# Appendix — United States v. Philip Morris USA Inc.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_1697%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2005
- **Citation:** 546 U.S. 960

## Text

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had called that denial to the court’s attention in the
caption of its motion, and a proposed order
accompanying the second motion.

Our dissenting colleague finds in Yamaha support for
the proposition that “the only issues ‘fairly included’
within a certified order are those decided in the district
court’s accompanying memorandum. . . .” Dissent at
1213. We understand the law to be, as suggested in
Yamaha, that issues are not decided in memoranda at
all, but rather in orders. Therefore, consistent with Ya-
nuuha, we review orders, not memoranda, Our col-
league asserts that in Yamaha the Court “found ‘fairly
included’ an issue that the district court had resolved in
the same opinion in which it decided the issue identified
as the controlling question of law.” Dissent at 1213.
While this may well be the case, the Supreme Court not
only did not stress that circumstance, it did not even
mention it. Indeed, we note that our colleague had to
repair to the unpublished opinion of the District Court
to discover the truth of his proposition. We seriously
doubt that the Supreme Court intended to establish a
precedent that difficult to discover, let alone apply.

Nothing in United States v. Stanley, 483 U.S. 669, 107
S. Ct. 3054, 97 L. Ed. 2d 550 (1987), is to the contrary.
The passage relied upon by our dissenting colleague to
the effect that courts considering interlocutory appeals
under § 1292(b) should “not consider matters that were
ruled upon in other orders,” id. at 677, 107 S. Ct. 3054,
did not address a situation like the one before us. Here
the order appealed from reiterated, and totally de-
pended upon, an issue fairly encompassed within the
motion before that court and the order now before us.
In Stanley, the court of appeals undertook interlocutory
review of an order dealing with one claim of a multi-

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claim complaint. In that order, the district court had
refused to dismiss a claim asserted under the authority
_ of Bivens v. Six Unknown Fed. Narcotics Agents, 403
US. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971). On
appeal, the court of appeals not only affirmed the dis-
trict court’s conclusion as to the Bivens claim, but
reached back in the record to order the district court to
reinstate another claim for relief asserted under the
Federal Tort Claims Act, 28 U.S.C. § 2671 et seg. In the
present case, the disputed “prior order” had denied
judgment of dismissal on the disgorgement claim. The
order concededly before us denied judgment of dis-
missal on the same disgorgement claim. We see noth-
ing in Staniey inconsistent with the later instruction in
Yamaha recognizing our jurisdiction to “address any
issue fairly included within the certified order.” Ya-
maha, 516 U.S. at 205, 116 S. Ct. 619. We therefore
proceed, obedient to our understanding of Yamaha, to
review the order before us denying summary judgment.

We review an order denying summary judgment de
novo. Cicippio-Puleo v. Islamic Republic of Iran, 353
F.3d 1024, 1081 (D.C. Cir. 2004). Obedient to Yamaha,
we will review Order #550 denying summary judgment
applying anew the standards of Rule 56, and will not
simply review that part of the District Court’s thinking
directed to the applicability of the Carson standard or
the consistency of the Government’s proffers with that
standard. Therefore, we must address the issue, logi-
cally prior to the Carson question, of whether disgorge-
ment is available at all. We hold that the language of
§ 1964(a) and the comprehensive remedial scheme of
RICO preclude disgorgement as a possible remedy in
this case.

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B. The Availability of Disgorgement

The Government argues that § 1964 contains a grant
of equitable jurisdiction that must be read broadly to
permit disgorgement in light of Porter v. Warner
Holding Co., 328 U.S. 395, 66 S. Ct. 1086, 90 L. Ed. 1332
(1946), and its progeny. The Porter Court considered
reimbursement awards under the Emergency Price
Control Act of 1942 (“EPCA”) and concluded that
where a statute grants general equitable jurisdiction to
a court, “all the inherent equitable powers . . . are
available for the proper and complete exercise of that
jurisdiction.” Porter, 328 U.S. at 398, 66 S. Ct. 1086.
This grant is only to be limited when “a statute in so
many words, or by a necessary and inescapable infer-
ence, restricts the court’s jurisdiction.” Jd. In this case
the text and structure of the statute provide just such a
restriction.

As the Supreme Court has repeatedly observed:
“Federal courts are courts of limited jurisdiction. They
possess only that power authorized by Constitution and
statute, which is not to be expanded by judicial decree.”
Kokkonen v. Guardian Life Ins. Co. of America, 511
U.S. 375, 377, 114 S. Ct. 1678, 128 L. Ed. 2d 391 (1994)
(citations omitted). Reading Porter in light of this
limited jurisdiction we must not take it as a license to
arrogate to ourselves unlimited equitable power. We
will not expand upon our equitable jurisdiction if, as
here, we are restricted by the statutory language, but
may only assume broad equitable powers when the

statutory or Constitutional grant of power is equally
broad.

As our dissenting colleague correctly notes, the
Court in Porter was considering whether a district
court acting under the authority granted in the EPCA

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had the authority to order restitution for overcharges.
The implication of broad equitable authority in Porter
came from a statute which empowered the district
court to grant “a permanent or temporary injunction,
restraining order, or other order.” EPCA § 205(a), 56
Stat. 28, 33 (1942). The action before the Court in
Porter was brought under a section providing that “the
Administrator” could bring action against persons
engaged in overcharges for “an order enjoining such
acts or practices, or for an order enforcing compliance
with such provision, and upon a showing by the Admi-
nistrator that such person has engaged or is about to
engage in any such acts or practices a permanent or
temporary injunction, restraining order, or other order
shall be granted without bond.” Jd.

The Supreme Court did not have to make much of a
stretch to determine that the phrase “enforcing compli-
ance with such provision,” and expressly referring to “a
permanent or temporary injunction, restraining order, |
or other order,” would include restitution for amounts
collected exceeding the ceilings determined under the
statute. The Government in the present case asks us to
work a far greater expansion of the statutory grant en-
abling the District Court in a civil RICO action brought
by the Government under § 1964(a). We further note
that the Court in Porter was ordering restitution, under
a statute designed to combat inflation. Restitution of
overcharge works a direct remedy of past inflation,
directly effecting the goal of the statute. The Court in
Porter set forth two theories under which “{a]n order
for the recovery and restitution of illegal rents may be
considered a proper ‘other order’ “ under the applicable
statute. 328 U.S. at 399, 66 S. Ct. 1086. First, the
recovery of the illegal payment by the victim tenant

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“may be considered as an equitable adjunct to the
injunction decree,” as it effects “the recovery of that
which has been illegally acquired and which has given.
rise to the necessity for injunctive relief.” Jd. (noting
that “such a recovery could not be obtained through an
independent suit in equity if an adequate legal remedy
were available.”). The equitable jurisdiction of the
Court having been properly invoked, the Court then
had the power “to decide all relevant matters in dispute
and to award complete relief. . . .” Jd. Also, and more
to the point, the Court was authorized “in its discretion,
to decree restitution of excessive charges in order to
give effect of the policy of Congress.” Id. at 400, 66 S.
Ct. 1086. The policy of Congress under the EPCA was
to-prevent overcharges with inflationary effect. The
goal of the RICO section under which the government
seeks disgorgement here is to prevent or restrain
future violations. We therefore must consider the for-
ward-looking nature of the remedy in a way not applica-
ble to a different remedy in Porter for the accomplish-
ment of a different goal under a different statute.

Section 1964(a) provides jurisdiction to issue a vari-
ety of orders “to prevent and restrain” RICO viola-
tions. This language indicates that the jurisdiction is
“limited to forward-looking remedies that are aimed at
future violations. The examples given in the text bear
this out. Divestment, injunctions against persons’
future involvement in the activities in which the RICO
enterprise had been engaged, and dissolution of the
enterprise are all aimed at separating the RICO crimi-
nal from the enterprise so that he cannot commit
violations in the future. Disgorgement, on the other
hand, is a quintessentially backward-looking remedy
focused on remedying the effects of past conduct to

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restore the status quo. See, e.g., Tull v. United States,
481 U.S. 412, 424, 107 S. Ct. 1881, 95 L. Ed. 2d 365
(1987). It is measured by the amount of prior unlawful
gains and is awarded without respect to whether the
defendant will act unlawfully in the future. Thus it is
both aimed at and measured by past conduct.

The Government would have us interpret § 1964(a)
instead to be a plenary grant of equitable jurisdiction,
effectively ignoring the words “to prevent and restrain”
aitogether. This not only nullifies the plain meaning of
the terms and violates our canon of statutory construc-
tion that we should strive to give meaning to every
word, see, e.g., Murphy Explor. & Production Co. v.
United States Dept. of the Interior, 252 F.3d 473, 481
(D.C. Cir. 2001), but also neglects Supreme Court pre-
cedent. In Meghrig v. KFC Western, Inc., 516 U.S. 479,
488, 116 S. Ct. 1251, 184 L. Ed. 2d 121 (1996), the Court
held that compensation for past environmental cleanup
was ruled out by the plain language of the Resource
Conservation and Recovery Act which authorized
actions “to restrain” persons who were improperly dis-
posing of hazardous waste. If “restrain” is only aimed
at future actions, “prevent” is even more so.

Mitchell v. DeMario Jewelry, 361 U.S. 288, 80 S. Ct.
332, 4 L. Ed. 2d 323 (1960), relied on by the Govern-
ment, is not to the contrary. The Mitchell case was
brought under the Fair Labor Standards Act of 1938, 29
U.S.C. § 215, 52 Stat. 1060 (1938) (“FLSA”). In that
action, the Government was invoking the court’s juris-
diction to restrain violations of a section making it un-
lawful for a covered employer to discharge or discrimi-
nate against employees who had filed complaints or
instituted actions under the FLSA. The Court re-
viewed the whole breadth of that broad Act to conclude

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that the available remedies included not only injunction
against further discrimination and mandatory injunc-
tions of reinstatement, but also a “make whole” reim-
bursement for lost wages because of the discriminatory
discharge. As in Porter, the Court reiterated that in
equitable jurisdiction “[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.” Mitchell, 361 U.S. at 291,
80 S. Ct. 332 (quoting Porter, 328 U.S. at 398, 66 S. Ct.
1086). In the RICO Act, Congress provided a statute
granting jurisdiction defined with the sort of limitations
not present in the FLSA or the EPCA. The statute
under which the Government sued Appellants, 18
U.S.C. § 1964(a), granted only the jurisdiction which we
set forth above. The District Court, so far as is rele-
vant to actions under that section, has jurisdiction only

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
commerce; or ordering dissolution or reorganization
of any enterprise. .

18 U.S.C. § 1964(a) (emphasis added). The order of
disgorgement is not within the terms of that statutory
grant, nor any necessary implication of the language of
the statute.

In considering the broad language from Porter upon
which our dissenting colleague relies for the proposition

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that we should find disgorgement available because
Congress has not taken it away, we note that the Su-
preme Court considered a similar argument in Meghrig.
The High Court nonetheless limited the available reme-
dies under CERCLA to those provided in the statute,
declaring that

where Congress has provided “elaborate enforce-
ment provisions” for remedying the violation of a
federai statute, 4s Congress has done with RCRA
and CERCLA, “it cannot be assumed that Congress
intended to authorize by implication additional judi-
cial remedies. . . .”

516 U.S. at 487-88, 116 S. Ct. 1251 (quoting Middlesex
County Sewerage Auth. v. Nat’l Sea Clammers Ass’n,
453 US. 1, 14, 101 S. Ct. 2615, 69 L. Ed. 2d 435 (1981)).

In RICO, as in RCRA and in CERCLA, Congress
- has laid out elaborate enforcement proceedings. One of
those proceedings is a government action brought
under § 1964(a). That one does not provide for dis-
gorgement. That one provides only for orders which
“prevent or restrain” future violations. Disgorgement
does not do that.

It is true, as the Government points out, that dis-
gorgement may act to “prevent and restrain” future
violations by general deterrence insofar as it makes
RICO violations unprofitable. However, as the Second
Circuit also observed, this argument goes too far. “If
this were adequate justification, the phrase ‘prevent
and restrain’ would read ‘prevent, restrain, and discour-
age,’ and would allow any remedy that inflicts pain.”
Carson, 52 F.3d at 1182.

The remedies available under § 1964(a) are also
limited by those explicitly included in the statute. The

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words “including, but not limited to” introduce a non-
exhaustive list that sets out specific examples of a
general principle. See Dong v. Smithsonian Iust., 125
F.3d 877, 880 (D.C. Cir. 1997). Applying the canons of
noscitur a sociis and eyusdem generis, we will expand
~ on the remedies explicitly included in the statute only
with remedies similar in nature to those enumerated.
See Wash. State Dep’t of Soc. & Health Servs. v.
Guardianship Estate of Keffeler, 537 U.S. 371, 384, 123
S. Ct. 1017, 154 L. Ed. 2d 972 (2003). The remedies
explicitly granted in § 1964(a) are all directed toward
future conduct and separating the criminal from the
RICO enterprise to prevent future violations. Dis-
gorgement is a very different type of remedy aimed at
_ separating the criminal from his prior ill-gotten gains
- and thus may not be properly inferred from § 1964(a).

The structure of RICO similarly limits courts’ ability
to fashion equitable remedies. Where a statute has a
“comprehensive and reticulated” remedial scheme, we
are reluctant to authorize additional remedies; Con-
gress’ care in formulating such a “carefully crafted and
detailed enforcement scheme provides strong evidence
that Congress did not intend to authorize other reme-
dies that it simply forgot to incorporate expressly.”
Great-West Life & Annuity Ins. Co. v. Knudson, 534
U.S. 204, 209, 122 S. Ct. 708, 151 L. Ed. 2d 635 (2002)
(quoting Mertens v. Hewitt Associates, 508 U.S. 248,
251, 254, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993))
(internal quotations omitted) (emphasis in original).
RICO already provides for a comprehensive set of
remedies. When Congress intended to award remedies
that addressed past harms as well as those that offered
prospective relief, it said as much. In a criminal RICO
action the defendant must forfeit his interest in the

20a

RICO enterprise and unlawfully acquired proceeds, and
may be punished with fines, imprisonment for up to
twenty years, or both. 18 U.S.C. § 1963(a). In a civil
case the Government may request limited equitable
relief under § 1964(a). Individual plaintiffs are made
whole and defendants punished through treble damages
under 18 U.S.C. $ 1964(c). This “comprehensive and
reticulated” scheme, along with the plain meaning of
the words themselves, serves to raise a “necessary and
inescapable inference,” sufficient under Porter, 328 U.S.
at 398, 66 S. Ct. 1086, that Congress intended to limit
relief under § 1964(a) to forward-looking orders, ruling
out disgorgement.

Congress’ intent when it drafted RICO’s remedies
would be circumvented by the Government’s broad
reading of its § 1964(a) remedies. The disgorgement re-
quested here is similar in effect to the relief mandated
under the criminal forfeiture provision, § 1963(a), with-
out requiring the inconvenience of meeting the addi-
tional procedural safeguards that attend criminal
charges, including a five-year statute of limitations, 18
U.S.C. § 8282, notice requirements, 18 U.S.C. § 1963(1 ),
and general criminal procedural protections including
proof beyond a reasonable doubt. Further, on the Gov-
ernment’s view it can collect sums paralleling-perhaps
exactly-the damages available to individual victims
under § 1964(c). Not only would the resulting overlap
allow the Government to escape a statute of limitations
that would restrict private parties seeking essentially
identical remedies, see Agency Holding Corp. v.
Malley-Duff & Assoc., Inc., 483 U.S. 148, 156, 107 S. Ct.
2759, 97 L. Ed. 2d 121 (1987), but it raises issues of du-
plicative recovery of exactly the sert that the Supreme
Court said in Holmes v. Securities Investor Protection

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Corp., 503 U.S. 258, 269, 112 S. Ct. 1311, 117 L. Ed. 2d
532 (1992), constituted a basis for refusing to infer a
cause of action not specified by the statute. Permitting
disgorgement under § 1964(a) would therefore thwart
Congress’ intent in creating RICO’s elaborate remedial
scheme.

A note appended to the statute stating that RICO
“shall be liberally construed to effectuate its remedial
purposes” does not effect this structural inference.
- Organized Crime Control Act of 1970, Pub. L. No.
91-452, § 904(a), 84 Stat. 947 (codified in a note following
18 U.S.C. § 1961). This clause may warn us against
taking an overly narrow view of the statute, but “it is
not an invitation to apply RICO to new purposes that
Congress never intended.” Reves v. Ernst & Young,
507 U.S. 170, 183, 113 S. Ct. 1163, 122 L. Ed. 2d 525
(1993). The text and structure of RICO indicate that
those remedial purposes do not extend to disgorgement
in civil cases.

The Second Circuit in Carson has interpreted “pre-
vent and restrain” not to eliminate the possibility of
disgorgement altogether, but to limit it to cases where
there is a finding “that the gains are being used to fund
or promote the illegal conduct, or constitute capital
available for that purpose.” Carson, 52 F.3d at 1182.
The Fifth Circuit adopted this interpretation in a case
holding that disgorgement after the defendant had
ceased production of an allegedly defective product
would be inappropriately punitive rather than directed
toward future violations. See Richard v. Hoechst Cela-
nese Chemical Group, 355 F.3d 345, 355 (5th Cir. 2003).
While we avoid creating circuit splits when possible, in
this case we can find no justification for considering any
order of disgorgement to be forward-looking as re-

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quired by § 1964(a). The language of the statute explic- -
itly provides three alternative ways to deprive RICO
defendants of control over the enterprise and protect
against future violations: divestment, injunction, and
dissolution. We need not twist the language to create a
new remedy not contemplated by the statute.

Our colleague reminds us that the Supreme Court
has instructed “[i]f a precedent of this Court has direct
application in a case, yet appears to rest on reasons
rejected in some other line of decisions, the Court of
Appeals should follow the case which directly controls,
leaving to this Court the prerogative of overruling its
own decisions.” Dissent at 1220 (quoting Rodriguez de
Quijas v. Shearson/American Express, Inc., 490 U.S.
477, 484, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989)). This
would be most devastating to one side of the case or the
other if we were in fact attempting to overrule a Su-
preme Court precedent. That is, if there were a Su-
preme Court case that had direct application to the
facts before us, we would be required to follow it, and
that would be the end of the matter. We would not
need to consider any other line of cases. However, the
Rodriguez de Quijas language is not particularly help-
ful when no precedent of the Supreme Court “has direct
application,” as in the present case. There is not a
Supreme Court case dealing with the jurisdiction of a
district court to order disgorgement under RICO
§ 1964(a). There is not a Supreme Court case
discussing that question. There is, in short, no Supreme
Court case having direct application. With no Supreme
Court case having direct application, it is our duty to
construe the statute. That is what we have done.

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III. Conclusion

Because we hold that the District Court erred when
it found that disgorgement was an available remedy
under 18 U.S.C. § 1964(a), we reverse the District
Court and grant summary judgment in favor of Appel-
lants as to the Government’s disgorgement claim.

WILLIAMS, Senior Circuit Judge, concurring.

I join the opinion for the court. I write separately to
emphasize problems with the government’s fallback
interpretation of 18 U.S.C. § 1964(a), under which the
government could obtain disgorgement for purposes of
reducing the defendant’s ability to commit future RICO
violations, with the amount accordingly limited to as-
sets “being used to fund or promote the illegal conduct,
or {that} constitute capital available for that purpose.”
United States v. Carson, 52 F.3d 1173, 1182 (2d Cir.
1995). This superficially appealing interpretation in fact
creates a kind of pushmi-pullyu, a beast that Congress
is most unlikely to have ordained.

I.

The statute gives district courts “jurisdiction to pre-
vent and restrain [RICO] violations.” 18 U.S.C. §
1964(a). Reasoning that pure deterrence was an imper-
missible objective of orders under § 1964(a), the Second
Circuit went on to find that disgorgement could “pre-
vent and restrain” if limited to the amount of ill-gotten
gains that were “being used to fund or promote the
illegal conduct, or constitute capital available for that
purpose.” /d. at 1182. Because money is fungible, as
indeed are virtually all resources when viewed as
enablers of future criminal conduct, the government
here refines its Carson-derived fallback position, quite
sensibly rejecting any limitation to “ill-gotten gains” in

24a

the form of specific money or resources so gained. Such
a limit, we have said (applying a different statute),
would lead to absurd results. SEC v. Banner Fund
International, 211 F.3d 602, 617 (D.C. Cir. 2000). There
the defendant proposed to confine disgorgement to the
“actual assets” unjustly received. We said that what
mattered was not the specific assets but the amownt by
which the defendant was unjustly enriched; the alter-
native would allow a defendant to escape liability by
spending ill-gotten gains while husbanding other assets.
Id. at 617. Thus the government’s proposal is that the
amount of the ill-gotten gains should set a ceiling on the
disgorgement recovery, subject to the further limit
mentioned above—essentially purporting to limit the
disgorgement to crime-enabling resources, broadly con-
strued.

In Carson itself the court ruled that this prevented
the government from forcing disgorgement of funds, ill-
gotten in the distant past, from a RICO defendant by
then retired from the RICO enterprise itself (a union).
In the context of corporate defendants such as those
before us, a possible limit would be the entire net worth
of the companies (a good deal less than the $280 billion
that the government claims to have been ill-gotten
gains). But perhaps not. Even that limit is arbitrary,
as resources can be used for criminal purposes even if
offset by company debt. Subject to the bankruptcy
laws, nothing in the logic of the crime-enablement
theory clearly calls for stopping at confiscation of the
shareholders’ interests; why not the bondholders’ as
well?

On the other side, it might be plausible under the
Carson theory to exempt firm resources now devoted
to non-tobacco enterprises. It is probably about as

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difficult for these defendants to re-allocate resources
from the businesses of cheese and crackers, for exam-
ple, to criminality in the sale of cigarettes, as for the
union in Carson to lure Carson and his funds back from
retirement to union criminality.

In short, Carson and the government’s fallback
position send the court off on a virtually metaphysical
quest to draw lines based on the likelihood that parti-
cular resources will be devoted to crime.

II.

It is hardly surprising that there are only gossamer
lines between drastic disgorgement (destruction of
bondholder as well as shareholder wealth) and rela-
tively mild disgorgement (cordoning off resources in
non-tobacco subsidiaries). The plain fact is that wealth
deprivation is an extremely crude device for “prevent-
fing}’ criminal behavior. Granted, a criminal miscreant
with a billion dollars is potentially more dangerous than
an impoverished criminal miscreant. But ordinarily the
forces most affecting the likelihood of criminal action
are, besides the actors’ ethical standards and sense of
shame, truly forward-looking conditions: the returns to
crime versus the possible costs, all adjusted for risk
(such as the risk of getting caught).

Confusion arises from an ambiguity in our under-
standing that, in the civil context, such remedies as
damage awards and restitution “deter,” and thus in a
sense “prevent” commission of torts, breaches of con-
tract, and other civil wrongs. It is quite true that a rule
or practice of awarding such remedies deters, and thus
prevents, such wrongs. Indeed, under one viewpoint
that is the primary or even sole purpose of awarding
such remedies. See William M. Landes & Richard A.

26a

Posner, The Economic Structure of Tort Law (1987).
But it is the rule or practice that creates the incentive.
To make the rule credible, of course, the awards must
be made; but no individual award has a material deter-
rent effect.

To evaluate that last statement consider a society
that empowered some deus ex machina to randomly
excuse one damage judgment in a million. Such an
exception to the rules would have no detectable effect
on the commission of torts or breaching of contracts.
Even the lucky defendant who enjoyed the benefit of
the pardon wouldn’t—unless a complete fool—materi-
ally alter his future conduct because of that manna from
heaven.

The equity court, empowered under § 1964(a) to
“prevent and restrain” future violations, has before it
the history of the defendant, including his past wrongs.
It can decree relief targeted to his plausible future
behavior. It can define the conditions bearing directly
on that behavior. It can, for example, establish sched-
ules of draconian contempt penalties for future viola-
tions, and impose transparency requirements so that
future violations will be quickly and easily identified.

In assessing the likelihood that Congress intended an
additional disgorgement remedy, it makes sense to
inquire into the tendency of such an implied remedy to
“prevent and restrain” future violations by the defen-
dant. Of course the rule the government seeks here
would be a rule, not merely a random extra penalty.
But the question would be its incremental effect, on top
of (1) RICQO’s explicit provisions for criminal penalties
(including disgorgement and imprisonment under §
1963(a)) and for victim recoveries (trebled) under §
1964(c), and (2) the whole available panoply of genu-

27a

inely forward-looking remedies—express controls over
substantive conduct, transparency-enhancing orders,
and contempt penalties for violations. It seems almost
inconceivable that many aspiring criminals would find
the incremental risk decisive. I find it hard to imagine a
waffling villain—already in court for RICO violations—
saying to himself: “Well, my chances of escaping
§ 1963(a) forfeiture and imprisonment because of the
statute of limitations and the burden of proof, and of
escaping treble damages under § 1964(c), and contempt
penalties for violating the court’s orders, still leave
RICO violations attractive on a net basis; but that im-
plied disgorgement under § 1964(a)—wow! Too much.
It tilts me over the line.”

The weakness of that scenario supports the inference
that for the defendant who winds up before the equity
court, Congress intended the words “prevent and
restrain” to authorize only a tailored, forward-looking
remedy. Penalties for violations of the court’s decree,
and transparency-enhancing measures meet that stan-
dard. A purported § 1964(a) disgorgement remedy, on
top of those explicitly authorized, would provide only a
trivial incremental effect (the reverse of the pardon
granted once in a million), and would not qualify. Nor
would disgorgement aimed at reducing the defendant’s
crime-enabling resources, a factor linked only crudely
to his future tendency toward criminality.

Once we (1) accept the proposition that § 1964(a)
limits the equity court to forward-looking remedies, as
even the dissent appears to do with respect to the
government’s narrower argument, see Dissent at 1224-
25 (“I also share the Second Circuit’s apparent con-
clusion. . . that disgorgement may be ordered only to
prevent and restrain a defendant from future RICO

28a

violations.”), and (2) reject the supposition that “what-
ever hurts a civil RICO violator necessarily serves to
‘prevent and restrain’ future violations,” Carson, 52
F.3d at 1182, the court must try to draw lines between
equitable remedies that merely “hurt” the defendant
and ones that have a genuine tendency to “prevent and
restrain” his future violations.

Because disgorgement under § 1964(a) so evidently
lacks that tendency, the dissent relies on Porter and on
the government’s experts. Porter indeed includes the
twice cited phrase suggesting that “[f]uture compliance
may be more definitely assured if one is compelled to
restore one’s ill- gotten gains.” Dissent at 1223, 1224.
But the statute at issue in Porter gave district courts
power to issue orders “enforcing compliance” and thus
didn’t seem to narrow the grant to forward-looking
remedies. Indeed the Porter dissent never suggests
such a limit; nor, so far as appears, did the defendant
firm. For construing § 1964(a), Porter is of remarkably
little help.

The expert testimony offered by the government for
the proposition that backward-looking disgorgement
will “‘prevent and restrain’ defendants from commit-
ting future RICO violations,” see Dissent at 1226, ser-
ves no better. Obviously such testimony cannot alone
resolve the issue, turning legal analysis of the statute
into a fact battle among experts. Thus the experts’
testimony is valuable for its analytic quality, not its
utterance by a PhD.

29a

The dissent’s genuflection before the experts leaves
the reader to imagine some supporting analysis. Lest
the imagination run riot, I attach an appendix con-
taining all of the expert testimony that the government
saw fit to offer on the point in the summary judgment
motion. The crux is Dr. Franklin Fisher’s statement:

[Defendants’ experts} have also suggested that
enjoining Defendants from future illegal behavior
and threatening them with the possibility of finan-
cial penalties would be more effective as future
deterrents than would be disgorgement. Professor
Weil, for example, suggests that ‘the Court could
establish now a schedule of fines or punishments
that it would levy should the Defendants engage in
prohibited behavior.’ These experts forget that
laws prohibiting this behavior already exist and
that, despite these laws and their associated reme-
dies, the Defendants allegedly chose to engage in
the illegal behavior. In this context, it is important
to note that requiring Defendants to pay proceeds
would strengthen the credibility of existing laws
and thus provide additional economic incentives to
deter future misconduct. '

While it is a nice rhetorical move to point out that the
defendants violated RICO (as we must assume) despite
existing sanctions, Fisher offers no analysis as to why
the presence of a civil disgorgement remedy in favor of

1 United States Memorandum in Opposition to Defendants’
Motion for Partial Summary Judgment Dismissing the Govern-
ment’s Disgorgement Claim, Appellee’s Appendix at 813-14.
Although Appellee’s Appendix was filed under seal, the expert
testimony presented to the court has also been posted by the gov-
ernment on its website.

30a

the government would have reduced the likelihood of
violations. (Indeed, on the government’s theory—that
the statute actually creates such a remedy—the defen-
dants would have taken that into account in deciding to
proceed with violations.) More important, Fisher looks
at the wrong setting. Before this (or any) RICO liti-
gation against a particular defendant, that defendant
would have operated without the spotlight of the
lawsuit itself. (That may explain why the government
let the statute of limitations run for decades, and why
the victims failed to seek treble damages.) Now
the spotlight is on, and the plausible explanations for
non-application of the explicit remedies (other than
§ 1964(a) equitable relief) have disappeared. And the
district court can amplify the spotlight with transpar-
ency-enhancing and prior-approval measures. The real
question is whether the imposition of this extra remedy
on the defendants before the court—backward-looking
civil disgorgement in favor of the government—would
materially alter their readiness to persist in violations, -
in the face of all RICO’s explicit remedies, and a for-
ward-looking schedule of penalties for even minute
infractions, made doubly effective by compulsory disclo-
sure and approval measures. The government’s ex-
perts simply did not address that question. This court’s
own analysis provides a clear answer that the extra
“remedy” would not do so.

The dissent’s use of the government’s experts is part
of its effort (in its qualified endorsement of the gov-
ernment’s fallback position) to transform an issue of
statutory interpretation into one of fact. See Dissent at
1222-23, 1227-28; see also id. at 1223 (noting that in
Meghrig v. KFC Western, Inc., 516 U.S. 479, 116 S. Ct.
1251, 134 L. Ed. 2d 121 (1996), there was no affirmative

+

3la

evidence that the defendants were likely to commit
future RCRA violations, and thus suggesting that the
case was something other than pure statutory interpre-
tation). But the “facts” hypothesized by the dissent are
unrelated to the real world faced by RICO defendants
—already arraigned for their past offenses and subject
to a battery of new disincentives on top of all RICO’s
conventional explicit remedies. Statutory interpreta-
tion shouldn’t turn on factual hypotheticals such as,
“What if pigs had wings.”

III.

The above analysis seems to me to confirm what
intuition suggests about the jurisdictional issue in this
case. Even the most narrowly formulated question
about the validity of the district court’s order—the
choice between the government’s primary position
(that § 1964(a) creates unlimited discretion to order
disgorgement) and its fallback position (that it provides
authority to award crime-enabling disgorgement)—
requires the court to plumb the meaning of § 1964(a).
The issues in this case, all turning on the interpretation
of § 1964(a)’s lone sentence, are so thoroughly en-
meshed that we needn’t explore the court’s language
hmiting § 1292(b) jurisdiction to issues “logically inter-
woven” with the explicitly identified issue. Maj. Op. at
1196. The dissent’s hypotheticals as to what might be
covered, see Dissent at 1212, plainly depend on an
astonishingly broad notion of either logic or weaving.
Having analyzed § 1964(a) and having found the order
in conflict with its terms, the court must reverse.

One final note. The dissent chides the court for
creating a circuit split. See Dissent at 1208. But if we
confined ourselves to what the dissent acknowledges to
be properly before us, and adopted the dissent’s

> ae

preferred position (that disgorgement is available like
any other equitable remedy, regardless of its likely
effects on a defendant’s future behavior, simply because
RICO doesn’t explicitly preclude it), we would create
no less of a split between this circuit and the Second.

Appendix

Excerpt from United States Memorandum in Opposi-
tion to Defendants’ Motion for Partial) Summary Judg-
ment Dismissing the Government’s Disgorgement
Claim, Appellee’s Appendix at 812-14.

B. Disgorgement Provides Economic Incentives That
Will Prevent Further RICO Violations

172. Despite the fact that it is not necessary for the
United States to prove this, disgorgement will prevent
and restrain further bad acts.

173. Drs. Fisher and Kothari have both stated in
their expert reports and deposition testimony, that dis-
gorgement of the proceeds calculated by Dr. Fisher
would in fact act to prevent and restrain future RICO
violations. Dr. Fisher directly addressed this point in
his rebuttal report in which he states:

Defendants’ experts have suggested that dis-
gorgement of ill-gotten gains such as the proceeds
sought in this matter will not serve the goal of pre-
venting or restraining the defendants from engag-
ing in similar bad acts in the future. For example,
Professor Carlton argues, “Having to disgorge past
proceeds, by itself, would not affect a defendant’s
incentives to engage in misconduct in the future
because it would not affect the returns (if any) from
future misconduct.” I address these criticisms with
well-known economic principles. What Professor

33a

Carlton and the other defendants’ experts who
espouse this view fail to recognize is that requiring
defendants to pay proceeds will affect their expecta-
tions (and those of others contemplating malfea-
sance) about the returns from future misconduct.
As a matter of economic principle, the higher the
proceeds amount, the lower the expected returns
from future misconduct and the greater the desired
effect of deterrence.

Expert Rebuttal Report of Franklin Fisher, United
‘ States v. Philip Morris, (R. 1450; filed July 24, 2002) at

45912. |
174. Dr. Kothari’s expert report confirms Dr.
Fisher’s conclusion:

Requiring the defendants to pay ill-gotten proceeds
is relevant. The economic incentive for illegal
behavior is higher (for defendants and onlookers) if
~ defendants are not required to pay the proceeds.
While payment of proceeds has some of the features
of sunk cost, it is not identical to a sunk cost because
it will affect future decisions or behavior. The
higher the proceeds paid the greater the economic
incentive to avoid illegal behavior in the future.

Expert Report of S.P. Kothari, United States v.
Philip Morris, (R. 1451; filed July 24, 2002) at 3-4, ¥ 8.

175. Dr. Fisher expressly states in his expert report:

[Defendants’ experts] have also suggested that
enjoining Defendants from future illegal behavior
and threatening them with the possibility of finan-
cial penalties would be more effective as future
deterrents than would be disgorgement. Professor
Weil, for example, suggests that ‘the Court could

34a

establish now a schedule of fines or punishments
that it would levy should the Defendants engage in
prohibited behavior.’ These experts forget that
laws prohibiting this behavior already exist and
that, despite these laws and their associated reme-
dies, the Defendants allegedly chose to engage in
the illegal behavior. In this context, it is important
to note that requiring Defendants to pay proceeds
would strengthen the credibility of existing laws
and thus provide additional economic incentives to
deter future misconduct.

Expert Rebuttal Report of Franklin Fisher, United
States v. Philip Morris, (R. 1450; filed July 24, 2002) at
5-6, ¢ 14.

176. Dr. Fisher has repeatedly confirmed the pre-
ventative benefit of disgorgement. At his deposition he
stated:

Q. . . . the idea is that disgorgement prevents
and restrains future violations by altering the defen-
dants’ expectations about the returns they might
receive from future misconduct. Is that right?

A. . .. I believe that to be correct.

Q. Does disgorgement prevent and restrain future
RICO violations in any other way?

A. Well, it removes at least some, and possibly all,
of the assets with which to engage in future illegal
activities.

Deposition of Franklin Fisher, United States v. Philip
Morris, September 12, 2002, 828:4-19 (Exhibit 77).

35a

177. “[A]s I have repeatedly and clearly stated in my
report and deposition testimony, disgorgement of De-
fendants’ proceeds, as I have calculated them, would in
fact act to prevent and restrain future RICO viola-
tions.” Declaration of Franklin Fisher, United States v.
Philip Morris, at 7, 4 16 (Master Rule 7.1/56.1 St.
Exhibit 5)

TATEL, Circuit Judge, dissenting.

Congress passed the Organized Crime Control Act of
1970, which included RICO, “to seek the eradication of

organized crime in the United States . . . by providing
enhanced sanctions and new remedies to deal with the
unlawful activities of those engaged in organized
crime.” United States v. Turkette, 452 U.S. 576, 589,
101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981) (quoting Pub. L.
No. 91-452, 84 Stat. 922, 923 (1970)). Through this law-
suit, the United States seeks to end what it perceives
as rampant racketeering violations within the tobacco
industry. Specifically, the government offers volumi-
nous evidence, which we must view in the light most
favorable to it, see Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)
(stating that at summary judgment the “evidence of the
non-movant is to be believed, and all justifiable infer-
ences are to be drawn in [its] favor”), that Philip
Morris, Altria Group, R.J. Reynolds, Brown & William-
son, Lorillard, BATCo, and Liggett have engaged in a
half eentury of deceptive practices to the detriment of
the health—and lives—of their customers. Acting both
individually and in concert through collective agree-
ments and jointly funded organizations like the Council
for Tobacco Research and the Tobacco Institute (also
defendants), these companies publicly defended smok-
ing as both harmless and nonaddictive despite knowing

36a

from internal research that it was neither. In their
advertising campaigns the companies targeted young
people, who “often lack the experience, perspective, and
judgment to recognize and avoid choices that could be
detrimental to them,” Bellotti v. Baird, 443 U.S. 622,
635, 99 S. Ct. 3035, 61 L. Ed. 2d 797 (1979), despite :
licly claiming otherwise.

The government alleges that during the course of
this behavior, the defendants committed over ninety
racketeering violations between RICO’s 1970 effective
date and the government’s 1999 complaint. Signifi-
cantly for this appeal, the government further claims
that absent court intervention and despite the master
settlement agreement between the tobacco companies
and the states, the companies are likely to continue
their deceptive practices and commit further racketeer-
ing violations in the future. The government’s claim
regarding likely future conduct rests not only on the
companies’ alleged history of deceptive activities, but
also on record evidence that the companies continue
making their misleading statements about both the
health consequences of smoking and the addictive na-
ture of nicotine, as well as persisting in their marketing
efforts aimed at young people. The government asks
the district court to enjoin the tobacco companies from
future unlawful conduct and to order them to disgorge
the profits they have earned due to their racketeering
violations since RICO’s effective date—profits the
government estimates amount to $280 billion.

In now holding that district courts may never order
disgorgement as a remedy for RICO violations, this
court ignores controlling Supreme Court precedent,
disregards Congress’s plain language, and creates a
circuit split—all in deciding an issue not properly before

37a

us. Because the tobacco companies ask us to address an
issue not fairly included in the certified order and not
presented at that time to the district court, I would
dismiss this interlocutery appeal. Were it appropriate
to reach the merits, I would uphold the district court’s
denial of summary judgment on either of two grounds.
First, unless “a statute in so many words, or by a nec-
essary and inescapable inference, restricts the court’s
jurisdiction in equity,” district courts may grant any
equitable relief. Porter v. Warner Holding Co., 328
U.S. 395, 398, 66 S. Ct. 1086, 90 L. Ed. 1332 (1946). Be-
cause under a fair application of Supreme Court prece-
dent, see id. at 398-403, 66 S. Ct. 1086, no such inference
can be drawn about RICO, I would conclude that the
district court has authority to order disgorgement. Al-
ternatively, even if RICO’s phrase “prevent and re-
strain violations,” 18 U.S.C. § 1964(a), limits the district
court’s equitable jurisdiction, I would still uphold the
denial of summary judgment because the government
has presented evidence that disgorgement will accom-
plish just that purpose in this case.

I.

Under 28 U.S.C. § 1292(b), if a district court “shall be
of the opinion that [an] order involves a controlling
question of law as to which there is substantial ground
for difference of opinion and that an immediate appeal
from the order may materially advance the ultimate
termination of the litigation,” it may certify the order
for interlocutory review, and the court of appeals “may
thereupon, in its discretion, permit an appeal to be
taken from such order.” Section 1292(b) establishes a
“two-tiered arrangement.” Swint v. Chambers County
Comm'n, 514 U.S. 35, 47, 115 S. Ct. 1208, 131 L. Ed. 2d
60 (1995). Congress “chose to confer on district courts

38a

first line discretion to allow interlocutory appeals,” id.,
and “even if the district judge certifies the order under
§ 1292(b), the appellant still has the burden of persuad-
ing the court of appeals that exceptional circumstances
justify a departure from the basic policy of postponing
appellate review until after the entry of a final judg-
ment,” Coopers & Lybrand v. Livesay, 487 U.S. 463,
475, 98 S. Ct. 2454, 57 L. Ed. 2d 351 (1978) (internal
quotation marks and citation omitted). In accepting
this interlocutory appeal, this court not only (at the
least) pushes the bounds of its jurisdiction, but also
exercises its discretion on behalf of defendants whose
litigating tactics leave much to be desired.

A.

In 2000, the tobacco companies—usually referred to
in this opinion as “Philip Morris”—filed a motion to dis-
miss, arguing (among other things) that “disgorgement
. . . is never available under a civil RICO count.” See
United States v. Philip Morris Inc., 116 F. Supp. 2d
131, 150 (D.D.C. 2000). Denying that motion, the dis-
trict court held that disgorgement could be available
under 18 U.S.C. § 1964(a), but did not address whether
disgorgement would be available in this particular case.
See id. at 150-52. Philip Morris never sought certifi-
eation of that order, though it could have done so at any ©
time after the order’s issuance. See Fed. R. App. P.
5(a)(3) (providing that the time for filing an appeal runs
from when the district court amends the order to
include certification, not from the issuance of the actual
order); 16 Wright, Miller & Cooper, Federal Practice
and Procedure § 3929 (2d. ed. 1996) (“This latitude [in
Rule 5(a) ] makes it possible to employ § 1292(b) with
some precision, deferring the question of appeal until it
is clear that prompt appeal is apt to be useful.”).

39a

In 2004, Philip Morris sought summary judgment
regarding the government’s request for disgorgement
in this case. Contrary to the court’s statement, see
majority op. at 1198, Philip Morris neither reargued the
position it took in 2000 nor aske 1 the district court to
revisit its 2000 decision. Philip Morris’s only reference
to its prior position came in a one-sentence footnote:
“As noted previousiy, Defendants respectfully disagree
with the Court and maintain that disgorgement in any
fashion is unavailable to the Government in a civil
RICO action.” Defs.’ Br. in Supp. Mot. Partial Summ. J.
at 6n.4. Instead, Philip Morris urged the court to grant
its motion for summary judgment for two primary rea-
sons. First, relying on United States v. Carson, where
the Second Circuit held that district courts may order
disgorgement as a RICO remedy only where the gains
“are being used to fund or promote the illegal conduct,
or constitute capital available for that purpose,” id. at
20 (quoting United States v. Carson, 52 F.3d 1178, 1182
(2d Cir. 1995)), Philip Morris claimed that 18 U.S.C.
§ 1964(a) “limits disgorgement to the amount-of ill-
gotten gains that remain available to defendants to
fund future RICO violations,” 7d. Philip Morris further
argued that “the Government deliberately has refused
to develop the proof properly required under Carson”
and this in turn “requires dismissai of the Govern-
ment’s disgorgement claim.” Jd. at 25. Second, Philip
Morris asserted that the government’s disgorgement
model fails as a matter of law to reasonably approxi-
mate the defendants’ ill-gotten gains.

The district court rejected both arguments and
denied summary judgment to Philip Morris. United
States v. Philip Morris USA, Inc., 321 F. Supp. 2d 72
(D.D.C. 2004). Interpreting section 1964(a) more

40a

broadly than had the Second Circuit, the court con-
cluded that it could order disgorgement in situations
besides those identified in Carson. Id. at 77-79. Unsur-
prisingly, the district court did not revisit its 2000 deci-
sion, observing only (in a footnote) that this decision
had held “that disgorgement is a permissible remedy
under Section 1964(a).” Id. at 76 n.7. The district court
also rejected Philip Morris’s contention regarding the
government’s disgorgement model. /d. at 81-82.

Philip Morris then asked the district court to certify
its 2004 order under section 1292(b). In its certification
request, Philip Morris did not reassert its legal argu-
ment from 2000. Instead, it stated that “[wJhether the
Carson standard applies to the Government’s disgorge-
ment claim is clearly a controlling question of law. .

If the Government is wrong, and Carson applies, noth-
ing is left of its claim in this case.” Def’s Br. Supp. Mot.
Certify Order # 550 for Interloc. App. at 4.

The district court agreed that a controlling question
of law existed as to whether “the disgorgement allowed
under 18 U.S.C. § 1964(a) is limited to those ill-gotten
gains which are ‘being used to fund or promote the
illegal conduct or constitute capital available for that
purpose.’” United States v. Philip Morris USA, Inc.,
No. 99-2496, slip op. at 2-4, 2004 WL 1514215 (D.D.C.
June 25, 2004) (quoting Carson, 52 F.3d at 1182). Al-
though in its 2004 order the district court had rejected
Carson’s interpretation of section 1964(a), it found
substantial ground for difference of opinion on this
issue, explaining that “it is obvious that the arguments
to the contrary in Carson are neither insubstantial nor
frivolous,” and certified the 2004 order. Jd. at 4, 7.

In its initial petition urging this court to accept the
interlocutory appeal, Philip Morris never raised the

4la

broader question the district court had addressed in
2000, i.e., whether disgorgement is ever available under
section 1964(a). Instead, Philip Morris focused on the
narrower issue actually raised in its 2004 motion for
summary judgment, arguing that the district court had
erred in rejecting Carson,’s interpretation of section
1964(a) and claiming that “[ilf this Court agrees with
the Second Circuit in Carson, its decision on appeal
would dispose of the Government’s disgorgement
claim.” Emergency Pet. for Permission to Appeal an
Order at 9. The government opposed Philip Morris’s
section 1292(b) petition, arguing that a host of factual
issues would require resolution regardless of whether
this court adopted Carson’s or the district court’s
interpretation of section 1964(a) and thus that “inter-
locutory appeal would not materially advance the ter-
mination of this litigation.” Resp. in Opp’n to Emer-
gency Pet. at 15.

Responding to the government’s opposition, Philip
Morris suddenly changed tack and brought in play the
issue decided in 2000. Philip Morris wrote:

The district court rejected [the government’s] argu-
ment [that an interlocutory appeal would not mate-
rially advance the litigation’s termination] as a rea-
son not to permit an appeal, and this Court should as
well.

First, and most obviously, if this Court reverses
the district court’s ruling that ‘disgorgement is a
permissible remedy under section 1964(a),’ (Sum-
mary Judgment Order at 8 n.7), then the Govern-
ment’s $280 billion claim is precluded as a matter of
law.

42a

Reply to Emergency Pet. for Permission to Appeal an
Order at 5. This entirely disingenuous statement con-
veyed the impression that the district court had ruled
on this broader issue in the certified 2004 order rather
than simply mentioning its 2000 decision. Moreover, by
placing this statement under the heading “The District
Court Properly Determined That an Appeal From Its
Order Would Materially Advance This Litigation,” id.,
Philip Morris insinuated that the district court had
certified this issue to this court as opposed to the
narrower question actually resolved in the 2004 order.
The government, of course, had no opportunity to
correct these misrepresentations, and a motions panel
accepted Philip Morris’s appeal, expressly leaving the
merits panel free to reconsider and dismiss the appeal.
In re Philip Morris USA, Inc., No. 04-8005 (D.C. Cir.
July 15, 2004).

Philip Morris’s opening brief on the merits reveals
the scope of its bait and switch. The brief devotes forty
pages to the issue decided in the 2000 order and only
seven to the issues decided in the certified 2004 order.
In response, the government urges us to dismiss the
appeal entirely, suggesting that we lack jurisdiction
over the issue decided in the 2000 order and observing
that “Defendants’ tactics subvert the mechanism for
appeal established by section 1292(b).” Appellee’s Br.
at 45-46.

As the foregoing discussion indicates, Philip Morris
asks us—and the court now agrees—to decide an issue
(1) not briefed in the motion leading up to the certified
order, (2) not decided in the district court’s opinion
accompanying the certified order, (3) not raised by
Philip Morris in its request for certification, (4) not

43a

discussed in the order granting certification, (5) not
raised by Phiiip Morris in its section 1292(b) petition
before this court, and (6) decided in an entirely different
order which Philip Morris could at any time have asked
the district court to certify. This presents serious
questions on two separate fronts: our jurisdiction over
this appeal under section 1292(b), and our general
policy of declining to consider arguments not made to
the district court in the motion leading to the order
under appeal. Unlike the court, I cannot brush these
concerns aside.

Regarding our jurisdiction under section 1292(b), the
Supreme Court has made clear that an appellate court
can review “any issue fairly included within the certi-
fied order” because “[a]s the text of § 1292(b) indicates,
appellate jurisdiction applies to the order certified to
the court of appeals, and is not tied to the partieular
question formulated by the district court.” Yamaha
Motor Corp., USA v. Calhoun, 516 U.S. 199, 205, 116 S.
Ct. 619, 133 L. Ed. 2d 578 (1996) (holding that where
the district court decided two issues in the certified
order but identified only the damages issue as the
controlling question of law, the court of appeals could
nonetheless address the other issue). But the “court of
appeals may not reach beyond the certified order to
address other orders made in the case.” /d.; see also
United States v. Stanley, 483 U.S. 669, 677, 107 S. Ct.
3054, 97 L. Ed. 2d 550 (1987) (holding that the court of
appeals erred in addressing a claim not raised in the
certified order though closely related to it). Both
“{cjommentators and courts have consistently observed
that ‘the scope of the issues open to the court of appeals
is closely limited to the order appealed from [and][{tJhe
court of appeals will not consider matters that were

44a .

ruled upon in other orders.’” Stanley, 483 U.S. at 677,
107 S. Ct. 3054 (quoting 16 Wright, Miller, Cooper &
Gressman, Federal Practice and Procedure § 3929
(1977)) (second and third alterations in original).

This case falls near the intersection of these com-
mands. For all intents and purposes, Philip Morris asks
us to address the 2000 order. Today’s decision over-
turns that order. This court has jurisdiction to do this
under Yamaha only if the issue addressed in the 2000
order is “fairly included within the certified order.”
Taking a broad view of “fairly included,” the court
concludes that because the 2004 order denies dismissal
of the government’s disgorgement claim, we may re-
view (at a minimum) any basis for summary judgment
that is “logically interwoven with the explicitly identi-
fied issue.” See majority op. at 1196. This approach not
only gives us jurisdiction over the issue decided by the
district court in the 2000 order, but also over the
district court’s 2002 determination, made in denying
Philip Morris’s motion for a jury trial, that disgorge-
ment is an equitable remedy rather than a legal one,
United States v. Philip Morris, Inc., 273 F. Supp. 2d 3,
8-11 (D.D.C. 2002). I ndeed, although the concurrence
_ apparently does not share this approach, see sep. op. at
1206 (Williams, J., concurring), the majority opinion
suggests that any issue which would result in “complete
dismissal of the Government’s claim for disgorgement
with prejudice” lies within our jurisdiction “regardless
of the grounds the District Court gave for its decision,”
see majority op. at 1194. By this logic, we may also
have interlocutory jurisdiction to review the district
court’s denial of the tobacco companies’ 2000 motion to
dismiss, where they claimed that the government has
not “adequately alleged that Defendants’ racketeering

45a

activity will continue into the future,” 116 F. Supp. 2d
at 147-50, and even the district court’s denial of
Liggett’s 2000 motion to dismiss, where the company
argued that (as to it) the government could not show
two elements required for a RICO claim, id. at 152-53.
Because victory for the tobacco companies on the first
issue (and, for Liggett, victory on the second) could also
trigger dismissal of the government’s disgorgement
claims, under the court’s theory our interlocutory juris-
diction may extend to these issues as well.

The court’s approach is problematic in several re-
spects. Most significantly, it curtails the district court’s
section 1292(b) certification role. In this case, the dis-
trict court had neither an opportunity to exercise “first
line discretion to allow interlocutory appeal[ J,” Swint,
514 U.S. at 47, 115 S. Ct. 12038, on the broader issue
resolved in its 2000 order nor notice that Philip Morris
would raise this issue with us. In future cases, district
courts will lose their flexibility to certify discrete issues
for review, since the certification of one order may give
this court jurisdiction over all sorts of prior orders.
Today’s situation illustrates this: under the court’s
theory, we have jurisdiction in this interlocutory appeal
to review at a minimum two prior orders, neither of
which Philip Morris sought to certify. Moreover, by
reducing the opportunity for tailored review, the
court’s jurisdictional theory threatens this circuit with
interlocutory overload. Parties who persuade us to
accept an interlocutory appeal may feel encouraged to
raise any or even all issues decided in prior orders that
fall within eur newfound jurisdiction especially since,
according to the court, issues raised in prior orders are
“preserved” for section 1292(b) purposes, see majority

46a

op. at 1196, and not simply for the purpose of appeal
after final judgment.

By contrast, no harm of consequence would result
from holding, as I would, that the only issues “fairly
included” within a certified order are those decided in
the district court’s accompanying memorandum—
exactly the situation with the issue reached by the
Supreme Court in Yamaha, 516 U.S. at 203-05, 116 S.
Ct. 619. There, the Court found “fairly included” an
issue that the district court had resolved in the same
opinion in which it decided the issue identified as-the
controlling question of law, see Calhoun v. Yamaha
Motor Corp., USA, No. 90-4295, 1993 WL 216238 (E.D.
Pa. June 22, 1993). While the Court did not explicitly
rely on this point, it is relevant to determining whether
’ Yamaha’s “fairly included” language stands for the
proposition that appellate courts have interlocutory
jurisdiction over all possible bases for reversing a sum-
mary judgment denial (as my colleagues read it) or only
over bases which the district court considered and
resolved in this denial (as I read it).

My approach, moreover, respects the Court’s instruc-
tion in Stanley that we should “not consider matters
that were ruled upon in other orders.” 483 U.S. at 677,
107 S.-Ct. 3054 (citation omitted); cf. Briggs v. Goodwin,
569 F.2d 10, 25 (D.C. Cir. 1977) (noting that any possi-
ble justification for addressing “all other issues relevant
to the result reached by [a certified] order” would “be
substantially diminished . . . where the order certified
for appeal is a separate order from the one [containing
the other issues]”); Dinsmore v. Squadron, Ellenoff,
Plesent, Sheinfeld & Sorkin, 135 F.3d 837, 840 (2d Cir.
1998) (finding that the certified order referred to rather
than incorporated a prior order and concluding that no

47a -

interlocutory jurisdiction existed over the issue decided
in the prior order). It is thus hardly surprising that the
court today points to no case in which an appellate court
has exercised interlocutory jurisdiction over an issue
decided in a different order from the one under certifi-
cation. True, under my approach a party seeking an
interlocutory appeal on a matter split across two orders
would need to seek certification of both orders to bring
the matter fully to this court. But that seems a small
burden. If the party fails to make this effort (as in this
case) and we conclude that it would be inappropriate to
address only the issues raised in the certified order (as
I would here), then we have discretion under section
1292(b) to refuse to permit the interlocutory appeal
altogether—a point this court overlooks.

In addition to resting on a dubious interpretation of
section 1292(b), the court’s decision to review the
broader issue runs counter to this circuit’s general rules
regarding waiver. Parties may raise here only those
arguments they presented to the district court in their
papers seeking (and opposing) the order under review,
since only in exceptional circumstances will we consider
an argument not made to the district court. See United
States v. British Am. Tobacco (Invs.) Ltd., 387 F.3d 884,
887-88 (D.C. Cir. 2004) (finding waiver based on a
party’s failure to appear and defend a privilege claim in
the proceedings resulting in the interlocutory appeal,
even though the party had asserted the privilege in a
related proceeding in the same case); see also id. at 892
(refusing to consider argument not raised below) (citing
United States v. Hylton, 294 F.3d 130, 135-36 (D.C. Cir.
2002)). Here, as discussed earlier, Philip Morris never
argued the broader issue in the relevant pleadings; a
sentence-long footnote stating “respectful disagree-

48a

ment” is not an argument, particularly when offered in
such a cursory fashion. Cf, e.g., Cement Kiln Recycling
Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001)
(per curiam) (observing that a “litigant does not prop-
erly raise an issue by addressing it in a ‘cursory fashion’
with only ‘bare-bones arguments’”); Wash. Legal Clinic
for the Homeless v. Barry, 107 F.3d 32, 39 (D.C. Cir.
1997) (declining to address argument made in a foot-
note). Although it is true, as the court points out, that
in the two just-cited cases-the issues were apparently
never raised at an earlier stage, here we are reviewing
not the entire case but only the certified 2004 order,
which sets the bounds of both our jurisdiction and
waiver doctrine. Moreover, while we sometimes make
exceptions to our waiver rules, I would not do so here
given Philip Morris’s questionable tactics. Even under
my colleagues’ jurisdictional theory, only by exercising
our discretion to accept an argument not raised in the
district court—and further exercising our discretion to
accept the interlocutory appeal—does the broader issue
stand before us.

In sum, whether viewed in terms of jurisdiction or
waiver, only Philip Morris’s narrower challenge is
properly before us. True, this means we should dismiss
the appeal altogether, as it makes little sense to decide
the narrower question at this time when the broader
question might be appealed later. But Philip Morris
itself created this problem. It had several ways it could
properly have brought the broader issue to our atten-
tion. In its 2004 motion for summary judgment, it could
have reargued the broader question and asked the
district court to reconsider its decision; the district
court’s denial of reconsideration would have brought
the issue fairly into the challenged order. Even more

49a

appropriately, Philip Morris could have asked the dis-
trict court to certify both the 2000 and 2004 orders and
candidly explained that it wished this court to review
the earlier order as well. Either way, the district court,
having fair notice that Philip Morris wanted to raise
both issues with us, could have performed its section
1292(b) gatekeeping function. Taking neither approach,
Philip Morris instead not only jumped the fence at the
district court level, but also circumvented our own
screening process by waiting until after the govern-
ment’s opposition to raise the broader issue with the
motions panel. This court should not be rewarding such
tactics by exercising its discretion to hear this appeal.

I would therefore dismiss the interlocutory appeal. I
reach this conclusion reluctantly because I certainly
understand how hearing this interlocutory appeal could
be helpful to Judge Kessler, who is presiding over a
long and difficult trial. In my view, however, preserv-
ing section 1292(b)’s integrity and discouraging the kind
of litigating tactics reflected in this record far outweigh
the efficiency that hearing this interlocutory appeal
might produce in this concededly complex case.

But the court disagrees with my position. The appeal
stands before us, so in the following sections I exercise
a dissenter’s prerogative to address the merits. See,
e.g., Gratz v. Bollinger, 539 U.S. 244, 291, 123 S. Ct.
2411, 156 L. Ed. 2d 257 (2003) (Souter, J., dissenting);
Arizona v. Evans, 514 US. 1, 18, 115 S. Ct. 1185, 131 L.
Ed. 2d 34 (1995) (Stevens, J., dissenting); Larson v.
Valente, 456 U.S. 228, 258, 102 S. Ct. 1678, 72 L. Ed. 2d
33 (1982) (White, J., dissenting).

50a

Il.

Like my colleagues, I begin with the structure and
language of RICO’s remedial provisions. RICO author-
izes criminal penalties and civil remedies against those
engaging in patterns of racketeering behavior. 18
U.S.C. § 1963 sets out the criminal penalties: guilty
persons shall “be fined under this title or imprisoned

. . or both, and shall forfeit to the United States” any
illegally acquired interest. Section 1964 provides for
the civil remedies. At issue in this case is subsection
(a), which states:

The district courts of the United States shall have
jurisdiction to prevent and restrain violations of
section 1962 of this chapter by issuing appropriate
orders, including, but not limited to: ordering any
person to divest himself of any interest, direct or
indirect, in any enterprise; imposing reasonable
restrictions on the future activities or investments
of any person, including, but not limited to, pro-
hibiting any person from engaging in the same type
of endeavor as the enterprise engaged in, the
activities of which affect interstate or foreign com-
merce; or ordering dissolution or reorganization of
any enterprise, making due provision for the rights
of innocent persons.

Another subsection, § 1964(c), authorizes injured per-
sons to sue RICO violators for treble damages and to
recover attorneys’ fees. Finally, Congress directed that
RICO “shall be liberally construed to effectuate its
remedial purposes,” Pub. L. No. 91-452, § 904(a), 84
Stat. 922, 947 (1970) (codified in a note following 18
U.S.C. § 1961)—a provision that, if it “is to be applied
anywhere, [should be applied] in § 1964, where RICO’s

5la

remedial purposes are most evident,” Sedima, S.P.R.L.
v. Imrex Co., 473 U.S. 479, 491 n.10, 105 S. Ct. 3275, 87
L. Ed. 2d 346 (1985).

The government argues that district courts have
authority to order any remedy, including disgorgement,
within their inherent equitable powers. More narrowly,
the government argues that assuming the district
courts may only impose equitable remedies for the
purpose of keeping defendants from committing RICO
violations, disgorgement—by reducing the incentives
for the tobacco companies to violate RICO in the future
—will accomplish that purpose in this case. These two
distinct arguments present very different consequences
for district courts: under the first theory, courts may
order disgorgement any time they find the remedy
necessary to ensure complete relief, while under the
second theory courts may order disgorgement only to
prevent ongoing or future violations. In this case, the
district court accepted only the second argument. See
321 F. Supp. 2d at 74-80. The court today rejects both.

- A.

In dismissing the argument that district courts may
impose any equitable remedy for RICO violations, the
court distinguishes—unconvincingly, in my view—the
two Supreme Court cases relied on by the government,
Porter v. Warner Holding Co., 328 U.S. 395, 66 S. Ct.
1086, 90 L. Ed. 1332 (1946), and Mitchell v. Robert
DeMario Jewelry, Inc., 361 U.S. 288, 80 S. Ct. 332, 4 L.
Ed. 2d 323 (1960). I believe these two cases control this
case and compe! the conclusion that district courts may
impose any equitable remedy for RICO violations.

In Porter, the Supreme Court considered whether a
district court had authority to order restitution in a suit

52a

brought by the Price Control] Administrator against a
landlord who had violated the Emergency Price Control
Act (EPCA) by charging too much rent. The act con-
tained no specific provision for restitution or disgorge-
ment, but-—like RICOQ—authorized a broad array of
other remedies, both criminal and civil. On the criminal
side, offenders could be fined and imprisoned. EPCA,
§ 205(b)-(c), 56 Stat. 23, 33 (1942). On the civil side,
injured individuals could sue for treble damages plus
attorneys’ fees, and if they were not entitled to sue or
the statutory period for their suit had passed, the Ad-
ministrator could sue for the same remedy on behalf
of the United States. Jd. § 205(e), 56 Stat. at 34, as
amended by Stabilization Extension Act of 1944, 7 §
108(b), 58 Stat. 6382, 640-41. The Administrator could
also sue to suspend a violator’s license. Id. § 205(f)(2),
56 Stat. at 35.

In the section most at issue in Porter, the act further
provided that

[w]Jhenever in the judgment of the Administrator
any person has engaged or is about to engage in
[violations of the act], he may make application to
the appropriate court for an order enjoining such
acts or practices, or for an order enforcing compli-
ance with such provision, and upon a showing by the
Administrator that such person has engaged or is
about to engage in any such acts or practices a per-
manent or temporary injunction, restraining order,
or other order shall be granted without bond.

Id. § 205(a), 56 Stat. at 33. Although this section clearly
authorized injunctions aimed at future behavior, it
made no express provision for restitution and did not,
contrary to my colleagues’ suggestion, explicitly

53a

“grant[] general equitable jurisdiction” to the district
courts, see majority op. at 1197. Indeed, in Porter, the
Eighth Circuit had held that district courts were
without authority to order restitution as a remedy for
violations of the EPCA. Bowles v. Warner Holding Co.,
151 F.2d 529, 532 (8th Cir. 1945) (concluding that the
district court had no authority to order restitution
because “[i]jt is well settled ‘That where a statute
creates a right and provides a special remedy, that
remedy is exclusive’ “) (citations omitted).

The Supreme Court reversed. Discussing “the juris-
diction of the District Court to enjoin acts and practices
made illegal by the Act and to enforce compliance with
the Act,” 328 U.S. at 397-98, 66 S. Ct. 1086, the Court
concluded—and I quote at length since the language is
so critical to the disposition of this case—that

[such a jurisdiction is an equitable one. Unless
otherwise provided by statute, all the inherent
equitable powers of the District Court are available
for the proper and complete exercise of that juris-
diction. And since the public interest is involved in
a proceeding of this nature, those equitable powers
assume an even broader and more flexible character
than when only a private controversy is at stake
. . . . [T]he court may go beyond the matters im-
mediately underlying its equitable jurisdiction and
decide whatever other issues and give whatever
other relief may be necessary under the circum-
Stances. Only in that way can equity do complete
rather than truncated justice.

Moreover, the comprehensiveness of this equitable
jurisdiction is not to be denied or limited in the ab-
sence of a clear and valid legislative command. Un-

54a

less a statute in so many words, or by a necessary
and inescapable inference, restricts the court’s juris-
diction in equity, the full scope of that jurisdiction is
to be recognized and applied.

Id. at 398, 66 S. Ct. 1086 (citations omitted). The Court
concluded that because the EPCA, despite the very
detailed and specific nature of the authorized remedies,
did not rule out restitution by a “necessary and inescap-
able inference,” the district court could order restitu-
tion even if not expressly authorized by the statute.
See id. at 398-400, 66 S. Ct. 1086; see also Mitchell, 361
U.S. at 291, 80 S. Ct. 332 (discussing Porter ).

Indeed, the Court further suggested that restitution
could be considered an “other order” to enjoin or
enforce compliance within section 205(a) in either of two
ways. First, it could be “considered as an equitable
adjunct to an injunction decree” since “where, as here,
the equitable jurisdiction of the district court has prop-
erly been invoked for injunctive purposes, the court has
the power to decide all relevant matters in dispute and
to award complete relief even though the decree
includes that which might be conferred by a court of

law.” 328 U.S. at 399, 66 S. Ct. 1086. Second, restitu-

tion could “be considered as an order appropriate and
necessary to enforce compliance with the Act” since
“{fjuture compliance may be more definitely assured if
one is compelled to restore one’s illegal gains.” Jd. at
400, 66 S. Ct. 1086. The Court then remanded for the
district court to “exercise the discretion that belongs to
it” and decide whether to order restitution. Jd. at 403,
66 S. Ct. 1086.

Porter was not unanimous. “It is not excessive to say
that perhaps no other legislation in our history has
equaled the Price Control Acts in the wealth, detail,

55a

precision and completeness of its jurisdictional,
procedural and remedial provisions,” 2d. at 404, 66 S.Ct.
1086, wrote Justice Rutledge in dissent. “The scheme of
enforcement was highly integrated, with the parts
precisely tooled and mninutely geared.” Id. “Congress
could not have been ignorant of the remedy of
restitution. It knew how to give remedies it wished to
confer.” Jd. at 405, 66 S. Ct. 1086. “[E]ven courts of
equity may not grant relief in disregard of the remedies
specifically defined by Congress.” Jd. at 408, 66 S. Ct.
1086.

The court’s opinion today sounds a lot like the Porter
dissent. The court observes that the language of sec-
tion 1964(a)—a court_has “jurisdiction to prevent and
restrain violations”—does not explicitly open the door
to all of equity, but. neither did EPCA section 205(a)
(a court may issue orders “enjoining” violations or “en-
forcing compliance”). The court asserts that reading
full equitable jurisdiction into RICO will render section
1964(a)’s language largely meaningless, but Porter
rejected just this concern with regard to EPCA section
205(a). The court emphasizes that RICO “already pro-
vides for a comprehensive set of remedies,” majority
op. at 1200, but the EPCA had at least as comprehen-
sive a remedial structure. The court further points out
that should restitution be available, the government
could obtain duplicative recovery (given RICO’s crimi-
nal forfeiture provisions) and also escape the applicable
statutes of limitations,-but the Porter majority dis-
missed similar concerns, 328 U.S. at 401-02, 66 S. Ct.
1086; see also zd. at 406-08, 66 S. Ct. 1086 (Rutledge, J.,
dissenting). Finally, the court attempts to distinguish
Porter on the grounds that the EPCA had a different
policy goal than RICO (preventing inflation rather than

56a

seeking to eradicate organized crime), but this has no
effect on Porter's essential holding that “the court may
go beyond the matters immediately underlying its
equitable jurisdiction . . . and give whatever other
relief may be necessary under the circumstances,” see
id. at 398, 66 S. Ct. 1086. In sum, the court offers no
basis for concluding that RICO’s structure and langu-
age get the statute past Porter’s high bar for finding by
a “necessary and inescapable inference” that Congress
intended to empower district courts to order only
limited equitable relief.

Nor does Philip Morris point to anything in RICO’s
legislative history that creates such a “necessary and
inescapable inference.” Only one remark even gives me
pause. The Senate Committee report stated, “Subsec-
tion [1964](a) contains broad remedial provisions for
reform of corrupted organizations. Although certain
remedies are set out, the list is not exhaustive, and the
only limit on remedies is that they accomplish the aim
set out of removing the corrupting influence and make
due provision for the rights of innocent persons.” S.
Rep. No. 91-617, at 160 (1969); accord H. Rep. No.
91-1549, at 57 (1970). The second part of this “limit”—
requiring due provision for the rights of innocent per-
sons—poses no concern, for it describes equity rather
than constricts it. See, e.g., Holly v. Domestic & For-
eign Missionary Soc’y, 180 U.S. 284, 295, 21 S. Ct. 395,
45 L. Ed. 531 (1901) (“[A] court of equity will not
transfer a loss that has already fallen upon one innocent
party to another party equally innocent.”). But the first
part of this “limit”—that remedies should accomplish
the aim of removing the corrupting influence—does
more than simply restate an equitable principle. Sug-
gesting that the remedies must remove the corrupting

57a

influence, it allows one to infer that remedies may
accomplish only this aim. But that inference is, to use
Porter’s words, neither “necessary” nor “inescapable.”
One could also infer that remedies must accomplish this
aim as a lower limit (i.e., no corrupting influence may
remain), but may also accomplish other aims—just as
remedies must make due provision for the rights of the
innocent, but may presumably do much more. Indeed,
this reading comports with how RICO’s sponsor, Sena-
tor McClellan, described the bill when he introduced it:
the “ability of our chancery courts to formulate a:
remedy to fit the wrong is one of the greatest benefits
of our system of justite. This ability is not hindered by
the bill.” 115 Cong. Rec. 9567 (1969).

Mitchell, the second Supreme Court decision the gov-
ernment relies on, considered whether district courts
could order restitution of wages lost from unlawful
discharge in suits brought by the Secretary of Labor
under section 17 of the Fair Labor Standards Act
(FLSA), 29 U.S.C. § 217 (1960). Relying on Porter, the
Court concluded that where the statute provided that
“the district courts are given jurisdiction . . . for.
cause shown, to restrain violations” of the act, 29 U.S.C.
§ 217, district courts had full equitable powers, 361 U.S.
at 291-95, 80 S. Ct. 332; see also id. at 289, 80 S. Ct. 332.
Reaffirming Porter’s strong presumption in favor of |
finding equitable relief fully available, the Court stated:
“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 provide complete relief
in the light of statutory purposes. As this Court long
ago recognized, ‘there is inherent in the Courts of
Equity a jurisdiction to . . . give effect to the policy of

58a

the legislature.’” Id. at 291-92, 80 S. Ct. 332 (quoting
Clark v. Smith, 38 U.S. (13 Pet.) 195, 203, 10 L. Ed. 123
(1839)) (omission in original); see also Califano v.
Yamasaki, 442 U.S. 682, 704-06, 99 S. Ct. 2545, 61 L.
Ed. 2d 176 (1979) (using the Porter presumption to
conclude that district courts could order injunctive
relief not explicitly authorized by ine Social Security
Act). The Mitchell Court thought it insignificant that
because both the aggrieved employees and the Sec-
retary could seek lost wages in actions at law under
FLSA section 16, 29 U.S.C. § 216 (1960), duplicative
recovery might occur. 361 U.S. at 292-93, 80 S. Ct. 332.
But see id. at 303, 80 S. Ct. 382 (Whittaker, J., dis-
senting) (concluding that the statutory scheme “seems
plainly to show that Congress intended by § 16(c) to
allow recovery of unpaid minimum wages and overtime
compensation at the instance of the Secretary only in an
action at law, brought under that subsection, and
triable by a jury”).

Mitchell reinforces the proposition that district
courts may order any equitable relief in civil RICO
suits brought by the government. My colleagues sug-
gest that in “the RICO Act, Congress provided a sta-
tute granting jurisdiction defined with the sort of
limitations not present in the FLSA.” Majority op. at
1199. The only jurisdictional hook in the FLSA’s text,
however, was its language: “the district courts are
given jurisdiction . . . for cause shown, to restrain vio-
lations” of the act, 29 U.S.C. § 217. If this language
opens the door to all equitable relief, then RICO’s lan-
guage—“[t)he district courts . . . shall have jurisdic-
tion to prevent and restrain violations”—-certainly does
the same. And if the possibility of duplicative recovery
did not circumscribe the district court’s equitable

- 59a

authority under the FLSA, then neither should that
possibility under RICO do so.

Not surprisingly, in the wake of Mitchell and Porter,
circuit courts including this one have read general
equitable jurisdiction into a variety of statutes that fail
to provide explicitly for it. In SEC v. First City
Financial Corp., 890 F.2d 1215 (D.C. Cir. 1989), we held
that district courts may order disgorgement under the
Security Exchange Act’s sections 21(d) and (e), 15
U.S.C. § 78u(d)-(e) (1989), which provide that the dis-
trict courts “shall have jurisdiction to issue writs of
mandamus, injunctions, and orders commanding” com-
pliance with the act and regulations made under it. See
890 F.2d at 1230 (relying on Porter and Mitchell ). “Dis-
gorgement, then, is available simply because the rele-
vant provisions of the Securities Exchange Act of 1934,
sections 21(d) and (e) . . . vest jurisdiction in the
federal courts.” Id.; see also SEC v. Tome, 833 F.2d
1086, 1096 (2d Cir. 1987); SEC v. Wash. County Util.
Mst., 676 F.2d 218, 227 (6th Cir. 1982). Other circuits
have reasoned similarly in interpreting other acts. See,
e.g., FTC v. Gem Merch. Corp., 87 F.3d 466, 468-70
(11th Cir. 1996) (applying Porter in holding that courts
may order restitution as a remedy for violations of the
Federal Trade Commission Act); JCC v. B & T Transp.
Co., 618 F.2d 1182, 1183-86 (Ist Cir. 1980) (applying
Porter in holding that courts may order restitution as a
remedy for violations of the Motor Carrier Act, though
noting that “(iJf we were writing on a blank slate, we -
might agree with the district court that the language of
the Motor Carrier Act cannot justify” the remedy of
restitution); CFTC v. Hunt, 591 F.2d 1211, 1221-23 (7th
Cir.1979) (applying Porter in holding that courts may

60a

order disgorgement as a remedy for violations of the
Commodity Exchange Act).

Instead of following Porter and Mitchell, the court
relies on a later Supreme Court decision, Meghrig v.
KFC Western, Inc., 516 U.S. 479, 116 S. Ct. 1251, 134 L.
Ed. 2d 121 (1996). In Meghrig, the Supreme Court con-
sidered whether private citizens could seek restitution
under the Resource Conservation and Recovery Act
(RCRA) for the cost of having cleaned up a prior
landowner’s toxic waste. The statute provided that the
“district court shall have jurisdiction . . . to restrain
any person who has contributed or who is contributing”
to waste problems, “to order such person to take such
others action as may be necessary, or both.” /d. at 482
n.*, 116 S. Ct. 1251 (quoting 42 U.S.C. §.6972(a)). The
Court held that it was “apparent from the two remedies
described . . . that RCRA’s citizen suit provision is
not directed at providing compensation for past cleanup
efforts.” Jd. at 484, 116 S. Ct. 1251. While not explicitly
defining the limits of the two remedies described, the
court suggested that these remedies should be equated
with prohibitory and mandatory injunctions. Jd. More-
over, relying in part on the fact that an analogous sta-
tute expressly authorized damages, the Court con-
cluded that “neither remedy . . . contemplates the
award of past cleanup costs, whether these are denomi-
nated ‘damages’ or ‘equitable restitution.’” Jd. at 484-
85, 116 S. Ct. 1251. According to the Court, it “is an
elemental canon of statutory construction that where a
statute expressly provides a particular remedy or
remedies, a court must be chary of reading cthers into
it.” Jd. at 488, 116 S. Ct. 1251 (quoting Middlesex
County Sewerage Auth. v. Nat'l Sea Clammers Ass'n,

6la

453 U.S. 1, 14- 15, 101 S. Ct. 2615, 69 L. Ed. 2d 435-
(1981)).

The Meghrig Court noted that in arguing that the
district court had inherent authority to award equitable
remedies, the plaintiffs relied on Porter and its
progeny. Jd. at 487, 116 S.Ct. 1251. Without expressly
distinguishing those cases, the Court explained that
“the limited remedies described in [RCRA], along with
the stark differences between the language of that sec-
tion and the cost recovery provisions [of the analogous
statute], amply demonstrate that Congress did not
intend for a private citizen to be able to undertake a
cleanup and then proceed to recover its costs under
RCRA.” Id. Notably for our purposes, Meghrig did not
overrule Porter. Indeed, even after Meghrig, the Su-
preme Court has cited Porter for the proposition that
“we should not construe a statute to displace courts’
traditional equitable authority absent . . . an
‘inescapable inference’ to the contrary.” Miller v.
French, 530 U.S. 327, 340, 120 S. Ct. 2246, 147 L. Ed. 2d
326 (2000); see also United States v. Oakland Cannabis
Buyers’ Co-op., 532 U.S. 483, 496, 121 S. Ct. 1711, 149 L.
Ed. 2d 722 (2001).

At one level, reconciling Meghrig with Porter and
Mitchell is difficult. Meghrig suggests that “to re-
strain” only authorizes prohibitory injunctions. By
contrast, Mitchell holds that this language imposes no
limit on the district court’s full equitable powers.
Meghrig, relying on a version of the canon expressio
unius est exclusio alterius, observes that courts should
be “chary” in reading remedies into a statute which ex-
pressly provides for other remedies. By contrast,
Porter indicates that in the context of equity jurisdic-
tion, the general expressio wnius canon gets inverted,

62a a

meaning that district courts possess all equitable
powers unless the statute “inescapabl[y]” provides to
the contrary. Cf. Renegotiation Bd. v. Bannercraft
Clothing Co., 415 U.S. 1, 18-20, 94 S. Ct. 1028, 39 L. Ed.
2d 123 (1974) (discussing these competing canons).

These tensions cannot be dealt with simply by dis-
missing Porter and Mitchell. Meghrig not only left both
cases intact, but also suggested that the “limited reme-
dies” in RCRA, together with the “stark differences”
between RCRA and the analogous statute, explain the
different outcomes. Given this, our responsibility is to
follow the Supreme Court’s oft-cited instruction that
“[ilf a precedent of this Court has direct application in a
case, yet appears to rest on reasons rejected in some
other line of decisions, the Court of Appeals should
follow the case which directly controls, leaving to this
Court the prerogative of overruling its own decisions.”
Rodriguez de Quijas v. Shearson/Am. Express, Inc.,
490 U.S. 477, 484, 109 S. Ct. 1917, 104 L. Ed. 2d 526
(1989); see also Agostini v. Felton, 521 U.S. 203, 237,
117 S. Ct. 1997, 188 L. Ed. 2d 391 (1997) (reaffirming
this requirement).

In my view, Porter and Mitchell, not Meghrig, “di-
rectly control” this case. Several reasons support this
conclusion, and nothing points the other way. First,
RICO’s statutory scheme resembles the EPCA more
than the RCRA. Both RICO and-the EPCA stand
alone in grappling with a broad social issue, whereas
the RCRA had a closely related statute on which the
Court in Meghrig relied heavily. Second, as in both

Porter and Mitchell, the government brought the suit ~

rather than a private party like the Meghrig plaintiff,
and Porter makes clear that district courts may have
“even broader and more flexible” equitable powers

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where the public interest is involved, 328 U.S. at 398, 66
S. Ct. 1086. This point has particular traction if the
government is the only party that may seek equitable
relief under RICO. See Religious Tech. Ctr. v. Woller-
sheim, 796 F.2d 1076, 1083-89 (9th Cir. 1986) (holding
that equitable relief under RICO is available only to the
government). But see Nat'l Org. for Women, Inc. v.
Scheidler, 267 F.3d 687, 695-700 (7th Cir. 2001) (holding
that private plaintiffs can seek equitable relief under
RICO), rev'd on other grounds, 537 U.S. 393, 123 S. Ct.
1057, 154 L. Ed. 2d 991 (2003). Finally, Meghrig’s sug-
gestion that “restrain” in the RCRA refers only to pro-
hibitory injunctions cannot apply to section 1964(a),
since that section explicitly authorizes other remedies
—e.g., divestment—to “prevent and restrain” RICO
violations. For these reasons, in determining whether
the phrase “prevent and restrain” limits the district
court’s equitable powers, I think it makes more sense to
look to Porter and Mitchell, not Meghrig.

The court “[{rjead[s} Porter in light of’ the statement
in Kokkonen v. Guardian Life Insurance Co., 511 U.S.
375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994), that
“‘(fjederal courts are courts of limited jurisdiction’” and
“‘possess only that power authorized by Constitution
and statute, which is not to be expanded by judicial
decree.”” Majority op. at 1197. But “‘{jJurisdiction,’ it
has been observed, ‘is a word of many, too many, mean-
ings.’” Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 90, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998) (citation
omitted). Kokkonen simply makes the unremarkable
point that federal courts have subject-matter jurisdic-
tion over cases only if the Constitution or Congress so
provides, 511 U.S. at 377, 114 S. Ct. 1673, and the
Supreme Court has since clarified that it is “unrea-

. 64a

sonable” to apply subject-matter jurisdiction principles
where a statute uses the term jurisdiction “merely [in]
specifying the remedial powers of the court,” Steel Co.,
523 U.S. at 90, 118 S. Ct. 1003.

Finally, while Congress modeled section 1964(a) on
the antitrust laws, see 115 Cong. Rec. 9567 (1969)
(statement of Sen. McClellan); see also 15 U.S.C. § 4
(the “district courts . . . are invested with jurisdiction
to prevent and restrain violations”); accord 15 U.S.C.
} 25, I disagree with Philip Morris that the Supreme
Court’s antitrust decisions provide useful guidance as
to whether the phrase “prevent and restrain” limits the
equitable remedies available to district courts. On the
one hand, the Court once ignored, though did not
explicitly reject, an invitation by Justice Douglas to
apply Porter to antitrust actions. See United States v.
Nat'l Lead Co., 332 U.S. 319, 366-67, 67 S. Ct. 1634, 91
L.Ed. 2077 (1947) (Douglas, J., dissenting in part); ef.
United States v. Oregon State Med. Soc’y, 343 U.S. 326,
333, 72 S. Ct. 690, 96 L. Ed. 978 (1952) (emphasizing
that in antitrust actions the purpose of injunctive relief
is to “forestall future violations”); Texas Indus., Inc. v.
Radcliff Materials, Inc., 451 U.S. 630, 639-47, 101 S. Ct.
2061, 68 L. Ed. 2d 500 (1981) (declining to fashion and
apply a common law right of contribution in the anti-
trust context). On the other hand, some antitrust cases
suggest that courts may impose equitable remedies
beyond those intended merely to stop future violations
from occurring. E.g., United States v. Crescent Amuse-
ment Co., 323 U.S. 173, 189, 65 S. Ct. 254, 89 L. Ed. 160
(1944) (although the district court ordered a remedy
said to “exceed any reasonable requirement for preven-
tion of future violations,” the “Court has quite consis-
tently recognized in this type of Sherman Act case that

65a

the government should not be confined to an injunction
against further violations. . . . Those who violate the
Act may not reap the benefits of their violations”); cf.
United States v. U.S. Steel Corp., 251 U.S. 417, 452, 40
S. Ct. 293, 64 L. Ed. 343 (1920) (observing that the
Sherman Act is “clear in its direction that the courts of
the nation shall prevent and restrain [monopolies] (its
language is ‘to prevent and restrain violations of’ the
act); but the command is necessarily submissive to the
conditions which may exist and the usual powers of a
court of equity to adapt its remedies to those condi-
tions”); Schine Chain Theatres v. United States, 334
US. 110, 128, 68 S. Ct. 947, 92 L. Ed. 1245 (1948) (sug-
gesting that “[ljike restitution,” divestment “merely
deprives a defendant of the gains from his wrongful
conduct” and upholding it as a remedy under the Sher-
man Act), overruled on other grounds by Copperweld
Corp. v. Indep. Tube Corp., 467 U.S. 752, 763 n.8, 777,
104 S. Ct. 2731, 81 L. Ed. 2d 628 (1984). As these cases
illustrate, antitrust precedent offers little reason to
doubt the applicability of Porter and Mitchell to the
case at hand.

To sum up, Porter and Mitchell rather than Meghrig
control this case, and no “necessary and inescapable
inference” limits the district court’s jurisdiction in
equity. If the district court concludes that the govern-
ment has shown that the tobacco companies have
committed RICO violations by advertising to youth
despite assertions to the contrary and by falsely dis-
puting smoking’s addictive, unhealthy effects, then it
may order whatever equitable relief it deems appropri-
ate. Of course, the court must work within the bounds
of equitable doctrines, recognizing defenses like laches
and unclean hands, paying due regard for the rights of

66a

the innocent, and generally exercising its discretion.
With these principles in mind, the district court can “do
complete rather than truncated justice,” Porter, 328
USS. at 398, 66S. Ct. 1086. _

B.

In addition to rejecting the government’s argument
that district courts may impose any equitable remedy
on RICO violators, the court rejects the government’s
alternative, narrower argument—that even if district
courts may order only remedies that “prevent and re-
strain” RICO violations, disgorgement can appropri-
ately accomplish that purpose. Because the court’s
analysis of this-argument is as flawed as its analysis of
the government’s broader argument, I add this discus-
sion of the issue. In my view, the court transforms
what should be a question of fact—what remedies ap-
propriately prevent and restrain future violations—intc
a question of statutory interpretation in a way that
disregards section 1964(a)’s plain language and ignores
Supreme Court precedent recognizing the equitable
flexibility of district courts.

Under section 1964(a), district courts may issue “ap-
propriate orders” to prevent and restrain” RICO vio-
lations. “Prevent” has many meanings. The first non-
archaic one listed in Webster’s Third New International
Dictionary (1961) is “to deprive of power or hope of
acting, operating, or succeeding in a purpose.” “Re-
strain” can mean “to hold (as a person) back from some
action, procedure, or course: prevent from doing some-
thing (as by physical or moral force or social pressure)”
and “to limit or restrict to or in respect to a particular
action or course: keep within bounds or under control.”
Webster’s Third New International Dictionary (1961).

67a

The government offers expert testimony to the effect
that a disgorgement order will deter the tobacco com-
panies from violating RICO in the future—in the
dictionary’s language, it will deprive them of the hope
of succeeding in benefiting from future RICO violations
and hold them back from committing such violations. In
essence, the government claims that the tobacco com-
panies, having engaged in a persistent pattern of decep-
tive representations over decades, will be less likely to
continue this illegal behavior if they must surrender
their past ill-gotten profits. Treating the government’s
expert testimony as correct, as we must at this stage of
the litigation, see Anderson, 477 U.S. at 255, 106 S. Ct.
2505, I think it enough to forestall summary judgment
in Philip Morris’s favor. Indeed, the Supreme Court
has accepted just this theory of deterrence, stating in
Porter that restitution “could be considered as an order
appropriate and necessary to enforce compliance with
the Act” since “(fJuture compliance may be more defi-
nitely assured if one is compelled to restore one’s illegal
gains.” 328 U.S. at 400, 66 S. Ct. 1086. If-restitution
helps enforce compliance, then we should have little
doubt that disgorgement helps prevent and restrain
violations.

This court does not conclude that disgorgement can
never have a restraining effect on future conduct of the
defendants—the only conclusion that could justify a
holding that district courts can never order disgorge-
ment under section 1964(a). Instead, the court offers
several unpersuasive reasons for its conclusion that as a
matter of statutory interpretation disgorgement is not
a permissible remedy under section 1964(a).

First, the court states that disgorgement “is a
quintessentially backward-looking remedy.” Majority

68a

op. at 1198. Although I agree that a court sitting in
equity cannot order disgorgement that exceeds a defen-
dant’s past ill-gotten profits, see Tull v. United States,
481 U.S. 412, 424, 107 S. Ct. 1831, 95 L. Ed .2d 365
(1987) (observing that “[rJestitution is limited to
‘restoring the status quo and ordering the return of
that which rightfully belongs to the purchaser or
tenant’”) (quoting Porter, 328 U.S. at 402, 66 S.Ct.
1086), this does not mean disgorgement is always
backward-looking and can never have a forward-
looking effect on the defendants. The Supreme Court
made this clear in Porter, 328 U.S. at 400, 66 S.Ct. 1086,
and Meghrig nowhere rejects Porter’s conclusion that a
disgorgement order can impact future conduct—indeed,
there was no evidence in Meghrig that the defendants
were likely to commit future RCRA violations, and in
any event, as discussed supra at 1220-21, Porter and
Mitchell are the cases most directly on point for our

purposes.

Second, the court concludes that district courts are
limited not merely by the words “prevent and restrain,”
but also “by those [three remedies] explicitly included
in the statute” by application of the canons noscitur a
sociis and ejusdem generis. See majority op. at 1200; cf.
United States v. Thomas, 361 F.3d 653, 659 (D.C. Cir.
2004) (defining these canons). Even assuming we
should apply these canons, however, they spell out
nothing more than what everyone agrees on: that the
only “appropriate” orders under this section are equit-
able ones. See West v. Gibson, 527 U.S. 212, 225-26, 119
S- Ct. 1906, 144 L. Ed. 2d 196 (1999) (Kennedy, J., dis-
senting) (observing that these canons “suggest the
appropriate remedies authorized by [a statute using the
word ‘including’} are remedies of the same nature as re-

69a

instatement, hiring, and backpay—z.e., equitable reme-
dies” and noting that “the phrase ‘appropriate reme-
dies,’ furthermore, connotes the remedial discretion
which is the hallmark of equity”).

More important, I doubt the canons apply here at all.
While the canons can prove useful where there is other-
wise “no general principle in sight,” Dong v. Smith-
sonian Inst., 125 F.3d 877, 880 (D.C. Cir.1 997); see also
Wash. State Dep’t of Health -Servs.v. Guardianship
Estate of Keffeler, 537 U.S. 371, 384, 128 S. Ct. 1017, 154
L. Ed. 2d 972 (2003) (applying the canons in inter-
preting the last listed term of “execution, levy, attach-
ment, garnishment, or-other legal process’), here the
statute provides the general principle of preventing and
restraining violations. Indeed, the Supreme Court
declined to use these canons altogether in interpreting
a statute which gave the EEOC the power of enforce-
ment “through appropriate remedies, including rein-
statement or hiring of émployees with or without back
pay,” 42 U.S.C. § 2000e-16(b). See West, 527 U.S. at 218,
119 S. Ct. 1906 (stating that the “word ‘including’ makes
clear that ‘appropriate remedies’ are not limited to the
examples that follow that word”); cf. Harrison v. PPG
Indus., Inc., 446 U.S. 578, 588-89, 100 S. Ct. 1889, 64 L.
Ed. 2d 525 (1980) (declining to apply ejusdem generis
canon where Congress used “expansive language”). I
see no reason why we should do otherwise here, espe-
cially since section 1964(a) uses the even more expan-
sive language: “including, but not limited to.” Finally,
noscitur a sociis and ejusdem, generis should not be
used to limit the types of equitable relief available to
district courts given Congress’s instruction that RICO
“shall be liberally construed to effectuate its remedial
purposes,” see supra at 1215, one of which is preventing

70a

and restraining future violations—an aim that, far from
being a “new purpose[ | that Congress never intended,”
see majority op. at 1201 (quoting Reves v. Ernst &
Young, 507 U.S. 170, 183, 113 S. Ct. 1163, 122 L. Ed. 2d
525 (1993)), expressly appears in the statute’s text. If
an equitable remedy achieves this goal, then the statute

authorizes it. :

Third, the court suggests that disgorgement should
be unavailable because it allows the government to
achieve relief “similar in effect” to criminal forfeiture,
raising concerns that the government can achieve dupli-
cative recovery and evade the procedural safeguards
girding the forfeiture provision. See majority op. at
1200-01. To be sure, such concerns are relevant in
considering whether to infer additional causes of action.
As discussed earlier, supra at 1217, however, given the
Supreme Court’s explicit rejection of similar concerns
in Porter and Mitchell, they cannot carry the day. Nor
should such concerns stop a court from issuing equit-
able orders that accomplish the express statutory
purpose of preventing and restraining RICO violations,
whether the remedies are specifically listed in section
1964(a), e.g., divestment, or available as other “appro-
priate orders.” Discussing RICO, the Supreme Court
has observed that “Congress has provided civil reme-
dies for use when the circumstances so warrant. It is
untenable to argue that their existence limits the scope
of the criminal provisions.” United States v. Turkette,
452 U.S. 576, 585, 101 S. Ct. 2524, 69 L. Ed. 2d 246
(1981). The converse should hold as well. If an equit-
able remedy prevents and restrains RICO violations
—one of the remedial purposes which we should liber-
ally construe the statute to effectuate—it is untenable
to claim that the existence of criminal provisions

Tla

renders this remedy nonetheless beyond the scope of
district court authority.

Of course, that disgorgement may sometimes serve
to prevent and restrain defendants from committing
RICO violations does not mean that it will always
accomplish that purpose. As the district court here
recognized, a court must first find that the defendants
are likely to commit future RICO violations. 321 F.
Supp. 2d at 75-76. This is not a foregone conclusion. In
Carson, for example, while the Second Circuit recog-
nized that disgorgement can sometimes serve to pre-
vent and restrain RICO violations, it was rightly
skeptical that disgorgement of the “gains ill-gotten long
ago by a retiree” who had long since left the union posi-
tion that he had abused in accepting kickbacks would
accomplish this purpose. 52 F.3d at 1182. Assuming
district courts are limited to remedies that prevent and
restrain, but see supra Part II.A, I also share the
Second Circuit’s apparent conclusion that disgorgement
may be ordered only to prevent and restrain a defen-
dant from future RICO violations, see 52 F.3d at 1182.
But see Richard v. Hoechst Celanese Chem. Group, 355
F.3d 345, 355 (5th Cir. 2003) (leaving open the possibil-
ity that disgorgement might be ordered solely to deter
other possible offenders). Because any remedy imposed
for a solely exemplary purpose (i.e., to dissuade others
from committing RICO violations) would amount to
punishment, it goes beyond what Congress intended,
see S. Rep. No. 91-617, at 81, as well as pushes the
boundaries of what equity permits, cf. Tull, 481 U.S. at
422, 107 S. Ct. 1831. In this case, however, the govern-
ment offers evidence that the defendant companies
themselves are likely to commit future RICO violations
by misleading the public about the health consequences

72a

of smoking and the addictive effects of nicotine, as well
as by persisting in marketing to young people.

According to Philip Morris, only injunctions are
“appropriate orders” under section 1964(a) because, in
its view, they will always adequately prevent past
lawbreakers from committing future violations, particu-
larly given the threat of heavy contempt penalties.
Refining this point, the concurrence finds it “almost in-
conceivable” that disgorgement can change the incen-
tives governing a defendant’s future behavior given
RICO’s other provisions. See sep. op. at 1204 (Williams,
J., concurring). The concurrence thus concludes that as
a matter of law, Congress intended to exclude disgorge-
ment from those remedies appropriate to prevent and
restrain RICO violations. See id. at 1204-05. I think
this approach is flawed in several respects.

To begin with, as noted above, Porter indicated that
disgorgement may encourage guilty defendants to obey
the law in the future. Interpreting a statute replete
(like RICO) with other remedies, the Court concluded
that “[fluture compliance may be more definitely as-
sured if one is compelled to restore one’s illegal gains.”
328 U.S. at 400, 66 S. Ct. 1086. We are without license
to ignore the Supreme Court’s views on this point.

Moreover, Philip Morris’s suggestion that only in-
junctions provide “appropriate” relief under section
1964(a) not only cuts against the statute’s plain lan-
guage—Congress would hardly have included divest-
ment in its list of sample remedies if it thought injunc-
tions alone would be adequate—but also ignores the
equitable flexibility the statute was designed to pre-
serve, see, €.g., 115 Cong. Rec. 9567 (1969) (statement of
Sen. McClellan). Indeed, nothing in the statute re-
quires courts to prefer contempt penalties (not explic-

73a

itly named in section 1964(a)) to disgorgement (also not
explicitly named). Rather, no single remedy is always
appropriate. “The essence of equity jurisdiction has
been the power of the Chancellor to do equity and to
mold each decree to the necessities of the particular
case. Flexibility rather than rigidity has distinguished
it.” Swann v. Charlotte-Mecklenburg Bd. of Educ., 402
US. 1, 15, 91 S. Ct. 1267, 28 L. Ed. 2d 554 (1971) (quot-
ing Hecht Co. v. Bowles, 321 U.S. 321, 329-30, 64 S. Ct.
587, 88 L. Ed. 754 (1944)). Sometimes injunctive relief
alone will make the most sense; other times, different
equitable remedies or combinations of equitable reme-
dies, perhaps including disgorgement, might prove as
or more effective.

To be sure, given RICO’s comprehensive remedial
scheme, disgorgement orders may prove appropriate in
preventing and restraining future violations only in
rare circumstances. But “[i]n equity, as nowhere else,
courts [should] eschew rigid absolutes,” Franks v.
Bowman Transp. Co., 424 U.S. 747, 777 n.39, 96 S. Ct.
1251, 47 L. Ed. 2d 444 (1976) (internal quotation marks
and citation omitted), and precisely what remedy or
combination of remedies, within the bounds of the equi-
table doctrines discussed earlier, will serve to prevent
and restrain defendants from committing RICO viola-
tions is an issue of fact, not statutory interpretation.
For these determinations, we must rely in the first
instance not on what we appellate judges can or cannot
imagine will “prevent or restrain,” but on tried and true
methods of fact-finding before district courts—includ-
ing cross-examination and presentation of contrary
evidence. Cf. id. at 780, 96 S. Ct. 1251 (noting district
courts’ “ ‘keener appreciation’ of peculiar facts and cir-
cumstances”) (citation omitted).

74a

Finally, and again as noted earlier, record evidence in
this case suggests that disgorgement will in fact “pre-
vent and restrain” defendants from committing future
RICO violations. As one of the government’s experts
_ stated, “[Rjequiring defendants to pay proceeds will
affect their expectations . . . about the returns from
future misconduct.” Appellee’s App. at 813. The
expert added that, even if coupled with an injunction
laden with contempt penalties, disgorgement will “pro-
vide additional economic incentives to deter future mis-
conduct” by “strengthen[ing] the credibility of existing
laws” which the defendants have allegedly violated in
the past. Jd. at 814. Disagreeing, the concurrence of-
fers its own “expert opinion” of the incentives driving
the behavior of past RICO violators. See sep. op. at
1203-05, 1205-06. According to the concurrence, the
most appropriate deterrence will stem from the “spot-
light of the lawsuit,” if properly “ampliflied]” by “trans-
parency-enhancing and prior-approval measures.” Jd.
at 1205. Perhaps so, but “on summary judgment, the
evidence should be viewed in favor of the nonmoving
party, not,” as the concurrence would have it, “the
other way around.” Langon v. Dep’t Health & Human
Servs., 959 F.2d 1058, 1059 (D.C. Cir. 1992) (reversing
district court grant of summary judgment where that
court disregarded admissible expert testimony); see
also Sears, Roebuck & Co. v. Gen. Servs. Admin., 553
F.2d 1378, 1381-83 (D.C. Cir. 1977) (holding that district
court inappropriately granted summary judgment
where experts disagreed about whether certain data
constituted a “trade secret” from which an intelligent
competitor could gain information}. At this stage of the
litigation, then, we must assume that the government
expert is correct and that disgorgement will “prevent
and restrain” future RICO violations. Should Philip

75a

Morris offer expert testimony along the lines suggested
by the concurrence, then it will be up to the district
court to evaluate the competing evidence and make
appropriate findings of fact. Should either party ap-
peal, this court, unrestrained by the inferences required
at summary judgment, would then review that factual
determination pursuant to Rule 52’s clear error stan-
dard. See Fed. R. Civ. P. 52 advisory committee’s note
(observing that judgment under this standard “differs
from a summary judgment under Rule 56 in the nature
of the evaluation made by the court”); see also 9A
Wright & Miller, Federal Practice and Procedure
§ 2585 (2d. ed. 1994) (noting that under Rule 52 a re-
viewing court need not view the evidence in the light
most favorable to the appellee).

Cc.

In sum, were this case properly before us, I would
hold, in accordance with Porter and Mitchell, that
district courts have authority to order any remedy,
including disgorgement, necessary to ensure complete
relief. As the concurrence points out, sep. op. at 1206
(Williams, J., concurring), my approach would create a
circuit split, since Carson did not apply Porter and
Mitchell to RICO (and, indeed, the parties do not
appear to have brought these cases to the Second Cir-
cuit’s attention). Even if, as Carson holds, district
courts may only impose equitable remedies for the
purpose of keeping defendants from committing RICO
violations, I would still affirm the denial of summary
judgment, leaving it-to the district court to determine,
on the basis of a fully developed record, whether dis-
gorgement will help accomplish this purpose. I
disagree with my colleagues’ conclusions not because
they have created a circuit split of their own by

16a

_

rejecting Carson’s holding that disgorgement may
prevent and restrain RICO violations, but because they
have done so by accepting an interlocutory appeal that
we should not hear and by disregarding both Supreme
Court precedent and section 1964(a)’s plain language.

Hil.

This leaves one final, distinct issue. Philip Morris
claims that the government’s disgorgement model fails
as a matter of law to measure the tobacco companies’
ill-gotten profits. Because the district court decided
this issue in the certified order, it is—unlike the issue
the court does resolve—properly before us. See
Yamaha, 516 U.S. at 205, 116 S. Ct. 619.

In calculating disgorgement, the government first
identifies what it calls the “Youth Addicted Population”
(YAP), namely, all people who were smoking an aver- -
age of at least 5 cigarettes a day at the time they turned
21. The government next calculates that from RICO’s
effective date in 1970 to 2001, the tobacco companies
earned profits of $280 billion through sales to these
people. The government arrives at this calculation by
(1) determining the gross revenue from these total sales
minus the direct costs (excluding overhead and taxes)
and (2) adjusting for the time value of money. Philip
Morris asserts that the government has failed to show
that these profits are attributable to the companies’
alleged RICO violations, relying on admissions by
government experts that it would be “highly unlikely”
to say that. “nobody under the age of 21 would have
ever smoked regularly . . . but for the defendants’
alleged RICO violations.”

Philip Morris cannot prevail on this issue at summary
judgment because the government need not show that

77a

nobody under 21 would have smoked but for the RICO
violations. As we held in First City Financial, 890 F.2d
at 1229, “disgorgement need only be a reasonable ap-
proximation of profits causally connected to the
violation.” In First City Financial, we found that the
district court appropriately ordered disgorgement of all
profits on a stock sale where the defendants failed to
make a material disclosure, purchased stock whose
value would likely have already risen had the disclosure
been made, and then sold the stock for a killing after
the undisclosed news broke. See id. at 1229-32. Al-
though the government never proved that all increases
in the stock’s value stemmed from the violation, we
rejected the defendants’ argument that because the
increase in price may have depended on other factors,
disgorgement of all profits was “simplistic, quite
unrealistic, and so de facto punitive.” See id. at 1231.
Noting that “[rJules for calculating disgorgement must
recognize that separating legal from illegal profits
exactly may at times be a near-impossible task,” we
held that “the government’s showing of appellants’
actual profits on the tainted transactions at least
presumptively satisfied” its “burden of persuasion that
its disgorgement figure reasonably approximates the
amount of unjust enrichment.” Jd. at 1231-32. Al-
though recognizing that this might result in “actual
profits becoming the typical disgorgement measure,”
we observed that “the risk of uncertainty should fall on
the wrongdoer whose illegal conduct created that
uncertainty.” Jd. at 1232; see also SEC v. Banner Fund
Int'l, 211 F.3d 602, 617 (D.C. Cir. 2000).

Disentangling the tobacco companies’ legal and illegal
profits might also be a “near-impossible task.” The
government offers evidence that the tobacco companies

78a

not only fraudulently suggested that smoking was
harmless and nonaddictive, but did so through a
comprehensive, decades-long pattern of deliberate
behavior. The government further offers evidence that
advertising is a “very substantial influence on young
people starting to smoke,” see Appellee’s App. at 783,
and that the tobacco companies committed RICO
violations in advertising to young people while publicly
denying that they were doing so. Under First City
Financial, then, the government’s calculations serve as
a reasonable approximation: just as we permit actual
profits in insider trading cases to serve as a proxy for
ill-gotten gains, so too can actual profits from sales to
the YAP meet the government’s initial burden of rea-
sonably approximating the tobacco companies’ unlawiul
gains. The burden would thus shift to Philip Morris te
“demonstrate that the disgorgement figure was not a
reasonable approximation,” 890 F.2d at 1232, and the
district court would have to sort out who is right.

79a

APPENDIX B

UNITED STATES COURT OF APPEALS
DISTRICT OF COLUMBIA CIRCUIT

No. CIV.A.99-2496 GK
UNITED STATES OF AMERICA, PLAINTIFF

v.

PHILIP MORRIS INCORPORATED, ET AL.,
DEFENDANTS

Sept. 28, 2000

MEMORANDUM OPINION

KESSLER, District Judge.
I. Introduction

Plaintiff, the United States of America (“the Gov-
ernment”), brings suit against eleven tobacco-related
entities (“Defendants”)'’ to recover health care
expenditures the Government has paid for or will pay

' The eleven Defendants are: Philip Morris, Inc. (“Philip
Morris”), R.J. Reynolds Tobacco Co. (“R.J.Reynolds”), Brown &
Williamson Tobacco Co. (“Brown & Williamson”), Lorillard To-
bacco Company (“Lorillard”), The Liggett Group, Inc. (“Liggett”),
American Tobacco Co. (“American Tobacco”), Philip Morris Cos.,
B.A.T. Industries p.l.c. (“BAT Ind.”), Britis

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_1697%3A2. Public record. Not legal advice.