This past Tuesday a fairly remarkable federal lawsuit got under way. It's remarkable for a few reasons: It takes on some of the largest corporations in America, it attempts to address more than a half century's worth of alleged misconduct, and it seeks damages of $280 billion. But here's what is really extraordinary about the federal suit against Big Tobacco: The law under which the government is pursuing its claim essentially labels the tobacco companies as criminal enterprises.
That's right, the Bonanno family, the Gottis, the Gambinos, the Colombos, all of them should move over. We present the new Mafia: Altria
This novel approach wasn't the federal government's first choice. This suit was originally filed during the Clinton administration and modeled after the Master Settlement Agreement (MSA) between the tobacco companies and 46 states, where the companies agreed to compensate the states some $206 billion in costs that the states claimed their treasuries had lost over time from smoking-related illnesses. The trial judge threw the case out, ruling that federal laws did not provide for the type of compensation that the government sought. The tobacco companies thought that they would be free from exposure to federal suits.
But the federal government is back with a 2,000-page case that states that the tobacco companies not only began conspiring in the 1950s to deny that there was any health damage caused by cigarette smoking but also have reformed in only the most superficial of ways even after they signed the MSA. It's the coordination of efforts here, most notably in the form of tobacco company-funded research institutes such as the Council for Tobacco Research, which the government claims weren't formed for scientific research but rather to create the appearance of scientific doubt over the impact of cigarette smoking. The tobacco companies have responded by saying that in the last five years they have gone through significant changes in how they communicate the dangers of smoking and that they have in place specific, aggressive programs to warn children and teenagers of the risks involved with smoking. The companies have acknowledged that they made mistakes in the past but have vehemently denied there being any conspiracy among them.
Under the RICO statutes, the government doesn't have to prove damages, and it doesn't have to show that conduct is ongoing. It calls for those convicted to disgorge all "ill-gotten gains," which in this case are about 50 years' worth of profits among the five companies. Should the tobacco companies lose this case, it is conceivable that they will be forced out of business in the U.S. The federal government claims that this is not its goal. Big surprise, too: Between the feds and the states, sales and excise taxes on cigarettes bring in more than $16 billion in annual revenues, to go along with the billions the states will receive under the MSA in perpetuity; the biggest beneficiaries from sales of tobacco aren't the companies, but rather the government.
Many people have chimed in on the government's use of RICO statutes to go after cigarette companies, calling it a novel, even a revolutionary, approach. I have my own word: inappropriate. Congress put RICO into place to combat something specific: organized crime. For whatever faults the tobacco companies have had and continue to have, they are not enterprises purpose-built for criminal endeavors.
What does it say about our system of government that it can contend that companies are unrepentant criminal organizations and yet be self-interested enough to make sure that these same scofflaws remain in business? In that light, the case makes absolutely no sense.
Bill Mann owns none of the companies mentioned in this story.