United States v. Philip Morris USA Inc.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 13, 2016 Decided November 1, 2016

No. 15-5210

UNITED STATES OF AMERICA,

UNITED STATES DEPARTMENT OF JUSTICE, ET AL.,

APPELLEES

v.

PHILIP MORRIS USA INC.,

FORMERLY KNOWN AS PHILIP MORRIS INCORPORATED,

APPELLEE

R.J. REYNOLDS TOBACCO COMPANY,

APPELLANT

BROWN & WILLIAMSON TOBACCO CORPORATION,

DIRECTLY AND AS SUCCESSOR BY MERGER TO AMERICAN

TOBACCO COMPANY, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:99-cv-02496)

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Jeffrey A. Mandell argued the cause for appellant. With

him on the briefs were Noel Francisco and Peter J.

Biersteker. David M. Bernick entered an appearance.

Lewis S. Yelin, Attorney, U.S. Department of Justice,

argued the cause for appellee United States of America. With

him on the brief were Benjamin C. Mizer, Principal Deputy

Assistant Attorney General, and Mark B. Stern and Alisa B.

Klein, Attorneys. Melissa N. Patterson, Attorney, entered an

appearance.

Howard M. Crystal and Katherine A. Meyer were on the

brief for plaintiff-intervenors-appellees Tobacco-Free Kids

Action Fund, et al.

Before: TATEL, Circuit Judge, and EDWARDS and

SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: This is the latest appeal in the

government’s long-running RICO case against the nation’s

major cigarette manufacturers. Ten years ago, the district

court issued a comprehensive remedial order, which included

a requirement that defendants and their successors televise

“corrective statements” about the dangers of smoking. Eight

years later, one defendant, R.J. Reynolds Tobacco Company

(RJR), sought to dissolve that order as void under Federal

Rule of Civil Procedure 60(b)(4) and unjust under Rule

60(b)(6). The district court denied RJR’s motion, and we

affirm. As the Supreme Court made clear in United States

Student Aid Funds, Inc. v. Espinosa, relief under Rule

60(b)(4) is available “only in the rare instance where a

judgment is premised either on a certain type of jurisdictional

error or on a violation of due process.” 559 U.S. 260, 271

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(2010). None of those defects exists here. And although RJR

could have challenged its remedial obligations under Rule

60(b)(6), its failure to do so in a timely manner dooms its

motion now.

I.

In 1999, the United States sued RJR, Brown &

Williamson Tobacco Corporation, and several other cigarette

manufacturers under the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. §§ 1961–68, alleging a

conspiracy to deceive the American public about the dangers

of cigarettes. The history of this case is described in our many

prior decisions. See, e.g., United States v. Philip Morris USA,

Inc., 566 F.3d 1095, 1105–10 (D.C. Cir. 2009) (Remedial

Opinion) (affirming most aspects of the district court’s

liability finding and remedial order); United States v. Philip

Morris USA Inc., 801 F.3d 250, 252–56 (D.C. Cir. 2015)

(Corrective Statements Opinion) (largely upholding the

content of the corrective statements). For purposes of this

appeal, the relevant facts are as follows.

Prior to trial, Brown & Williamson merged its domestic

tobacco operations with RJR and reconstituted itself into a

passive holding company called Brown & Williamson

Holdings (BWH). The district court then conducted a nine-

month bench trial followed by a two-week remedial hearing.

In 2006, the court found defendants liable and ordered a

complex set of remedies, including a prohibition on the use of

misleading terms such as “ultra light” and “low tar,” a ban on

deceptive statements about the addictiveness of cigarettes, and

the remedy at issue here: a requirement that each defendant

televise corrective advertisements about the health

consequences of smoking. United States v. Philip Morris

USA, Inc., 449 F. Supp. 2d 1, 938–45 (D.D.C. 2006). The

remedial order required the ads to be run in primetime on one

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of “three major television networks” at least once a week for a

year. Id. at 941. Central to this case, the order expressly stated

that the injunction applied to “each of the Defendants, except

[three], and to each of their . . . successors.” Id. at 937.

The tobacco manufacturers appealed, challenging many

aspects of the order, including the corrective statements

remedy and its application to BWH. Relying on an earlier

opinion in which we held that RICO’s remedial provision, 18

U.S.C. § 1964(a), authorizes only forward-looking remedies

aimed at preventing future violations of the Act, the

manufacturers argued that the district court lacked authority to

require corrective statements. They also argued that the

district court had no basis for subjecting BWH to the remedial

order given its status as a passive holding company. In 2009,

we upheld the corrective statements remedy and remanded for

fact finding on “the extent of BWH’s control over tobacco

operations” and its “current capabilities” to “commit future

RICO violations.” Remedial Opinion, 566 F.3d at 1135, 1140.

On remand, the parties agreed that BWH was not a defendant

and thus not subject to the injunction, including the obligation

to televise corrective ads. See United States v. Philip Morris

USA, Inc., No. 99-2496, ECF No. 5846 (D.D.C. Dec. 22,

2010) (approving the parties’ agreement concerning BWH).

Two years later, the district court issued an order setting

forth the final text of the corrective statements, which the

manufacturers appealed. See United States v. Philip Morris

USA, Inc., 907 F. Supp. 2d 1, 27 (D.D.C. 2012). While that

appeal was pending, the parties began to negotiate how the

statements would be disseminated. Although they agreed on

most issues, they disagreed about whether RJR had to televise

two sets of ads, one as an original defendant and another in its

capacity as Brown & Williamson’s successor. In RJR’s view,

requiring it to run two sets of ads exceeded the court’s

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remedial authority. For its part, the government insisted that

double ads were required because the injunction, by its plain

terms, applies to “each of the Defendants . . . and to each of

their . . . successors.” See Philip Morris, 449 F. Supp. 2d at

937. In June 2014, the district court entered a consent order

outlining the implementation plan and explaining that by

agreeing to the order RJR had not “waiv[ed]

[its] . . . challenge to the requirement that it publish Corrective

Statements on television in its capacity as successor to Brown

& Williamson.” United States v. Philip Morris USA, Inc., No.

99-2496, 2014 WL 2506611, at *10 (D.D.C. June 2, 2014).

Shortly after entry of the consent order, RJR filed a Rule

60 motion seeking “relief from those provisions of [the

remedial order] . . . that require corrective statements on

behalf of [Brown & Williamson].” Philip Morris, No.

99-2496, ECF No. 6103, at 1 (D.D.C. June 11, 2014).

Specifically, RJR invoked Rule 60(b)(4), which allows courts

to reopen final orders that are “void,” and Rule 60(b)(6),

which allows courts to revisit final orders for “any other

reason that justifies relief.” See Fed. R. Civ. P. 60. In other

words, RJR sought to modify the injunction so that it would

have to run only one set of ads. In May 2015, we largely

upheld the order specifying the text of the corrective

statements. Corrective Statements Opinion, 801 F.3d at 252–

62. A week later, the district court denied RJR’s Rule 60

motion, prompting this appeal.

RJR argues, as it did in the district court, that the order

requiring it to run ads as Brown & Williamson’s successor is

void under Rule 60(b)(4) because it is punitive rather than

preventive, and thus exceeds the district court’s RICO

authority. RJR also argues that the double-ad requirement is

unjust under Rule 60(b)(6).

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II.

We begin, as we must, with our jurisdiction. Steel Co. v.

Citizens for Better Environment, 523 U.S. 83, 94 (1998) (“On

every writ of error of appeal, the first and fundamental

question is that of jurisdiction . . . .” (quoting Great Southern

Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453 (1900))).

Invoking 28 U.S.C. § 1292(a), which authorizes review of

orders “refusing to dissolve or modify injunctions,” RJR

argues that we may hear this appeal because the district court

denied its request to eliminate the double-ad requirement.

Although the government agrees, intervenors, a group of six

public health organizations, question our jurisdiction on the

ground that the district court’s denial of RJR’s Rule 60

motion “did not change [RJR’s] relationship” to the

injunction. Intervenors’ Br. 18 n.7.

Section 1292(a) creates an exception to the general rule

that appellate courts may review only “final decisions.”

Salazar ex rel. Salazar v. District of Columbia, 671 F.3d

1258, 1261 (D.C. Cir. 2012) (quoting Carson v. American

Brands, Inc., 450 U.S. 79, 83 (1981)). This circuit construes

section 1292(a) narrowly in order to avoid the “debilitating”

problems engendered by piecemeal appeals. Id. (quoting

Coopers & Lybrand v. Livesay, 437 U.S. 463, 471 (1978)). As

we explained in a 2012 decision in this very case, section

1292(a) jurisdiction exists in only two circumstances: where

the district court order “clearly grants or denies a specific

request for injunctive relief,” such as a request to dissolve an

injunction; or, if the order does not clearly grant or deny such

relief, where the appellant can show that it has the “practical

effect” of doing so. United States v. Philip Morris USA, Inc.,

686 F.3d 839, 844 (D.C. Cir. 2012); see also Salazar, 671

F.3d at 1261–62. In the latter situation, the appellant must

show that the order “might have a serious, perhaps

irreparable, consequence” and can be “effectually challenged

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only by immediate appeal.” Philip Morris, 686 F.3d at 844

(quoting Salazar, 671 F.3d at 1262) (internal quotation marks

omitted). An order that “merely clarifies” an injunction fails

this test and is therefore unreviewable. Washington

Metropolitan Area Transit Commission v. Reliable Limousine

Service, LLC, 776 F.3d 1, 9 (D.C. Cir. 2015).

Intervenors contend that the district court’s Rule 60 order

merely clarified RJR’s existing obligations and thus lacks the

practical effect required for appellate jurisdiction. But this

argument overlooks the first step of section 1292(a) analysis.

Although it is true that the denial of RJR’s Rule 60 motion

left its remedial obligations intact, an order’s “practical

effect” comes into play only if it is unclear whether the order

denied a specific request for injunctive relief. Philip Morris,

686 F.3d at 844. Here, the remedial order expressly applies to

“each of the Defendants . . . and to each of their . . .

successors,” Philip Morris, 449 F. Supp. 2d at 937, RJR

sought to dissolve its successor obligations, and the district

court refused to do so. Because the district court clearly

denied “a specific request to dissolve an injunction,” Salazar,

671 F.3d at 1261, we have section 1292(a) jurisdiction.

III.

Rule 60(b)(4) authorizes relief from a final order if “the

judgment is void.” Fed. R. Civ. P. 60(b)(4). We review a

district court’s Rule 60(b)(4) decision de novo. Bell

Helicopter Textron, Inc. v. Islamic Republic of Iran, 734 F.3d

1175, 1179 (D.C. Cir. 2013).

The Supreme Court addressed Rule 60(b)(4)’s scope in

United States Student Aid Funds, Inc. v. Espinosa, 559 U.S. at

260. That case concerned a provision of the Bankruptcy Code

that permits discharge of student loan debts only after the

bankruptcy court finds that failure to discharge the debt would

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impose “undue hardship on the debtor and his dependents.”

Id. at 263 (citing 11 U.S.C. §§ 523(a)(8), 1328). In Espinosa,

the bankruptcy court discharged a student debt without

making the requisite “undue hardship” finding. Id. at 265.

Holding that this error did not render the confirmation order

void, the Supreme Court explained that Rule 60(b)(4) applies

“only in the rare instance where a judgment is premised either

on a certain type of jurisdictional error or on a violation of

due process that deprives a party of notice or the opportunity

to be heard.” Id. at 271. Although the Court did not specify

which types of jurisdictional infirmities make a judgment

void, it did cite a First Circuit case and two treatises limiting

voidness to defects in personal jurisdiction, subject matter

jurisdiction, and due process. Id. None of those defects is

present here. As RJR concedes, “the district court had subject

matter jurisdiction in this action,” Appellant’s Br. 1, and RJR

neither challenges personal jurisdiction nor asserts a due

process violation.

Instead, RJR contends that the injunction is void because

it exceeds the district court’s “remedial jurisdiction.”

Appellant’s Br. 26. In support, RJR notes that both RICO’s

remedial provision, 18 U.S.C. § 1964(a), and our prior

opinions speak in terms of the district court’s “jurisdiction” to

prevent RICO violations, see, e.g., Corrective Statements

Opinion, 801 F.3d at 256. RJR also points out that the Court

in Espinosa nowhere limited “jurisdictional error[s]” under

Rule 60(b)(4) to subject matter and personal jurisdiction. 559

U.S. at 271. This is true. Indeed, Espinosa contains a footnote

in which the Court declined to decide whether other errors—

specifically, the discharge of certain tax and child support

debts, which the Bankruptcy Code prohibits—might also

render a judgment “void” for Rule 60(b)(4) purposes. Id. at

273 n.10. Espinosa thus left the exact boundaries of voidness

uncharted.

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In our view, however, mere use of the word “jurisdiction”

is insufficient to turn a remedial error into a basis for Rule

60(b)(4) relief. As the Supreme Court has made clear,

jurisdiction is “a word of many, too many, meanings,” Steel

Co., 523 U.S. at 90—a proposition all too evident in this case.

In section 1964, the term “jurisdiction” refers to a court’s

authority to impose certain remedies. 18 U.S.C. § 1964(a).

That authority is fundamentally different from a court’s

subject matter jurisdiction over a case and from its personal

jurisdiction over the parties, both of which concern the power

to proceed with a case at all.

Extending Rule 60(b)(4) relief beyond such “fundamental

infirmit[ies],” Espinosa, 559 U.S. at 270, would raise serious

finality concerns. Because remedial authority is by nature

broad, allowing Rule 60(b)(4) challenges to allegedly

unauthorized remedies could produce an endless series of

interlocutory appeals, especially in complex, long-running

cases. Under RICO, for example, even though district court

remedial authority is limited to “preventing and restraining”

violations of the statute, courts nonetheless retain expansive

power to craft remedies within that stricture, as the

comprehensive injunction in this case well illustrates.

This finality problem, moreover, is not limited to RICO

cases. The Sherman Act, like RICO, grants district courts

“jurisdiction to prevent and restrain violations” of the Act. 15

U.S.C. § 4. Under RJR’s conception of voidness, litigants

could upend complex remedial orders in any antitrust case

years or even decades after those orders became final. The

same holds true for litigation arising under any statute that

grants courts remedial “jurisdiction.” See, e.g., 15 U.S.C. §

378(a) (granting “jurisdiction to prevent and restrain

violations” of cigarette tax laws); 31 U.S.C. § 5365(a)

(granting “jurisdiction to prevent and restrain” internet

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gambling violations). And if remedial overreach renders an

order void, a statute need not even say “jurisdiction” for

remedial errors to trigger Rule 60(b)(4) relief. Complex

remedial schemes in voting rights, securities fraud,

affirmative action, prison conditions, and scores of other cases

could all be challenged on the ground that the remedies

imposed were, in one litigant’s view, unauthorized by the

statute at issue.

This is precisely the outcome the Supreme Court in

Espinosa warned us to avoid. Although the Court never

delineated the precise limits of voidness, it did make clear that

the list of defects that render a judgment void must be

“exceedingly short,” lest “Rule 60(b)(4)’s exception to

finality . . . swallow the rule.” 559 U.S. at 270. Heeding that

guidance, we hold that Rule 60(b)(4) does not permit relief

where a court has exceeded its remedial authority. Cf. United

States v. Boch Oldsmobile, Inc., 909 F.2d 657, 662 (1st Cir.

1990) (“Consent decrees that run afoul of the applicable

statutes lead to an erroneous judgment, not to a void one.”).

Such errors are simply not the type of fundamental defects the

Court had in mind in Espinosa.

Nothing in our prior opinions forecloses this

understanding of Rule 60(b)(4). Invoking law of the case,

RJR points out that our rulings in this case establish that

RICO “constrains the district court’s remedial jurisdiction.”

Appellant’s Br. 26. But as we have just explained, remedial

jurisdiction differs significantly from subject matter and

personal jurisdiction. Although we have confined district

court remedial jurisdiction to remedies that “prevent and

restrain” violations of the Act, see Corrective Statements

Opinion, 801 F.3d at 256, we have never held that an order

exceeding the court’s section 1964 authority falls within Rule

60(b)(4).

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RJR also leans on Karsner v. Lothian, 532 F.3d 876

(D.C. Cir. 2008). In that case, the district court denied a state

Securities Commissioner’s motion to intervene in an action to

confirm an arbitration proceeding. Id. at 879. On appeal, the

Commissioner asserted that if the case were remanded to the

district court she would “move under Rule 60(b)(4) to void”

the confirmation order on the ground that the district court

had confirmed an arbitrator’s “recommendation” when the

statute authorized it to confirm only arbitration “award[s].” Id.

at 886. In response, we observed that “before a judgment may

be deemed void . . . it must be determined that the rendering

court was powerless to enter it.” Id. (quoting Combs v. Nick

Garin Trucking, 825 F.2d 437, 442 (D.C. Cir. 1987)). We also

noted that if “the Commissioner successfully move[d] under

Rule 60(b)(4) to void the district court’s confirmation order,”

the court would need to identify a source of authority for its

revised order. Id. at 887. Seizing on this dicta, RJR contends

that voidness applies any time a court has “acted outside of its

authority.” Appellant’s Br. 18. Karsner concerned the

erroneous denial of a motion to intervene. Although the court

discussed Rule 60(b)(4) and even implied that such relief

might be available, it never held that Rule 60(b)(4) relief was

warranted on remand. In any event, Karsner preceded

Espinosa by two years.

Our conclusion, which flows from Espinosa’s instruction

that voidness is “rare,” 559 U.S. at 271, does not leave parties

unable to challenge remedies that exceed a district court’s

remedial authority. They may do so by filing a motion to alter

or amend the judgment under Rule 59(e) and they can appeal

pursuant to 28 U.S.C. § 1291 (authorizing direct appeal of

final decisions). See Fed. R. Civ. P. 59(e). They may also seek

relief under Rule 60(b)(6)—the issue we address next.

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IV.

Rule 60(b)(6) “grants federal courts broad authority to

relieve a party from a final judgment upon such terms as are

just.” Salazar ex rel Salazar v. District of Columbia, 633 F.3d

1110, 1116 (D.C. Cir. 2011) (quoting Liljeberg v. Health

Services Acquisition Corp., 486 U.S. 847, 863 (1988)). To

obtain relief under this provision, a party must file its motion

within a “reasonable time” and demonstrate “extraordinary

circumstances justifying the reopening of a final judgment.”

Id. (quoting Gonzalez v. Crosby, 545 U.S. 524, 534 (2005)).

In this case, the district court determined that RJR failed on

both counts. We review its decision for abuse of discretion.

Id. at 1119.

Although this circuit has rejected a strict limit to the

reasonable time requirement, id. at 1118–19, we have held

that in “a long-running institutional reform case . . . it would

be an abuse of discretion to rule that a Rule 60(b)(6) motion is

not filed within a reasonable time without finding that the

movant’s delay has prejudiced the non-moving party,” id. at

1119. The district court made no such finding in this long-

running, complex case. That, however, does not end the

matter, as the district court also denied the motion on the

ground that the “circumstances presented in [RJR’s] Motion

[were] not extraordinary.” Philip Morris, No. 99-2496, ECF

No. 6147, at 3 (D.D.C. May 28, 2015); see also Salazar, 633

F.3d at 1122 (affirming the denial of a Rule 60(b)(6) motion

for lack of “extraordinary circumstances” notwithstanding the

district court’s failure to address prejudice).

“Extraordinary circumstances” is a high bar. We

explained in Kramer v. Gates that Rule 60(b)(6) cannot be

used “to rescue a litigant from strategic choices that later turn

out to be improvident.” 481 F.3d 788, 792 (D.C. Cir. 2007)

(quoting Good Luck Nursing Home, Inc. v. Harris, 636 F.2d

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572, 577 (D.C. Cir. 1980)). As the district court in this case

observed, RJR failed to raise the double-ad issue in its 2006

appeal of the remedial order. Moreover, when appealing the

order specifying the text of the corrective statements, RJR

chose not to challenge the double-ad requirement; instead it

merely mentioned its Rule 60 motion in a footnote. Under our

precedent, failure to raise a ripe issue precludes a finding of

extraordinary circumstances unless that failure was essentially

“involuntary.” Salazar, 633 F.3d at 1121 (quoting Twelve

John Does v. District of Columbia, 841 F.3d 1133, 1141 (D.C.

Cir. 1988)).

RJR believes it meets this standard. It argues that the

earliest opportunity to challenge its successor obligations

came in 2014 when, during the parties’ negotiations over how

to disseminate the corrective ads, the government took the

position that the injunction required RJR to run double ads.

This argument suffers from a fatal flaw.

Recall that we have section 1292(a) jurisdiction because

the district court denied RJR’s request to dissolve—rather

than clarify—part of the injunction. See supra Part II. Indeed,

RJR conceded in its Rule 60 motion that the 2006 remedial

order requires it to run two sets of ads. See Mot. for Relief,

Philip Morris, No. 99-2496, ECF No. 6103, at 1 (D.D.C. June

11, 2014) (asserting that RJR, “in its capacity as successor to

Brown and Williamson,” sought to dissolve “those provisions

[of the remedial order] . . . that require corrective statements

on behalf of [Brown & Williamson] . . . in addition to

publication of the corrective statements by [RJR]”). Given the

standard for appellate jurisdiction, supra Part II, this was a

wise concession. But it undercuts RJR’s assertion that its

remedial obligations were unclear until 2014 and undermines

its argument for Rule 60(b)(6) relief. Simply put, RJR cannot

have it both ways. Either the remedial order imposes a

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double-ad requirement, in which case we have appellate

jurisdiction but RJR has no excuse for its untimeliness, or the

order is unclear, in which case we would lack jurisdiction to

entertain this appeal.

Having failed to challenge its successor obligation at any

earlier stage of this litigation, RJR now finds itself trapped

between this circuit’s narrow construction of section 1292(a),

which prevents piecemeal appeals, and the high bar for Rule

60(b)(6) relief, which protects the finality of judgments.

Together, these settled principles compel the conclusion that

RJR’s challenge to the double-ad requirement comes too late.

V.

For the foregoing reasons, we affirm.

So ordered.