United States v. Philip Morris U.S. Inc.
| Decision Date | 13 April 2022 |
| Docket Number | Civil Action 99-2496 (PLF) |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. PHILIP MORRIS USA INC., et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
On October 29, 2021, defendant tobacco manufacturers (“manufacturers”) and the national retailer groups (“retailers”) filed two motions in limine to exclude certain testimony proffered by plaintiffs' expert witnesses.[1] The first motion alleges that two of plaintiffs' experts - Dr. Frank Chaloupka and Dr. James Spaeth - provided improper testimony in their rebuttal reports on topics not previously disclosed in their initial expert reports or at their depositions, and seeks to exclude from the record the portions of the testimony alleged to be improper. See Mot. Exclude Rebuttal Evid at 1. The second motion seeks to exclude the opinions set forth in the expert report of Mr. Greg Brancaleone, another of plaintiffs' experts, in full on the grounds that he presented no proper basis for his opinions concerning the design of the proposed point-of-sale (“POS”) remedy. See Mot. Exclude Brancaleone Op. For the reasons discussed below, the Court will deny both motions in limine.
Litigation in this case has persisted for over two decades. While the facts and procedural history of this case have been extensively laid out in previous opinions and orders see, e.g., United States v. Philip Morris USA Inc., 566 F.3d 1095, 1105-10 (D.C. Cir. 2009) (per curiam), the Court will briefly set forth the pertinent details below.
After a nine-month bench trial concluding in 2006, Judge Gladys Kessler issued a thorough opinion in which she found that the defendant manufacturers had conspired to and did in fact violate the substantive provisions of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962. See United States v. Philip Morris USA, Inc., 449 F.Supp.2d 1, 27 (D.D.C. 2006). In accordance with that finding, Judge Kessler issued a remedial order that set forth remedies tailored to preventing and restraining future RICO violations by the defendant tobacco manufacturers, including an injunction that required the defendants to issue “corrective statements.” United States v. Philip Morris USA, Inc., 449 F.Supp.2d at 27, 938-41; see also 18 U.S.C. § 1964 (). Judge Kessler determined that such an injunction “[wa]s appropriate and necessary to prevent and restrain [defendants] from making fraudulent public statement on smoking matters and health matters in the future.” United States v. Philip Morris USA, Inc., 449 F.Supp.2d at 926. One requirement, known as the “POS remedy, ” ordered retailers participating in the defendants' Retail Merchandising Program to display signs containing corrective statements at the retail point of sale of tobacco products. See Id. at 939-40; United States v. Philip Morris USA Inc., 566 F.3d at 1141. Under the Retail Merchandising Program, participating retailers contract with the defendants to display the manufacturers' in-store advertising. Id.
On appeal, the D.C. Circuit largely affirmed Judge Kessler's decision but “vacate[d] the remedial order as it regard[ed] point-of-sale displays and remand[ed] for the district court to make due provision for the rights of innocent third parties.” United States v. Philip Morris USA Inc., 566 F.3d at 1150. The court reasoned that the retailers affected by the POS remedy “did not receive notice of th[e] remedy or an opportunity to present evidence or arguments to the district court regarding the impact the injunction would have on their businesses, ” nor did the district court “independently consider[] the impact of th[e] [remedy] on affected retailers, ” as required by Section 1964(a). Id. at 1141.
The impact that the POS remedy may have on third party retailers is the single remaining issue on remand before this Court. To adequately resolve this issue, the Court decided that an evidentiary hearing would be necessary to allow the parties to present their legal and factual arguments concerning the implementation of the POS remedy and to allow third party retailers the opportunity to air their concerns. See Order #86-Remand [Dkt. No. 6283].
In 2019, the Court clarified the scope of this evidentiary hearing. See United States v. Philip Morris USA Inc., 436 F.Supp.3d 1 (D.D.C. 2019). The Court noted that Judge Kessler's detailed opinion “settle[d] most of the legal questions” involved, namely that: (1) the Court had authority to enjoin future RICO violations pursuant to Section 1964(a); (2) “an injunction ordering Defendants to issue corrective statements is appropriate and necessary to prevent and restrain them from making fraudulent public statements”; (3) the defendants' First Amendment rights did not prohibit this remedy; and (4) the corrective statement injunction is “narrowly tailored to prevent Defendants from continuing to disseminate fraudulent public statements and marketing messages by requiring them to issue truthful corrective communications.” See Id. at 6. Consistent with the law of the case doctrine, the Court decided that it will “respect and apply Judge Kessler's prior legal conclusions to the POS remedy issue.” Id. at 7. The Court was clear that “[t]he only question therefore is whether this Court can craft a new proposal to implement the POS remedy that makes due provision for retailers' rights.” Id.
United States v. Philip Morris USA Inc., 436 F.Supp.3d at 9. Accordingly, the parties are constrained to presenting evidence consistent with this scope and these “due provision” considerations.
In anticipation of the evidentiary hearing scheduled for June and July 2022, the parties have proffered a number of expert witness reports, opinion witness declarations, and fact witness declarations. Plaintiffs' initial pre-hearing disclosures included their most recent POS remedy proposal, including the proposed Guidelines for Court-Ordered Corrective Statements at Retail Points of Sale [Dkt. No. 6341-2] and the Specifications for Audits of Manufacturer Compliance with Implementation of the Corrective Statement Remedy at Point-of-Sale [Dkt. No. 6341-3]. Each proposal includes plaintiffs' recommended specifications for the POS remedy, and each is accompanied by expert reports explaining the methodology leading to the development of the updated proposal. See, e.g., Brancaleone Initial Rep. (describing the methodology involved in designing the proposed POS corrective statement signage); Chaloupka Initial Rep. (considering the potential economic effects of the proposed remedy on retailers' businesses); Spaeth Initial Rep. ( the efficacy of the proposed audit mechanism).
At issue in the manufacturers and retailers' motions in limine are the opinions of three of plaintiffs' expert witnesses. Mr. Greg Brancaleone is a design professional who plaintiffs retained to develop a design with implementation specifications that would “communicate truthful information” about manufacturers' cigarettes at the point of sale. Brancaleone Initial Rep. ¶ 1. Dr. Frank Chaloupka, a research professor at the University of Illinois at Chicago and the Director of the UIC Health Policy Center, was retained by plaintiffs to provide testimony on the economic impact that the government's proposed POS statements would have on the retailers. See Chaloupka Initial Rep. ¶¶ 1, 12. Dr. James Spaeth, an expert in the market research industry, was retained by plaintiffs to “identify and recommend mechanisms for detecting and measuring cigarette manufacturers' non-compliance with the plaintiffs' proposed court order, ” which became the “proposed audit mechanism, ” at points of sale. Spaeth Initial Rep. ¶¶ 1-2.
After plaintiffs made their initial disclosures, including the initial expert reports of Mr. Brancaleone, Dr. Chaloupka, and Dr. Spaeth, the manufacturers and retailers filed their own initial pre-hearing disclosures, including their own experts' initial reports. See, e.g., Murphy Initial Rep. On March 24, 2021, plaintiffs filed a number of rebuttal reports, including one each from Dr. Chaloupka and Dr. Spaeth. See Chaloupka Rebuttal Rep. at 1; Spaeth Rebuttal Rep. at 1. On October 29, 2021, the manufacturers and retailers filed two motions in limine to exclude certain testimony proffered by three of plaintiffs' experts: Dr. Chaloupka, Dr. Spaeth, and Mr. Brancaleone.
In the first motion in limine, the manufacturers and retailers assert that Dr. Chaloupka and Dr. Spaeth offer previously undisclosed opinions and evidence in their rebuttal reports. Mot. Exclude Rebuttal Evid. at 1. First they maintain that it was improper for Dr. Chaloupka, an economist, to opine in his rebuttal report about the economic effects of the government's proposed audit and about his own prior experience with retail audits, given the fact that he did not mention the...
To continue reading
Request your trial