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United States v. Philip Morris USA Inc.

United States Court of Appeals for the District of Columbia Circuit · Civil Procedure

Civil ProcedureRICO remediescompelled commercial speechFirst AmendmentRICO18 U.S.C. § 1964(a)corrective statementsforward-looking remedies

Facts

The district court had found that cigarette manufacturers violated RICO by conspiring for decades to misinform the public about smoking and ordered them to disseminate corrective statements on several topics. Earlier appellate decisions allowed corrective statements that reveal the previously hidden truth about defendants' products, but rejected preambles that disclosed defendants' prior deceptive conduct. On remand, the district court approved preambles stating: "A Federal Court has ordered [Defendants] to make this statement about [the topic of the statement]. Here is the truth: ...." Defendants challenged that language, as well as topic descriptions in Statements C and D, as backward-looking and unconstitutional compelled speech.

Issue

Whether the district court's revised preambles to the corrective statements were permissible under civil RICO's limitation to forward-looking remedies and under the First Amendment. Also, whether the topic descriptions for Statements C and D improperly conveyed past wrongdoing.

Rule

Under 18 U.S.C. § 1964(a), civil RICO remedies must be forward-looking and designed to prevent and restrain future violations, not punish or expose prior wrongdoing. Corrective statements are permissible when they require defendants to reveal the previously hidden truth about their products, but language that most naturally suggests prior misconduct is impermissible. For First Amendment purposes in this case, Zauderer applies: compelled disclosures are valid if they are purely factual and uncontroversial, reasonably related to preventing consumer deception, and not unjustified, unduly burdensome, or carrying impermissible innuendo of past misconduct or moral responsibility.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A federal court in Chicago finds that Lakefront Nutraceuticals engaged in a civil RICO scheme by misleading consumers about the health effects of its herbal inhalers. As a remedy, the court orders the company to post on its website: "A Federal Court has ordered Lakefront Nutraceuticals to make this statement about the health risks of VaporEase inhalers," followed by several factual bullet points about those risks.

If the company challenges only the quoted preamble under the governing doctrine, how should a court most likely rule?

Explanation. The majority held that civil RICO permits forward-looking remedies aimed at preventing and restraining future violations. A preamble stating only that a federal court ordered the defendant to make a statement about a topic is permissible because, once stripped of language like "Here is the truth," it merely attributes the statement to a court and introduces the subject matter. The defect arises when wording most naturally suggests prior deception or punishment for past wrongdoing. (Derived from United States v. Philip Morris USA Inc. (n.d.).)