Judge Limits But Does Not Dismiss Tobacco Lawsuit Against Big Tobacco

WASHINGTON—A federal judge has narrowed the government’s lawsuit against the tobacco industry but has allowed the Justice Department to proceed with its case using a federal racketeering statute.

Judge Gladys Kessler of the US District Court for the District of Columbia ruled that the government could not pursue its $20 billion action against the tobacco companies under two laws, the Medical Care Recovery Act (MCRA) and the Federal Employees Health Benefits Act (FEHBA). She did allow government attorneys to proceed with the lawsuit using the Racketeering Influence and Corrupt Organizations Act (RICO).

Judge Kessler ruled that the Justice Department had failed to act promptly enough to recover the health expenses paid by the government for tobacco-related illnesses dating back to the 1950s.

“Congress’ total inaction for over three decades ‘precludes’ an ‘interpretation’ of MCRA that would permit the government to recover Medicare and FEHBA expenses,” she wrote in her decision. “Accordingly, the government’s MCRA claim must be dismissed.”

However, the judge upheld the government’s right to continue its action under the racketeering law. “Based on the sweeping nature of the government’s allegations and the fact that the parties have barely begun discovery to test the validity of these allegations, it would be premature for the court” to dismiss the lawsuit entirely, she said. “At a very minimum, the government has stated a claim for injunctive relief; whether the government can prove it remains to be seen.”

The Justice Department filed its lawsuit in September 1999, contending that the industry had long misled the public about the health risks of smoking. It argues that the court should force cigarette makers to surrender their profits, which it contends were gained through an “unlawful activity.”

The department also wants the court to order the industry to change its marketing and advertising practices. The suit names nine tobacco companies and two industry groups.

Several health groups expressed disappointment at Judge Kessler’s decision to bar use of the two federal health acts in the lawsuit, but applauded her decision not to dismiss the case entirely, as the industry had requested.

“The ruling is a repudiation of repeated assertions by the tobacco industry and its defenders in Congress that the lawsuit is entirely without merit,” said William V. Corr, executive vice president of the Campaign for Tobacco-Free Kids.

Mr. Corr and other antismoking advocates also called on Congress to fully fund the lawsuit, which the Justice Department has estimated will cost the government $40 million over the next 2 years.

The Republican leadership and members from tobacco-growing states have sought to deny the money necessary to pursue the case. “Any move by Congress to stop the lawsuit now would be seen as a blatant attempt to protect Big Tobacco from serious federal claims,” the American Cancer Society said.