams, McLean, VA, Duane J. Mauney, Arnold & Porter, Washington, DC, James Lewis Brochin, Theodore V. Wells, Jr., Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Robert M. Rader, Thomas M. Stimson, Timothy M. Broas, Winston & Strawn LLP, Washington, DC, Seth Barrett Tillman, U.S. District Court for the Middle District of Alabama, Montgomery, AL, David B. Alden, Paul Crist, Randal S. Baringer, Robert C. Weber, Jones, Day, Reavis & Pogue, Cleveland, OH, Elizabeth P. Kessler, Ivan C. Smith, Scott C. Walker, Jones, Day, Reavis & Pogue, Columbus, OH, Geoffrey T. Wright, Jonathan Redgrave, Patrick L. Hubbard, Paul Sommer Ryerson, Peter John Biersteker, Robert Francis McDermott, Jr., Karen O'Brien Hourigan, Jones Day, Washington, DC, Harold K. Gordon, Jones, Day, Reavis & Pogue, New York City, John Buchanan Williams, William M. Bailey, Collier Shannon Scott, PLLC, Washington, DC, Lisa M. Sheppard, Womble, Carlyle, Sandridge & Rice, PLLC, Winston-Salem, NC, Nicholas N. Nierengarten, Gray, Plant, Mooty, Mooty & Bennett, PA., Minneapolis, MN, Andrew Martin McCormack, William Charles Hendricks, III, King & Spalding, Washington, DC, Dan H. Willoughby, Leign Ann Dowden, King & Spalding, Atlanta GA, David M. Bernick, Deirdre A. Fox, Douglas G. Smith, Michelle H. Browdy, Stephen R. Patton, Steven D. McCormick, Kirkland & Ellis, Chicago, IL, David Mendelson, Dawn D. Marchant, Jason Beckerman, Karen McCartan DeSantis, Kirkland & Ellis LLP, Washington, DC, David Patrick Sullivan, Kenneth N. Bass, Kirkland & Ellis, Washington, DC, Paul Lamont McDonald, Philadelphia, PA, Rebecca I. Ruby, Goodwin Procter, LLP, Washington, DC, Bruce D. Ryder, J. William Newbold, James M. Cox, Michael B. Minton, Richard Paul Cassetta, Thompson Coburn LLP, St. Louis, MO, Edward Craig Schmidt, Matthew David Schwartz, Thompson Coburn, LLP, Washington, DC, Paige Q. Szajnuk, Thomas A. Duncan, Shook, Hardy & Bacon, Kansas City, MO, Aaron H. Marks, Daniel R. Benson, Julie R. Fischer, Leonard A. Feiwus, Marc E. Kasowitz, Nancy E. Straub, Kasowitz, Benson, Torres Friedman, L.L.P., New York City, Fred W. Reinke, Kenneth Anthony Gallo, Clifford Chance US, LLP, Washington, DC, Melodie M. Mabanta, Robinson Woolson, P.A., Baltimore, MD, Michael P.A. Cohen, Washington Lawyers' Committee, Washington, DC, Warren Neil Eggleston, Howrey Simon Arnold & White, LLP Washington, DC, Demetra Frawley, Mary Elizabeth McGarry, Michael V. Corrigan, Simpson Thatcher & Barlett, New York City, Michael Asher Schlanger, Sonnenschein, Nath & Rosenthal, Washington, DC, Arnon D. Siegel, Lawrence Saul, Roy T. Englert, Jr., Robbins Robbins, Russell, Englert, Orseck & Untereiner, David L. Wallace, F. John Nyhan, Garyowen P. Morrisroe, Jessica L. Zellner, Washington, DC, Bruce G. Sheffler, Lawrence Edward Savell, Chadbourne & Parke LLP, New York City, Timothy M. Hughes, Chadbourne & Parke, New York City, William Salvatore D'Amico, Chadbourne & Parke, Washington, DC, Bruce G. Merritt, David Runtz, Judah Best, Kevin C. Lombardi, Debevoise & Plimpton, Steven Klugman, Washington, DC, Dennis H. Hranitzky, Joseph P. Moodhe, Steven S. Michaels, Debevoise & Plimpton, New York City, Clausen Jr. Ely, James Alexander Goold, John Vanderstar, Joseph A. Kresse, Keith Allen Teel, Covington & Burling, Washington, DC, Jason T. Jacoby, Hunton & Williams, Richmond, VA, for Defendants.
This matter is now before the Court on the United States' Motion for Partial Summary Judgment on Defendants'1 Equitable Defenses of Waiver, Equitable Estoppel, Laches, Unclean Hands, and In Pari Delicto ("Motion"). The Government argues that each of these affirmative defenses is insufficient as a matter of law and must be dismissed.2
The essence of the Government's argument is that the equitable defenses of waiver, equitable estoppel, laches, unclean hands and in pari delicto may not be asserted against the United States when, as here, "it is acting in its sovereign capacity to exercise public rights to protect the public interest." Motion at 1-2. Defendants argue to the contrary that equitable defenses are routinely available against the Government and are supported by the evidence in this case.
The case law overwhelmingly supports the Government's position. The United States brings its RICO claims in its capacity as sovereign, acting on behalf of the public to vindicate public rights. The Supreme Court has stated that any waiver of such sovereign authority must be unmistakable, United States v. Cherokee Nation of Oklahoma, 480 U.S. 700, 707, 107 S.Ct. 1487, 94 L.Ed.2d 704 (1987) (internal citation omitted), yet the Defendants have not pointed to anything in the record that constitutes an unmistakable waiver of the Government's right to pursue these claims. The case law is also clear that if equitable estoppel is ever to apply to the Government, the justification for it must be compelling and must go beyond the showing a party would have to make against an ordinary opponent in an ordinary case. ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (D.C.Cir.1988). In this case, the Defendants have not even satisfied the traditional elements of equitable estoppel. It is equally clear that, under the law of this Circuit, laches and unclean hands are both unavailable as a matter of law when, as here, the Government acts in the public interest. Illinois Central Railroad Co. v. Rogers, 253 F.2d 349, 353 (D.C.Cir.1958) (laches); United States ex rel. Purcell v. MWI Corp., 254 F.Supp.2d 69, 74 n. 2 (D.D.C.2003) (laches); SEC v. Sprecher, No. 92-2860, 1993 WL 544306, *2 (D.D.C.1993) (citing Pan American Petroleum & Transport Co. v. United States, 273 U.S. 456, 506, 47 S.Ct. 416, 71 L.Ed. 734 (1927)) (unclean hands); SEC v. Gulf & Western Ind., Inc., 502 F.Supp. 343, 348 (D.D.C.1980) (unclean hands). Finally, in pari delicto is only available when a party has "violated the law in cooperation with the defendant," Pinter v. Dahl, 486 U.S. 622, 632, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988). Since Defendants have not even alleged that the Government has committed any illegality during the period covered by the Complaint's allegations of conspiracy, the defense of in pari delicto has no applicability.
Upon consideration of the Motion, the Opposition, the Reply and the entire record herein, and for the reasons set forth below, the United States' Motion is granted.
Plaintiff, the United States of America ("the Government") has brought this suit against Defendants pursuant to Sections 1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.3 Defendants are manufacturers of cigarettes and other tobacco-related entities. The Government seeks injunctive relief and $289 billion4 for what it alleges to be an unlawful conspiracy to deceive the American public.
The Government's Amended Complaint describes a four-decade long conspiracy, dating from at least 1953, to intentionally and willfully deceive and mislead the American public. According to the Government the underlying strategy Defendants adopted was to deny that smoking caused disease and to consistently maintain that whether smoking caused disease was an "open question." Am. Compl. at ¶ 34. In furtherance of that strategy, Defendants allegedly issued deceptive press releases, published false and misleading articles, destroyed and concealed documents which indicated that there was in fact a correlation between smoking and disease, and aggressively targeted children as potential new smokers. Am. Compl. at ¶ 36.
The Government also alleges that over the course of the conspiracy, Defendants made false and misleading statements concerning the addictiveness of nicotine. Defendants continually denied that nicotine is addictive, even in the face of what the Government calls overwhelming evidence to the contrary. Am. Compl. at ¶¶ 71-72. Defendants allegedly took actions to make cigarettes even more addictive by manipulating and increasing the potency of nicotine in their cigarettes. Am. Compl. at ¶ 77. Nevertheless, Defendants have repeatedly denied that they manipulated the level of nicotine in their products. Am. Compl. at ¶ 79.
The Government also alleges that Defendants used deceptive marketing to exploit smokers' desire for less hazardous products and "misled consumers by marketing products that consumers believe are less harmful, even though they are not." Am. Compl. at ¶ 83. For example, according to the...
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