Opposition Brief — Philip Morris USA Inc. v. United States
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Nos. Tp : 980 and 09-1012
TA TT TT I TRE i
Jn the Supreme Court of the United States
PHILIP MORRIS USA INC., FKA PHILIP MORRIS. INC.,
PETITIONER
Vv.
UNITED STATES OF AMERI( A ET Ai.
h.J. REYNOLDS TOBACCO COMPANY. ET AL..
PETITIONERS
i)
UNITED STATES OF AMERICA. ET AL.
ALTRIA GROUP, INC., PETITIONER
UV.
UNITED STATES OF AMERICA, ET AL.
BRITISH AMERICAN TOBACCO (INVESTMENTS).
LIMITED, PETITIONER
2),
UNITED STATES OF AMERICA, ET AL.
LORILLARD TOBACCO COMPANY, PETITIONER
??,
UNITED STATES OF AMERICA. ETAL.
ON PETITIONS FOR A WRIT OF CERTIORARI
lO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
NEAL KUMAR KATYAI
1; tima Nolieitor (reneral
ry ? 1)
( Owvsel OF re cord
(Additional Counsel] Listed on Inside Cover)
ERE HEL ATR STL EE AY LI RS TN SAN RRR I SE AN ANAS
iii nc ye 2 ee —
GREGORY C.J. I is
ALLOTNeYs
De partment of Just
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QUESTIONS PRESENTED
The petitions collectively present the following ques-
tions:
1. Whether the court of appeals correctly held that
an unincorporated association of corporations and
individuals may form an “enterprise” under 18 U.S.C.
1961(4).
2. Whether the court of appeals was required to un
dertake independent appellate review of the district
court’s unchallenged findings of fact establishing fraud.
3. Whether the court of appeals correctly held that
the First Amendment does not protect petitioners’ pub-
lic statements because they were fraudulent.
4. Whether the court of appeals correctly held that
petitioners’ statements about “light” and “low tar” ciga
rettes were false, misleading, and not authorized by the
federal Trade Commission.
5. Whether the court of appeals correctly rejected
the argument that any reasonable likel‘hood of future
violations was eliminated by the signing of the Master
Settlement Agreement or, alternatively, by the passage
of the Family Smoking Prevention and Tobacco Control]
Act.
6. Whether the court of appeals correctly sustained
relief prohibiting specified conduct and requiring cor-
rective statements.
7. Whether the court of appeals correctly concluded
that British American Tobacco (Investments) Limited,
a foreign corporation, was subject to RICO when it used
the interstate mails and wires and engaged in other
conduct in the United States in furtherance of a schem:
to defraud Americ: nconsumers, and wnen it conspired
|
with American companies to pursue that fraudulent
SCnemMe
&. Whether the court of appeals correctly rejected
Altria’s contention that it did not act with specific intent
to defraud.
TABLE OF CONTENTS
‘rgeument I
A. An unincorporated association of corporatior
and individuals may form a RICO enterpriss
B. The court of appeals was not required to
indertake independent appellate review of the
district court’s unchallenged findings of fact
establishing fraud .....
C. Petitioners’ fraud was not protected by the Fiz
Amendment ............. APE
D. Petitioners’ statements about “light” and “1
tar” cigarettes were fraudulent and not
authorized by the F'I'C _.. eee ()
t.. Neither the master settlement agreement nor
the passage of the Family Smoking Preventiu1
and Tobaccuv Control Act eliminated all likelihe
of future violations .....
t. The court of appeals correet ly upheld the
Injunction prohibiting specified conduct an
requiring corrective statements ,
G. The court of appeals correctly rejected BAT
claim that this case involves an extraterritorial]
application of RICO
li. The court of appeals correet vy concluded that
Altria acted with intent to defraud
Appendn Transcript of oral argument (D.C. Cir
Oct. 14, 200%
rABLE OF AUTHORITIES
502 U.S. 1005 (1991)
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ert. denied, 526 U.S. 1087 (1999
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LAe yr Airway Lid. v. Nabe ya, Beloaaan VU orla
‘
31 F.2d 909 (D.C. Cir. 1984) ............. 67
nev. CMP Publ’ns., Inc., 738 F.2d 660 (5th Cir.
1984 +]
f aati ( mdr re OF Ban O lnk rcontinental Vv.
frenta, 530 I°.3d 1339 (11th Cir. 2008) ......... .,, 69
gQ Liesigns. Inc. v. BE] Dupont de Nemours &
tol F.8d 353 (9th Cir. 2005). cert. denis ad.
17 U.S. 1192 (2006) een 26
di f 4 I 2d 142 if ( r LYSh Zo
/ j 1; A _ } Uy») 1
Inty Blect Comm’n, 514 34
1995 35
| doin, 552 U.S. 985 (2007 7
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hi Vutri AT 70 F 2d
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yases—Continued: Page
Odom v. Microsoft Corp., 486 F.3d 541 (9th Cir
cert. denied, 552 U.S. 985 (2007) .. cf
Pasquantino v. United States, 544 U.S. 349
aE ae ee aii a 10, 63, ¢
Peel v. Attorney Registration & Disciplinary
Yy tveg /
Comm'n, 496 U.S. 91 (1990) .............. 0
Pinkerton vy. ‘mited States, 328 U.S. 640 ( 1946) 4?
Professional Real Estate Investors Inc. v. Columb;
La
Pictures Indus., Inc. 508 U.S. 49 (1993) 4
Republic of the Phillippines v. Marcos, 862 F.2d 1355
9th Cir. 1988), cert. denied, 490 U.S. 1035 (1989) .... 63
Revo v. Disciplinary Bd. of the Sup. Ct., 106 F.3d 929
10th Cir.), cert. denied. 521 U.S. 1121 (1997) ree |
ee |
Reussello v. l/nited State S, 464 U.S. 16 (19883 Is, 21, 24
Saba v. Compagnie Nationale Air France.
78 F.3d 664 (D.C. Cir. 1996 12
Salinas Vv. United States, 522 U.S. 52 (1997 66, 72
SC. Jol on & Son, / Clo? ( "41 F.3d 232
Viadnageme? di nies, I ld F.2d &0
"ci ( ! Q75
bh \ P ryt ly ) ile ps) ' <6 Per | hy ¢ }
2UOY), petition for cert. pending 09-1176 (f
Mar /t AT)
4 PRL / ( » | , - Z4
ynher rt 20) | - ; ] “tt it) |
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Cases—Continued: Page
United States v. Atmone, 715 F.2d 822 (3d Cir. 1983).
cert. denied, 468 U.S. 1217 (1984) .................. 25
United States v. Blinder, 10 F.3d 1468 (9th Cir. 1993) ... 26
United States v. Butler, 954 F.2d 114 (2d Cir. 1992)... ._. 20
United States v. Campanale, 518 F.2d 352 (9th Cir.
1975), cert. denied, 423 U.S. 1050 (1976)
l/nited States v. Cianci, 378 F.3d 71 (1st Cir. 2004) 26
=
U/nited States v. Console, 13 F.3d 641 (3d Cir. 1993).
cert. denied, 511 U.S. 1076, and 513 U.S. 812 (1994) 6
United States v. Feldman, 853 F.2d 648 (9th Cir.
1988), cert. denied, 489 U.S. 1080 (1989) ........ a"
United States v. Goldin Indus., Inc., 219 F.3d 127]
(lith Cir.), cert. denied 531 U.S. 1015 (2000) . 26
ited States v. Huber. 603 F.2d 387 (2d Cir. 1979).
|
cert. denied, 445 U.S. 927 (1980) ._.. 23, 2D
Live d State SV [nco Bank Fa Tri: ,(.0n
S45 F.2d 919 (11th Cir. 1988 6°
t Stutes v. London, 66 F.3d 1227 (ist Cir. 1995
cert. denied, 517 U.S. 1155 L996
; Vasters, 924 F.2d 1362 (7th |
ert. demiet O00 US. 919, and 502 U.S 2
4
! / Va ) >f ) | (1 466 ttn 4
rt. denied, 537 U.S. 1094 (200? (
4 \ ro-O (70 F 2 yy Q
Ith Cir. 19845 , iy lO 19
Cases—Continued:
United States v. Pierce. 224 F.3d 158 (2d Cir. 2006)
United States v. Perholtz, 842 F.2d 343 (D.C. Cir.).
cert. denied, 488 U.S. 821 (1988)
‘nited States v. Philip Morris USA, Inc.,
477 F. Supp. 2d 191 (D.D.C. 2007)
meted States v Sawyer, 239 F.3d 31 (1st Cir
nited States v. Stolfi, 889 F.2d 378 (2d Cir. 1989)
mited States v. Thevis, 665 F.2d 616 (5th Cir.).
cert. denied, 456 U.S. 1008, 458 U.S. 1109,
and 459 U.S. 825 (1982)
nite d States i lurkette, 152
(1981).
‘nited States v. Winter, 509 F.2d 975 (Sth Cir
cert. denied, 423 U.S. 825 (1975)
Vvarner-Lumobert Co. yv. FTC, 562 F.2d 749 (1977).
cert. denied, 435 U.S. 950 (1978)
Zauderer Vv. Office oOo} Dis iplinary C'o
Ct., 471 U.S. 626 (1985) ...
. y 7
10 ¢ GTp. % Haz tan laa se
LOO (1969
statutes and rules—Continued:
§ 4(a), 123 Stat. 1782
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, Pub. L. No. 101-73,
§ 968, 103 Stat. 506
Racketeer Influenced and Corrupt Organizations :
(RICO), 18 U.S.C. 1961 et seg
Pub. L. No. 91-452, § 904(a), 84 Stat. 947
18 U.
LS |
18 U.
ISU
Is U.
18 U.S.C
IS U.S
S.C.
S.C.
S.C.
.C,
S.C.
1961
1961(1)
1961(3)
1961(4)
1961(5)
. 1961(10)
5. 1962(e)
>. 1962(d)
. 1964(a)
. 1964(b)
.C. 1964(c)
Weapons of Mass Destruction Prohibition
Improvement Act of 2004, Pub. L. No. 108
» 6802(e), 118 Stat. 3767 ....
XJ
Statutes and rules—Continued:
18 U.S.C. 1621...
25 U.S.C. 479
28 U.S.C. 593(b)
26 U.S.C. 899 .......
F'ed. R. Civ. P.:
tule 52(a)
ee ee ee a oe ee oe oe ee a ae 2%
DU ID os oo be vb 0 beens dea 57, 58, 59
Rule 65(d)(1) 59
Rule 65(d)(1)(C) 2... i w.0g 6b ee be ek eo
Misecellaneou -
Authority Of the President to Name an Acting
Attorney General, 31 Op. Off. Legal Counsel
(2007), hitp://www.justice.gov/olc/2007/aut! ority
of-the-president-name-ag-070908.pdf ........ ; ae
H.R. Rep. No. 1549, 91st Cong., 2d Sess. (1970) . . 2)
Rep. No. 617, 91st Cong., 1st Sess. (1969) _ os
INO
Jn the Supreme Court of the Gnited States
No. 09-976
PHILIP MORRIS USA INC... FKA PHILIP MORRIS, INC..
PETITIONER
U.
UNITED STATES OF AMERICA. ET AL.
No. 09-977
R.J. REYNOLDS TOBACCO COMPANY. ET AL:.
PETITIONERS
VU.
UNITED STATES OF AMERICA, ET AL.
No. 09-979
ALTRIA GROUP, INC., PETITIONER
UV.
UNITED STATES OF AMERICA, BT AL.
No. 09-980
>RITISH AMERICAN TOBACCO (INVESTMEN rs), LIMITED.
PETITIONER
UINITED STATES OF AMERICA. ET A]
No. 09 LO}?
LORI] LARD TOBACCO COMPANY, PETITIONER
NITED STATES OF AMERICA. ET AL.
IN PETITIONS FOR A WRIT OF CERTIORAR:!
MLHE UNITED STATES COURT OF APPEA,
FOR THE DISTRICT OF COLUMBIA CIRCUTT
BRIEF FOR THE UNITED STATES IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. la-
100a) is reported at 566 F.3d 1095. The opinion of the
district court (Pet. App. 101a-2181a) is reported at 449
F. Supp. 2d 1.
JURISDICTION
The judgment of the court of appeals was entered on
May 22, 2009. Petitions for rehearing were denied on
September 22, 2009 (Pet. App. 2182a-2815a). On No-
vember 10, 2009, the Chief Justice extended the time
within which to file petitions for a writ of certiorari to
and including February 19, 2010, and the petitions were
filed on that date. This Court’s jurisdiction is invoked
under 28 U.S.C. 1254(1).
STATEMENT
The United States brought this action under the
Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. 1961 et seq., alleging that petitioners
engaged in a coordinated scheme to deceive Americans
about the addictiveness and health risks of cigarettes,
thereby enhancing petitioners’ cigarette sales and asso-
ciated profits. The district court held a nine-month
bench trial, admitting nearly 14,000 exhibits and hearing
live testimony from 84 witnesses and written testimony
from 162 witnesses. Pet. App. 8a. The voluminous evi-
dentiary record includes large numbers of petitioners’
internal documents, see, e.g., id. at. 36a-39a, as well as
testimony from numerous former tobacco industry em-
ployees and participants that detail petitioners’ fraudu-
lent behavior, e.g., id. at 35a-36a.
Based on that record, the district court issued a final
decision documenting the “overwhelming evidence” that
petitioners conducted and conspired to conduct the af-
fairs of a RICO enterprise through a pattern of racke-
teering activity, in violation of 18 U.S.C. 1962(e) and (d).
by engaging in a decades-long scheme to defraud that
petitioners executed in part through their use of mail
and wire communications. Pet. App. 103a, 114a-115a,
I887a; see id. at 1885a-2004a. The court’s opinion, which
spans nearly an entire volume of the Federal Supple-
ment, includes more than 4000 enumerated findings ot
fact and details the affairs of petitioners’ enterprise and
petitioners’ pattern of mail and wire fraud. See id. at
119a-1885a.
The district court found, and the court of appeals
unanimously affirmed, that the government proved that
petitioners participated in the conduct of an enterprise
and “knowingly and intentionally engaged in a scheme
to defraud smokers and potential smokers, for purposes
of financial gain, by making false and fraudulent state-
ments, representations, and promises.” Pet. App. 1888a;
id. at 5a-6a, 30a. “Put more colloquially, and less legal-
istically, over the course of more than 50 years, [peti-
tioners] lied, misrepresented, and deceived the Ameri-
can public, including smokers and the young people they
avidly sought as ‘replacement. smokers,’ about the devas-
tating health effects of smoking and environmental to-
bacco smoke, they suppressed research, they destroyed
documents, they manipulated the use of nicotine so as to
increase and perpetuate addiction, they distorted the
truth about low tar and light cigarettes so as to discour-
age smokers from quitting, and they abused the legal
system in order to achieve their goal.” Jd. at 1887a-
1X&&a.
As the court of appeals observed, a summary of peti-
tloners’ conduct “cannot adequately present the volumes
of evidence underlying the district court’s findings of
fact.” Pet. App. 37a. “(The evidentiary picture must be
viewed in its totality in order to fully appreciate how
massive the case is against [petitioners], how irresponsi-
ble their actions have been, and how heedless they have
been of the public welfare and the suffering caused by”
their fraudulent conduct. /d. at 112a. The following
Summary thus provides but an outline of the nature and
history of the RICO enterprise as found by the district
court and affirmed by the D.C. Circuit.
1. In 1953, petitioners’ RICO enterprise was estab-
lished when the presidents of Philip Morris, Reynolds,
Brown & Williamson, Lorillard, and American met to
develop a joint response to the growing public concern
about the health risks of smoking. Pet. App. 122a-127a,
1923a-1925a. The companies, normally rivals in the cig-
arette market, agreed that no manufacturer would “seek
a competitive advantage by inferring to its public that
its product is less risky than others,” id. at 124a, and
jointly issued a full-page advertisement entitled “A
Frank Statement to Cigarette Smokers” that they pub-
lished in newspapers nationwide on January 4, 1954. /d.
at 128a-132a. “The Frank Statement set forth the indus-
try’s ‘open question’ position that it would maintain for
more than forty years—that cigarette smoking was not
a proven cause of lung cancer; that cigarettes were not
injurious to health; and that more research on smoking
and health issues was needed.” Jd. at 129a.
At its core, petitioners’ scheme was designed to “mis-
lead[] consumers in order to maximize [petitioners’] rev-
enues by recruiting new smokers (the majority of whom
are under the age of 18), preventing current smokers
from quitting, and thereby sustaining the industry.”
Pet. App. 201 1a; see 2d. at 1888a. The goal of the “open
question” strategy, as a senior Philip Morris executive
later explained, was to create the impression of scientific
uncertainty and thereby “give eet ers a psy¢e hological
crutch and a self-rationale to continue smoking.” Jd. at
417a. The companies declared in the Frank Statement
that “[w]e accept an interest in people’s health as a basic
responsibility, paramount to every other consideration
in our business”; asserted that “{w]e believe the prod-
ucts we make are not injurious to health”; and promised
to fund objective research into “all phases of tobacco use
and health” by scientists “of unimpeachable integrity
and national repute.” /d. at 131a-132a.
Yet at the time the companies issued the “Frank
Statement,” they already had “documented a large num-
ber of known carcinogens contained in cigarette smoke.”
Pet. App. 396a. Over the ensuing decades, petitioners
developed a sophisticated understanding of the to xIcity
and addictiveness of cigarettes that outpaced that of the
public, regulators, and public health authorities. /d. at
Ja-lla. As the public’s knowledge increased, the compa-
nies intensified the level of their deceptions. The dis-
trict court, as the court of appeals explains, catalogued
“countless examples of deliberately false statements” by
petitioners regarding the health effects of smoking and
secondhand smoke, the addictiveness of nicotine and pe-
titioners’ manipulation of nicotine delivery to create and
sustain addiction, and the claimed health bencfits of
“light” cigarettes. /d. at 45a. The district court found
that petitioners’ “efforts to deny and distort the scien-
tific evidence of smoking’s harms are demonstrated by
not only decades of press releases, reports, booklets.
newsletters, television and radio appearances, and scien-
tific symposia and publications, but also by evidence of
their concerted[] efforts to attack and undermine the
6
studies in mainstream scientific publications such as the
Reports of the Surgeon General.” /d. at 1894a. In addi-
tion, “[aJs their internal documents reveal. {petitioners |
engaged in massive, sustained, and highly sophisticated
marketing and promotional campaigns to portray their
light brands as less harmful than regular cigarettes.”
id. at 1904a. Petitioners “have known for decades that
filtered and low tar cigarettes do not offer a meaningful
reduction of risk, and that their marketing which em-
phasized reductions in tar and nicotine was false and
misleading.” Jd. at 1905a-1906a.
Petitioners executed their scheme to defraud by uti-
lizing an array of jointly created entities, the most visi-
ble of which was the Tobaceo Institute (TI). which
served for four decades as “the leading public voice of
|petitioners}.” Pet. App. 195a; id. at 119a. Petitioners
jointly financed Tl’s operations through payments ex
ceeding $600 million, 7d. at 183a, and their chief execu-
tive officers served on TI’s Executive Committee, id. at
180a, which had the “‘final voice on TI matters’ and To-
bacco Institute statements.” /d. at 216a (citation omit
pamphlets, and other written materials on behalf of [ pe-
titioners]” that denied “any link between smoking and
disease,” denied that “nicotine was addictive,” denied
that “cigarette companies marketed to youth,” denied
that secondhand smoke “posed a health risk.” and
“discreditled] scientists and public health officials who
took a different position on these issues.” /d. at 196a.
As internal TI documents admit: “Our basic position in
the cigarette controversy is subject to the charge, and
maybe subject. to a finding, that we are making false or
misleading statements to promote the sale of ciga-
rettes.” Jd. at 186a.
The Tobacco Institute was but one part of a “network
of interlocking organizations” that petitioners created to
maintain unity and discipline. Pet. App. 1777a. The In-
stitute’s Executive Committee emphasized internally
that it was “of prime importance that the Industry main-
tain a united front and that if one or more companies
were to conduct themselves as a matter of self interest.
particularly in advertising, obvious vulnerability would
be the result.” /d. at 218a (citation omitted), To that
end, the International Committee on Smoking Issues
(ICOSI) and its successor organizations, the Interna-
tional Tobacco Information Center (INFOTAB) and the
Tobacco Documentation Centre (TDC), were established
lo enabie Philip Morris, Reynolds, British American
Tobacco (BATCo) and other tohaeceo companies to “meet
discreetly to develop a defensive smoking and health
strategy for major markets,” including the United
States. /d. at 1619a (citation omitted): see also id. at
920a-335a. BATCo acknowledged internally that “[t]he
aim of ICOSI is defensive research aimed at throwing up
a smoke screen and to throw doubt on smoking research
findings which show smoke causes diseases.” /d. at
1624a (citation omitted). The members of this rroup
included Philip Morris, Reynolds, Lorillard, BATCo and
TI, as well as foreign tobacco companies. /d. at 327a-
32384.
Petitioners also formed a variety of organizations to
create what they termed “marketable science.” Pet.
App. 1687a. For example, through the Council for To-
bacco Research (CTR) and Lawyers’ Special Accounts.
petitioners jointly financed research programs that were
directed by company lawyers and ealculated to vield
favorable results. /d. at 240a-275a. Petitioners regu-
larly cited the conclusions of the scientists funded
hrough these programs as if they were the objective
results of disinterested research, without revealing that
the scientists had, in fact, been funded by the industry.
Id. at 195a.
Petitioners likewise created organizations that ap-
peared to have no connection to the industry, but were
in fact designed to generate purportedly independent
evidence for use as “ammunition” in manipulating public
opinion. Pet. App. 1614a (citation omitted). For exam-
ple, petitioners created the Center for Indoor Air Re
search (CIAR) in a manner designed “to ‘hide’ industry
involvement,” id. at 1652a (citation omitted), and CIAR’s
influential papers on secondhand smoke failed to dis-
close the organization’s connection to the tobacco indus-
try. fd. at 1651a-1653a. Similarly, Indoor Air Interna-
tional (TAI) held itself out as “a ‘learned society’ dedi-
cated to ‘promoting indoor air quality,’” id. at 1695a-
1696a (citation omitted), while in reality it was funded by
Philip Morris and BATCo and run by the law firm of
Covington & Burling, id. at 1695a-169Sa, which served
as legal counsel for TI and the industry. /d. at 181a.
214a. “All billing was processed through Covington &
Burling to avoid any direct connection to the industry.”
Id. at 1695a.
[he district court found that attorneys actively facilitated and
“played an absolutely central role” in petitioners’ illegal activity “falt
every stage” by, inter alza, “direct[ing] scientists as to what researeh
they should and should not undertake”; “vettling} scientific research
papers and reports’; “hid{ing] the relationship between [scientific wit-
nesses] and the industry”; “devis[ing] and carr[ying] out document de
struction policies”; and taking “shelter behind baseless assertions of the
attorney client privilege.” Pet. App. 106a
2. In 2006, after developing an immense trial record.
the district court held that petitioners had participated
in the conduct of the affairs of an enterprise through a
pattern of racketeering activity, and conspired to do so,
in violation of 18 U.S.C. 1962(c) and (d). Pet. App.
lsd0a, 1995a. The court determined that petitioners’
enterprise had the common purpose of preserving and
expanding the cigarette market through fraud, id. at
1923a-1925a; that it operated through formal and infor-
mal organizations, id. at 1925a-1928a: and that it has
functioned as a continuous unit since 1953, id. at 1928a-
1930a.
The district court specifically found that petitioners
“knowingly and intentionally engaged in a scheme to
defraud smokers and potential smokers, for purposes of
financial gain, by making false and fraudulent state-
ments, representations, and promises.” Pet. App. 1888a.
It explained that, “[ijJn the majority of instances, the
authors of the fraudulent statements alleged as Racke
teering Acts were executives, including hig
entists—CEOs, Vice Presidents, Heads of Research &
Development, not entry level employees—at each of the
[petitioner] companies who would reasonably be ex
pected to have knowledge of the company’s internal re
search, public positions, and long term strategies.” Jd.
at 1984a. The court found it “absurd to believe that the
highly-ranked representatives and agents of these ecor-
porations and entities had no knowledge that their pub
lic statements were false and fraudulent,” explaining
that the “Findings of Fact are replete with examples of
C.E.0.s, Vice-Presidents, and Directors of Research and
Development, as well as [petitioners’] lawyers, making
Statements which were inconsistent with the internal
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courts lability findings in all significant respects.
remanded for further proceeding on “
Id. at 6a, 100a.
The court of appeals rejected scabsonp onthe th
argument that petitioners could not be liable under
RICO for participating in the conduct of the affairs of an
“enterprise” because, in petitioners’ view, RICO “pro-
vides an exclusive list of possible enterprises that covers
lonly] groups of individuals associated in fact. not
mixed groups of individuals and corporations associated
in fact.” Pet. App. 18a. The court held that the defini-
tion of “enterprise” in 18 U.S.C. 1961(4) is non-exhaus-
tive.and includes groups of corporations associated in
fact (like petitioners). Pet. App. 18a-20a, 28a. The court
reasoned that petitioners’ contrary argument was ineon-
sistent both with RICO’s text and the uniform decisions
of all ten courts of appeals to have addressed the ques-
tien, and that RICO’s broad statutory understanding of
“enterprise” ensures that sophisticated racketeers can-
not evade liability by employing the corporate form. /d.
at 18a-29a.
The court of appeals concluded that other p urported
legal challenges were not properly presented. For ex-
ample, although the court indicated that it shared peti-
tioners’ doubt that a corporation’s specific intent to de-
fraud could properly be established by ager egating the
Knowledge of disparate corporate employees under
theory of “collective intent,” it did “not pass on the mer-
IN
its of such a standard * * * because the district court
relied on a permissible view of specific intent.” Pet.
App. 33a, 4la. The court explained that the “over-
whelming indirect and circumstantial evidence was suffi-
cient to allow the district court to reasonably infer that
the high level executives, including ‘CEOs, Vice Presi-
dents, [and] Heads of Research & Development’ for [pe-
titioners] knew about their respective companies’ ‘inter-
nal research, public positions, and long term strategies’”
and “then made, caused to be made, and approved public
statements contrary to this knowledge.” Jd. at 39a (cita
tion omitted).
The court of appeals rejected petitioners’ First
Amendment defenses, concluding that petitioners’ public
statements were “clearly and deliberately false” and
therefore fell outside the scope of protected speech.
Pet. App. 43a-45a. The court explained that it was “not
dealing with accidental falsehoods, or sincere attempts
to persuade,” and that “{petitioners] knew of their fal-
sity at the time and made the statements with the intent
to deceive.” Jd. at 45a. The court similarly held that
“Noerr-Pennington protection” for attempts to per-
suade the legislature or executive to take particular ac-
tion “does not apply” because the doctrine does not ex-
tend to “deliberately false or misleading” statements
and petitioners’ racketeering acts were themselves “in
tended to defraud consumers.” /d. at 44a, 46a.
The court rejected petitioners’ contention that the
Federal Trade Commission (FTC) had “blessed their
use of labels such as ‘light’ and ‘low tar’” cigarettes, ex-
plaining that the argument was foreclosed by this
Court’s decision in Altria Group, Ine. v. Good, 129 S. Ct.
538 (2008) (Altria). Pet. App. 46a-47a. In addition, the
court emphasized that the district court “did not find
liability solely based on the use of descriptors such as
‘light’ and ‘low tar’”; rather, the district court permissi
bly found that “{petitioners| orchestrated ‘highly sophis
ticated marketing and promotional campaigns to portray
their light brands as less harmful than regular ciga
rettes,’” despite their knowledge of the falsity of that
claim. /d. at 47a-48a.
The court further concluded that the Master Settle-
ment Agreement (MSA) executed in separate lawsuits
by the tobacco companies and several States did not
eliminate the likelihood of petitioners’ future violations.
Pet. App. 6la-67a. It explained that petitioners “began
to evade and at times even violate the MSA’s prohibi
tions almost immediately after signing the agreement”
and that petitioners’ failure to alter their conduct after
the MSA amply warranted the district eourt’s conclusion
that future violations were likely. Jd. at 64a, 67a.
The court rejected challenges to liability that were
specific to petitioners Altria and BATCo, Pet. App. 55a-
60a, and it rejected most of petitioners’ challenges to the
district court’s injunctive order. The court explained
that the injunctions “sufficiently specify the activities
enjoined,” id. at 73a, and that the district. court permis-
sibly required that corrective statements appear in the
same media that petitioners used “to promulgate false
smoking and health messages.” /d. at 83a."
’ ‘The court vacated the finding of liability as to CTR and TI because
those entities had been dissolved pursuant tothe MSA. Pet. App. 100a.
The court also vacated certain minor provisions of the injunction and
remanded for reconsideration of those “discrete issues,” such as the
application of the injunction to petitioners’ overseas subsidiaries and
clarification of the requirements for point-of-sale displays. /bid. ‘The
panel also rejected the government's cross-appeal on remedies. /d. at
14
0. Petitioners filed five separate rehearing petitions,
all of which the court of appeals denied without dissent.
Pet. App. 2183a.
Meanwhile, petitioners Philip Morris, Reynolds, and
Lorillard filed a “Suggestion Of Mootness And Motion
For Partial Vacatur,” arguing that the June 2009 pas
sage of the Family Smoking Prevention and Tobacco
Control Act (FSPTCA), Pub. L. No. 111-31, Div. A, 123
Stat. 1776, had rendered aspects of the injunction moot.
The government’s opposition explained that the
FSPTCA did not render the injunction moot and that
any request to modify the injunction in light of the legis-
lation should be directed to the district court in the first
instance. Gov’t Opp. to Suggestion of Mootness 3-4, 9,
11-12. The court of appeals denied the suggestion of
mootness and vacatur motion without opinion.
ARGUMENT
Collectively, petitioners suggest that nearly every
aspect of the unanimous decision of the court of appeals
presents a significant legal! error warranting certiorari.
That suggestion is without merit. The D.C. Circuit eor-
rectly resolved the only pure question of law the peti-
tioners presented in a ruling that reflects the uniform
judgment of all ten courts of appeals to have considered
the issue. The remaining legal issues that petitioners
now raise are either not properly presented on the re-
cord in this case, not subject to any conflict, or otherwise
unworthy of review. The petitions should therefore be
denied.
92a 99a. The government's petition for a writ of certiorariin No. 09-978
seeks review of the remedial aspect of the court’s judgment
15
A. An Unincorporated Association Of Corporations And
[Individuals May Form A RICO Enterprise
Petitioners Philip Morris and Lorillard contend that
certiorari is warranted because the court of appeals pur-
portedly erred in holding that a RICO “enterprise” may
consist of corporations.and individuals associated in fact.
09-976 Pet. (PM Pet.) 24-28; 09-1012 Pet. (Lorillard Pet.)
11-28. In their view, 18 U.S.C. 1961(4) “provides an ex
clusive list of possible enterprises” and that list includes
“groups of individuals associated in fact” but “not
mixed groups of individuals and corporations associated
in fact.” Pet. App. 18a. That contention lacks merit.
RICO’s text and the reasoning of Boyle v. United States.
1298. Ct. 2237 (2009), demonstrate that RICO provides
non-exhaustive examples of an “enterprise” that illus-
trate, but do not restrict, the ordinary meaning of the
term. All ten courts of appeals to have confronted the
question have likewise concluded—without as much as
a dissenting opinion from even one judge—that corpo-
rate entities associated in fact may forma RICO enter
prise. No further review is warranted.
1. a. Congress routinely defines Statutory terms in
one of two ways. Exhaustive statutory definitions—
which state precisely what the defined term “means”-
establish a self-contained meaning for the term that
“excludes any meaning that is not stated.” Bu rgess Vv.
United States, 553 U.S. 124, 130 (2008) (citation omit-
ted). Terms so defined take their meaning from the def-
inition Congress provides in statute instead of the
“term’s ordinary meaning.” Stenberg v. Carhart, 530
U.S. 914, 942 (2000). By contrast, non-exhaustive defini-
tions merely state that the defined term “includes” cer-
tain enumerated things. In that context, “the term ‘in-
clud[es|’ is not one of all-embracing definition, but con-
16
notes simply an illustrative application of the general
principle,” Federal Land Bank v. Bismarck Lumber Co.,
314 U.S. 95, 100 (1941), that itself builds upon the “ordi-
nary connotation of the [underlying] term.” Groman v.
Commissioner, 302 U.S. 82, 88 (1937): id. at 85-86;
American Sur. Co. v. Marotta, 287 U.S. 513, 517 (1933)
(the term “‘include’ is frequently, if not generally, used
as a word of extension or enlargement” in definitional
provisions).
RICO’s definitional section, 18 U.S.C. 1961, provides
a non-exhaustive definition of “enterprise.” Section
1961(4) states that the term “‘enterprise’ includes any
individual, partnership, corporation, association, or
other legal entity, and any union or group of individuals
associated in fact although not a legal entity.” 18 U.S.C.
1961(4) (emphasis added). As the court of appeals ex-
plained, Congress’s “use of the word ‘includes’ indicates
that RICO’s list of ‘enterprises’ is non-exhaustive.” Pet.
App. 25a-26a. The term therefore encompasses groups
that fall within the ordinary meaning of “enterprise ’—
such as “a group of individuals, corporations, or partner
Ships associated in fact”—even though Section 1961(4)
does not “expressly mention[] this type of association.”
Id. at 19a; see id. at 21a. The broader context of Section
1961 confirms “the non-exhaustive nature of ‘ineludes’”
because Congress chose in that provision to “alternat/e|
between the words ‘means’ and ‘includes’ to introduce
the section’s various definitions.” thereby “signalfing] its
intent to distinguish between [the] exhaustive and non-
exhaustive lists” defining RICO’s statutory terms. /d.
at 26a.
One month alter the court of appeals issued its deci-
sion, this Court. confirmed that Section 1961(4)’s defini-
tion of “enterprise” is non-exhaustive. In Boyle, this
Court made clear that Section 1961(4)’s “obviously
broad” “enumeration of included enterprises” does “not
purport to set out an exhaustive definition of the term”
and does “not specifically define the outer boundaries of
the ‘enterprise’ concept.” 12958. Ct. at 2243 & n.2. Like
the court below, Boyle concluded that Congress's dispa-
rate use of “means” and “includes” in RICO’s defini-
tional section demonstrates that the inclusive definition
of “enterprise” retains the “ordinary meaning” of the
term and therefore “does not foreclose the possibility
that the term might include” other types of enterprises
other than the “specifically enumerated” ones. /d. at
2243 n.2 (citing the Court’s similar interpretation of Sec-
tion 1961 in A.J. Inc. v. Northwestern Bell Tel. Co. , 492
U.S. 229, 238 (1989)). Boyle therefore reasoned that the
meaning of “enterprise” reflected in “ordinary usage”
informs the meaning of the term in RICO and held,
based on that ordinary meaning, that an association in
fact of individuals “must have a purpose” to qualify as an
“enterprise.” /d. at 2244.
Boyle’s reasoning: is fatal to Lorillard’s contention
(Pet. 14-18) that Section 1961(4) exhaustively describes
the entities that may constitute an “enterprise.” In re-
solving the question wnether “an association-in-fact en-
terprise must have an ascertainable structure beyond
that inherent in the pattern of racketeering activity,”
Boyle, 129 S. Ct. 2244 Ginterna) quotation marks and
citation omitted), the Court expressly held that Section
1961(4) does not provide “an exhaustive definition” of
“enterprise” or “define the outer boundaries” of the
term. /d. at 2245 & n.2. If Lorillard were correct that
RICO’s text provides a wholly exhaustive definition,
then the ordinary meaning of “enterprise” would have
been irrelevant and the (purportedly exhaustive) defini-
L&
tional text in Section 1961(4) would have controlled. See
Carhart, 5380 U.S. at 942 (citing cases). The Court in-
stead interpreted “enterprise” based on the “meaning of
the term in ordinary usage” as reflected in dictionary
definitions precisely because the definitional text was
not itself exhaustive. See Boyle, 1298. Ct. at 2244.
The court of appeals’ decision also follows from the
logic of several decisions of this Court that have repeat-
edly drawn a distinction between “means” and “in-
cludes” when Congress has alternated between those
terms to introduce statutory definitions. ‘Those deci-
sions have consistently found that such “disparate inclu-
sion or exclusion” (Russello v. United States, 464 US.
16, 23 (1983) (citation omitted)) to reflect an intent to
provide a non-exhaustive definition of those terms that
Congress has defined to “include” specifically enumer-
ated items. See, e.g., Boyle, 1298S. Ct. at 2243 n.2 (con-
struing Section 1961(4)); see also, e.g., United States v.
New York Tel. Co., 4834 U.S. 159, 169 & n.15 (1977):
Helvering v. Morgan's, Inc., 293 U.S. 121, 125 nl
(1934); American Sur. Co., 287 U.S. at 517; ef. HJ. Ine.,
492 U.S. at 237 (concluding that the definitional use of
“require” instead of “mean” in Section 1961(5) reflects
that the scope of the defined term is “broad”).
Lorillard asserts (Pet. 16) that Section 1961’s other
definitions beginning with “includes” are “exhaustive”
even though it offers argument only for the definition of
“Attorney General.” Even that definition, however, is
not “exhaustive.” The enumeration in Section 1961(10)
does not, for example, specifically include a person se
leeted by the President to perform temporarily “the
functions and duties” of the Attorney General, 5 U.S.C.
3345(a)(2) and (3), or an independent counsel that could
have been appointed by a court to prosecute RICO viola-
19
tions, 28 U.S.C. 593(b), 599 (expired 1999), neither of
whom are “designated by the Attorney General” under
the definition. See 18 U.S.C. 1961(10); ef. Authority of
the President to Name an Acting Attorney General, 31
Op. Off. Legal Counsel _ (2007), http://www.justice.
gov/ole/2007/authority-of-the-president-name-ag-
070908.pdf. Lorillard makes no attempt to demonstrate
that any other definition in Section 1961 that begins with
“includes” is exhaustive, but simply quotes (Pet. 16) the
definition of “person” and “documentary material” with-
out elaboration.
Based on Congress’s direction in RICO that courts
may issue appropriate orders, “including, but not limited
to,” three categories of orders, 18 U.S.C. 1964(a), Loril-
lard also contends (Pet. 16-17) that Congress used the
term “includes” differently in Section 1961 because Con-
gress omitted the phrase “but not limited to.” But that
supplementary language in Section 1964(a)—which
is not a definitional section—simply emphasizes the
breadth of the appropriate remedial orders that it au-
thorizes. Section 1961 had no need for such emphasis
because it employs “includes” in a significantly different
context: the juxtaposition of “means” and “includes” in
that section itself makes clear that the inclusive defini-
tions are non-exhaustive. See Pet. App. 27a.
Lorillard’s reliance (Pet. 17) on Carcieri v. Salazar,
129 S. Ct. 1058 (2009), is also misplaced. Although
Carcieri interpreted a single, free-standing provision
defining “Indian” to “include” certain categories of Indi-
ans as comprehensively defining the term, 25 U.S.C. 479,
it did so because other statutory provisions specifically
showed that Congress recognized that the definition did
not “encompass tribes other than those” in the statutory
enumeration. 1298. Ct. at 1066. And, unlike RICO, the
20
definition in Carcieri does not disparately employ
“means” and “includes” to define different statutory
terms, reflecting Congress’s intent to enact exhaustive
and non-exhaustive definitions.
b. Because the ordinary meaning of “enterprise” is
not restricted by Section 1961(4)’s non-exhaustive “enu
meration of included enterprises,” Boyle, 129 S. Ct. at
2243 & n.2, Lorillard’s heavy emphasis on that enumera-
tion is misplaced. As Boyle explains, the ordinary mean-
ing of “enterprise” encompasses “a ‘venture,’ ‘undertak
ing,’ or ‘project.’” /d. at 2244 (citation omitted). And
Lorillard’s own arguments show that “a group of corpo-
rations associated in fact” constitute, in common par-
lance, just such a “joint venture[].” See Lorillard Pet.
26. So long as a joint venture by corporate entities re-
flects a common “purpose,” embodies “relationships
among those associated with the enterprise,” and has
“longevity sufficient to permit those associates to pursue
the enterprise’s purpose,” Boyle, 129 S. Ct. at 2244, it
qualifies as an “enterprise” under RICO.
Philip Morris resists the conclusion that the “ordi
nary meaning” of enterprise can include a group of cor-
porate entities, asserting that “a group of unaffiliated
corporations informally cooperating in an effort to influ-
ence government policy” would not be thought of as an
“enterprise.” PM Pet. 26-27. But that assertion (which
reflects a factual premise far removed from this case)
cannot be squared with this Court’s explanation that “an
association-in-fact enterprise is simply a continuing unit
that funetions with a common purpose.” Boyle, 1298S.
Ct. at 2245. Even an “‘informal’ group” without much
“structure” can constitute an enterprise if its members
coordinate their actions to pursue a common objective
lbid.
c. Petitioners’ restrictive interpretation of Section
1961(4) disregards this Court’s repeated admonition that
“RICO is to be read broadly.” Sedima, S.P.R.L. v.
Imrex Co., 473 U.S. 479, 497 (1985); accord Boyle, 1298.
Ct. at 2243 (citing cases). Congress followed a “pattern
* * utilizing terms and concepts of breadth” in RICO,
including in the statute’s inclusive definition of “enter-
prise.” Jtussello, 464 U.S. at 21; see also NOW v.
Scheidler, 510 U.S. 249, 257 (1994) (“RICO broadly de-
fines ‘enterprise’”); United States v. Turkette, 452 U.S.
576, 580-581, 583 (1981) (construing “enterprise”). If
there were any doubt on that score, Congress’s express
statutory direction that RICO be “liberally construed to
effectuate its remedial purposes” confirms the “expan-
sive” scope of its “concept of an association in fact.”
Boyle, 129 S. Ct. at 2243 (quoting RICO, Pub. L. No. 91-
$52 § 904(a), 84 Stat. 947); see also S. Rep. No. 617, 91st
Cong., lst Sess. 158 (1969) (“enterprise” is defined “to
elude associations in fact, as well as legally recognized
associative entities,” and that “infiltration of any asso-
clative group by any individual or group capable of hold-
ing a property interest can be reached”); H.R. Rep. No.
1549, 91st Cong., 2d Sess. 56 (1970) (same).
The broad scope of the enterprise concept reflects
RICO’s origins. “RICO was an aggressive initiative to
supplement old remedies and develop new methods for
fighting crime.” Sedima, 473 U.S. at 498. And, while
Congress undoubtedly intended the statute to be used to
combat organized crime, “Congress for cogent reasons
chose to enact a more general statute, one which, al-
though it had organized crime as its focus, was not lim-
ited in application to organized crime.” H.J. Inc., 492
U.S. at 248; accord NOW, 510 U.S. at 260. RICO aecord-
ingly targets criminal associations that “extend well be-
2?
yond|] those traditionally grouped under the phrase ‘or-
ganized crime’” in order to target “a wide range of crim-
inal activity, taking many different forms” and involving
‘‘a broad array of perpetrators operating in many differ-
ent ways.” H.J. Inc., 492 U.S. at 243, 248-249.
Congress’s decision to provide a broad, non-
exhaustive definition of “enterprise” capturing the full
range of associational forms that might be employed by
sophisticated criminals is consistent with its intent that
RICO be “a weapon against the sophisticated racketeer
as well as (and perhaps more than) the artless.” United
States v. Perholtz, 842 F.2d 348, 353 (D.C. Cir.), cert.
denied, 488 U.S. 821 (1988) (rejecting petitioners’ inter-
pretation of “enterprise” for its “bizarre result[s]”). As
the D.C. Circuit explained, an association of individuals
and legal entities that exhibits common purpose, organi-
zation, and continuity is plainly among “the kinds of en-
tities Congress had in mind.” Pet. App. 28a (emphasis
omitted) (citing Turkette, 452 U.S. at 583). Congress
had no reason to doubt that corporations, labor unions,
partnerships, or other legal entities would be capable of
entering into the sort of dangerous de facto alliances
that characterize RICO enterprises. See id. at 24a (ex-
plaining that, on petitioners’ theory, “racketeers who
would otherwise constitute an association-in-fact might
evade RICO’s grasp by virtue of their ability to operate
through corporations and establish complex networks of
companies, kickbacks, and contracts to achieve their
elicit ends”). As the Seventh Circuit observed:
Surely if three individuals can constitute a RICO
enterprise, as no one doubts, then the larger associa-
tion that consists of them plus entities that they con-
trol can be a RICO enterprise too. Otherwise while
three criminal gangs would each be a RICO enter-
23
prise, a loose-knit merger of the three, in which each
retained its separate identity, would not be, because
it would not he an association of individuals. That
would make no sense.
United States v. Masters, 924 F.2d 1362, 1366 (7th Cir.),
cert. denied, 500 U.S. 919, and 502 U.S. 823 (1991);
United States v. Huber, 603 F.2d 387, 393-394 (2d Cir.
1979) (petitioners’ reading would “perversely insulate
the most sophisticated racketeering combinations from
RICO’s sanctions”), cert. denied 445 U.S. 927 (1980); see
also McCullough v. Suter, 757 F.2d 142, 143-144 (7th
Cir. 1985) (“[WJe cannot believe that Congress would
have wanted gangsters to be able to eseape the clutches
of section 1962(c) Just by avoiding the corporate form.”).
d. Lorillard contends that vagueness concerns, prac-
tical considerations, and the rule of lenity, should
“resolve any] ambiguity” in Section 1961(4) by limiting
enterprises to those expressly listed. Lorillard Pet. 20;
id. at 20-25. But Section 1961(4) is an inclusive, not ex-
clusive, definition whose text employs capacious, not
ambiguous terms. Congress specifically directed that
RICO’s terms be “liberally,” not narrowly, construed to
effectuate the statute’s remedial goals, Boyle, 129 S. Ct.
at 2243, and this Court has declined repeated requests
to narrow the scope of RICO’s “enterprise” concept with
restrictions that themselves are not found in the statu-
tory text. See, e.g., 7d. at 2245-2246 (declining to impose
limits that are not “fairly inferred from the language of
the statute”); NOW, 510 U.S. at 260-261 (refusing to
adopt economic-motive limitation); Turkette, 452 U.S. at
580-581 (declining to limit “enterprise” to legitimate
associations because RICO imposes “no restriction upon
the associations embraced” by the term and because
Congress could have, but did not, “narrow|] the sweep of
24
the definition by inserting” additional text). The Court
has repeatedly rejected similar appeals to narrow
RICO’s provisions based on the rule of lenity. Boyle,
129 S. Ct. at 2246-2247; see also NOW, 510 U.S. at 262;
Sedima, 473 U.S. at 492; Turkette, 452 U.S. at 588 n.10;
Russello, 464 U.S. at 29.
e. Petitioners’ remaining contentions largely reflect
policy arguments of the kind this Court has rejected “in
favor of the clear but expansive text of the statute,”
Boyle, 1298. Ct. 2246-2247 (collecting cases). Lorillard
asserts that the “purpose of RICO” is to protect corpo
rations from being “victimized by organized crime,” not
“to combat corporations engayed in joint criminal activ-
ity.” Lorillard Pet. 18-19 (emphases omitted). But as
the court of appeals explained, there is no dispute that
corporations can be RICO defendants under the stat-
ute’s plain terms. Pet. App. 2la (discussing 18 U.S.C.
1961(3), 1962(c)). Indeed, this Court has emphasized
that “[RICO’s] use ‘against respected businesses alleg-
edly engaged in a pattern of specifically identified crimi-
nal conduct is hardly a sufficient reason for assuming
that the provision is being misconstrued.’” H.J. Inc.,
492 U.S. at 249 (quoting Sedima, 473 U.S. at 499). Quite
the contrary, the “ability to use RICO against busi-
nesses engaged in a pattern of criminal acts” is a result
that itself is “inherent in the statute as written.” /bid.
(quoting Sedima, supra); see also Sedima, 473 U.S. at
499 (explaining that the fact that plaintiffs have brought
“fraud cases * * * against” nominally legitimate busi-
nesses under RICO “does not demonstrate ambiguity”
in the statute, “[i]Jt demonstrates breadth’) (citation
omitted).
2. Petitioners ultimately provide no sound reason
for this Court to revisit RICO’s definition of “enter-
25
prise” so soon after Boyle addressed the term’s mean-
ing. Petitioners concede that their interpretation of Sec-
tion 1961(4) finds no support in the “uniform” decisions
of the courts of appeals, Lorillard Pet. 12, 27, which all
agree “with the D.C. Circuit’s conclusion that a group of
corporations can constitute an ‘associated in fact’ RICO
enterprise.” PM Pet. 27.* Indeed, all ten courts of ap-
peals to have considered the question have held that
legal entities like corporations that are associated in fact
may form or be part of a RICO enterprise. See United
States v. London, 66 F.3d 1227, 1243-1244 (1st Cir. 1995)
(corporation and a sole proprietorship), cert. denied, 517
U.S. 1155 (1996); Huber, 603 F.2d at 393-394 (2d Cir.)
(corporations and individuals); United States v. Aimone,
715 F.2d 822, 828 (3d Cir. 1983) (individuals and a corpo-
ration), cert. denied, 468 U.S. 1217 (1984); United States
v. Thevis, 665 F.2d 616, 625-626 (5th Cir. 1982) (individ-
uals. and corporations), cert. denied, 456 U.S. 1008, 458
U.S..1109, and 459 U.S. 825 (1982); Dana Corp. v. Blue
Cross & Blue Shield Mut., 900 F.2d 882, 887 (6th Cir.
1990) (group of ecrporations); Masters, 924 F.2d at 1366
(7th Cir.) (law firm, two police departments, and three
individuals); Atlas Pile Driving Co. v. DiCon Fin. Co.,
886 F.2d 986, 995 & n.7 (8th Cir. 1989) (five legal enti-
ties): United States v. Feldman, 853 F.2d 648, 655-656
(9th Cir. 1988) Gndividuals and corporations), cert. de-
nied, 489 U.S. 1030 (1989); United States v. Navarro-
Ordas, 770 F.2d 959, 969 n.19 (11th Cir. 1985) (group of
corporations), cert. denied, 475 U.S. 1016 (1986);
Perholtz, 842 F.2d at 352-354 (D.C. Cir.) (group of indi-
' Lorillard suggests (Pet. 27) that review is warranted to resolve
whether a corporation and its employees can constitute an association-
in-fact enterprise. That issue is not presented by the tacts of this case
and was not addressed by the court of appeals.
26
viduals, corporations, and partnerships). Those courts
have reached that unanimous conclusion without even
one judge in dissent. Pet. App. 19a-20a (citing cases).
In many other cases—including in an eleventh court of
appeals—the courts have similarly upheld RICO claims
involving association-in-fact enterprises with members
including corporations. /d. at 20a-21a.° Congress, in
turn, has repeatedly amended RICO’s definitional sec-
tion against the background of that strikingly uniform
appellate authority without adjusting RICO’s definition
of “enterprise.”
’ See, e¢.g., United States v. Najjar, 300 F.3d 466, 484-485 (4th Cir.),
cert. denied, 537 U.S. 1094 (2002); see also, e.¢., Odom v. Microsoft
Corp., 486 F.3d 541, 547-553 (9th Cir.) (en banc), cert. denied, 552 U.S.
985 (2007); Living Designs, Inc. v. F.1. Dupont de Nemours & Co., 431
F.3d 353, 361 (9th Cir. 2005), cert. denied, 547 U.S. 1192 (2006); United
States v. Cranci, 378 F.3d 71, 79-85 (st Cir. 2004); United States v.
Goldin Indus., Ine., 219 F.3d 1271, 1275-1277 & n.6 (11th Cir.), cert.
denied, 531 U.S. 1015(2000): United States v. Parise, 159 F.3d 790, 794-
795 (3d Cir. 1998): United States v. Console, 13 F.3d 641, 652 (3d Cir.
1993), cert. denied, 511 U.S. 1076, and 513 U.S. 1012 (1994); United
States v. Blinder, 10 F.3d 1468, 1473 (9th Cir. 1993); United States v.
Butler, 954 F.2d 114, 120 (2d Cir. 1992); United States v. Stolfi, 889
F.2d 378, 379-380 (2d Cir. 1989); Ocean Energy II, Ine. v. Alexander &
Alexander, Inc., 868 F.2d 740, 748-749 (Sth Cir. 1989); Bunker Ramo
Corp. v. United Bus. Forms, Inc., 713 F.2d 1272, 1285 (7th Cir. 1983);
United States v. Camponale, 418 F.2d 352, 357 n.t t Oth Cir. 1975), cert.
denied, 423 U.S. 1050 (1976).
See, e.g., Financial Institutions Reform, Recovery, and E.nforce-
ment Act of 1989, Pub. L. No. 101-73, § 968, 103 Stat. 506 (adding bank
fraud as a predicate act); Anticounterfeiting Consumer Protection Act
of 1996, Pub. L. No. 104-153, & 3, 110 Stat. 1386 (adding criminal in-
fringement of copyright and trafficking in counterfeit labels for com-
puter programs, movies, and music); Weapons of Mass Destruction
Prohibition Improvement Act of 2004, Pub. L. No. 108-458, § 6802(e),
118 Stat. 3767 (adding offenses relating to biological, chemical and
nuclear materials).
27
Petitioners’ reliance on the oral argument transcript
in Mohawk Industries, Inc. v. Williams, No. 05-465 (ar-
gued Apr. 26, 2006), see, e.g., Lorillard Pet. 11-12, 16-17,
simply underscores the absence of authority for their
position.’ The Mohawk petitioner argued that corpora-
tions cannot be members of an association-in-fact enter-
prise, even though its petition for a writ of certiorari did
not separately raise the issue. At oral argument, Justice
Scalia noted that the Court would have been “unlikely to
accept certliorari]” on that issue if it had been raised,
given the unanimous holdings of the courts of appeals.
05-465 Tr. at 6. This Court ultimately dismissed the writ
in Mohawk as improvidently granted, 547 U.S. 516
(2006), and denied a subsequent petition that expressly
presented the question. See Microsoft Corp. v. Odom,
552 U.S. 985 (2007); Pet. at i, 18-19, Microsoft, supra
(No. 07-138); Br. in Opp. at 2, 11-14, Microsoft, supra.
There is no reason for a different result here.
B. The Court Of Appeals Was Not Required To Undertake
Independent Appellate Review Of The District Court’s
Unchallenged Findings Of Fact Establishing Fraud
Although petitioners expressly diselaimed any chal-
lenge to the district court’s factual findings on appeal,
they now contend that the court of appeals was nonethe-
less required to undertake “independent appellate re-
view” of the more than 4000 findings of fact made by the
" When the Court decided Boyle, it presumably was familiar with the
oral argument in Mohawk. The petitioner repeatedly cited to the
Mohawk argument transcript, Pet. Br. at 48 1.37, 538 n.42, Boyle, supra:
Reply Br. at 12-13, Boyle, supra; and his amici specifically argued that
corporations could not constitute an association-in-fact enterprise be-
cause Section 1961(4) employs the term “includes” to set out an “ex-
haustive” list of entities constituting a RICO “enterprise.” See Cham-
ber of Commerce Amici Br. at 32-33 & n.5, Boyle, supra.
28
district court. See PM Pet. 13-23 (citing Bose Corp. v.
Consumers Union of United States, /nc., 466 U.S. 485
(1984)); see also 09-977 Pet. (RJR Pet.) 29; Lorillard
Pet. 28-29. The question of the proper standard of re-
view for a party’s challenge to factual determinations is
not presented when the party makes no such challenges.
Moreover, no court has adopted petitioners’ view that
every factual determination in a fraud case must be sub-
jected to de novo review on appeal. Finally, petitioners
do not explain how independent review would have made
a difference to the outcome here, given the “overwhelm-
ing evidence” establishing their fraud. Pet. App. 103a.
1. In Bose, the Court held that the “ultimate fact” of
“actual malice” in a defamation case is not an ordinary
factual finding reviewed only for clear error under Fed.
R. Civ. P. 52(a). 466 U.S. at 498 n.15, 499-500. The stan-
dard of review for such ultimate facts, the Court ex-
plained, “must be faithful to both Rule 52(a) and the rule
of independent review applied in New York Times Co. v.
Sullivan, [376 U.S. 254 (1964)],” which held that courts
in defamation actions must review the record as a whole
to ensure that the judgment does not interfere with free
expression. Bose, 466 U.S. at 499. The Court empha-
sized, however, that even in such a case, an appellate
court’s review of the record must give “‘due regard’
* * * to the trial judge’s opportunity to observe the
demeanor of the witnesses,” 7d. at 499-500 (quoting Fed.
R. Civ. P. 52(a)), and must afford “special deference” to
the “trial judge’s credibility determinations,” 2b7d.
2. Petitioners argue that Bose required the court of
appeals to review de novo the district court’s factual
findings. #£.g., PM Pet. 13-23. Unlike the defendant in
Bose, however, petitioners did not challenge any of the
district court’s factual findings as unsupported by the
IQ
evidence. Instead, they made a strategic decision to
raise only legal claims before the court of appeals. Thus,
their joint appellate brief assured the court of appeals
that it “need not delve into the district court’s lengthy
fact-finding.” C.A. Joint Br. 22. At oral argument, de-
fense counsel reiterated that petitioners “haven’t chal-
lenged * * * any fact finding.” App., znfra, 5a (Mr.
Estrada). He explained that although petitioners did
not “agree with the fact findings of the district court,”
“we're bringing legal challenges to the court.” Jd. at 7a.
It is thus entirely unsurprising that the court of appeals
did not discuss the applicability of Bose and repeatedly
noted that the key factual findings underlying the dis-
trict court’s judgment were unchallenged by petitioners.
See, e.g., Pet. App. 53a (“|Petitioners] never challenge
the district court’s findings documenting the impact of
nicotine on the body and, more importantly, | petition-
ers’| understanding of its effeets.”); 7d. at 52a (citing the
“unchallenged findings” that petitioners acted with
“fraudulent intent” in denying the risks of second-hand
smoke).°
Petitioners cannot credibly challenge the standard of
review applied to a claim they did not make. This case
would accordingly present a poor vehicle for deciding
the relevance of Bose to factual findings in a fraud case.
3. Even if petitioners had challenged the district
court’s factual findings below, there would be no basis
for review of their Bose claim. Although this Court sug-
gested that an appellate court “could” review a fraud
finding independently “fa]s an additional safeguard,”
Petitioners’ opening and reply briefs cited Bose in the standard of
review sections, see C.A. Joint Br. 20-21 & C.A. Joint Reply Br. 6, but
only once elsewhere, and that lone citation was not in connection with
a challenge to a factual finding, see C.A. Joint Br. 112-113.
30
Illinois ex rel. Madigan v. Telemarketing Assocs., Inc.,
538 U.S. 600, 621 (2003) (Madigan), the Court did not.
suggest that such review is required. In fact, the Fourth
Circuit expressly rejected the argument that independ-
ent review is required in a fraud case. See SEC v. P?-
rate Investor LLC, 580 F.8d 233, 242 (4th Cir. 2009),
petition for cert. pending, No. 09-1176 (filed Mar. 26,
2010). Petitioners fail to identify any case in which a
court has applied Bose in reviewing a finding of fraud
under the mail or wire fraud statutes.
The few eases petitioners cite (PM Pet. 14-17) do not
involve intentional fraud, but rather constitutional re-
view of broad restrictions on commercial advertising
alleged to be potentially misleading. Jbaivez v. Florida
Depaurtinent of Business & Professional Regulation, 512
U.S. 136 (1994), found the Florida Board of Public Ac-
countaney’s reprimand of.an attorney for (truthfully)
including her designation as a certified public accoun-
tant on her letterhead to violate the First Amendment.
Td. at 144. In doing so it did not cite Bose or discuss the
standard of review.”
Similarly, Peel v. Attorney Registration & Disciplin-
ary Commission, 496 U.S. 91 (1990), found a prophylac-
tic rule prohibiting attorneys from accurately listing
specialization eredentials in their advertisements to vio-
late the First Amendment. In that setting, the Court
was reviewing whether the overall character of the ad-
vertising placed it beyond the protections of the First
Amendment, see id. at 108, not findings of historical fact
such as those in a fraud action. As this Court has ex-
Moreover, it is clear that the Court would have reached the same
determination under any standard of review—the Board’s argument
that the letterhead was misleading was “entirely insubstantial.” /banez,
512 U.S. at 148
2]
.y
,
plained, there is a critical constitutional difference be-
tween such a “‘broad prophylactic rule’” categorically
limiting speech and “a properly tailored fraud action
targeting fraudulent representations themselves.”
Madigan, 538 U.S. at 619 (alterations omitted); see
Kraft, Inc. v. FTC, 970 F.2d 311, 317-318 (7th Cir. 1992)
(“In Peel, the issue was whether a prophylactic regula-
tion applicable to all lawyers, completely prohibiting an
entire category of potentially misleading commercial
speech, passed constitutional muster. * * * Here, by
contrast, the issue is whether an individualized FTC
cease and desist order, prohibiting a particular set of
deceptive ads, passes constitutional muster. * * * Ac-
cordingly, we decline to review de novo the F TC’s find-
ings.'’), cert. denied, 507 U.S. 909 (1993).'°
The concerns animating the holding in Bose (and sub
sequent cases assessing claims that certain categories of
professional advertising are potentially misleading) do
not apply to the factual findings in a fraud case. “The
meaning of terms such as ‘actual malice’—and, more
particularly, ‘reckless disregard’— * * * is not readily
captured in ‘one infallible’ definition,” and “only through
Byrumv. Landreth, 566 F.3d 442 (Sth Cir. 2009), likewise involved
a constitutional challenge to astate prophylactic rule that “prohibit[ed|
significant truthful speech” in interior designers’ advertisements. /d.
at 448; see PM Pet. 16. By contrast, when a case-specific finding of
truth or falsity based on assessment of witness credibility is at. issue,
the Fifth Circuit reviews only for clear error. See Levine v. CMP
Puhl'ns, Inc., 738 F.2d 660, 672 & n.19 (1984) (“Even the Bose court
recognized that it is important for the reviewing court to respect such
choices made by the finder of fact.”). Revo v. Disciplinary Bd. of the
Sup. Ct., 106 F.8d 929 (10th Cir.), cert. denied, 521 U.S. 1121 (1997),
and Falanga v. State Bar, 150 F.3d 1333 (] Ith Cir. 1998), cert. denied,
526 U.S. 1087 (1999), see PM Pet. 16, also involved challenges to pro
phvlactic rules on attorney advertising
32
the course of case-by-case adjudication can [appellate
courts] give content to these otherwise elusive constitu-
tional standards.” Harte-Hanks Communications, Inc.
v. Connaughton, 491 U.S. 657, 686 (1989). The Court
has explained that in the libel setting, it therefore has
been “reluctant to give the trier of fact’s conclusions
presumptive force and, in so doing, strip a federal appel-
late court of its primary function as an expositor of law.”
Miller v. Fenton, 474 U.S. 104, 114 (1985). By contrast,
the elements of fraud, such as falsity and specific intent
to deceive, are not “elusive.” Harte-Hanks Communica-
tions, Inc., 491 U.S. at 686. They are well-established
legal concepts that can be readily applied by fact-finders
without a need for de novo exposition by appellate courts
in every single fraud appeal. See Altria Group, Ine. v.
Good, 129 S. Ct. 538, 545 (2008) (“LF Jraud claims ‘rely
only on a single, uniform standard: falsity.’”) (citation
omitted); Cherichel v. Holder, 591 F.3d 1002, 1012 (8th
Cir. 2010) (“Specific intent is a term of art in American
jurisprudence, well known to practitioners and law stu-
dents alike.”), petition for cert. pending, No. 09-1235
(filed Apr. 12, 2010); Unzted States v. Sawyer, 239 F.3d
31,40 n.7 (1st Cir. 2001) (same).
4. Finally, petitioners’ assertion that “independent.
appellate review would likely have altered the outcome
of thlis] case” (PM Pet. 21) is meritless. [t was for good
reason that petitioners made no attempt in the court of
appeals to challenge the district court’s fact-finding. As
the court of appeals explained, the district. court docu-
mented “countless examples of deliberately false state-
ments by jpetitioners],” Pet. App. 45a, and the finding of
intent to deceive rested on “hundreds” of subsidiary
findings, 7d. at 3&a; see also Part C, infra.
Moreover, the vast majority of the district court’s
findings establish historical facts—such as the fact that
TI’s president was warned in writing that “({ojur basic
position in the cigarette controversy is subject to the
charge, and may be subject to a finding, that we are
making false or misleading statements to promote the
sale of cigarettes,” Pet. App. 37a (brackets in origi-
nal)--that would unquestionably be subject to review
only for clear error even if Bose had some applicability
here. See 466 U.S. at 514 1.31. Similarly, even where
Bose is applicable, “special deference” is due “to the
trial judge’s opportunity to observe the demeanor of the
witnesses.” Jd. at 499-500; see also zd. at 500 (noting
that deference to a trial judge’s findings “tends to in-
crease when trial judges have lived with the controversy
for weeks or months instead of Just a few hours”). Here,
the district court found that petitioners had engaged in
“a multi-faceted, sophisticated scheme to defraud” (Pet.
App. 2009a) after observing the live testimony of &4 wit-
nesses, including many of petitioners’ senior executives,
overthe course of a nine-month trial. /d. at &a.
Petitioners highlight (PM Pet. 21) one sentence in
the section of the court of appeals’ decision on the likeli-
hood of future violations suggesting that it “may not
have reached all of the same conclusions as the district
court.” Pet. App. 67a; see zd. at 50a. Such formulaic
recitations of the clear-error standard, particularly
where the parties have not contested the factual deter-
minations of the district court, do not suggest that the
result below would have been different if the panel had
conducted “independent” review under Bose. Indeed,
the immediately preceding sentence in the court of ap-
peals’ opinion observes that “examples in the record of
[petitioners’| marketing campaigns and internal docu-
34
ments amply support the district court’s conclusion that
{petitioners} ‘continue to make|! false and misleading
statements regarding low tar cigarettes in order to reas-
sure smokers and dissuade them from quitting.’” /d. at
67a (emphasis added; brackets in original)."’
C. Petitioners’ Fraud Was Not Protected By The First
Amendment
Petitioners Reynolds and Lorillard contend (RJR
Pet. 5-29; Lorillard Pet. 29-30) that the district court’s
judgment violates the First Amendment by imposing
civil liability for constitutionally protected speech. They
contend that their statements to the public in press re
leases, pamphlets, and television appearances are enti-
tled to First Amendment protection as expressions of
opinion “in an ongoing scientific and political debate.”
RJR Pet. 21; see Lorillard Pet. 29. Petitioners claim
protection for their statements made to Congress and
'' Philip Morris cites three examples of purported “factual findings”
it claims would be reversed under the standard of review it urges. PM
Pet. 21; see 1d. at 21-23. First, it cites the district court’s finding of
specific intent, but it makes a legal argument, 7.e., that the court applied
the wrong standard. Compare PM Pet. 21-22, with RJK Pet. 23-29 &
09-979 Pet. (Altria Pet.) 7-8. Second, it challenges the finding of fraud
in connection with use of “low tar” and “light” descriptors, but, again,
this is a legal claim (indeed, one that Reynolds claims is the subject of
a circuit split, see RJR Pet. 80-32). Finally, Philip Morris claims the
district court erred in concluding there was a “scientific consensus” on
the dangers of environmental tobacco smoke and cancer in 1986. PM
Pet. 22. As the court of appeals explained, however, this contention is
“heside the point.” Pet. App. 50a. “The district court based its finding
of fraudulent intent not just on the existence of a consensus but also on
evidence of | petitioners’| own knowledge” of the dangers of environ-
mental tobacco smoke, and petitioners before the court of appeals
“nowhere challenge the accuracy of * * * any of the district court's
other findings suggestive of their knowledge” /d. at 50a-5la.
35
federal agencies under the Noerr-Pennington doctrine,
an antitrust doctrine with underpinnings in the First
Amendment’s petition clause.
Those contentions lack merit. Although framed in
terms of the First Amendment, petitioners’ arguments
in reality amount to belated factbound challenges to the
district court’s findings that their statements were
fraudulent. Because the district court properly found
that petitioners’ statements satisfied all the traditional
clements of fraud, the First Amendment issues peti-
tioner identifies are not presented here. The court of
appeals’ decision upholding the district court’s view of
the evidence establishing fraud does not conflict with
any decision of this Court or of another court of appeals.
Further review of is therefore unwarranted.
1. “{I]t is well settled that the First Amendment
does not protect fraud.” Pet. App. 43a-44a (citing Mc/n-
tyre v. Ohro Elections Comm’n, 514 U.S. 334, 357 (1995)
(the government “may, and does, punish fraud di-
rectly”). Petitioners do not contest that bedrock princi-
ple. Instead, they assert. that the court of appeals failed
to apply the traditional requirements of a fraud claim
and therefore impermissibly extended the civil fraud
statutes. Specifically, petitioners assert that unlike ac-
tionable fraud, their public statements were not false,
material, or made with specific intent to defraud con-
sumers of money or property. Each assertion is merit-
less, and none presents a legal question warranting re-
view,
a. Falsity. Petitioners argue that their public pro-
nouncements could not form the basis for fraud liability
because they were not “false factual statements,” but
instead were assertions supporting “one side of a scien-
tific debate.” RJR Pet. 20 (citation, emphasis, and ellip-
36
sis omitted). It is unclear whether petitioners ure con-
tinuing to assert that their statements about cigarettes
are not in fact false—that, for example, it remains an
open question whether cigarettes cause disease—or in-
stead whether petitioners are asserting that their state-
ments were not deliberately false at the time they were
made. [Either way, petitioner’s contention fails in the
face of the district court’s extensive factual findings
based on evidence that the court of appeals correctly
labeled “overwhelming.” Pet. App. 39a. As the court of
appeals explained, the district court found that petition-
ers’ statements were “clearly and deliberately false,”
and it provided “countless examples” of such “deliber
ately false statements.” /d. at 45a.
The basis for the district court’s findings included
“decades of evidence that scientists within the [peti-
tioner] corporations and outside scientists hired by the
corporations and their joint entities were continually
conducting research and reviewing the research of other
scientists regarding cigarettes and health, addiction,
nicotine and tar manipulation, and secondhand smoke.”
Pet. App. 35a. “The evidence at trial demonstrated that
the results of this research—essential to the core of [pe-
titioners’] operations, including strategic planning, prod-
uct development, and advertising—were well known,
acknowledged, and accepted throughout the corpora-
tions.” /bid. “These results established that cigarette
smoking causes disease, that nicotine is addictive, that
light cigarettes do not present lower health risks than
regular cigarettes due to smoker compensation, and that
secondhand smoke is hazardous to health.” /érd.
Trial testimony and internal company documents
“demonstrate that [petitioners’] top officials were di-
rectly informed of negative research results,” Pet. App.
37
37a, and “that the executives crafted their corporate
priorities and strategies in response to these findings.”
Id. at 36a-37a. For example, Dr. William Farone, a
Philip Morris scientist for 18 years whom the distriet
court found to be “impressive and credible as both a fact
and expert witness,” id. at 35a-36a (quoting id. at 445a),
testified that there was “widespread acceptance” at the
company “that smoking caused disease,” 7d. at 36a, that
nicotine is addictive, id. at 37a-38a, and that petitioners’
“superior knowledge of compensation * * * was closely
held within Philip Morris and the tobacco industry.” /d.
at 38a. Indeed, petitioners’ own documents support the
finding that their statements were false, and deliber-
ately so. TI’s Vice President of Public Relations advised
its President confidentially: “[OJjur basic position in the
cigarette controversy is subject to the charge, and may
be subject to a finding, that we are making false or mis-
leading statements to promote the sale of cigarettes.”
Id. at 37a (citation omitted).
Based on specific examples and “hundreds more find-
ings” of fact, the court of appeals concluded that the
district court had sufficient evidence from which to con-
clude that petitioners’ “executives, who directed the ac-
tivities of the [petitioner] corporations and their joint
entities, knew about the negative health consequences of
smoking, the addictiveness and manipulation of nicotine,
the harmfulness of secondhand smoke, and the concept
of smoker compensation,” and that “[t]hese executives
then made, caused to be made, and approved public
statements contrary to this knowledge.” Pet. App. 38a-
39a; see id. at 45a (district court provided “countless
examples of deliberately false statements by [petition-
ers]|”). Those findings defeat petitioners’ efforts to char-
acterize their public statements as good-faith expres-
38
sions of opinion on a matter of legitimate disagreement.
There is no reason for this Court to review both the dis-
trict court’s and the panel’s evaluation of the trial re-
cord, which included nearly 14,000 exhibits and the testi-
mony of nearly 250 witnesses, 7d. at 8a, especially given
that petitioners disclaimed any challenge to the district
court’s factual findings below, see App., ¢fra, 5a, 7a.
b. Money or property. Petitioner Reynolds ad-
vances the related argument that the statements on
which the district court based fraud liability were “not
directed to consumers” or aimed at obtaining their
money or property, but rather addressed “important
public controversies.” RJR Pet. 15. This assertion con-
tradicts the district court’s factual findings. Reynolds
asserts that “[nJeither court below disputed that most of
the allegedly ‘fraudulent’ speech was not designed to
deprive consumers of money or property.” RJR Pet. 14-
15. That is simply incorrect: The district court specifi-
cally found that “the vast majority of [ petitioners’ | state-
ments were made with the primary purpose of influenc-
ing smokers” and “potential smokers,” as well as the
general public, Pet. App. 1960a, while the court of ap-
peals concluded that all of the racketeering acts on
which the district court relied “were intended to defraud
consumers,” id. at 46a.
The premise of Reynolds’ disagreement with the
courts below is its assertion that any statement other
than a “product advertisement” necessarily was not di-
rected at consumers or intended to deprive them of
money or property. See RJR Pet. 16 (contending that
“98.9% of the ‘fraudulent’ public statements identified
by the district court * * * were not product advertise-
ments,” and thus that such statements are “plainly not
speech directed at consumers”). But a statement obvi-
39
ously need not take the form of an advertisement to be
targeted at consumers or intended to persuade them to
purchase cigarettes. To cite one particularly notable
example, the Frank Statement itself was not a “product
advertisement,” but it was plainly targeted at consum-
ers—indeed, it was entitled “A Frank Statement To Cig-
arette Smokers’—and the evidence at trial showed that,
like petitioners’ many other false public statements, the
Frank Statement was designed to obtain money or prop-
erty by persuading smokers to continue purchasing ciga-
rettes. Pet. App. 128a; see, e.g. id. at 417a (noting that,
according to petitioners’ own documents, the open ques-
tion strategy was intended to “give smokers a psycho-
logical crutch and a sell-rationale to continue smoking’”’).
ce. Materiality. Petitioner Reynolds argues (Pet. 1&-
20) that both courts below erred in deeming its false
statements material to consumers. Pet. App. 41a-43a.
As with its challenge to the falsity findings, Reynolds’
arguments on materiality amount to an attack on the
district court’s factual determinations and present no
question of law warranting this Court’s review.
Reynolds asserts that there was “not a scintilla of
evidence or any district court finding that any of the
challenged statements (excluding ‘lights’) were ‘impor-
tant to a reasonable person purchasing cigarettes.”
RJR Pet. 18 (quoting Pet. App. 42a). But the district
court specifically found that petitioners’ false state-
ments were material to consumers, Pet. App. 1986a-
1990a, and that petitioners intended the public to rely on
their claims. /d. at 198a. Those findings of materiality,
are neither speculative nor “counterintuitive.” RJR Pet
18. As the panel explained, the matters addressed in
petitioners’ false statements are important to a reason-
able consumer “because each concerns direct and signifi-
40
cant consequences of smoking.” J/d. at 43a. “When de-
ciding whether to smoke cigarettes, tobacco consumers
must resolve initial reservations (or lingering qualms)
about the potential for cancer, the risk of addiction, or
the hazardous effects of secondhand smoke for friends,
family, and others who may be exposed.” /bzd.
The open question strategy itself shows materiality.
That strategy reflected petitioners’ recognition that, to
meet their objectives, it was necessary only to create
enough public uncertainty to reassure smokers that the
connection between smoking and disease was an “open
controversy,” “not a closed case.” Pet. App. 1752a (cita-
tion omitted). For similar reasons, there is no merit to
Reynolds’ contention (Pet. 19-20 & n.5) that its false
statements could not be material because they contra-
dicted “[t]he overwhelming public knowledge of smok-
ing’s health effects.” Such contradiction was an integral
part of the open question strategy. As Brown and Wil-
liamson observed in 1967: “Doubt is our product since
it is the best means of competing with the ‘body of fact’
that exists in the mind of the general public.” Pet. App.
456a; see id. at 43a (“[Petitioners’] prevarications about
each of these issues suggests full awareness of this obvi-
ous fact; reasonable purchasers of cigarettes would con-
sider these statements important.”).'”
* Reynolds incorrectly contends that the government was required
to prove that identified consumers actually relied on petitioners’
misrepresentations. As this Court has explained, “{u]sing the mail to
execute or attempt to execute a scheme to defraud is indictable as mail
fraud, and hence a predicate act of racketeering under RICO, even ifno
one relied on any misrepresentation.” Bridge v. Phoenix Bond &
Indem. Co., 128 S. Ct. 2131, 2138 (2008). That is because the mail and
wire fraud statutes “punish[] the scheme, not its success.” Pasquantino
v. United States, 544 US. 349, 371 (2005) (quoting United States v.
Pierce, 224 F.3d 158, 166 (2d Cir. 2000)).
41
Reynolds is therefore incorrect in contending (RJR
Pet. 6-7) that its First Amendment challenge resembles
the one at issue in Nike, Inc. v. Kasky, 539 U.S. 654
(2003). Nike involved non-fraudulent, freestanding cor-
porate speech about public policy issues, not, as in this
case, an integrated course of conduct designed to de-
ceive and defraud consumers. As the government ex-
plained in the portion of its Nike amicus brief that
Reynolds quotes in its petition (Pet. 6-7), the First
Amendment concern in that case arose because the Cali-
fornia law at issue permitted private suits challenging
speech “that does not injure individuals or materially
affect their purchasing decisions.” U.S. Amicus Br. at 9,
Nike, supra. In this ease, by contrast, the district court
specifically found, and the court of appeals correctly
agreed, that petitioners’ false statements both injured
individuals and materially affected consumers’ decisions
about whether to purchase cigarettes. The issues in
Nike, therefore are not presented here. As the govern-
ment noted in Nike, suits of this kind—based on “legis-
lation that protect[s] purchasers of goods and services
from deception, including fraud”—“are unquestionably
compatible with the First Amendment.” /62d.
d. Specifie intent to defraud. Reynolds contends
(Pet. 23-28) that the court of appeals erred in upholding
the district court’s finding that it acted with specific in-
tent to defraud consumers. Pet. App. 32a-4la. To the
extent that this argument reflects disagreement with
the district court’s view of the evidence, it simply re-
peats the belated challenge to the district court’s finding
that petitioner’s statements were deliberately false and
fails for the same reasons. See pp. 35-38, supra. In ad-
dition to challenging the finding of falsity, however,
Reynolds advances two specific arguments about the
12
manner in which the courts below determined that the
specific-intent requirement was satisfied. Those argu-
ments lack merit and do not warrant review.
i. First, Reynolds argues (Pet. 23-26) that the dis-
trict court rested its specific-intent finding on an incor-
rect legal standard because, Reynolds contends, the
court considered the “collective intent” of the corpora-
tion as a whole and did not require that any single em-
ployee act with specific intent to defraud. /d. at 23-24
(emphasis omitted).'’ That argument is incorrect. Al-
though the district court mentioned a “collective knowl-
edge doctrine,” Pet. App. 1980a, the court made clear
that a finding of specific intent requires proof that a per
son with authority to act on behaif of the corporation
possessed the requisite wrongful intent or acted with
reckless disregard for or willful blindness to the truth.
Jd. at 198la. Indeed, the district court noted that, in
Saba v. Compognie Nationale Air France, 78 F.3d 664,
670 n.6 (1996), the D.C. Circuit stated that “the pro-
scribed intent (willfulness) depend|s] on the wrongful
intent of specific employees.” J/bid. The district court
also specifically rejected the proposition “that aggrega-
tion of different states of minds of various corporate
actors is sufficient to demonstrate specific intent in
cases where individuals within a corporation make
fraudulent statements.” /bid.
The district court’s analysis is consistent with the
court of appeals’ articulation of the governing legal prin-
ciples, which Keynolds does not dispute. As the court of
appeals explained, see Pet. App. 32a-34a, “|clorporations
‘" Petitioner Altria presents a separate statutory argument premised
ona challenge to the legal standard the district court applied in deter
mining whether Altria acted with specific intent to defraud. See Altria
Pet. 7-10. That argument is addressed in Part H, infra
43
may be held liable for specific intent offenses based on
the ‘knowledge and intent’ of their employees.” /d. at
33a (quoting New York Cent. & Hudson River R.R. v.
United States, 212 U.S. 481, 495 (1909)). “Beeause a
corporation only acts and wills by virtue of its employ-
ees, the proscribed corporate intent depends on the
wrongtul intent of specific empioyees.” /bid. A showing
of specific intent does not require that individual! officers
or employees personally testify to their frame of mind.
“A person’s state of mind is rarely susceptible of proof
by direct evidence, so specific intent to defraud may be,
and most often is, inferred from the totality of the cir-
cumstances, including indirect and circumstantial evi-
dence.” /bid.
Applying these principles, the court of appeals cor-
rectly upheld the district court’s finding that Reynolds
acted with specific intent to defraud. As the panel ex-
plained, the district court concluded “that the chief exec-
utive officers and other highly placed officials in the | pe-
titioner] corporations made or approved statements they
knew to be false or misleading, evinecing their specific
intent to defraud consumers.” Pet. App. 34a. In light of
the “overwhelming evidence” that petitioners knew of
the toxicity and addictiveness of their products, the dis-
trict court explained that “it is absurd to believe that the
highly-ranked representatives and agents of these cor-
porations and entities had no knowledge that their pub-
lic statements were false and fraudulent.” /d. at 1890a;
see id. at 1984a (noting that, “liJn the majority of in-
stances, the authors of the fraudulent statements al-
leged as Racketeering Acts weve executives, including
44
high level scientists—CEOs, Vice Presidents, Heads of
Research & Development, not entry level employees.”)."*
Thus, contrary to Reynolds’ assertions (Pet. 24-25),
the district court did in fact find, properly based on in-
ferences from “overwhelming” evidence, that petition-
ers’ executives knew the information that rendered their
public statements false and misleading—in other words,
that they acted with specific intent to defraud. The
court of appeals therefore correctly held that the “dis-
trict court did not commit legal error by imputing to [pe-
titioners’| executives knowledge of the falsity of their
statements based on inferences reasonably drawn from
the facts shown.” Pct. App. 35a.
As noted, the district court explicitly disavowed the
“collective intent” theory that petitioner attributes to it.
' Petitioner Reynolds challenges the validity of the district court’s
inference of knowledge on the ground that “most of the alleged ‘fraud’
was statements by the Tobacco Institute.” RJR Pet. 26 (emphases
omitted). But even if that were true, Reynolds did not dispute its re
sponsibility for TIl’s conduct in the court of appeals, and for good
reason. As the panel explained, petitioners (including Reynolds) cre-
ated Tl, staffed its board and its committees, and used TI (along with
other joint entities) to conduct their “joint public relations through false
and misleading press releases and publications.” Vet. App. 9a; see also
id. at 183a (petitioners funded ‘I'l’s operations with contributions ex-
ceeding $600 million). Indeed, the district court found that petitioners
formed TI toserve as their collective spokesperson on matters of smok-
ing and health and to provide a confidential forum in which to refine and
coordinate their fraudulent scheme. See generally id. at 177a-230a.
Petitioners structured their operations in this way because, as the T'l
Executive Committee stressed, it was “of prime importance that the in-
dustry maintain a united front and that if one or more companies were
to conduct themselves as a matter of selfinterest, particularly in adver-
Lising, obvious vulnerability would be the result.” /d. at 218a (citation
omitted). Petitioners’ effort to characterize ‘Tl as “a separate entity”
(RJR Pet. 26) is thus squarely at odds with the record.
45
Pet. App. 1981la. But even if it had not, the court of ap-
peals explained that the district court “relied on a per-
missible view of specific intent,” zd. at 41a, finding that
the individuals who made and directed the fraudulent
statements in fact knew that those statements were
false. See ed. at 1890a. Because the district court’s
“conclusions based on the proper standard are sufficient
to uphold its judgment,” zd. at 41a, the court of appeals
correctly found no need to decide the validity of the
“collective intent” theory that petitioners challenge
here. Accordingly, the validity of that theory is not pre-
sented for this Court’s review. See Cutter v. Wilkinson,
544 U.S. 709, 718 n.7 (2005) (‘| We are a court of review,
not of first view.”).
ii: Second, Reynolds contends Pet. 27-29) that it was
deprived of due process because it was denied the oppor-
tunity to “show|] that all corporate statements accu-
rately reflected the prevailing internal views—and cer-
tainly the speakers’ views.” RJR Pet. 27, 28-29. The
record in the district court belies the assertion that
Reynolds was “tricked” into “putting on no defense on a
hotly contested issue.” 7d. at 28.
Reynolds had every opportunity and incentive in the
nine-month trial in this case to establish, by oral testi-
mony or otherwise, the exceedingly unlikely proposition
that its executives believed the public statements made
on hehalf of the corporation. In their opening state-
ment, petitioners declared that “the evidence will show,
Your Honor, these defendants gen[uine]ly believed their
positions, advanced legitimate assessments of the sci-
ence, and made statements with no intent whatsoever to
mislead or to defraud anybody.” 9/22/04 Tr. 337. The
government then presented volumes of evidence estab-
lishing petitioners’ specific intent to deceive. As the
46
court of appeals explained, “(t]he government presented
evidence indicating that specific high-ranking corporate
officials were directly informed” about “the negative
health consequences of smoking, the addictiveness and
manipulation of nicotine, the harmfulness of secondhand
smoke, and the concept of smoker compensation,” and
that “[t]hese executives then made, caused to be made,
and approved public statements contrary to this knowl-
edge.” Pet. App. 38a-39a.'” The central dispute at trial
was whether the statements made by petitioners and
their employees “accurately reflected” the “prevailing
internal views” of the corporation and the speaker. RJR
Pet. 28-29. It is simply implausible that Reynolds pos-
sessed but deliberately withheld exculpatory evidence
that not only would have disproved the showing
Reynolds contended the government was required to
make but also would have rebutted the specific evidence
the government presented. Reynolds’ factbound claim
of unfairness lacks any merit and does not warrant this
Court’s review.
2. Petitioners Reynolds and Lorillard contend (RJR
Pet. 7-8, 17-18; Lorillard Pet. 29-30) that a subset of
their public statements—those directed in the first in-
stance toward Congress or other governmental agen-
cies—enjoy protection under the Noerr-Pennington
’ Indeed, the government’s post-trial brief provided more than 20
pages of “examples of particular executives, employees, and agents of
{ petitioners] who possessed the specific intent required under the mail
and wire fraud laws,” with citations to the supporting record evidence.
C.A. App. A13593-A1414. Petitioners made no attempt to rebut this
evidence in the district court, claiming only that the officers who made
or approved petitioners’ false statements might have “personally be-
lieved” the statements were true despite a wealth of contradictory evi-
dence. /d. at A1489 (citing petitioners’ joint post-trial brief).
47
doctrine. The court of appeais correctly rejected that
contention, which does not present any legal issue war-
ranting review.
The Noerr-Pennington doctrine bears only slight, if
any, relevance to this case. Under that doctrine,
“{t]hose who petition government for redress are gener-
ally immune from antitrust liability.” Professional Real
E'state Investors, Inc. v. Columbia Pictures Indus., Inc.,
508 U.S. 49, 56 (1993); see Eastern R.R. Presidents Con-
ference v. Noerr Motor Freight, lne., 365 U.S. 127, 136
(1961) (Noerr); United Mine Workers of Am. v. Pen-
nington, 381 U.S. 657, 669 (1965). Were this an antitrust
case, the Noerr-Pennington doctrine might have some
conceivable bearing. But as the court of appeals ex-
plained, Pet. App. 44a-46a, this case concerns fraud on
consumers; petitioners’ liability rests on their use of the
mails and wires while executing a scheme to defraud
cigarette purchasers of their money. 18 U.S.C. 1341,
1343 (Supp. II 2008). This Court has never suggested,
and petitioners cite no case holding, that the Noerr-
Pennington doctrine confers some sort of generalized
immunity from laws punishing consumer fraud. See Pet.
App. 44a-45a."'
'’ Petitioner Reynolds argues (Pet. 16) that its speech before Con
press or other government agencies does not constitute “consumer
fraud” because it “was not directed to consumers.” Kut the same state-
ments may he intended both to influence government agencies and to
defraud consumers of money or property. The district court’s findings
make clear that what petitioners describe as their “Noerr-Pennington
speech” was in fact an integra] part of petitioner’s overall strategy to
portray the health cffects of smoking as an “open question” and thereby
to obtain money from cigarette smokers by means of false representa
tions.
Petitioners are thus mistaken in claiming (PM Pet. 26n.4: RJR Pet.
18)) that the decision below conflicts with other circuits’ application of
48
Similarly, while Noerr-Pennington immunity stems
in part from First Amendment right-to-petition con-
cerns, see Noerr, 365 U.S. at 138, this Court has
stressed that “[tJhe Petition Clause * * * was inspired
by the same ideals of liberty and democracy that gave us
the freedoms to speak, publish, and assemble[,] * * *
and there is no sound basis for granting greater consti-
tutional protection to statements made in a petition
* * * than other First Amendment expressions.” Mc-
Donald v. Smith, 472 U.S. 479, 485 (1985); see zd. at 484
(concluding that “petitions to the President that contain
intentional and reckless falsehoods do not enjoy consti-
tutional protection”) (internal quotation marks and cita-
tion omitted).
Petitioners appear to contend that the Noerr-Pen-
nington doctrine confers immunity from all liability for
any speech—even knowingly false statements—that is
addressed to a government agency and takes the form of
“efforts to affect governmental regulation.” Lorillard
Pet. 29-30; see RJR Pet. 17. But that sweeping proposi-
tion cannot be squared with established and unquestion
ably constitutional prohibitions against making false
statements to Congress, federal agencies, and the fed-
eral courts. See, e.g., 18 U.S.C. 1001 (prohibiting false
statements to the federal government); 18 U.S.C. 1621
(perjury of witnesses); sce also Buckman Co. v. Plain
tiffs’ Legal Comm., 531 U.S. 341, 348 (2001) (explaining
that federal law “amply empowers the |Food and Drug
Administration| to punish and deter fraud against the
Administration”).
the Noerr-Pennington doctrine. All of the cases on which petitioners
rely, like Noerr itself, involved immunity from antitrust claims. None
involved consumer fraud.
49
In any event, the scope of the Noerr-Pennington
doctrine is not squarely presented in this case. As a
precautionary measure, the district court excluded evi-
dence of certain testimony petitioners’ executives pro-
vided to Congress. See Pet. App. 46a; id. at 1962a-
1963a. Even if those statements were properly ex-
cluded, a question the court of appeals found no need to
resolve, see id. at 46a, the district court specifically
found “that the vast majority of | petitioners’] statements
were made with the primary purpose of influencing
smokers, potential smokers, and the general public and
are, therefore, not protected by the Noerr-Pennington
doctrine.” Id. at 1960a; see 7d. at 46a (concluding that,
even if petitioners’ congressional testimony was prop-
erly excluded, petitioners’ “remaining acts were in-
tended to defraud consumers, so Noerr-Pennington pro-
tection does not apply”). Indeed, even if the district
court. had excluded from consideration not just congres-
sional testimony but all of petitioners’ statements to the
I’'TC.and other federal regulators, the record would stil!
contain ample evidence—including misleading market-
ing materials, press releases, statements on television
talk shows, and advertising campaigns—to support the
finding of a scheme to defraud consumers. In view of
that record, the question that Reynolds seeks to raise
(RJR Pet. 17)—whether First Amendment protection
applies to deliberate deception of regulatory bodies and
legislators in pursuit of a fraudulent scheme aimed at
consumers—is not properly presented.
50
D. Petitioners’ Statements About “Light” And “Low-Tar”
Cigarettes Were Fraudulent And Not Authorized By The
FTC
Petitioners Reynolds and Philip Morris (RJR Pet.
29-34; PM Pet. 29-30) contend that the court of appeals
erred in upholding fraud liability based on their adver-
tising of “light” and “low-tar” cigarettes. That conten-
tion is based on two arguments, neither of which has
merit or warrants review.
First, petitioners argue that “they should be immune
from liability because the [FTC] * * * has blessed
their use of labels such as ‘light’ and ‘low tar.’” Pet.
App. 46a-47a. But as the court of appeals explained,
that argument is “entirely foreclosed” by this Court’s
decision in Altria, which held that “the FTC has in fact
never required that cigarette manufacturers disclose tar
and nicotine yields, nor has it condoned representations
of those yields through the use of ‘light’ or ‘low tar’
descriptors.” Pet. App. 47a (quoting Altria, 129 S. Ct. at
550).
Second, petitioners contend that their “light” and
“low tar” descriptors were not actionable under the
fraud statutes because although such statements “could
be interpreted to imply a health benefit, that is not the
only reasonable interpretation that could be drawn from
the terms.” Lorillard Pet. 30-31; see also RJR Pet. 30.
The district court found, however, that petitioners knew
and intended that consumers would interpret “light” and
“low tar” descriptors to convey a health benefit, see Pet.
App. 1068a-1096a, even though petitioners “have known
for decades that filtered and low tar cigarettes do not
offer a meaningful reduction of risk, and that their mar-
keting which emphasized reductions in tar and nicotine
was false and misleading.” /d. at 46a (quoting 2d. at
ol
1905a-1906a); see id. at 1140a-1147a, 1255a-1256a.
There is also no merit to petitioners’ characterization of
“light” and “low tar” descriptors as “simply verbal rep-
resentations of numerical ratings authorized by the
FTC.” Jd. at 49a. That argument “founders on the dis-
trict court’s finding that ‘there are lights of certain
brands with higher tar levels than regulars of other
brands from the same company, and there are also lights
and regulars of the same brands that have the same
FTC tar rating.’” /btd. (quoting zd. at 1907a); see 2d. at
1142a (finding that the terms “light” and “low tar,” as
used by petitioners, are empirically “meaningless” and
“arhitrary”’). This evidence, “which [petitioners] do not
attempt to show is clearly erroneous, reveals the
descriptors were not simply representations of numeri-
cal ratings and thus were not ‘literally true.’” /d. at 49a.
In any event, the “fraudulent activity surrounding
‘light’ cigarettes was not merely limited to the use of
misleading descriptors.” Pet. App. 48a. The district
court found, for example, that petitioners’ public state-
ments:about the demand for light cigarettes were “bla-
tantly false,” 7d. at 1906a; that petitioners “withheld and
suppressed their extensive knowledge and understand-
ing of nicotine-driven smoker compensation,” id. at
1907a; and that petitioners intentionally designed their
light cigarettes to facilitate smokers’ ability to compen-
sate and thereby obtain the required dosage of nicotine
to remain addicted, zd. at 1905a. See generally id. at
775a-850a (describing petitioners’ efforts to “design
commercial cigarettes that were capable of delivering
nicotine across a range of doses that would keep smok-
ers addicted,” including through filter design, the place-
ment of ventilation holes, paper porosity, and alterations
to the chemical form of the nicotine delivered to smok-
ers’ brains).
EX. Neither The Master Settlement Agreement Nor The Pas-
sage Of The Family Smoking Prevention And Tobacco
Control Act Eliminated All Likelihood Of Future Viola-
tions
Both courts below properly found that an injunction
was warranted, especially given petitioners’ vast,
decades-long fraudulent enterprise. Pet. App. 60a-67a,
2007a-2021a; see 18 U.S.C. 1964(a) Gnjunctions available
under RICO to “prevent and restrain violations”). This
Court has long recognized that “|iJn exercising its equl-
table jurisdiction, |a] federal court has broad power to
restrain acts which are of the same type or class as un-
lawful acts which the court has found to have been com-
mitted.” Zenith Radio Corp. v. Hazeltine Research,
Inc., 395 U.S. 100, 132 (1969) (internal quotation marks
and citation omitted). Petitioners Philip Morris and
Lorillard nonetheless contend that the Master Settle-
ment Agreement (MSA) and the FSPTCA “{floreclose
[fluture [rJacketeering” and thus “extinguished the dis-
trict court’s jurisdiction.” PM Pet. 2&8; see 7d. at 28-31;
Lorillard Pet. 31-32. Petitioners do not contend that the
district court’s injunction conflicts with any decision of
this Court or any court of appeals, and their challenge is
without merit.
1. Petitioners erroneously contend that the injunc-
tive relief ordered in this ease was barred by the MSA
—an agreement between state attorneys general and
some tobacco companies settling tort and reimburse-
ment suits through a variety of state-specific injunctions
and consent decrees, see Pet. App. 6la-66a, 1864a-187(a.
As an initial matter, they cite no authority whatsoever
53
for the proposition that a racketeer’s settlement of other
causes of action with other parties can strip a federal
district court of “jurisdiction” to provide injunctive re-
lief for the United States in a RICO case. PM Pet. 28;
see Pet. App. 62a (characterizing this argument by peti-
tioners as “odd”); ef. SEC v. Management Dynamics,
Inc., 515 F.2d 801, 807 (2d Cir. 1975) (“{I|njunctive relief
is not barred by a defendant’s disclaimer of an intent to
violate the law in the future.”). In any event, this con-
tention ignores the district court’s express factual find-
ings regarding petitioners’ violations of the MSA, as
well as the settlement’s inadequacy when compared to
the injunction issued here.
As the court of appeals found, petitioners “cannot
hide behind the MSA to avoid the imposition of RICO
remedies when they do not comply with the agreement.”
Pet. App. 66a. Those petitioners subject to the MSA
“began to evade and at times even violate the MSA’s
prohibitions almost immediately after signing the agree-
ment.” Jd. at 64a. For example, “although the MSA
required [petitioners] to dissolve CIAR, only two days
after signing the MSA Lorillard’s general counsel wrote
to Philip Morris, Reynolds, and Brown & Williamson
asking to ‘discuss the status of the plan to reinstate
CIAR.’” J/bid. (citation omitted). “Shortly thereafter,
Covington & Burling LLP informed the CIAR contrac-
tors ‘[t]he members of CIAR have decided to create a
new organization to continue the work. . . . The mem-
bers of CIAR that will be members of the new organiza-
tion intend to continue to fund the research.” /d. at 64a-
65a (citation omitted). “Subsequently, in 2000, Philip
Morris initiated a new research program that had the
same offices, phone numbers, and board as CIAR and
many of the same employees, management, researchers,
o4
peer reviewers, and grantees.” /d. at 65a; see also ibid.
(“CIAR is not the lone example of [petitioners’] organi-
zations poised to circumvent the MSA’s prohibitions
against joint activities or participation in an enter-
prise.”).
Moreover, as further “evidence of the MSA’s failures
and pitfalls, the district court noted that despite the
MSA [petitioners] still fraudulently denied the dangers
of secondhand smoke, marketed ‘low tar’ cigarettes as
a healthier alternative to quitting, and falsely denied
manipulating nicotine delivery and marketing to youth.”
Pet. App. 66a; see also zd. at 1873a-1877a (summarizing
additional MSA violations by petitioners); id. at 2044a
(“| Petitioners] eontinue to make affirmative statements
on smoking and health issues that are fraudulent.”).
Petitioners offered “no rebuttal” to these factual find-
ings. Jd. at 66a.
Additionally, the MSA does not include core compo-
nents of the injunctive relief ordered in this case. See
Pet. App. 1884a (MSA does not enjoin against future
RICO violations, regulate “‘light’ and ‘low tar’” descrip
tors, require corrective statements, or fund smoking
cessation programs.).
Finally, the States “could not be relied upon to ‘vigor-
ously’ enforce the MSA,” Pet. App. at 66a (citation omit-
ted); some provisions of the MSA had either expired at
the time of the district court’s order or were on the cusp
of expiring, cbid.; and BATCo and Altria were not even
parties to the MSA, 7bid.; see zd. at 1879a. The MSA is
no substitute for the injunction ordered in this case, and
it certainly did not deprive the district court of “juris
diction” to enter injunctive relief.
2. Shortly after the panel decision was issued, Con-
gress enacted the FSPTCA, Pub. L. No. 111-31, 128
a5)
Stat. 1776. Congress specifically cited the district
court’s findings in this case in its own legislative find-
ings, see § 2(47)-(49), 123 Stat. 1781, and instructed that
“(njothing” in the new Act “shall be construed to * * *
affect any action pending in Federal, State, or tribal
court,” § 4(a), 123 Stat. 1782. Nonetheless, several peti-
tioners filed a Suggestion Of Mootness And Motion For
Partial Vacatur (“Suggestion Of Mootness”) in the court
of appeals, arguing that the new law rendered aspects of
the injunction “moot.” The government opposed the
motion, explaining that the legislation was not co-exten-
sive with the injunction in this case and arguing that any
request to modify the injunction should be presented to
the district court in the first instanee. The panel denied
the Suggestion Of Mootness. See PM Pet. 1. The court
of appeals also denied Philip Morris’s petition for re-
hearing en bane, which made a similar argument. See
Pet. App. 21&3a.
Review of the court of appeals’ summary rejection of
petitioners’ claims regarding the new legislation is not
warranted. See PM Pet. 29-31; Lorillard Pet. 31-32.
Petitioners can assert their claim that the injunction in
this case should be modified in light of the new law in
the district court, which is the appropriate forum to con-
sider it in the first instance. See Horne v. F'lores, 129 S.
Ct. 2579, 2593 (2009) (party subject to an injunction may
seek relief from the district court in light of changed
circumstances). In particular, that court is better situ-
ated to evaluate petitioners’ factual contention that the
new legislation renders it unlikely that they “will engage
in future joint racketeering activity of the type the dis-
trict court found and on which it premised its forward-
looking injunctive relief.” PM Pet. 30. The district
court’s dispesition of such a request would then be
26
reviewable in the court of appeals and, if necessary, in
this Court. Review now is premature.
Allowing the district court to evaluate this contention
in the regular course is especially appropriate in light of
the fact tha’ petitioners Reynolds and Lorillard, as well
as other plaintiffs, have brought a First Amendment
challenge to the FSPTCA. See Commonwealth Brands,
Inc. v. United States, 678 F. Supp. 2d 512 (W.D. Ky.
2010), appeal pending, Nos. 10-5234 and 10-5235 (6th
Cir. filed Mar. 9, 2010). Petitioners cannot establish
that the new law “dispels any doubt” about whether they
will engage in future racketeering, PM Pet. 30, while
two of them are simultaneously attempting to invalidate
the legislation.’*
Nor is there any merit to Philip Morris’s cursory
suggestion that the new legislation renders this ease
moot. PM Pet. 30-31. That very contention was re-
jected by Congress in the text of the Act itself. § 4(a),
123 Stat. 1782. In an attempt to alter the meaning of
this text, Philip Morris points to some of the legislation’s
provisions that address topics also covered by the in-
junction, but it does not and cannot claim that the new
law wholly duplicates the district court’s injunction. For
example, the Act does not purport to provide tailored
remedies for decades of fraud, such as the corrective
statements ordered by the district court. Nor does it
provide any redress for the harm to the millions of vie-
tims of petitioners’ scheme whg, us petitioners intended,
'* Philip Morris argues in the alternative that this Court should grant
vacate, and remand to allow the court of appeals to consider its argu-
ment regarding the impact of the new legislation. PM Pet. 28, 31. But
the court of appeals has already considered the impact of the new legis
lation, denying petitioners’ Suggestion Of Mootness and petitions for
rehearing en banc, so a GVR would not be appropriate.
a?
continue to purchase cigarettes because they have be-
come chemically dependent on nicotine. See Gov’t Pet.
at 29-31, United States v. Philip Morris USA, Inc., No.
09-978 (filed Dee. 10, 2009).
F. The Court Of Appeals Correctly Upheld The Injunction
Prohibiting Specified Conduct And Requiring Correc-
tive Statements
1. The district court enjoined petitioners from “com-
mitting any act of racketeering, as defined in 18 TJ.S8.C.
§ 1961(1), relating in any way to the manufacturing,
marketing, promotion, health consequences, or sale of
cigarettes in the United States,” Pet. App. 2069a, and
from “making, or causing to be made in any way, any
material false, misleading, or deceptive statement or
representation, or engaging in any public relations or
marketing endeavor that is disseminated to the United
States public and that misrepresents or suppresses in-
formation concerning cigarettes,” 7d. at 2070a. Petition-
ers contend that these provisions are too vague to sat-
isfy Fed. R. Civ. P. 65(d). PM Pet. 31-34; Lorillard Pet.
32. That claim, which involves application of settled law
to the particular circumstances of this case, does not
warrant this Court’s review and is meritless in any
event.
RICO specifically authorizes district courts to “pro-
hibit|| any person from engaging in the same type of
endeavor as the enterprise engaged in,” 18 U.S.C.
1964(a), and that is precisely what the district court did
in this case. This is not a case in which the district court
“enjoin|ed} all future illegal conduct of the defendant”
or even all future violations of RICO “however unrelated
to the violation found by the court.” Zenith Radro
Corp., 395 U.S. at 133. Instead, the court exercised its
D8
well-established equitable authority to enjoin petition-
ers “from committing other related unlawful acts.” /bzd.
In doing so, there was no requirement “that all of the
untraveled roads to that end be left open and that only
the worn one be closed.” /bid. As the district court ex-
plained, “Rule 65(d) does not require the [dlJistrict
[clourt to ‘predict exactly what [petitioners] will think of
next,” especially since “it would be impossible to foresee
what the ingenuity and creativity of [petitioners’] cadres
of sophisticated lawyers could ‘think of next.’” United
States v. Philip Morris USA, Inc., 477 F. Supp. 2d 191,
196 (D.D.C. 2007) (quoting S.C. Johnson & son, Ine. v.
Clorox Co., 241 F.3d 232, 240 (2d Cir. 2001)).
The cases that Philip Morris cites (Pet. 32-833) are
inapposite. In Hartford-Empire Co. v. United States,
323 U.S. 386 (1945), this Court held that an order pro-
hibiting acts “as charged in the complaint” was imper-
missible under Rule 65(d), which bars courts from de-
scribing the acts enjoined “by referring to the com-
plaint.” /d. at 410; see Fed. R. Civ. P. 65(d)(1)(C). In
International Longshoremen’s Ass’n Vv. Philadelphia
Marine Trade Ass’n, 389 U.S. 64 (1967), the Court va-
cated an injunction purporting “to enforce an arbitra-
tor’s award” where that award “containled] only an ab-
stract conclusion of law, not an operative command ¢a-
pable of ‘enforcement.’” /d. at 74. Here, the district
court order did not refer to the complaint or direct the
“enforcement” of abstract conclusions of law. And it
“specified the matters about which [petitioners] are to
avoid making false statements or committing rackcteer-
ing acts: the manufacturing, marketing, promotion,
health consequences, and sale of cigarettes, along with
related issues that {petitioners] have reason to know are
of concern to cigarette consumers.” Pet. App. 73a-74a.
og
The court of appeals concluded that the injunction
“sufficiently speciflied] the activities enjoined as to pro-
vide [petitioners | with fair notice of the prohibited con-
duct,” given that the district court “did not abstractly
enjoin [petitioners] from violating RICO or making false
statements, but instead specified the matters about
which {| petitioners] are to avoid making false statements
or committing racketeering acts.” Pet. App. 73a-74a.
The court of appeals went on to observe that separate
and apart from the clear terms of the injunction itself,
“the context of the district court’s legal conclusions and
4,088 findings of fact about fraud in the manufacture,
promotion, and sale of cigarettes” provided yet more
clarity. /d. at 74a. Petitioners argue that this observa-
tion by the court of appeals “squarely contravene|d)
Rule 65(d)” by referring to the findings of fact. PM Pet.
33; see Fed. R. Civ. P. 65(d)(1)(C) (“Every order grant-
ing an injunction * * * must * * describe in rea-
sonable detail—and not by referring to the complaint or
other document—the act or acts restrained or re-
quired.”). An appellate opinion cannot “contravenc| |”
this rule (PM Pet. 33), for it is not an “order granting an
injunction,” Fed. R. Civ. P. 65(d)(1). The district court’s
injunction order did not rely on the findings of facet to
provide specificity or otherwise violate Rule 65(d).
At bottom, petitioners’ objection is not that the in-
junction is unclear, but that it happens to be broad. But
Rule 65(d) limits vague injunctions, not comprehensive
ones, and this Court has stressed that broad decrees
prohibiting future violations of a statute are “wholly
warranted” “where a proclivity for unlawful conduct has
been shown.” McComb v. Jacksonville Paper Co., 336
U.S. 187, 192 (1949) (concluding that an order “enjoin-
[ing] any practices which were violations of thle] statu-
60
tory provisions” was justified by the defendant’s “record
of continuing and persistent violations”). That is exactly
what the record established here. Pet. App. 74a (citing
McComb, 336 U.S. at 192).
2. The district court also ordered petitioners to pub-
lish corrective statements on their websites, as a one-
time full-page advertisement in thirty-five major news-
papers, and in ten advertisements on a major television
network over the course of one year. Pet. App. 83a.
“The court chose these media in order to ‘structure a
remedy which uses the same vehicles which [petitioners |
have themselves historically used to promulgate false
smoking and health messages.” /bid.; see also td. at
2047a-2048a. The district court found such statements
appropriate to counteract decades of false and mislead-
ing statements by petitioners coneerning the health ef-
fects of smoking and nicotine addiction, commercial
speech that even at the time of the court’s order
“eontinue[d] to omit material information or present
information in a misleading and incomplete fashion.” /d.
at 2043a; see zd. at 86a (all such statements were “at-
tempts to persuade the public to purchase cigarettes”).
The court of appeals properly concluded that against the
background of petitioners’ false and fraudulent state-
ments to consumers about their products over 50 years,
the publication of appropriate corrective statements
addressing petitioners’ false assertions in the same me-
dia petitioners themselves have used is a suitable means
of preventing petitioners from continuing to deceive
their customers. /d. at 83a-8¥a.
The court of appeals affirmed this aspect of the dis-
trict court’s order only in the abstract, however, noting
that the content. of the corrective statements has not yet
been determined. See Pet. App. 88a. Indeed, the dis-
61
trict court said it would determine the content of the
corrective statements based on submissions by both the
United States and petitioners, 7d. at 2048a-2049a, so
petitioners themselves will have an opportunity to shape
the statements. Accordingly, review of the corrective
statements requirement by this Court at this time, as
petitioner Reynolds urges (Pet. 34-36), would be prema-
ture.
The court of appeals cautioned the district court that
the statements must be “carefully phrased so they do
not impermissibly chill protected speech.” Pet. App.
88a. “Consequently, the court must confine the state-
ments to ‘purely factual and uncontroversial informa-
tion,’ geared towards thwarting prospective efforts by
[petitioners] to either directly mislead consumers or
capitalize on their prior deceptions by continuing to ad-
vertise in a manner that builds on consumers’ existing
misperceptions.” Jbid. (quoting Zauderer v. Office of
Disciplinary Counsel of Sup. Ct., 471 U.S. 626, 651
(1985))., The court of appeals concluded that “/a/ssum-
iny the corrective advertising once drafted meets these
requirements, it is a permissible restraint on [petition-
ers’| commercial speech.” /d. at 89a (emphasis added).
This Court could not meaningfully evaluate petitioner
Reynolds’ claim that the corrective statements will vio-
late the First Amendment and RICO without knowing
what the corrective statements are.
Reynolds erroneously contends (Pet. 35) that the
court of appeals’ affirmance of a corrective statement
obligation in the abstract conflicts with National Com-
misston on Egg Nutrition v. FTC, 570 F.2d 157 (7th Cir.
1977), cert. denied, 439 U.S. 821 (1978). In that decep-
tive advertising case, the Seventh Circuit modified an
FTC order requiring corrective statements on the ex-
62
press ground that the case did nol involve “a long his-
tory of deception” that had “permeated the consumer
mind.” Jd. at 164. That is precisely what the district
court found here. See Pet. App. 2047a-2048a. Indeed,
the Seventh Circuit contrasted the record before it with
the D.C. Cireuit’s decision in Warner-Lambert Co. v.
FTC, 562 F.2d 749 (1977), cert. denied, 435 U.S. 950
(1978), which sustained a corrective advertising require-
ment as a remedy for decades of false advertising. See
id. at 769 (upholding corrective statements because,
after fifty years of false claims, “advertising which fails
to rebut the prior claims * * * inevitably builds upon
those claims; continued advertising continues the decep-
tion, albeit implicitly rather than explicitly”). Likewise
here, the panel explained, petitioners “violated RICO by
making false and fraudulent statements to consumers
about their products” for “over fifty years.” Pet. App.
88a.
G. The Court Of Appeals Correctly Rejected BATCo’s
Claim That This Case Involves An Extraterritorial Ap-
plication Of RICO
BATCo contends that the decision below conflicts
with decisions of other courts of appeals holding that
RICO does not apply to conduct occurring outside the
United States merely because it has “effects” in the
United States. 09-980 Pet. (BATCo Pet.) 10. This case,
however, does not provide any occasion for resolving the
asserted conflict. In addition to engaging in overseas
conduct with effects in the United States, BATCo en-
gaged in extensive conduct within the United States,
and it also conspired with U.S.-based petitioners.
BATCo may therefore be held liable for violations of
RICO’s substantive and conspiracy provisions without
63
regard to any foreign conduct, and this case does not
involve extraterritorial liability under the test used by
any of the courts of appeals. In any event, the cases
giving rise to the asserted conflict involved private civil
RICO damages actions, in which the plaintiffs were re-
quired to show that the defendants’ actions had proxi-
mately caused their injuries. Those decisions are not
relevant to this case, which arises from an action by the
United States for equitable relief under Section
1964(aj)—a provision that does not impose a proxi-
mate-causation requirement.
1. The premise of BATCo’s petition is that its liabil-.
ity rests on “wholly foreign conduct.” Pet. i; see td. at
13 (arguing that “this Court has long treated laws as
having ,extraterritorial reach if they apply to conduct
that occurs in a foreign country”). That is incorrect.
BATCo is liable under RICO’s substantive provision
because it used the interstate mails and wires—and en-
gaged in other conduct within the United States—in
furtherance of a scheme that was aimed at defrauding
American consumers. Such an application of RICO pre-
sents no issue of extraterritoriality. See Pasquantino v.
United States, 544 U.S. 349, 371 (2005) (application of
the wire-fraud statute did not have extraterritorial ef-
fect where defendants “used U.S. interstate wires to
execute a scheme to defraud a foreign sovereign of tax
revenue”); Environmental Def. Fund, Inc. v. Massey,
986 F.2d 528, 531 (D.C. Cir. 1993) (“Even where the sig-
nificant effects of the regulated conduct are felt outside
U.S. borders, the statute itself does not present a prob-
lem of extraterritoriality, so long as the conduct which
Congress seeks to regulate occurs largely within the
United States.”); Alfadda v. Fenn, 935 F.2d 475, 479-480
(2d Cir.), cert. denied, 502 U.S. 1005 (1991); Republic of
64
the Philippines v. Marcos, 862 F.2d 1355, 1358-1359 (9th
Cir 1988) (en bane), cert. denied, 490 U.S. 1035 (1989).
This Court has explained that “[mJail fraud * * *
occurs whenever a person, ‘having devised or intending
to devise any scheme or artifice to defraud,’ uses the
mail ‘for the purpose of executing such scheme or arti-
fice or attempting so to do.’” Bridge v. Phoenix Bond &
Indem. Co., 128 S. Ct. 2131, 2138 (2008) (quoting 18
U.S.C. 1341). “[T]he indictable act under § 1341 is not
the fraudulent misrepresentation, but rather the use of
the mails with the purpose of executing or attempting to
execute a scheme to defraud.”” 7d. at 2140; see Pas-
guantino, 544 U.S. at 355 n.2 (noting that the Court has
adopted a parallel construction of the identical language
of the wire-fraud statute, 18 U.S.C. 13843). Thus, in Pas-
quantino, this Court rejected the argument that the
application of the wire-fraud statute to a scheme to de-
fraud the Government of Canada of liquor-tax revenues
gave the statute extraterritorial effect, emphasizing that
the defendants in that case “used U.S. interstate wires
to execute a scheme to defraud.” 544 U.S. at 371. Be-
cause the defendants’ “offense was complete the mo-
ment they executed a scheme inside the United States,”
the Court explained, the “domestic element of [their]
conduct is what the Government is punishing.” /bid.
Like the offenses in Pasquanteno, BATCo’s predi-
cate offenses were consummated when it used the
United States mails and wires in furtherance of petition-
ers’ fraudulent scheme. See, e.g., Pet. App. 1851a-1852a
(deseribing BATCo’s practice of delivering sensitive
research reports to petitioners in the United States by
sending unmarked envelopes to an attorney in Ken-
tucky); id. at 591a-592a (BATCo sent report document-
ing the phenomenon of nicotine compensation to B&W
65
in the United States); id. at 690a (BATCo sent research
on the physiological effects of nicotine to B&W in the
United States); see also zd. at 2145a. Indeed, before
trial, BATCo stipulated that it had used the U.S. mails
and wires as alleged by the government in eleven sepa-
rate instances, including mailings to BATCo’s United
States affiliate B&W. See BATCo Pet. 3 n.3 (describing
BATCo’s affiliation with B&W); Gov’t Exh. 86,700, 1 J
(stipulating that the documents identified in Racketeer-
ing Acts 11, 30, 50, 51, 58, 54, 57, 60, and 63 were “trans-
mitted via U.S. mails as that term is used in 18 U.S.C.
§ 1341” and that “{ajll requirements for mailing pursu-
ant to 18 U.S.C. § 1341 have heen satisfied with respect
to” those mailings); td. 11 2-3 (similar stipulation for
wire-fraud offenses). BATCo’s various claims (Pet. 5
n.4) that its mailings were “unpublished,” were not “di-
rected.at U.S. consumers,” and did not “deseribe[] state-
ments or conduct by BATCo in the United States” are
irrelevant under the mail-fraud statute, which prohibits
any use of the mails in furtherance of a scheme to de-
fraud... See Bridge, 128 S. Ct. at 2138. In light of its
stipulations, BATCo cannot now contend (Pet. 31) that
its liability rests on “wholly foreign conduct.”
Moreover, BATCo’s domestic conduct in furtherance
of the U.S.-based scheme to defraud extended well be-
yond its use of the mails and wires: the district court
also documented BATCo’s direct and extensive partici-
pation in petitioners’ enterprise in the United States.
For example, BATCo was the organizer of a nicotine
pharmacology conference for petitioners in South
Carolina. Pet. App. 848a-849a. Its representatives at-
tended TI's “College of Tobacco Knowledge” for train-
ing in the enterprise’s coordinated public-relations mes-
sages. /d. at 221a-222a. They also attended meetings in
66
the United States of the joint industry groups that were
used to coordinate the affairs of the enterprise. See,
e.g., id. at 326a-327a (ICQSI meeting in Kansas City,
Missouri); 2d. at 332a-333a (INFOTAB meeting in
Washington, D.C.). BATCo maintained “frequent and
direct” contacts with “high level smoking and health
research scientists” at the U.S.-based TI Research Com-
mittee and the CTR, including frequent visits to the
United States by BATCo scientists and executives. /d.
at 138a-159a. BATCo operated an experimenta! tobacco
farm in North Carolina for producing tobacco that was
genetically engineered to yield extra nicotine. /d. at
788a. And BATCo sold millions of cigarettes In the
United States through a marketing agreement with a
Reynolds subsidiary. /d. at 2022a n.&83.
In sum, even without the actions taken by BATCo
abroad in furtherance of the scheme to defraud United
States consumers, there was ample evidence to support
BATCo’s liability under RICO. Aithough the court of
appeals had no occasion to discuss BATCo’s conduct
within the United States, the government argued that
BATCo’s liability could be sustained on that basis, see
Gov’t C.A. Br. 175-177, and it would provide an alterna-
tive ground for affirming the judgment below.
2. In addition to violating RICO’s substantive provi-
sions, BATCo also ei gaged in a RICO conspiracy, in
violation of 18 U.S.C. 1962(d). Pet. App. 1991a-2002a.
Under RICO, a conspirator is liable for the acts of its co-
conspirators undertaken in furtherance of the conspir-
acy, Salinas v. United States, 522 U.S. 52, 63-64 (1997),
and it is well established that a co-conspirator outside
the United States may be held liable for substantive
offenses committed in furtherance of a conspiracy by
conspirators inside the United States. See, e.g., Ford v.
67
United States, 273 U.S. 593, 619-624 (1927) (defendants
whose conspiratorial activity occurred outside the
United States were liable for conspiracy to violate
United States law because of conduct of other conspira-
tors within the United States); accord United States v.
Inco Bank & Trust Corp., 845 F.2d 919, 920 (11th Cir.
1988) (“It is well settled that the government has the
power to prosecute every member of a conspiracy that
takes place in United States territory, even those con-
spirators who never entered the United States.”);
United States v. Winter, 509 F.2d 975, 982 (5th Cir.),
cert. denied, 423 U.S. 825 (1975). Since there is no dis-
pute that the conduct of BATCo’s co-conspirators oc-
curred in the United States, that principle—which
BATCo does not address—provides an independent ba-
sis for the decision below.
3. ‘The court of appeals based its decision on the
“substantial domestic effects” of BATCo’s overseas con-
duct. Pet. App. 58a. As the court correctly explained,
“(plecause conduct with substantial domestic effects
implicates a state’s legitimate interest in protecting its
citizens within its borders, Congress’s regulation of for-
eign conduct meeting this ‘effects’ test is ‘rot an extra-
territorial assertion of jurisdiction.’” J/bid. (quoting
Laker Airways Ltd. v. Sabena, Belgian World Airlines,
731 #.2d 909, 923 (D.C. Cir. 1984))."° According to
The evidence amply supported the conclusion that BATCo’s foreign
conduct was intended to cause, and did cause, substantial effects in the
United States. BATCo was a founding member of ICOSI—a joint or-
ganization used, in the words of an internal BATCo document, to
“throw[] up a smoke screen and to throw doubt on smoking research
findings which show smoke causes diseases.” Pet. App. 1624a. BATCo
also founded or participated in other joint entities and covert “opera-
tions” that petitioners used to further the goals of the enterprise in the
68
BATCo, the court’s analysis conflicts with decisions of
other courts of appeals that have heid that domestic ef-
fects of foreign conduct are insufficient to establish
RICO liability. For the reasons explained above, this
case does not implicate that asserted conflict because
BATCo’s domestic conduct—and its conspiracy with the
domestic cigarette manufacturers—provide independent
grounds for liability, and that liability is not extraterri-
torial under the test used by any court of appeals.
In any event, BATCo’s suggestion of a conflict is in-
correct. BATCo’s argument rests in part (Pet. 12, 20,
30) on several decisions addressing the extraterritorial
effect of various statutes other than RICO. As BATCo
admits (Pet. 34), however, “RICO is quite different”
from those statutes, and therefore those decisions shed
little light on whether, or under what circumstances,
Congress intended RICO to apply to conduct abroad
that has substantial effects in the United States.
As to the few cases that did involve RICO, all of them
arose from the very different context of private actions
under Section 1964(c), which allows a plaintiff to recover
damages caused “by reason of” a RICO violation. The
“by reason of” language requires the plaintiff to prove
United States. See, e.g., zd. at 1620a (“Operation Berkshire”); id. at
1627a (INFOTAB); id. at 1634a 1635a (“Operation Downunder’’); zd. at
1660a (International ETS Management Committee); zd. at 1693a (Asso-
ciation for Research on Indoor Air); id. at 1695a-1696a (LAL). BATCo
collaborated with other petitioners to craft and enforce a unified mes-
sage on matters of smoking and health, with a particular eye toward the
consequences in the United States. See zd. at 300a, 302a-303a, 305a,
3074-308a, 31la-3loa, 317a, 319a, 343a, 570a-571a, 1620a, 1625a-1626a.
Thus, the TI praised INFOTAB, of which BATCo was a founding mem-
ber, as critical in pretecting the industry’s position in the United States
from the “powerful[j” “back-wash” of anti-smoking developments in
other countries. /d. at 343a (citation omitted); 2d. at 60a.
69
that the RICO violation was the proximate cause of in-
jury to the plaintiff’s business or property. See Bridge,
128 S. Ct. at 2141. In one ease cited by BATCo, the
Ninth Circuit held that RICO did not reach the defen-
dants’ overseas conduct because there was no evidence
that it had “‘directly caused’ loss or injury in the United
States” to any of the plaintiffs’ businesses or property.
Doe Iv. Unocal Corp., 395 F.3d 932, 961-962 (2002), va-
cated, 395 F.3d 978 (2003). In another, the Eleventh
Circuit held that RICO did not reach the defendant’s
foreign conduct under the “effects” test because “[n]Jo
United States person or business [was] harmed by this
scheme,” although the court went on to hold that liabil-
ity could be based on the “jsJignificant amounts of con-
duct” that took place in the United States. Liquidation
Comm'n of Banco {ntercontinental vy. Renta, 530 F.3d
1339, 1352 (2008).”°
Unlike the cases cited by BATCo, this case involves
a suit by the United States under Section 1964(a) “to
prevent and restrain” RICO violations. See 18 U.S.C.
1964(b) (authorizing the Attorney General to bring such
proceedings). It does not require that the violation have
proximately caused injury, or even that it have caused
any injury at all. Moreover, a mail or wire fraud viola-
tion may occur whether or not the scheme to defraud
succeeded in harming any intended victim. See Bridge,
128 S. Ct. at 2137-2141; Durland v. United States, 161
U.S. 306, 315 (1896). Thus, principles of causation artic-
ulated in Section 1964(c) cases are not applicable to
” BATCo also relies (Pet. 17-18) on North South Finance Corp. v. Al-
Turki, 100 F.3d 1046 (2d Cir. 1996), but, as it acknowledges (Pet. 18),
the court in that case expressly declined to consider whether a civil!
RICO damages action may be based on foreign conduct with substantia!
effeets inthe United States. See North S. Fin. Corp., 100 F.3d at 1052.
70
eases arising under Section 1964(a). BATCo does not
argue that there is any circuit conflict on the proper
standard for the application of RICO in the context of
Section 1964(a) to conduct abroad, and in light of the
extensive evidence of BATCo’s domestic conduct, this
ease presents no occasion for addressing that issue.
Moreover, because the conduct at issue here had “a sub-
stantial, direct, and foreseeable effect within the United
States,” Pet. App. 59a, BATCo has not shown that any
other court of appeals would have decided this case dif-
ferently even under the standards applicable to Section
1964(c).
H. The Court of Appeals Correctly Concluded That Altria
Acted With Intent To Defraud
Altria contends that there was insufficient evidence
to show that its executives acted with intent to defraud.
That fact-intensive question, which was resolved against
Altria by both lower courts, see Pet. App. 55a-57a; id. at
2005a-2007a, does not warrant this Court’s review. In
any event, the evidence established that Altria’s execu-
tives were active participants in the enterprise.
For example, Altria directed and funded CTR “spe-
cial projects,” which were research projects on topics
selected by petitioners’ lawyers and designed to gener-
ate ostensibly independent results that were used to
support petitioners’ false public statements. Pet. App.
7a; see, é.g., d. at 258a (letter from Altria vice-president
transmitting check to cover Altria’s contribution to CTR
special project); id. at 356a; see generally zd. at 9a, 240a-
258a. Altria executives participated in meetings of the
TI’s board of directors and its Executive Committee,
which had final approval authority on all TI matters. /d.
at 183a-184a, 350a. Altria participated on TI’s Commit-
tee of Counsel and hosted several meetings of that com-
mittee at its corporate headquarters in New York. /d.
at 210a-21la. Altria organized and hosted petitioners’
“Operation Downunder” conference, where petitioners
devised their strategy for denying the health risks posed
by second-hand smoke. /d. at 1629a-1635a. And Altria
issued a joint statement on behalf of petitioners denying
the addictiveness of nicotine. /d. at 634a.
Altria does not address the many findings by the
district court demonstrating its active participation in
the enterprise. Instead, it contends that there was no
proof that its mailings were sent with intent to defraud.
09-979 Pet. (Altria Pet.) 3-7. As the court of appeais
explained, this objection misunderstands the governing
law. “Nothing in the mail fraud statute requires a mail-
ing to be fraudulent at all, as long as the mailing is in
furtherance of a fraudulent scheme.” Pet. App. 56a; see
Bridge, 1288. Ct. at 2138. In light of the factual find-
ings establishing Altria’s participation in the enterprise,
the district court did not clearly err in further finding
that Altria’s executives acted with specific intent to de-
fraud. Pet. App. 57a. Altria Joined the scheme to de-
fraud; its executives acted with specific intent in doing
so; and Altria’s lawyers used the mails to further that
scheme.’ No more was required to establish Altria’s
liability for mail fraud.
Altria also fails to challenge the district court’s addi-
tional conclusion that Altria violated RICO’s conspiracy
“ Although Altria stresses (Pet. 3) that the mailings were all cease
and-desist letters written by in-house counsel, there is no question that
they were in furtherance of petitioners’ scheme to defraud. Altria sent
the letters to suppress publication of data that would have revealed
petitioners’ intimate internal understanding of the physiological etfects
of nicotine. See Pet. App. 680a-68 1a.
72
provision. See Pet. App. 57a. “The district court’s find-
ings of fact regarding Altria’s actions in furtherance of
the goals of the enterprise[,] * * * as well as the volu-
minous findings of concerted action and explicit agree-
ment by [petitioners], amply support the circumstantial
inference that Altria conspired with the other [petition-
ers] to violate RICO.” Jbid; see Salinas, 522 U.S. at 66
(finding RICO conspiracy where defendant “knew about
and agreed to facilitate the scheme”). Altria’s iiability
for the RICO conspiracy provides an independent basis
for subjecting Altria to the remedial order. See zd. at
63-64 (each member of RICO conspiracy “is responsible
for the acts of each other” (citing Panrkerton v. United
States, 328 U.S. 640, 646 (1946)).
CONCLUSION
The petitions for a writ of certiorari should be de-
nied.
Respectfully submitted.
NeAL KUMAR KATYAL
Acting Solteitor General
TONY WEST
Assistant Attorney General
MARK B. STERN
ALISA B. KLEIN
MARK R. FREEMAN
GREGORY C.J. LISA
Attorneys
MAY 2010
APPENDIX
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 06-5267
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
AND TOBACCO-FREE KIDS ACTION FUND, ETAL.,
INTERVENORS
v.
PHILIP MORRIS USA, INC. F/K/A PHILIP MORRIS, INC..
ET AL., DEFENDANTS-APPELLANTS
Tues. Oct. 14, 2008
APPEARANCES:
ON BI LF OF THE APPELLANTS:
goin HAEL A. CARVIN, ESQ.
MIGUEL A. ESTRADA, ESQ.
ON BEHALF OF THE ‘Asaibibete LEES:
MAR K B. rERN, ESQ. (DOJ)
ON BEHALF OF THE INTERVENORS:
HOWARD C. CrYSTAL, ESQ.
3efore: Chief Ju’. SENTELLE and Circuit Judges
TATEL and BROWN
2a
ORAL ARGUMENT OF MIGUEL A. ESTRADA, ESQ.
ON BEHALF OF THE APPELLANT
MR. ESTRADA: Thank you, Your Honor. And may
it please the Court. My name is Miguel Estrada. I’m
counsel for Philip Morris USA, and I, and I will speak
on behalf of all defendants to the lights issue, the future
violations issue, and the remedies issue.
Let me start with the lights. The government’s posi-
tion in this case is that it is perfectly lawful for the [26]
defendants to tell a consumer that a pack of cigarettes
has per cigarette 16 milligrams of tar under the F'l'C
measure, and that another pack has 11 milligrams of tar,
but that it is criminal fraud to tell the consumer that 11
is lower than 16. To call this position incomprehensible,
as Judge Alito did in the argument last week, doesn’t
quite do it justice. It is now the case, and it has never
been the case, that the use of descriptors is fraudulent
or even false because they correctly characterize the
outcomes of the FTC-authorized tests since 1966.
Now the government's theory in the case, and which
Judge Kessler accepted, is entirely this. This would not
be fraud. This would not be false but for compensation.
Because of the fact that a consumer may puff more
deeply or smoke more cigarettes, this has now become
fraud. Now this was—
JUDGE TATEL: Well isn’t her, isn’t her reason for
that that the, that the companies knew that? When, in
other words, when they said, when they say that it’s a
low-tar cigarette, they knew, based on their own re-
search, that in fact it wasn’t because of compensatory
smoking?
3a
MR. ESTRADA: I did not hear the first part of the
question.
JUDGE TATEL: Oh, I’m sorry. Is this better? My
question was, didn’t the, didn’t the District court say
that extractly, the phrase low-tar is not inaccurate, but
that [27] based on the company’s own research about
compensatory smoking that they knew that in fact they
weren’t low-tar because of the way smokers compen-
sate?
MR. ESTRADA: See but—
JUDGE TATEL: That’s her theory, right?
MR. ESTRADA: Yes. And that’s exactly right.
JUDGE TATEL: Yes.
MR. ESTRADA: At finding, I believe, 2068, she ex-
plains that the way consumers compensate is by puffing
more deeply on the one hand or smoking more ciga-
rettes.
JUDGE TATEL: Right. And the companies
JUDGE SENTELLE: (Indiscernible.)
JUDGE TATEL: Yes, and the companies knew that
based on their own research.
MR. ESTRADA: Everybody knew it, Judge Tatel.
That’s, that’s the problem.
JUDGE TATEL: Well but the point is, the point is
in terms of whether it’s fraudulent or not—
MR. ESTRADA: Well but—
JUDGE TATEL: — if the companies knew it—
MR. ESTRADA: - -but on that, we can go to the re-
cord. I mean, on the one hand, just as a matter of law,
4a
it is unreasonable to say that a consumer could think
that, that he would get the prescribed amount solely on
the basis of, of smoking more units of the product. And
the facet is, in 1966, |28] and this is in the record, when
the FTC was conducting hearings on this issue, the com-
panies did tell the FTC that a smoker might be com-
pelled to get his nicotine fix by smoking more, and that’s
Joint Exhibit 47, 48—
JUDGE TATEL: Right.
MR. ESTRADA: —at page 131. This was known in
1966. Now on whether consumers would puff more
deeply, the issue has been sort of speak, ventilated ad
nauseam in this courthouse. The Brown & Williamson
litigation came here in 1983. You may recall that the
whole issue in the litigation was compensation. And
both the FTC, Judge Cazelle (phonetic sp.) and this
Court were fully aware that compensation was going on
and that there were two types of it. You could smoke
more or take deeper puffs. And the FTC, Judge Cazelle
and this Court all said, it is irrelevant because every-
body has known from 1966 that the point of the system
is to tell the consumer how much tar they would get
compared to another cigarette if they smoked the two
cigarettes in the same way. It was never from the get-
go any sort of a claim, by the agency mind you, that, that
this was, that any of these numbers had any bearing on
the amount of tar or nicotine that a, that a consumer
would get.
JUDGE TATEL: Is there, is there a difference in
your, is there a difference between, I, I think your point
about low tar. Your point there is that low tar reflects
the [29] actual numbers, right? Low tar identifies ciga-
rettes that in fact have low tar, correct?
5a
MR. ESTRADA: Yes.
JUDGE TATEL: But what about, what about the
phrases like, like light? And I ask that because of the
District court. The District court has this finding. She
says, there are lights of certain brands with higher tar
levels than regulars of other brands from the same com-
pany. And there are also lights and regulars of the same
brand that have the same FTC tar rating. Now so what
she’s saying there is that these, that the labels, light, are
being used inconsistently, that they don’t always reflect
low tar.
MR. ESTRADA: Well I think there—
JUDGE TATEL: Is that, by the way, you don’t chal-
lenge that fact finding, do it?
MR. ESTRADA: We haven’t challenged any fact—
JUDGE TATEL: Right.
MR. ESTRADA: —any fact finding, Judge Tatel.
JUDGE TATEL: Okay. So that, that’s a fact find-
ing—
MR. ESTRADA: (indiscernible) arguments are
purely legal.
JUDGE TATEL: Yes.
MR. ESTRADA: The key point about something like
lights is that there is, that no consumer gets the same
[30] message from hearing, lights.
JUDGE TATEL: No, but in terms of, you were say-
ing that the labels accurately describe—
MR. ESTRADA: But they do, and that’s the point—
6a
JUDGE TATEL: —the level. Let me, let me just
finish. You say the labels accurately describe the tar
level in the cigarettes, but here, you have a finding that
that’s not the case, that they are inaccurate.
MR. ESTRADA: Weil, no. Whether they are accu-
rate or inaccurate I would think is a legal conclusion.
But in fact, the finding is—
JUDGE TATEL: Well let me go back. | thought
you said they’re just, they’re, they’re just true. They
are literally true.
MR. ESTRADA: They are true.
JUDGE TATEL: That’s your argument.
MR. ESTRADA: They’re literally true. They’re
actually true.
JUDGE TATEL: But, but here, here you have a
finding. Here you have a finding that you haven’t chal-
lenged which suggests that’s not the case.
MR. ESTRADA: Well because what, what is going
on with lights as opposed to low tars, that lights are a
particular kind of low-tar cigarette. And what lights do
accurately describe is that they are, that they have low-
er tar [31] than the regular pack of the small brand, and
also have, have also the meaning that—
JUDGE TATEL: Well actually, that’s inconsistent
with this finding.
MR. ESTRADA: I don’t believe so, because I don’t
believe she was making any findings as between brands.
But in any event, it also conveys a taste message. And
of course, look, we have a large, a dispute in the District
court on the question of whether, whether the defen-
Va
dants intended a health message or a taste message.
Our positicn is that we intended a taste message. * * *
* ok * *K *
[118]
ORAL ARGUMENT OF MIGUEL A. ESTRADA, ESQ.
ON BEHALF OF THE APPELLANT
MR. ESTRADA: Thank you, Your Honor. I have
some quick points.
I don’t want to be misquoted as having said that |
agree with the fact findings of the district court. What
I said is, we’re bringing legal challenges to the court.
Obviously, we disagree with a lot of what Judge Kessler
had to say, and just because she calls something a find-
ing also does not make it a finding. As you know, the
Supreme Court said in Pullman Standard v. Swint, you
have (indiscernible) of law and fact, and if you have
made a legal error in your approach to the facts, you
know, the judgment may be set aside on that basis.
Frankly, after you get a trial in which 60 years of
your conduct out on trial, and an appeal in which even
with [119] more pages, you cannot possibly address all
of that. It is the only thing that we could do to sort of
bring the, the unfairness and the injustice of the whole,
of the whole process in front of the court, and to high-
light that this is the type of case that was tried purport-
edly under a federal criminal trial under circumstances
that never would have heen permitted if it were a crimi-
nal trial.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.