Petition for Writ of Certiorari — United States v. Philip Morris USA Inc.

6

include the power to order equitable disgorgement.

Pet. App. 18a-23a. In an opinion written by Judge

Sentelle, the majority declared that “[t]his language

indicates that the jurisdiction is limited to forward-

looking remedies that are aimed at future violations,”

whereas disgorgement, in the majority’s view, “is a

quintessentially backward-looking remedy focused on

remedying the effects of past conduct to restore the

status quo.” Jd. at 15a-16a. The majority further noted

that RICO’s criminal forfeiture provision, 18 U.S.C.

1963(a), and the private right of action for treble dam-

ages, 18 U.S.C. 1964(c), provide remedies for past con-

duct, and it concluded that “{tjhis ‘comprehensive and

reticulated’ scheme, along with the plain meaning of the

words themselves, serves to raise a ‘necessary and

inescapable inference’ * * * that Congress intended to

limit relief under § 1964(a) to forward-looking orders,

ruling out disgorgement.” Pet. App. 20a (citation

omitted).”

Judge Tatel stated in his dissenting opinion that the

court should dismiss the interlocutory appeal to “pre-

serv(e] section 1292(b)’s integrity and discourag[e] the

kind of litigating tactics reflected in this record.” Pet.

App. 49a. But because the majority addressed the

merits, he did so as well. /d. at 49a-78a. Judge Tatel

concluded that the majority’s narrow reading of Con-

gress’s grant of power to “prevent and restrain” RICO |

violations is inconsistent with this Court’s decisions in

2 Judge Williams joined in Judge Sentelle’s opinion, but wrote

separately to emphasize his disagreement with the Second Cir-

cuit’s conclusion in Carson that disgorgement should be available

when unlawfully obtained profits are “being used to fund or pro-

mote the illegal conduct, or [that] constitute capital available for

that purpose.” Pet. App. 23a (quoting Carson, 52 F.3d at 1182); see

id. at 23a-25a.

7

Porter v. Warner Holding Co., 328 U.S. 395 (1946), and

Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288

(1960), which established that a grant of equitable juris-

diction encompasses the full range of traditional equi-

table remedies unless the statute by its terms or by

necessary inference restricts the court’s jurisdiction in

equity. Pet. App. 5la-65a. He rejected the proposition

that disgorgement is, by its nature, “backward-look-

ing,” id. at 67a-68a, and urged that the district court

should be allowed to decide in the first instance “what

remedy or combination of remedies” would “serve to

prevent and restrain” defendants from committing fu-

ture RICO violations, id. at 73a.

The court of appeals denied the government’s peti-

tion for rehearing en banc by a 3-3 vote, with 3 judges

not participating. Pet. App. 156a-157a.*

REASONS FOR GRANTING THE PETITION

The court of appeals’ decision in this case holds that a

district court’s equitable authority to “prevent and

restrain” violations of the Racketeer Influenced and

Corrupt Organizations Act (RICO), 18 U.S.C. 1964(a),

excludes, as a matter of law, the remedial authority to

order disgorgement of illegally obtained proceeds.

There are compelling reasons for this Court to review

that decision.

First, the divided court of appeals’ erroneous con-

struction of RICO’s remedial provisions has fractured

widely accepted understandings respecting a district

court’s equitable jurisdiction. That decision: (a) rejects

this Court’s teachings in Porter v. Warner Holding Co.,

3 The district court has not stayed the trial proceedings during

_ the interlocutory appeal. The court has heard testimony and re-

ceived other evidence, heard closing arguments, and scheduled

post-trial briefing. See note 7, infra.

8

328 U.S. 395 (1946), and Mitchell v. Robert DeMario

Jewelry, Inc., 361 U.S. 288 (1960); and (b) presents a

direct and self-acknowledged conflict with the decisions

of two other courts of appeals on the precise issue pre-

sented, see Richard v. Hoechst Celanese Chem. Group,

Inc., 355 F.3d 345, 354-355 (5th Cir. 2008), cert. denied,

125 S. Ct. 46 (2004); United States v. Carson, 52 F.3d

1173, 1181 (2d Cir. 1995), cert. denied, 516 U.S. 1122

(1996). Those conflicts, by themselves, warrant this

Court’s review.

Second, the divided panel has incorrectly decided an

issue of surpassing importance in an exceptionally im-

portant case. Congress enacted RICO to create new

tools to combat structured illicit activities and gave the

government the full panoply of equitable remedies

needed to. achieve that goal. See United States v.

Turkette, 452 U.S. 576, 585 (1981). The government

invoked those powers in this case to address ongoing

concerted unlawful activity in the tobacco industry

spanning decades and affecting the lives of millions of

Americans. The government’s suit, by any measure, is

the most important civil RICO action that the govern-

ment has ever brought. The government’s ability to

achieve justice in this case depends on the availability

of the full scope of equitable remedies that Congress

conferred. The government cannot protect the public

interest if it cannot “divest the [RICO enterprise] of

the fruits of its ill-gotten gains.” Ibid.

Third, while the interlocutory character of a court of

appeals’ decision normally counsels against this Court’s

immediate review, in this case it heightens-the need for

the Court’s intervention. This case was in the court of

appeals pursuant to 28 U.S.C. 1292(b), which Congress

enacted specifically to provide for appellate review of

controlling questions of law while a case is still pending

_9

in the district court. This Court has granted certiorari

in a number of cases that reached the court of appeals

through that special mechanism, where the issue

decided by the court of appeals otherwise warrants

review. Here, moreover, the district court certified its

order for interlocutory appeal under 28 U.S.C. 1292(b)

because it discerned the need for interlocutory

guidance on a relatively narrow remedial issue. At

respondents’ urging, however, the panel majority went

much further and entered an erroneous categorical

ruling that will impede, rather than advance, the

ultimate resolution of this case. The Court’s inter-

vention at this juncture will not only resolve the conflict

with decisions of this Court and other courts of appeals,

but also will reinvest the district court with the

authority it needs for the expeditious and correct re-

solution of this litigation.

I. THE COURT OF APPEALS’ DECISION IS INCON-

SISTENT WITH THE DECISIONS OF THIS

COURT AND DECISIONS OF OTHER COURTS OF

APPEALS

A. The Court Of Appeals’ Decision Conflicts With The

Principles Established By This Court’s Decisions In

Porter and Mitchell

This Court’s decisions provide a specific analytical

framework for determining the scope of equitable

jurisdiction of the type conferred by Section 1964. As

the Court observed in Turkette, Congress enacted

RICO to provide “new remedies to deal with the unlaw-

ful activities of those engaged in organized crime.” 452

U.S. at 589 (quoting Organized Crime Control Act of

1970, Pub. L. No. 91-452, 84 Stat. 923). Section 1964(a)

correspondingly vests the courts with broad equitable

jurisdiction to “prevent and restrain” RICO violations

10

through “appropriate orders.” 18 U.S.C. 1964(a).“ As

the Court explained in Porter and Mitchell, statutory

provisions of this character authorize the district courts

to employ the full range of equitable powers, including

an order of disgorgement, so that those courts can

fashion appropriate relief. See Mitchell, 361 U.S. at

290-293; Porter, 328 U.S. at 397-398.

1. When Congress enacted RICO in 1970, it was

legislating against the backdrop of this Court’s 1946

Porter decision and its 1960 Mitchell decision. This

Court may properly presume that Congress was aware

of the Court’s well known, firmly established, and di-

rectly relevant decisions. See, e.g., United States v.

Alaska, 521 U.S. 1, 35 (1997); Cannon v. University of

Chicago, 441 U.S. 677, 699 (1979). The decisions in

Porter and Mitchell established that a legislative grant

of general equitable authority, such as the power to

“enjoin” or “restrain” statutory violations, encompasses

all the traditional equitable powers of chancery, in-

cluding the power to order disgorgement of ill-gotten

profits.

- Porter construed the Emergency Price Control Act

of 1942 (EPCA), ch. 26, 56 Stat. 23. EPCA authorized

courts to issue orders “enjoining such acts or practices”

that “constitute or will constitute a violation of any pro-

vision of section 4 of this Act” and to issue orders

4 Those remedies include, but are “not limited to: ordering any

person to divest himself of any interest, direct or indirect, in any

enterprise; imposing reasonable restrictions on the future activi-

ties or investments of any person, including, but not limited to,

prohibiting any person from engaging in the same type of endeavor

as the enterprise engaged in, the activities of which affect inter-

state or foreign commerce; or ordering dissolution or reorgani-

zation of any enterprise, making due provision for the rights of

innocent persons.” 18 U.S.C. 1964(a).

11

“enforcing compliance with such provision.” 328 U.S. at

397 (quoting EPCA § 205(a), 56 Stat. 33). The Court

held that, “{uJnless otherwise provided by statute, all

the inherent equitable powers of the District Court are

available for the proper and complete exercise of that

jurisdiction,” including the power to enter a “decree

compelling one to disgorge profits.” Jd. at 398.

Mitchell, which quoted Porter at length, similarly held

that federal legislation authorizing courts “to restrain

violations” of the Fair Labor Standards Act of 1938

(FLSA), ch. 676, § 17, 52 Stat. 1069, granted equitable

power to order reimbursement of wages lost because of

an unlawful discharge. See 361 U.S. at 290-293.

Porter and Mitchell explicitly set out general prin-

ciples governing the scope of a court’s powers when the

court acts pursuant to a legislative grant of equitable

jurisdiction. In Porter, the Court pronounced the

general principle that “(uJnless otherwise provided by

statute, all the inherent equitable powers of the

District Court are available for the proper and complete

exercise” of the grant of equitable jurisdiction. 328 U.S.

at 398 (emphasis added). The Court made clear that the

“comprehensiveness of this equitable jurisdiction is not

to be denied or limited in the absence of a clear and

valid legislative command.” Ibid. Accordingly, “[uJn-

less a statute in so many words, or by a necessary and

inescapable inference, restricts the court’s jurisdiction

in equity, the full scope of that jurisdiction is to be

recognized and applied.” Ibid. Porter emphasized that

when “the public interest is involved,” the court’s

“equitable powers assume an even broader and more

flexible character than when onlya private controversy

is at stake.” Jbid. Fourteen years later, Mitchell re-

iterated the vitality of Porter's teachings, quoting

12

Porter’s crucial passages as controlling authority. See

361 U.S. at 291.

The court of appeals’ decision in this case defies those

venerable principles and turns the Court’s governing

presumption on its head. The majority reasoned that

Section 1964(a)’s scope should be restricted because it

could not find “any necessary implication” in RICO that

Section 1964(a) includes disgorgement. Pet. App. 18a.

The majority’s ruling cannot be reconciled with Porter’s

explicit holding that a legislative grant of equitable

jurisdiction must be interpreted to include “the full

scope” of equitable powers, including disgorgement,

“ynless a statute * * * by anecessary and inescapable

inference, restricts” that authority. 328 U.S. at 398

(emphasis added).

2. None of the court of appeals’ purported bases for

declining to follow Porter and Mitchell survives

analysis. The majority attempted to confine Portér to

the particular statute that the decision construed by

noting that, after the Court announced the controlling

principles of construction, it went on to “set forth two

theories under which” the restitution order fit within

the specific language of EPCA. Pet. App. 15a. This

Court’s decision in Mitchell, however, expressly re-

jected just such an attempt to limit Porter. The Court

stated that “[t]he applicability of [Porter's] principle is

not to be denied * * * because, having set forth the

governing inquiry, [Porter] went on to find in the

language of the statute affirmative confirmation of the

power to order reimbursement.” 361 U.S. at 291.

Mitchell left no doubt that Porter stated a rule of

general applicability: “When Congress entrusts to an

equity court the enforcement of prohibitions contained

in a regulatory enactment, it must be taken to have

acted cognizant of the historic power of equity to pro-

13

vide complete relief in light of the statutory purposes.”

Id. at 291-292.

The majority also stated that Porter is distinguish-

able on the ground that a district court’s authority

under RICO to “prevent and restrain” violations is

uniquely forward-looking in a way that EPCA’s grant

of jurisdiction to enter an order “enforcing compliance”

with the statute was not. Pet. App. 14a-15a. Mitchell,

however, applied Porter's principle of construction to

the FLSA, which, like RICO, authorizes the courts to

“restrain violations” of the act, a phrase that the Court

equated.to “the enforcement of prohibitions contained

in [the] enactment.” 361 U.S. at 289, 291-292. As Judge

Tatel observed in dissent, “[i]f this language opens the

door to all equitable relief, then RICO’s language—to

“prevent and restrain” violations, 18 U.S.C. 1964(a)—

certainly does the same.” Pet. App. 58a. In Mitchell,

the Court held that the power to “restrain violations”

includes ordering reimbursement of lost wages fol-

lowing a retaliatory discharge that violated the FLSA.

It follows that here, the power to “restrain violations”

includes the authority to order disgorgement of

proceeds obtained from violations of RICO.°

5 The court of appeals also erred more generally in char-

acterizing disgorgement as a “quintessentially backward-looking

remedy” (Pet. App. 16a). See id. at 66a-75a (Tatel, J., dissenting).

This Court and the lower courts have repeatedly recognized that

disgorgement serves a crucial deterrent function. See, ¢.g., Porter,

328 U.S. at 400 (“Future compliance may be more definitely

assured if one is compelled to restore one’s illegal gains.”); SEC v.

First City Fin. Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989) (“{djis-

gorgement is an equitable remedy designed to deprive a wrong-

doer of his unjust enrichment and to deter others from violating”

federal law); FTC v. Gem Merch. Corp., 87 F.3d 466, 470 (11th Cir.

1996) (same) (quoting First City Fin., 890 F.2d at 1230); SEC v.

Manor Nursing Ctrs. Inc., 458 F.2d 1082, 1104 (2d Cir. 1972) (“The

14

The court of appeals also inferred a limitation on the

relief available under 18 U.S.C. 1964(a) based on the

section’s specification of certain authorized remedies,

including “ordering any person to divest himself of any

interest, direct orindirect, in any enterprise; imposing

reasonable restrictions on the future activities or

investments of any person * * * ; or ordering dissolu-

tion or reorganization of any enterprise.” Applying the

canons of noscitur a sociis and eyusdem generis, the

court believed the relief available under Section 1964(a)

to “prevent and restrain” violations must be limited to

remedies of a similar character. See Pet. App. 19a. The

court was wrong for two reasons.

In the first place, ordering disgorgement of unlawful

profits is similar to (if not expressly encompassed by)

the example of “ordering any person to divest himself

of any interest, direct or indirect, in any enterprise.”

But in addition, the purpose of RICO’s remedial pro-

visions was to afford “enhanced sanctions and new

remedies,” 84 Stat. 923 (emphasis added). The evident

reason for expressly including certain specific remedies

in Section 1964(a) was to ensure that it would be read

expansively to encompass specifically tailored remedial

measures that were deemed essential in the partitular

context of removing the illicit influence and economic

base of RICO violators from commerce. See Turkette,

452 U.S. at 585, 591-598. Nothing in the statute was

intended to preclude traditional equitable relief; indeed,

deterrent effect of an SEC enforcement action would be greatly

undermined if securities law violators were not required to dis-

gorge illicit profits.”); CFTC v. Hunt, 591 F.2d 1211, 1223 (7th Cir.

1979) (“to allow a violator to retain the profits from his violations

would frustrate the purposes of the regulatory scheme”); CFTC v.

CO Petro Mktg. Group, Inc., 680 F.2d 573, 584 (9th Cir. 1982) _

(same).

15

a? 66

the type of “appropriate orders” “permitted under the

statute expressly includes, but is “not limited to,” those

RICO-specific orders. The court of appeals therefore

fundamentally erred in inferring from the identification

of certain remedies in Section 1964(a) an affirmative

intent to limit the breadth that the words “prevent and

restrain” have under this Court’s decisions in Porter

and Mitchell. 3

The majority’s additional contention that the other .

remedies provided in RICO outside of Section 1964(a)

constitute a “‘comprehensive and reticulated’ remedial

scheme” that, by implication, excludes disgorgement

from the equitable powers available under Section

1964(a), Pet. App. 19a, 20a, cannot be reconciled with

the similar characteristics of EPCA and the FLSA,

which provided similarly broad ranges of remedies.

EPCA, which was at issue in Porter, “authorized a

broad array of other remedies, both criminal and civil,”

including a right for individual suits for treble damages

and a provision that the Administrator could sue for the

same remedy on behalf of the United States if the in-

dividual was not entitled to sue. /d. at 52a (Tatel, J.,

dissenting). As for the FLSA, the Court in Mitchell

“thought it insignificant that because both the ag-

grieved employees and the Secretary could seek lost

wages in actions at law under FLSA * * * duplicative

recovery might occur.” /d. at 58a (citing 361 U.S. at 303

(Whittaker, J. dissenting)).

The majority was also mistaken in suggesting that

disgorgement should be disallowed because the “over-

lap” between disgorgement and criminal- forfeiture

would circumvent “the additional procedural safe-

guards that attend criminal charges.” Pet. App. 20a-

2la. Congress did not intend RICO’s criminal and civil

remedies to be mutually exclusive. Rather, Congress

—~s

16

intended that the deliberately “enhanced sanctions and

new remedies” in RICO, 84 Stat. 923, would give the

government a full range of criminal and civil tools and

the ability to choose whichever would be most effective.

See S. Rep. No. 617, 91st Cong., Ist Sess. 80 (1969)

(observing that criminal prosecution is “a relatively

ineffectual tool” for implementing RICO’s “economic

policy”). Indeed, Congress recognized the potential

“overlap” between RICO’s criminal and civil remedies,

noting that a criminal influence “can be legally sepa-

rated from the organization, either by the criminal law

approach * * * or through a civil law approach of

equitable relief.” Id. at 79.

In finding a statutory overlap, the majority also in-

correctly equated equitable disgorgement with the pro-

visions for eriminal forfeiture and private damages. In

contrast to the mandatory sanction of criminal for-

feiture, an award of disgorgement under Section

1964(a) is subject to the court’s sound discretion and

must make “due provision for the rights of innocent

persons.” See Pet. App. 72a-73a. And, unlike a private

damages award under Section 1964(c), disgorgement is

not trebled or keyed to a victim’s loss, but is directly

tied to the wrongdoer’s profits.

3. The court of appeals placed erroneous reliance on

Meghrig v. KFC Western, Inc., 516 U.S. 479 (1996), for

the view that “it cannot be assumed that Congress

intended to authorize by implication additional judicial

remedies,” such as disgorgement under Section 1964(a),

in light of the “elaborate enforcement proceedings” set

forth in RICO. Pet. App. 18a. Mehgrig arose in the

wholly different context of a private action seeking

compensation for past clean-up costs through a citizen

suit under the Resource Conservation and Recovery

17

Act of 1976 (RCRA), 42 U.S.C. 6901 et seg. 516 U.S. at

484.

This Court has long recognized that the citizen suit

provisions of environmental statutes, which require

advance notice to the alleged violator and are barred if

the government is taking enforcement action, are

“meant to supplement rather than to supplant govern-

mental action,” and are specifically addressed to on-

going violations of the statute. Gwaltney of Smithfield

Ltd. v. Chesapeake Bay Found., 484 U.S. 49, 60 (1987).

Meghrig also turned on the irrationality of RCRA’s

scheme if citizen clean-up actions were permitted, 516

U.S. at 486, and on Congress’s express provision, in a

companion environmental statute, of a mechanism for

private recovery of past clean-up costs, id. at 484-485.

_ Against that background, it is not surprising that the

Court said that “it cannot be assumed that Congress

intended to authorize by implication additional judicial

remedies for private citizens suing under the statute.”

Id. at 488 (internal quotation marks omitted).

This case, in contrast, involves a governmental action

for equitable relief, where the “public interest” justifies

a “broader and more flexible” application of “equitable

powers” than in a mere “private controversy.” Porter,

328 U.S. at 398. The applicable canon in the present

context is drawn from Porter: a clear and unmistakable

inference is required to curtail the court’s equitable

jurisdiction. No such inference can be drawn here.

Thus, as Judge Tatel correctly recognized, “Porter and

Mitchell, not Meghrig, ‘directly control’ this case.” Pet.

App. 62a.

18

B. The Court Of Appeals’ Decision Creates A Direct

Conflict With Decisions Of Other Courts Of Appeals

The court of appeals’ decision not only conflicts with

the principles that this Court set out in Porter and

Mitchell, but also creates a direct conflict with the

Second Circuit’s decision in United States v. Carson, 52

F.3d 1173 (1995), and the Fifth Circuit’s decision in

Richard v. Hoechst Celanese Chem. Group, Inc., 355

F.3d 345 (2003). As the court of appeals in this case

itself acknowledged (Pet. App. 21la-22a), its decision

stands in irreconcilable conflict with those decisions and

isolates the D.C. Circuit as the only court of appeals to

reject disgorgement under RICO regardless of the

facts.

Carson and Richard each hold, in accordance with

this Court’s decisions in Porter and Mitchell, that Sec-

tion 1964(a) authorizes equitable disgorgement as an

available RICO remedy in appropriate circumstances.

It is true that those decisions impose fact-based limita-

tions on a district court’s use of that remedy. Carson

states that disgorgement is limited to assets that are

“being used to fund or promote the illegal conduct, or

{that] constitute capital available for that purpose,” 52

F.3d at 1182, while Richard states that disgorgement is

available only to prevent ongoing and future RICO vio-

lations, 355 F.3d at 354-355. The dissent rightly con-

cluded that this Court’s decisions do not sanction those

limitations. See Pet. App. 5la-65a. But regardless of

those limitations, the Second and Fifth Circuit decisions

cannot be reconciled with the panel majority’s ruling in

this case that Section 1964(a) precludes the govern-

ment, as a matter of law, from obtaining equitable dis-

gorgement in a civil RICO action under any circum-

stances. See Richard, 355 F.3d at 354 (“disgorgement

19

is generally available under § 1964”); Carson, 52 F.3d at

1181 (“As a general rule, disgorgement is among the

equitable powers available to the district court by

virtue of 18 U.S.C. § 1964.”).°

6 The panel majority’s decision is also inconsistent with

numerous decisions of other courts of appeals applying the

principles of Porter and Mitchell to other statutory schemes. As

Judge Tatel explained (Pet..App. 58a-59a), those courts have

repeatedly held that grants of equitable authority similar to the

grant in RICO do not restrict a district court’s inherent power to

order disgorgement or restitution. See, e.g., FTC v. Gem Merch.

Corp., 87 F.3d 466, 469 (11th Cir. 1996) (authorization “to enjoin”

violations of the Federal Trade Commission Act encompasses the

power to order disgorgement); United States v. Universal Mgmt.

Servs., 191 F.3d 750; 760 (6th Cir. 1999) (grant of jurisdiction in

Section 332(a) of the Federal Food, Drug, and Cosmetic Act (21

U.S.C. 332(a)) “to restrain” violations authorizes district courts to

compel disgorgement and restitution), cert. denied, 530 U.S. 1274

(2000); SEC v. First City Fin. Corp., 890 F.2d 1215, 1230 (D.C. Cir.

1989) (provisions of the Securities Exchange Act, 15 U.S.C. 78u(d)-

(e), authorizing the district court “to enjoin” future violations allow

disgorgement); ICC v. B & T Transp. Co., 613 F.2d 1182, 1183,

1184-1185 (1st Cir. 1980) (provision of Motor Carrier Act of 1980

empowering ICC “to seek only prospective injunctions to restrain

future conduct” encompassed authority to seek restitution); CFTC

v. Hunt, 591 F.2d 1211, 1223 (7th Cir. 1979) (in the absence of an

express restriction, the Commodity Exchange Act authorizes an

order compelling disgorgement of illegally obtained profits); CFTC

v. British Am. Commodity Options Corp., 788 F.2d 92, 94 (2d Cir.)

(following Hunt), cert. denied, 479 U.S. 853 (1986); CFTC v.

American Metals Exch. Corp., 991 F.2d 71, 76 & n.9 (3d Cir. 1993)

(same); CFTC v. CO Petro Mktg. Group, Inc., 680 F.2d 573, 583-

584 (9th Cir. 1982) (same).

20

Il. THE COURT OF APPEALS’ DECISION IN-

CORRECTLY RESOLVES AN IMPORTANT ISSUE

IN A CRITICALLY IMPORTANT CASE

In formulating RICO, Congress gave the federal

government essential resources for combating the use

of an unlawful enterprise to violate federal fraud pro-

scriptions for financial gain. RICO’s civil remedy pro-

visions, which are to “be liberally construed to effectu-

ate [RICO’s] remedial purposes,” Pub. L. No. 91-452,

§ 904(a), 84 Stat. 947, provide the curative instruments

for eradicating the wrongful conduct. The court of

appeals has disabled the government from employing a

critically important remedial tool—equitable disgorge-

ment—for achieving Congress’s objectives. That court

has done so in a case of vital interest to the American

public.

As this Court has explained, Congress sought to

curtail the “revenue and power” that RICO violators

derive from past illegal conduct, and it therefore pro-

vided remedies that would allow “an attack * * * on

their source of economic power itself.” Turkette, 452

U.S. at 591-592 (quoting, with emphasis, S. Rep. No.

617, 91st Cong., lst Sess. 79 (1969)). Section 1964(a)

accordingly grants courts authority to craft “equitable

relief broad enough to do all that is necessary” to ad-

dress “the economic base” of RICO violators and to

“free the channels of commerce from all illicit activity.”

S. Rep. No. 617, supra, at 79. “Although certain re-

medies are set out, the list is not exhaustive.” IZd.

_at 160.

This Court’s decision in Turkette envisioned that the

government would seek equitable disgorgement, as one

of RICQ’s various remedies, in order to rectify past

RICO violations and deter future misconduct. 452 U.S.

7S

21

at 585. The court of appeals, however, brushed aside

the Court’s express recognition that Section 1964 em-

powers the courts “to divest the association of the frurts

of its ill-gotten gains,” ibid. (emphasis added), and held

that disgorgement is categorically unavailable precisely

because it is “aimed at separating the criminal from his

prior ill-gotten gains.” Pet. App. 19a. That holding

frustrates one of the chief aims of RICO’s civil remedies

—deterring future RICO violations by depriving the

RICO enterprise of the economic benefits of its unlaw-

ful conduct. Accomplishing that purpose is especially

important in the context of this case, because the

addictive nature of the products that are the subject of

respondents’ extensive pattern of fraud has ensured

that their conduct will have a lasting effect in its impact

on victims and in generating profits for respondents

that continue to this day and beyond.

The court of appeals’ decision has potentially far-

reaching implications for RICO cases generally and

enormous consequences for the American public. The

decision already has had consequences for the ongoing

litigation in this important civil-RICO action. The

government alleges that respondents—which include

the Nation’s major tobacco companies—formed an en-

terprise to convince millions of past, present, and future

smokers, through numerous documented instances of

mail and wire fraud over a period of decades, that

cigarettes—including “light” and “low-tar” varieties—

are safe and non-addictive and that second-hand smoke

does not pose a significant health risk. The government

has put forward extraordinarily extensive evidence in

the nine-month trial that respondents have violated

RICO. Notwithstanding the government’s compelling

showing of liability, the court of appeals’ decision will

22

severely constrain the remedies available to the

government.’

In the wake of the court of appeals’ decision, respon-

dents have argued that the ruling broadly “prohibits

remedies that ‘cure ill effects of past unlawful

conduct,” including: (a) a “smoking cessation program

* * * aimed at ameliorating * * * the addiction of

smokers * * * -deceived by fraudulent conduct”; (b)

“monitoring [of] smokers for the onset of smoking-

related diseases”; or (c) a “public education campaign

and * * * youth smoking prevention campaign” that

would “protect the public from being negatively

impacted by [respondents’] violations.” Defendants’

Memo. Regarding Non-Disgorgement Remedies 3, 9,

10, 11 (Feb. 23, 2005). The district court has not

definitively decided the scope of permissible relief, but

it has stated that the court of appeals’ ruling “simply

does not permit non-disgorgement remedies to prevent

and restrain the effects of past violations of RICO.”

Order #886, at 5 (Feb. 28, 2005). The government has

correspondingly curtailed its proposed remedies to

accord with the divided court of appeals’ ruling.®

7 The government’s evidence in support of RICO liability and

remedies has included testimony from 178 witnesses and more

~ than 11,000 offered or admitted trial exhibits. The government has

described its evidence in its opening statement, Trial Tr. 8-197, in

interim summations, id. at 6398-6455, 14,214-14,296, 19,676-19,758,

and in closing arguments, id. at 22,894-23,102.

8 The government developed evidence in discovery supporting

a disgorgement remedy that could have required respondents to

relinquish $280 billion in ill-gotten gains. But at trial, in light of

the court of appeals’ decision, the government has requested from

the trial court more limited remedies that, if imposed, would re-

quire respondents to pay at least $10 billion over five years for a

smoking cessation program and $4 billion over ten years for public

23

This case graphically illustrates the practical conse-

quences of the court of appeals’ decision. Under that

decision, the government faces the prospects that it

cannot effectively compel RICO violators to address

the consequences of their statutory violations and that

those violators may retain the profits of their unlawful

activity no matter how destructive the consequences

for the American public as a whole. Congress did not

intend that result, which in this case could prevent the

government from formulating effective equitable re-

medies and obtaining disgorgement of many billions of

dollars of proceeds that respondents obtained ee

the violation of federal law.

lil. THE INTERLOCUTORY CHARACTER OF THE

COURT OF APPEALS’ DECISION IN THIS

INSTANCE WEIGHS IN FAVOR OF THIS

COURT'S REVIEW

The United States has pointed out in numerous

instances that the interlocutory character of a court of

appeals’ decision normally counsels against this Court’s

immediate review because the proceeding in the lower

court may obviate the need for the Court’s interven-

tion. See, e.g., Brotherhood of Locomotive Firemen &

Enginemen v. Bangor & Aroostook R.R., 389 U.S. 327,

328 (1967). But the Court has recognized that “there is .

no absolute bar to review of nonfinal judgments of the

lower federal courts” and that the interlocutory char-

acter of a decision affects only the prudential calculus of

whether certiorari should be granted. See, e.g.,

Mazurek v. Armstrong, 520 U.S. 968, 975 (1997) (per

curiam) (summarily reversing an interlocutory order).

When “there is some important and clear-cut issue of

education and counter marketing. See [Proposed] Final Judgment

and Order (June 27, 2005).

24

law that is fundamental to the further conduct of the

case and that would otherwise qualify as a basis for

certiorari, the case may be reviewed despite its inter-

locutory status.” Robert L. Stern et al., Supreme Court

Practice 259 (8th ed. 2002). The Court has not hesitated

to review an interlocutory decision when “it is neces-

sary to prevent extraordinary inconvenience and em-

barrassment in the conduct of the cause.” American

Constr. Co. v. Jacksonville, Tampa & Key West Ry.,

148 U.S. 372, 384 (1898). Indeed, this Court has granted

review of interlocutory court of appeals decisions, de-

cided pursuant to 28 U.S.C. 1292(b), innumerable

times.” 3

This case presents an instance in which the pru-

dential considerations weigh heavily in favor of im-

mediate review. The issue presented here—whether

Section 1964(a) authorizes a court to grant the govern-

ment the remedy of equitable disgorgement in a RICO

action—plainly warrants this Court’s review for the

reasons already stated: (1) the divided court of appeals’

resolution of that issue is inconsistent with the de-

cisions of this Court and other courts of appeals (pp. 9-

19, supra); and (2) and the issue presents a vitally

important and recurring question that has major

consequences for this important case (pp. 20-23, supra).

The interlocutory character of the court of appeals’

ruling on that issue should not preclude this Court’s

® For a few recent examples, see, e.g., Cutter v. Wilkinson, 125

S. Ct. 2113 (2005); Norfolk S. Ry. v. Kirby, 125 S. Ct. 385 (2004);

Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369 (2004); Gratz v.

Bollinger, 539 U.S. 244 (2003); Beneficial Nat'l Bank v. Anderson,

539 U.S. 1 (2003); Breuer v. Jim’s Concrete of Brevard, Inc., 538

U.S. 691 (2003); Bartnicki v. Vopper, 532 U.S. 514 (2001); Green

Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000); Harris Trust

& Sav. Bank v. Salomon Smith Barney Inc., 530 U.S. 238 (2000).

25

review where the interlocutory review process has

produced an erroneous intermediate appellate court

ruling that, if left undisturbed, would require the

district court to fashion a remedy based on funda-

mentally mistaken principles of law.

- The district court determined five years ago that

Section 1964(a) allows equitable disgorgement, Pet.

App. 117a-121a, and it certified its May 24, 2004, order,

despite the government’s objection, for the limited

purpose of obtaining guidance on whether the so-called

“Carson standard” for disgorgement applies to this

case. See id. at 148a-153a. Over a forceful dissent, the

court of appeals panel majority elected to go beyond the

narrow issue that prompted the district court to certify

its order. See id. at 37a-49a, (Tatel, J., dissenting); see

note 1, supra. Indulging respondents’ “questionable

tactics” (id. at 48a), the divided court reached out to

decide an issue unnecessarily and contrary to the

decisions of this Court, other courts of appeals, and the

court of appeals’ own precedent. See pp. 9-19, supra.

That unwarranted and badly mistaken decision—

which the en bane court left unreviewed following a tie

vote on whether to grant rehearing—will impair, rather

than advance, the ultimate resolution of this case. The

district court certified its order for interlocutory review

to address the applicability of the Carson standard,

which that court discerned to provide a “substantial

ground for difference of opinion.” See Pet. App. 15la

(emphasis omitted). The court of appeals majority

instead reached out to address an issue—the avail-

ability of disgorgement—over which the district court

and the courts of appeals were heretofore in agreement.

If the Court postpones correction of the court of ap-

peals’ mistaken guidance until after the district court

issues an artificially constrained final judgment and this

: 26

complex case traces a new route through the court of

appeals, then the district court will be precluded from

correctly resolving this litigation until remand pro-

ceedings can be convened at a far distant date."

The district court has-not yet rendered a ruling on

liability in this case, but respondents have no basis for

expecting a favorable outcome. The government has

put forward a powerful liability case, see note 7, supra,

and the district court has provided no indication that

the government has failed to carry its burden of proof.

In any event, this Court has repeatedly granted review

of interlocutory court of appeals decisions in similar cir-

cumstances involving issues of far less significance. For

example, the Court recently reviewed an interlocutory

court of appeals decision addressing remedial issues

in advance of a liability determination in Norfolk

Southern Railway v. Kirby, 125 8S. Ct. 385 (2004). That

10 Under the current schedule, post-trial briefing will not be

completed until October 2005. See Order #964-A (June 10, 2005).

The district court could conceivably issue a final decision by early

2006, but even if the court of appeals undertook expedited review,

the briefing in the court of appeals would likely not be completed

until the summer of 2006. Given the massive record in this case,

the court of appeals would be unlikely to issue a decision until 2007.

Under the best of circumstances, this Court would not receive a

petition for writ of certiorari before the summer of 2007. If the

Court granted the petition, it could not reasonably be expected to

issue a decision until 2008. Under this optimistic projection,

remand proceedings would be unlikely to commence until late 2008

at the earliest. In light of the daunting burden the district court

would face in recommencing proceedings three or more years from

now in this complex six-year-old case, the Court should resolve the

correctness of the court of appeals’ interlocutory guidance during

its 2005 Term so that the district court can issue a final

decision—relying on this Court’s definitive guidance—by the

summer of 2006.

27

case, which involved narrow issues of maritime liability

affecting a limited number of carriers, involved matters

of far less pressing public importance than the issue

involved here. Nevertheless, the Court granted review

to decide—before the district court had determined

petitioner’s liability in the maritime contract dispute

—whether petitioner was entitled to the protection of

potential contractual liability limitations. See id. at

392."

In short, this case warrants the Court’s attention at

this critical juncture of the litigation. The court of

appeals’ mistaken interlocutory guidance not only pre-

sents an obstacle, rather than an aid, to the ultimate

termination of the litigation, but it stands as a mistaken

precedent that will continue to misdirect other courts

and constrain the government’s ability to seek full relief

in future civil RICO cases. As the court of appeals

'!'The Court followed the same practice in Yamaha Motor

Corp., U.S.A. v. Calhoun, 516 U.S. 199 (1996), granting review to

determine, in advance of a liability determination, whether certain

state law remedies remain available to a personal injury claimant

in a maritime wrongful-death suit. See id. at 204. The Court also

followed that practice in Chan v. Korean Air Lines, Ltd., 490 U.S.

122 (1989), granting review, in advance of a liability determination,

to determine whether the Warsaw Convention’s limitation on

damages for passenger death applies despite the defendant’s fail-

ure to provide adequate notice of the limitation. See id. at 124.

Similarly, the Court decided a case concerning the availability of

an innocent-owner defense in a civil forfeiture action where the

claimant, on remand, could also defeat forfeiture by rebutting the

finding of probable cause. United States v. 92 Buena Vista Ave.,

507 U.S. 111 (1993). Each of these cases reached the Court after

the respective court of appeals rendered a decision through the

interlocutory procedure set out in 28 U.S.C. 1292(b). See Kirby,

125 S. Ct. at 392; Yamaha, 516 U.S. at 204-205; Chan, 490 U.S. at

124-125; 92 Buena Vista Ave., 507 U.S. at 116.

28

panel itself acknowledged, its decision has created a

circuit conflict, and the court of appeals’ inability to

decide the issue en banc ensures that the conflict will

persist until this Court resolves it.

- CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

EDWIN S. KNEEDLER ss

Acting Solicitor General

PETER D. KEISLER

Assistant Attorney General

MICHAEL R. DREEBEN

Deputy Solicitor General

JEFFREY P. MINEAR

Assistant to the Solicitor

General

SHARON Y. EUBANKS

“ STEPHEN D. BRODY

FRANK J. MARINE

MARK B. STERN

ALISA B. KLEIN

MARK R. FREEMAN

Attorneys

JULY 2005

* The Solicitor General is disqualified in this case.

Court, U.S.

FILED

05-92 JUL 18 208

No. OGhkicE a= 7 13 CI EPK

In the Supreme Court of the Gnited States

UNITED STATES OF AMERICA, PETITIONER

Vv.

PHILIP Morris USA, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

APPENDIX TO THE

PETITION FOR A WRIT OF CERTIORARI

EDWIN S. KNEEDLER

Acting Solicitor General

Counsel of Record

PETER D. KEISLER

Assistant Attorney General

MICHAEL R. DREEBEN

Deputy Solicitor General

JEFFREY P. MINEAR

Assistant to the Solicitor ee

General

SHARON Y. EUBANKS

STEPHEN D. BRODY

FRANK J. MARINE

MARK B. STERN

ALISA B. KLEIN

MARK R. FREEMAN

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

TABLE OF CONTENTS

Page

Appendix A (court of appeals opinion,

dated Feb. 4, 2005) ....... idinidiblinapienpatiiegAciabeiins la

Appendix B (district court memorandum opinion,

REG OIE Fi OOO. cetcescescnsasscsensteveccncsonsonenasenasshesiateis - 79a

‘Appendix C (district court memorandum opinion,

dated May 21, 2004) ........ccccesecevee jindisishinindiinaingins 129a

Appendix D (district court memorandum order #579,

OE IND Big BPD hctietincntcintadcsiicnesintivanitanbisnsinncdtbenndite 148a

Appendix E (district court order, dated

EE i, PE sisncicesetiptnicncintininsintitivinndominnanionsactananiahasee 154a

Appendix F (district order, dated Ape. 19, 2005) .......... 156a

Appendix G (statutory provision) ............:sssssssersseseeeee 158a

(I)

APPENDIX A

UNITED STATES COURT OF APPEALS

DISTRICT OF COLUMBIA CIRCUIT

No. 04-5252

UNITED STATES OF AMERICA, APPELLEE

v.

PHILIP Morris USA INC., ET AL., F/K/A PHILIP MORRIS

INCORPORATED, APPELLANTS

Feb-4, 2005

OPINION

Before: SENTELLE and TATEL, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge

SENTELLE.

Concurring opinion filed by Senior Circuit Judge

WILLIAMS.

Dissenting opinion filed by Circuit Judge TATEL.

SENTELLE, Circuit Judge.

A group of cigarette manufacturers and related enti-

ties (“Appellants”) appeal from a decision of the District

Court denying summary judgment as to the Govern-

ment’s claim for disgorgement under the Racketeer

Influenced and Corrupt Organizations Act (““RICO” or

“the Act”), 18 U.S.C. §§ 1961-68. The relevant section

(la)

2a

of RICO, 18 U.S.C. § 1964(a), provides the District

Courts jurisdiction only for forward-looking remedies

that prevent and restrain violations of the Act. Be-

cause disgorgement, a remedy aimed at past violations,

does not so prevent or restrain, we reverse the decision

below and grant partial summary judgment for the

Appellants.

I. Background

In 1999 the United States brought this claim against

appellant cigarette manufacturers and research organi-

zations, claiming that they engaged in a fraudulent

pattern of covering up the dangers of tobacco use and

marketing to minors. The Government sought damages

under the Medical Care Recovery Act (“MCRA”), 42

U.S.C. §§ 2651-53, and the Medicare Secondary Payer

(“MSP”) provisions of the Social Security Act, 42 U.S.C.

§ 1895y to recover health-care related costs Appellants

allegedly caused. The United States also claimed that

Appellants engaged in a criminal enterprise to effect

this cover-up, and sought equitable relief under RICO,

including injunctive relief and disgorgement of pro-

ceeds from Appellants’ allegedly unlawful activities.

The Government sought this relief under 18 U.S.C. §

1964(a), which gives the District Court jurisdiction .

to prevent and restrain violations of [RICO] by issu-

ing appropriate orders, including, but not limited to:

ordering any person to divest himself of any inter-

est, direct or indirect, in any enterprise; imposing

reasonable restrictions on the future activities or

investments of any person, including, but not limited

to, prohibiting any person from engaging in the

same type of endeavor as the enterprise engaged in,

the activities of which affect interstate or foreign

3a

commerce; or ordering dissolution or reorganization

of any enterprise. .. .

18 U.S.C. § 1964(a).

Appellants moved to dismiss the complaint in 2000.

The District Court did dismiss the MCRA and MSP

claims, but allowed the RICO claim to stand. United

States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 134

(D.D.C. 2000).

Section 1964(a) conferred jurisdiction on the District

Court only to enter orders “to prevent and restrain vio-

lations of the statute.” In considering whether dis-

orgement came within this jurisdictional grant, the

court relied on a decision of the Second Circuit, the only

circuit then to have considered “whether .. . dis-

gorgements . . . are designed to ‘prevent and restrain’

future conduct rather than to punish past conduct.”

United States v. Carson, 52 F.3d 1173, 1182 (2d Cir.

1995) (emphasis in original). After noting that “RICO

has a broad purpose [and] the legislative history of

§ 1964 indicates that the equitable relief available under

RICO is intended to be ‘broad enough to do all that is

necessary,” id. at 1181, the Carson court went on to

observe that it did not see how it could “serve[ } any

civil RICO purpose to order disgorgement of gains ill-

gotten long ago. . . .” Z/d. at 1882. The portion of

Carson relied upon by the District Court in the present

controversy suggested that disgorgement might “serve

the goal of ‘preventing and restraining’ future viola-

tions,” but flatly held that the remedy would not do so

“unless there is a finding that the gains are being used

to fund or promote the illegal conduct, or constitute

4a

capital available for that purpose.”' Jd. at 1182. The

Second Circuit went on to caution that disgorgement

would be better justified under this analysis where the

“gains [were] ill-gotten relatively recently.” Jd. The

District Court accepted the Second Circuit’s suggested

holding that the appropriateness of disgorgement

depends on whether the proceeds are available for the

continuing of the criminal enterprise, but ruled that the

question was premature, and denied the motion for

dismissal on the RICO-disgorgement claim. Philip

Morris, 116 F. Supp. 2d at 151-52. Neither party

sought leave to file an interlocutory appeal of that

ruling.

The case proceeded, and the Government sought dis-

gorgement of $280 billion that it traced to proceeds

from Appellants’ cigarette sales to the “youth addicted

population” between 1971 and 2001. This population

includes all smokers who became addicted before the

age of 21, as measured by those who were smoking at

least 5 cigarettes a day at that age.

1 While the Carson language may appear to be dicta, the

Second Circuit remanded for determination of which disgorgement

amounts were sufficiently directed to prevention and restraint to

qualify under § 1964(a), thus treating the language on availability

of disgorgement as essential to the outcome of the case, and

therefore a holding. Some other courts have followed Carson. See,

¢.g., Richard v. Hoechst Celanese Chem. Group, Inc., 355 F.3d 345,

354 (5th Cir. 2003) (observing that “the Second Circuit noted

that disgorgement is generally available under § 1964”); United

States v. Private Sanitation Indus. Ass'n, 914 F. Supp. 895, 901

(E.D.N.Y. 1996) (“{(T]he disgorgement in this case is clearly di-

rected towards the prevention of future illegal conduct, and is

therefore a permissible remedy for civil RICO violations under the

limitations imposed by Carson.”).

5a

After discovery, Appellants moved for summary

judgment on the disgorgement claim arguing that (1)

disgorgement is not an available remedy under

§ 1964(a), (2) even if disgorgement were available, the

Government’s model fails the Carson test for permissi-

ble disgorgement that will “prevent and restrain” fu-

ture violations, and (3) even if disgorgement were avail-

able, the Government’s proposed model is impermissi-

ble because it includes both legally and illegally ob-

tained profits in violation of SEC v. First City Finan-

cial Corp., 890 F.2d 1215 (D.C. Cir. 1989). The District

Court denied this motion in a memorandum order

designated “#550.” United States v. Philip Morris

USA, Inc., 321 F. Supp. 2d 72 (D.D.C. 2004). On motion

of the defendants, the District Court certified Order

#550 for interlocutory appeal pursuant to 28 U.S.C.

§ 1292(b). That section provides for interlocutory ap-

peal where a district judge has certified that “an order

not otherwise appealable . . . involves a controlling

question of law as to which there is substantial ground

for difference of cpinion and that an immediate appeal

from the order may materially advance the ultimate

_termination.of litigation. . . .” Under § 1292(b), the

Court of Appeals may then decide whether to permit

the appeal to be taken from such order. In the present

case, we allowed the appeal.

II. Analysis

<—

A. Scope of Review

At the outset, the Government urges that our review

should be limited to the narrow question of whether the

disgorgement it seeks is consistent with the standards

of Carson, not whether disgorgement vel non is an

available remedy under civil RICO. The Government

bases this argument on the theory that the order on

6a

appeal—that is the memorandum order denying

“defendants’ motion for partial summary judgment dis-

missing the Government’s disgorgement claim”—was

reiterating a prior order on the general question of

availability of disgorgement. Further, the Government —

argues, the order spoke anew only to the measure of

disgorgement, assuming such disgorgement to be

otherwise available. In support of its proposed limita-

tion of our review, the Government relies upon Ya-

maha Motor Corp., USA v. Calhoun, 516 U.S. 199, 116

S. Ct. 619, 183 L. Ed. 2d 578 (1996). In Yamaha, the

Supreme Court dealt with the breadth of review prop-

erly conducted by a court of appeals under 28 U.S.C.

§ 1292(b). Id. at 204, 116 S. Ct. 619. The Government

selectively quotes from Yamaha the sentence that,

“The court of appeals may not reach beyond the certi-

fied order to address others made in the case.” Id. at

205, 116 S. Ct. 619. Based on this sentence, the Gov-

ernment then argues that because the first order deny-

ing a motion to dismiss had dealt with the question of

the availability of disgorgement, this certified interlocu-

tory review of the subsequent summary judgment

order is restricted to the new theory considered by the

court on that occasion-that the disgorgement the Gov-

ernment pursued exceeded the standard available for

such disgorgement as set by the Second Circuit in

Carson.

Unfortunately for the Government’s position, the

Yamaha opinion did not end with the sentence upon

which the Government relies. The Supreme Court

went on to say in the same paragraph: “But the appel-

late court may address any issue fairly included within

the certified order because ‘it is the order that is ap-

pealable, and not the controlling question identified by

Ta

the district court.’” Id. (emphasis in original) (quoting 9

J. MOORE & B. WARD, MOORE’S FEDERAL PRAC-

TICE § 110.25{1) at 300 (2d ed. 1995) and citing 16 C.

Wright, A. Miller, E. Cooper, & E. Greshman, Federal

Practice & Procedure § 3929 at 144-45 (1977)). Appel-

lants’ motion below was for “Summary Judgment Dis-

missing the Government’s Disgorgement Claim,” and

granting this motion would have resulted in complete

dismissal of the Government’s claim for disgorgement

with prejudice. See Appellee’s App. at 19, 79. Thus the

District Court’s denial was on the question of whether

disgorgement would be allowed at all, and we may

review it as such regardless of the grounds the District

Court gave for its decision. In the memorandum ac-

companying its denial of this motion, evidencing an

accurate understanding of the summary judgment

standard provided by Rule 56 of the Federal Rules of

Civil Procedure, the District Court noted that “sum-

mary judgment is appropriate if the pleadings, deposi-

tions, answers to interrogatories, and admissions on

file, together with the affidavits, if any, show that there

is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of

law.” Philip Morris, 321 F. Supp. 2d at 74 (citing FED.

R. Civ. P. 56(c)). Significantly, the court further noted

that “Defendants argue that any disgorgement which

might be ordered upon a finding of liability must be

limited by both the text of Section 1964(a) itself and the

holding in United States v. Carson . . . interpreting

that section.” Philip Morris, 321 F. Supp. 2d at 74

(emphasis added). Thus the court clearly implied the

possibility that none might be ordered, and that sta-

tutory issues outside Carson were before the court.

8a

Our dissenting colleague argues that the availability

of the disgorgement claim vel non is not before us be-

cause Appellants did not fully restate their earlier argu-

ments in their motion, but only expressed their reser-

vation in a footnote referencing the District Court’s

prior rejection of their position. While it is true, as our

colleague reminds us, that we have held that a “litigant

does not properly raise an issue by addressing it in a

‘cursory fashion,’ with only ‘bare-bones arguments,”

Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855,

869 (D.C.Cir. 2001) (per curiam), our prior holdings on

that subject have been in very different contexts. In

Cement Kiln, for example, and in Wash. Legal Clinic

for the Homeless v. Barry, 107 F.3d 32, 39 (D.C. Cir.

1997), relied upon by the dissent, we were determining

whether an issue was properly before us that had been

raised in no other fashion: In the present case, we are

reviewing a summary judgment decision, presumably

according to the standards set forth by the Supreme

Court in such decisions as Yamaha, and the issue in

question was clearly decided by the District Court in

the first rejection of the motion to dismiss. The issue

was called to the attention of the second summary

judgment order, now under direct review, and ex-

pressly pointed out in the footnote which our colleague

disdains. Furthermore, the motion leading to the order

presently before us sought summary judgment of

dismissal of the disgorgement claim, not simply a

limitation to such disgorgement as might have been

supported by the Carson test or other factors. Given

the Supreme Court’s plain teaching in Yamaha, par-

ticularly its adoption from a learned treatise of the

language “it is the order that is appealable, and not the

controlling question identified by the district court,”

Yamaha, 516 U.S. at 205, 116 S. Ct. 619 (see other

9a

authorities, supra), Cement Kiln and Barry have no

applicability. Yamaha controls. We therefore proceed

to review the denial of summary judgment, under the

usually applicable standards, not simply the sole

question to which the Appellees and the dissent would

restrict us.

Our dissenting colleague suggests that we are limited

by “our general policy of declining to consider argu-

ments not made to the district court in the motion lead-

ing to the order under appeal.” Dissent at 1211. We

know of no such “general policy” that the particular

issue addressed has to have been raised in the parti-

cular motion. Rather, we understand our general policy

to be following the instructions of the Supreme Court

that we are to “address any issue fairly included within

the certified order.” Yamaha, 516 U.S. at 205, 116 S.

Ct. 619. Insofar as our colleague’s differing under-

standing rests on United States v. British Am. Tobacco

(Invs.) Ltd., 387 F.3d 884, 892 (D.C. Cir. 2004) (citing

United States v. Hylton, 294 F.3d 130, 135-36 (D.C. Cir.

2002)), cited by Dissent at 1213, we do not read that

case aS supporting a general policy that limits con-

sideration to those arguments raised in the particular

motion leading to the certified order, as opposed to

being “fairly included” within that order, or even to

address the point. The court in British American

Tobacco held only that an intervenor that had raised a

privilege issue with respect to an entire collection of

documents at one stage of the litigation, but that failed

to participate at all in later proceedings focused on one

of the documents, despite having notice, had not ade-

quately preserved its objection as to that single docu-

ment. 387 F.3d at 887-88. It had nothing to do with the

scope of review on an interlocutory appeal under

10a

§ 1292(b). Neither it nor Hylton dealt in any fashion

with the breadth of interlocutory review, nor was

establishing any standard for the papers in which an

argument must have been raised. Each rejected an

attempt by an appellant to raise a new ground for the

first time on appeal. Appellants before us raised and

preserved their argument as set forth in the text above.

We read nothing in British American Tobacco or

Hylton to suggest a general policy barring our review

under the Yamaha standard.

We find no history of such a general policy that would

bar us from considering questions logically antecedent

and essential to the order under review. Especially is

this so given the Supreme Court’s instructions in Ya-

maha that we are to “address any issue fairly included

within the certified order.” That must include at least

issues that are logically interwoven with the explicitly

identified issue and which were properly presented by

the appellant. Even ignoring the apparent allusion to

the broader issue of summary judgment preserved in

the caption of the motion, the relief sought, and the

footnote provided above, it is difficult to see how we

could establish such a policy that would cause us to

affirm a decision denying summary judgment when a

ground compelling its grant is fairly encompassed

within the order. Our colleague’s interpretation of

general policy would seem to compel us to return for

trial a case before us for review of a denial of summary

judgment, no matter how plain the absence of sub-

stantial question of material fact, on the grounds that

the denial of summary judgment had been based on

rejection of some other reasoning in a previous motion,

even though the trial court had earlier erred in denying

the first motion to dismiss—even when the appellant