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Tobacco Firms Outline Their Case

The cigarette makers say the U.S. has ignored the changes the industry made since a settlement with the states in 1998.

September 23, 2004|Myron Levin | Times Staff Writer

WASHINGTON — Tobacco company lawyers accused the government of exaggerating past wrongdoing and refusing to acknowledge significant improvements in the industry's behavior as opening statements concluded Wednesday in the Justice Department's mammoth racketeering case against the big cigarette makers.

A day after government attorneys outlined their case for U.S. District Judge Gladys Kessler, tobacco lawyers said the U.S. would be unable to prove that the companies were guilty of a decades-long conspiracy to mislead the public or that they are likely to commit fraud in the future. Both things must be established, the lawyers said, for the government to win its claim for $280 billion and tough new controls on cigarette makers.

Ted Wells, a lawyer for Philip Morris USA, said the U.S. had ignored the "profound change" in the companies' conduct since their 1998 settlement with the states required them to get rid of some types of advertising and admit the dangers of smoking.

Displaying blowups of current statements on company websites, Wells said all major cigarette makers now declare that smoking is dangerous and addictive and that there is no such thing as a safe cigarette. "It is an unambiguous and clear message that ... we sell a dangerous product," Wells said. The industry's candor "is good for the society," but "fatal to the government's case," he said.

Filed in 1999 by the Clinton administration, the suit contends that cigarette makers over a 50-year period were guilty of fraudulent statements and acts concerning the hazards of smoking and secondhand smoke, the addictiveness of nicotine, the marketing of cigarettes to teens, the design and promotion of low-tar cigarettes and the support for independent research.

It is the largest civil racketeering case on record and the largest amount of monetary damages sought by the Justice Department in a civil case. Defendants include Altria Group Inc.'s Philip Morris, R.J. Reynolds Tobacco, Brown & Williamson Tobacco, British American Tobacco, Loews Corp.'s Lorillard Tobacco unit, and Vector Group Ltd.'s Liggett Group.

To accommodate about 200 tobacco lawyers and executives, journalists, financial analysts and representatives of anti-smoking groups, the judge held opening statements in a large, ceremonial courtroom where figures of ancient lawgivers -- Moses, Hammurabi, Solon and the Emperor Justinian -- look down from a marble wall.

Holding forth on the steps of the courthouse, across from the Capitol, Deputy Associate Atty. Gen. Matt Zabel said "recent superficial changes" in industry conduct "are too little, too late." The government, he said, will present overwhelming evidence of "past misconduct and also the likelihood of future misconduct."

The companies say that under the federal racketeering act, known as RICO, they can't be ordered to forfeit allegedly ill-gotten gains unless the government proves the money is likely to be used to commit fraud in the future. But just in case, the companies are arguing that they never committed fraud in the first place.

The industry did things that were "wrongheaded," Wells said, but "we do not concede in any way, shape or form that there ever was a RICO conspiracy."

Kessler allotted five hours for opening statements to each side. Philip Morris, highest on the industry pecking order, took about one third of the time to boast of the things it has done to appease critics. The company has spent more than $700 million to fight underage smoking, said its lawyer Dan Webb, and has eliminated magazine advertising.

The company also has been lobbying hard for legislation authorizing the Food and Drug Administration to regulate tobacco products, which Webb called an "enormous break from the past."

When Kessler noted that the company's rivals oppose granting authority to the FDA, Webb said that was exactly his point. Despite the conspiracy claims, he said, the companies "are not in lock step."

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