tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cheap cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

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Court Can’t Quit DOJ’s Tobacco Case

In 92 pages last week, the U.S. Court of Appeals for the D.C. Circuit dug into one of the largest civil racketeering cases the Justice Department has ever brought, the mail and wire fraud suit against major cigarette manufacturers. The judgment on that judgment has been mixed.

The appeals court’s May 22 opinion in U.S. v. Philip Morris USA, largely upheld a landmark ruling against a group of tobacco companies for a decades-long conspiracy to dupe consumers about the health effects of smoking. The government prevailed on the liability issue under the Racketeer Influenced and Corrupt Organizations Act, and Deputy Attorney General David Ogden dubbed it “a victory for the American people.”

But defense lawyers and legal scholars following the case point out that the tobacco industry did not walk away with a wholesale loss. The cigarette makers “lost liability, but they lost the liability question years ago,” said University of Notre Dame Law School professor G. Robert Blakey, who drafted the RICO law in the 1970s. “What they’ve won in this case is the narrowest possible remedy.”

Washington lawyers Michael Carvin of Jones Day and Miguel Estrada of Gibson, Dunn & Crutcher, who argued for the tobacco companies in the D.C. Circuit, declined to comment.

Going forward, there are two main areas for a defense attack: corporate liability and available remedies.

The D.C. Circuit opinion — issued per curiam by Chief Judge David Sentelle and judges David Tatel and Janice Rogers Brown — rejected for a second time the government’s bid for disgorgement as a remedy to prevent future RICO violations. The court had ruled during an interlocutory appeal in 2005 that corporate profits cannot be seized for past misconduct in civil RICO cases. Several lawyers said there is disagreement among the circuits over whether disgorgement is even available in civil RICO. “Even those courts that would allow some version of disgorgement … recognize that the statute is limited to preventing future violations and does not extend to future effects flowing from past violations,” the D.C. Circuit said last week.

The U.S. Supreme Court has not weighed in on the disgorgement issue, said Blakey, who signed onto an amicus brief in the case for the Tobacco-Free Kids Action Fund. The Court declined to review that part of the case earlier in the litigation. The government was seeking more than $250 billion from the tobacco industry.

LIABLE IN FACT

Lawyers following the case predict the tobacco companies will also seek review in the high court on the liability finding, which is rooted in the government’s theory that the defendants made up an “association-in-fact” enterprise with individuals and trade associations. Lawyers for the tobacco companies argued in briefs that association-in-fact enterprises involve individuals, not corporations. The D.C. Circuit, citing its own precedent, ruled that corporations can also be part of an association in fact.

The risk, say defense lawyers, is that a company will face RICO liability as part of an association-in-fact based on the actions of just a few employees. “It creates a huge opportunity for plaintiffs to haul multiple defendants into court, scare them with treble damages and induce them to settle cases that otherwise lack merit,” said Steven Cottreau, a Washington partner at Clifford Chance who has defended clients in civil RICO cases.

More good news from a defense vantage: The appellate judges directed the trial court to re-examine whether subsidiaries should be lumped in with parent companies under the same remedial restraining order. “The court is signaling that, just because you have a parent who’s been convicted of a RICO violation doesn’t necessarily mean an entire corporate organization will have to change its way of doing business,” said Richard Brusca, a Washington partner at New York-based Skadden, Arps, Slate, Meagher & Flom who handles complex civil litigation.

Defense opportunities to mitigate the damage aside, Brusca acknowledged the ruling is likely a confidence-builder for prosecutors and plaintiffs. “It certainly isn’t going to chill the Justice Department’s willingness to use RICO,” he said.

© Copyright: Law

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