United States v. Philip Morris USA Inc.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 23, 2015 Decided May 22, 2015
No. 13-5028
UNITED STATES OF AMERICA, UNITED STATES DEPARTMENT OF
JUSTICE, ET AL.,
APPELLEES
v.
PHILIP MORRIS USA INC., FORMERLY KNOWN AS PHILIP
MORRIS INCORPORATED, ET AL.,
APPELLANTS
AMERICAN TOBACCO COMPANY, DIRECTLY AND AS
SUCCESSOR TO THE TOBACCO INTEREST OF AMERICAN BRANDS,
INC., ET AL.,
APPELLEES
ALTRIA GROUP, INC., FORMERLY PHILIP MORRIS COMPANIES
INC.,
APPELLANT
SMITHKLINE BEECHAM CORP., DOING BUSINESS AS
GLAXOSMITHKLINE, ET AL.,
APPELLEES
Consolidated with 14-5161
2
Appeals from the United States District Court
for the District of Columbia
(No. 1:99-cv-02496)
Miguel A. Estrada argued the cause for appellants.
With him on the briefs were Amir C. Tayrani, Noel Francisco,
Robert F. McDermott, Peter J. Biersteker, Thomas J.
Frederick, Michael B. Minton, and Bruce D. Ryder.
Richard A. Samp and Cory L. Andrews were on the brief
for Washington Legal Foundation in support of appellants.
Melissa N. Patterson Attorney, U.S. Department of
Justice, argued the cause for appellees United States of
America, et al. With her on the briefs were Ronald C.
Machen, Jr., U.S. Attorney, and Mark B. Stern and Alisa B.
Klein, Attorneys.
Howard M. Crystal argued the cause for appellees
Tobacco-Free Kids Action Fund, et al. With him on the brief
was Katherine A. Meyer.
Thomas Bennigson, appointed by the court, was on the
brief for amicus curiae Tobacco Control Legal Consortium in
support of appellee.
Before: TATEL, Circuit Judge, and EDWARDS and
RANDOLPH, Senior Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
3
TATEL, Circuit Judge: In this appeal, the fifth in this
long-running RICO case against the nation’s cigarette
manufacturers, defendants challenge a district court order
requiring that they add two statements to their cigarette
packages and advertisements: an announcement that a federal
court has ruled that they “deliberately deceived the American
public” about the dangers of cigarettes; and a declaration that
they “intentionally designed cigarettes” to maximize addiction.
Reading the extensive briefs the parties and their amici have
submitted, one might think this case presents thorny,
unresolved questions under both RICO and the First
Amendment. As we explain below, however, the heavy lifting
has already been done. Given our earlier decisions in this case,
the manufacturers’ objection to disclosing that they
intentionally designed cigarettes to ensure addiction is both
waived and foreclosed by the law of the case. Those decisions
make equally clear that the district court, in ordering
defendants to announce that they deliberately deceived the
public, exceeded its authority under RICO to craft remedies
that “prevent and restrain” future violations. 18 U.S.C.
§ 1964(a).
I.
Fifteen years ago, the United States filed this suit in the
U.S. District Court for the District of Columbia alleging that
Philip Morris and eight other cigarette manufacturers violated
the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. §§ 1961–1968, by engaging in a then
still-ongoing conspiracy to deceive the American public about
the health consequences and addictiveness of smoking
cigarettes. Pretrial proceedings lasted for years, and when the
bench trial finally began in 2004, it spanned nine months,
involved hundreds of witnesses, and saw nearly 14,000
exhibits entered into evidence.
4
Two years later, supported by more than 4,000 findings of
fact detailing the cigarette manufacturers’ “pervasive scheme
to defraud consumers and potential consumers of cigarettes,”
carried out “over the course of more than 50 years,” the district
court entered final judgment against the defendants. United
States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1, 851–54
(D.D.C. 2006); see also id. at 936. Finding that they joined
together to “maximize their profits” through “false and
fraudulent statements, representations, and promises” about
“the devastating health effects of smoking,” id. at 852, the
court concluded that the manufacturers operated an illegal
racketeering enterprise in violation of RICO section 1962(c),
and that they conspired to do so in violation of RICO section
1962(d), id. at 851, 903. Given the defendants’ then-ongoing
business practices, the district court also determined that many
of them, including appellants Philip Morris, R.J. Reynolds,
Brown & Williamson, Altria, and Lorillard, were, unless
enjoined, likely to commit future RICO violations, id. at 909, a
prerequisite to ordering relief under RICO, see SEC v. Savoy
Industries, Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978). In
2009, we affirmed the district court’s finding of RICO liability
with respect to each cigarette manufacturer, United States v.
Philip Morris USA Inc., 566 F.3d 1095, 1150 (D.C. Cir. 2009)
(2009 Opinion), along with its conclusion that many of the
manufacturers, unless enjoined, would likely commit similar
RICO violations in the future, id. at 1134.
This overview tells only half the story. Because the
government initially sought not only injunctive relief under 18
U.S.C. § 1964(a), but also disgorgement of $280 billion in
proceeds from the manufacturers’ fraudulent sale of cigarettes,
the issue of available remedies under RICO’s civil-remedy
provision has from the very beginning loomed just as large as
the liability question itself. The district court determined that
5
were it to find that the manufacturers had violated RICO, it had
authority under the statute to order disgorgement. On pretrial
interlocutory appeal, we reversed. Using language central to
the issues before us here, we held that “because disgorgement
is aimed at past violations,” it does not “prevent or restrain”
future RICO violations as required by section 1964. United
States v. Philip Morris USA, Inc., 396 F.3d 1190, 1192 (D.C.
Cir. 2005) (emphasis added) (Disgorgement Opinion).
After our disgorgement decision, the government
reformulated its remedial request, and the district court
permitted a handful of public health organizations to intervene
to assert their interests in the proposed remedies. Those same
organizations—the American Cancer Society, the American
Heart Association, the American Lung Association, Americans
for Nonsmokers’ Rights, the National African American
Tobacco Prevention Network, and the Tobacco-Free Kids
Action Fund—are parties to this appeal.
Following a two-week trial on remedies, the district court
enjoined the manufacturers from making any false or
misleading public representation about cigarettes, and, most
relevant here, ordered them to make corrective disclosures
about five topics on which the court found they had made
fraudulent public claims: (1) the adverse health effects of
smoking; (2) the addictiveness of smoking and nicotine; (3) the
lack of any significant health benefit from smoking “low tar”
or “light” cigarettes as opposed to regular cigarettes; (4) the
manufacturers’ manipulation of cigarette design to ensure
optimum nicotine delivery; and (5) the dangers of exposure to
secondhand smoke. Philip Morris USA, Inc., 449 F. Supp. 2d
at 938–39. The district court also directed the manufacturers to
disseminate the statements via their websites, retail
point-of-sale displays, newspaper and television ads, and
cigarette-package “onserts,” i.e., “communication[s] affixed
6
to” cigarette packs. Id. at 939–41, 948. The district court
rejected other remedies the government and public-health
intervenors had requested, including counter-marketing and
national smoking-cessation programs. Id. at 933, 936–37. Both
sides appealed.
In our 2009 opinion, we largely affirmed the district
court’s remedial order. Recognizing that “breadth is warranted
to prevent further violations where, as here, a proclivity for
unlawful conduct has been shown,” we upheld the broad
injunction prohibiting defendants from making any false or
misleading public statement about cigarettes. 2009 Opinion,
566 F.3d at 1137 (citation, internal quotation marks, and
alteration omitted). We also rejected the manufacturers’ RICO
and First Amendment challenges to the corrective-disclosure
remedy, vacating only the requirement that the statements be
published on retail displays. Id. at 1141–44. Although the
statements’ precise content had yet to be determined, we
concluded that ordering the manufacturers to issue corrective
statements on the proposed topics complied with RICO since
“[r]equiring Defendants to reveal the previously hidden truth
about their products [would] prevent and restrain” future RICO
violations. Id. at 1140. We further explained that, in light of
their subject matter, the corrective statements would qualify as
commercial speech and satisfy the First Amendment if
designed to prevent defendants from misleading consumers
through fraudulent marketing in the future. Id. at 1144–45.
Finally, we agreed with the manufacturers that the
counter-marketing campaign and smoking-cessation program
exceeded the district court’s RICO authority. These programs,
we explained, sought not to prevent and restrain future RICO
violations—section 1964’s sole permissible objective—but
rather to “remedy the continuing effects of past illegal
conduct” and generally reduce the manufacturers’ “incentive
to market their products.” Id. at 1147–48 (emphasis added).
7
On remand, the district court set about drafting the
required corrective disclosures. After additional briefing and
oral argument, and over defendants’ objections on RICO and
First Amendment grounds, the court ordered the manufacturers
to disseminate the following statements, which we reproduce
in full for the reader’s benefit (at issue in this case are the five
preambles announcing that a federal court has ruled that
defendants “deliberately deceived the American public,” as
well as the underlined bulleted statements):
A. Adverse Health Effects of Smoking
A Federal Court has ruled that Altria, R.J.
Reynolds Tobacco, Lorillard, and Philip Morris
USA deliberately deceived the American public
about the health effects of smoking, and has
ordered those companies to make this
statement. Here is the truth:
 Smoking kills, on average, 1200 Americans.
Every day.
 More people die every year from smoking than
from murder, AIDS, suicide, drugs, car crashes,
and alcohol, combined.
 Smoking causes heart disease, emphysema,
acute myeloid leukemia, and cancer of the
mouth, esophagus, larynx, lung, stomach,
kidney, bladder, and pancreas.
 Smoking also causes reduced fertility, low birth
weight in newborns, and cancer of the cervix.
B. Addictiveness of Smoking and Nicotine
A Federal Court has ruled that Altria, R.J.
Reynolds Tobacco, Lorillard, and Philip Morris
8
USA deliberately deceived the American public
about the addictiveness of smoking and
nicotine, and has ordered those companies to
make this statement. Here is the truth:
 Smoking is highly addictive. Nicotine is the
addictive drug in tobacco.
 Cigarette companies intentionally designed
cigarettes with enough nicotine to create and
sustain addiction.
 It’s not easy to quit.
 When you smoke, the nicotine actually changes
the brain – that’s why quitting is so hard.
C. Lack of Significant Health Benefit From
Smoking “Low Tar,” “Light,” “Ultra
Light,” “Mild,” and “Natural” Cigarettes
A Federal Court has ruled that Altria, R.J.
Reynolds Tobacco, Lorillard, and Philip Morris
USA deliberately deceived the American public
by falsely selling and advertising low tar and
light cigarettes as less harmful than regular
cigarettes, and has ordered those companies to
make this statement. Here is the truth:
 Many smokers switch to low tar and light
cigarettes rather than quitting because they
think low tar and light cigarettes are less
harmful. They are not.
 “Low tar” and filtered cigarette smokers inhale
essentially the same amount of tar and nicotine
as they would from regular cigarettes.
 All cigarettes cause cancer, lung disease, heart
attacks, and premature death – lights, low tar,
9
ultra lights, and naturals. There is no safe
cigarette.
D. Manipulation of Cigarette Design and
Composition to Ensure Optimum Nicotine
Delivery
A Federal Court has ruled that Altria, R.J.
Reynolds Tobacco, Lorillard, and Philip Morris
USA deliberately deceived the American public
about designing cigarettes to enhance the
delivery of nicotine, and has ordered those
companies to make this statement. Here is the
truth:
 Defendant tobacco companies intentionally
designed cigarettes to make them more
addictive.
 Cigarette companies control the impact and
delivery of nicotine in many ways, including
designing filters and selecting cigarette paper to
maximize the ingestion of nicotine, adding
ammonia to make the cigarette taste less harsh,
and controlling the physical and chemical
make-up of the tobacco blend.
 When you smoke, the nicotine actually changes
the brain – that’s why quitting is so hard.
E. Adverse Health Effects of Exposure to
Secondhand Smoke
A Federal Court has ruled that Altria, R.J.
Reynolds Tobacco, Lorillard, and Philip Morris
USA deliberately deceived the American public
about the health effects of secondhand smoke,
10
and has ordered those companies to make this
statement. Here is the truth:
 Secondhand smoke kills over 38,000
Americans each year.
 Secondhand smoke causes lung cancer and
coronary heart disease in adults who do not
smoke.
 Children exposed to secondhand smoke are at
an increased risk for sudden infant death
syndrome (SIDS), acute respiratory infections,
ear problems, severe asthma, and reduced lung
function.
 There is no safe level of exposure to
secondhand smoke.
United States v. Philip Morris USA, Inc., 907 F. Supp. 2d 1,
8–9 (D.D.C. 2012); see also United States v. Philip Morris
USA Inc., No. 99-CV-2496, 2014 WL 2506611, at *1 (D.D.C.
June 2, 2014) (slightly modifying corrective statements).
Four of the original defendants—Philip Morris USA, Inc.,
Altria Group, Inc., R.J. Reynolds Tobacco Company
(individually and as successor to Brown & Williamson
Tobacco Corporation), and Lorillard Tobacco
Company—appeal, contending that the corrective statements
exceed the district court’s remedial authority under RICO and
violate the First Amendment. Reviewing the district court’s
conclusions of law de novo, we begin, as usual, with the
statutory challenge. See Blum v. Bacon, 457 U.S. 132, 137
(1982) (“Where a party raises both statutory and constitutional
arguments . . . ordinarily [federal courts] first address the
statutory argument in order to avoid unnecessary resolution of
the constitutional issue.”). And with respect to the principal
11
issues before us, due to claims waived and questions already
settled, we end there too.
II.
Federal courts “possess only that power authorized by
Constitution and statute, which is not to be expanded by
judicial decree.” Kokkonen v. Guardian Life Insurance Co. of
America, 511 U.S. 375, 377 (1994) (citations omitted).
In this case, the government sued defendants under
RICO’s civil-remedy provision, 18 U.S.C. § 1964(a), which
grants district courts jurisdiction “to prevent and restrain
violations [of the Act] by issuing appropriate orders.” We have
carefully defined the power authorized by section 1964. In our
disgorgement opinion, we held that Congress limited
relief under section 1964(a) to “forward-looking remedies that
prevent and restrain [future] violations of the Act.” 396 F.3d at
1192. Accordingly, we rejected remedies like disgorgement
that seek to punish prior wrongdoing or correct the effects of
past conduct. Id. Recognizing that although RICO must be
“liberally construed to effectuate its remedial purposes,” id. at
1201 (quoting Organized Crime Control Act of 1970, Pub. L.
No. 91-452, § 904(a), 84 Stat. 947 (1970)), we stressed that
section 1964 is no “plenary grant of equitable jurisdiction” that
broadly sanctions general deterrence remedies, id. at
1198–200. Indeed, echoing the Second Circuit, we explained
that if general deterrence were a permissible objective, “the
phrase ‘prevent and restrain’ would read ‘prevent, restrain, and
discourage,’ and would allow any remedy that inflicts pain.”
Id. at 1200 (quoting United States v. Carson, 52 F.3d 1173,
1182 (2d Cir. 1995)). Reiterating as much in our 2009 opinion,
we rejected “general deterrence remedies aimed [] wide of the
statutorily-ordained mark” and emphasized that “a remedy
‘may not be justified simply on the ground that whatever hurts
12
a civil RICO violator necessarily serves to ‘prevent and
restrain’ future RICO violations.” 566 F.3d at 1148 (quoting
Carson, 52 F.3d at 1182)). Section 1964, in short, empowers
district courts to issue remedies for one purpose—to “prevent
and restrain” future RICO violations—and our decisions read
this mandate narrowly, permitting only remedies that, through
reasonably direct means, keep RICO violators from again
violating the Act.
Although we endorsed the district court’s
corrective-disclosure remedy and the statements’ proposed
topics, we did so on exceedingly narrow grounds. Specifically,
we declined to adopt the government’s argument that the
statements were necessary to correct and prevent ongoing
consumer misconception about cigarettes. Instead, we held
simply that the corrective-statement remedy was permissible
under section 1964 because defendants, if compelled to tell the
truth about cigarettes, would, at the same time, be “impaired in
making false and misleading assurances.” Id. at 1140. In other
words, “[r]equiring Defendants to reveal the previously hidden
truth about their products will prevent and restrain them from
disseminating false and misleading statements, thereby
violating RICO, in the future.” Id.
In addition to these carefully defined parameters for RICO
remedies, two basic principles of judicial review guide our
resolution of this case. The first, law of the case, reflects the
understanding that “[i]nconsistency is the antithesis of the rule
of law.” LaShawn A. v. Barry, 87 F.3d 1389, 1393 (D.C. Cir.
1996). Developed to “maintain consistency and avoid
reconsideration of matters once [settled],” 18B C. Wright & A.
Miller, Federal Practice and Procedure § 4478 (2d ed.), the
doctrine recognizes that “court[s] involved in later phases of a
lawsuit should not re-open questions decided,” Crocker v.
Piedmont Aviation, Inc., 49 F.3d 735, 739 (D.C. Cir. 1995). Of
13
particular relevance here, “[w]hen there are multiple appeals
taken in the course of a single piece of litigation,
law-of-the-case doctrine holds that decisions rendered on the
first appeal should not be revisited on later trips to the appellate
court.” Id. This is especially so where, as here, each of those
appeals was heard by a different panel. Because this panel has
no authority to overrule another, “an even stronger than usual
version of the law-of-the-case doctrine,” law of the circuit,
governs. LaShawn A., 87 F.3d at 1395. “[W]hen both doctrines
are at work, the law-of-the-circuit doctrine should increase a
panel’s reluctance to reconsider a decision made in an earlier
appeal in the same case.” Id.
The second, related principle—waiver—is sometimes
understood as an application of law-of-the-case doctrine to
“prior rulings of the trial court that could have been but were
not challenged on an earlier appeal.” Id. Critical to “the orderly
conduct of litigation,” this rule means that “a party waives a
contention that could have been but was not raised on a prior
appeal.” Laffey v. Northwest Airlines, Inc., 740 F.2d 1071,
1089 (D.C. Cir. 1984) (alterations, internal quotation marks,
and citations omitted). Thus, “a legal decision made at one
stage of litigation, unchallenged in a subsequent appeal when
the opportunity to do so existed, governs future stages of the
same litigation, and the parties are deemed to have waived the
right to challenge that decision at a later time.” United States v.
Thomas, 572 F.3d 945, 949 (D.C. Cir. 2009) (alterations,
internal quotation marks, and citations omitted).
With these remedial and procedural principles in mind, we
turn to the manufacturers’ claim that the district court exceeded
the bounds of its remedial power under RICO when it ordered
them to disseminate the five corrective disclosures listed
above. The manufacturers principally challenge (1) the
bulleted statements in disclosures B and D, which reveal that
14
they “intentionally designed cigarettes” to ensure addiction
and (2) the preambles announcing that a federal court has ruled
that they “deliberately deceived the American public” about
the dangers of cigarettes. Characterizing both as impermissibly
backward looking and conduct focused, the manufacturers
maintain that these disclosures “force Defendants to vilify and
shame themselves for past wrongdoing,” rather than “reveal
the previously hidden truth” about cigarettes as required by our
prior decisions. Defs. Br. 53–55; see also 2009 Opinion, 566
F.3d at 1140 (concluding that “[r]equiring Defendants to reveal
the previously hidden truth about their products will prevent
and restrain” future RICO violations).
A.
We begin with the bulleted statements. Recall that the
district court’s 2006 remedial order warned defendants that
they would be required to make just such corrective statements
about their “manipulation of cigarette design and composition
to ensure optimum nicotine delivery,” 449 F. Supp. 2d at
939—statements, in other words, revealing that they “do
manipulate [the] design of cigarettes in order to enhance the
delivery of nicotine,” id. at 928. The manufacturers did not
object to this requirement when they appealed the remedial
order in 2008, so they are “deemed to have waived the right to
challenge [it].” Thomas, 572 F.3d at 949. True, they argued
that the corrective statements as a whole focused improperly
on righting past wrongs—an argument we rejected, 2009
Opinion, 566 F.3d at 1139–40—but they raised no specific
objection to the requirement that they disclose their
“manipulation of [the] physical and chemical design of
cigarettes,” 449 F. Supp. 2d at 928. Moreover, they challenged
none of the district court’s findings of fact supporting that
requirement. For example, they never challenged the district
court’s finding that “Defendants have designed their cigarettes
15
to precisely control nicotine delivery levels and provide doses
of nicotine sufficient to create and sustain addiction.” Id. at 309
(finding 1366). Nor did they object to the district court’s
determination that “[e]very aspect of a cigarette is precisely
tailored to ensure that a cigarette smoker can pick up virtually
any cigarette on the market and obtain an addictive dose of
nicotine.” Id. (finding 1368); see also id. at 320, 374 (findings
1427 and 1703 discussing manufacturer strategies to
“maximize” nicotine content and migration to outer periphery
of the cigarette).
In our 2009 opinion, moreover, we recognized that the
district court had ordered corrective disclosures on five topics,
including “the manufacturers’ manipulation of cigarette design
and composition to ensure optimum nicotine delivery.” 566
F.3d at 1138. And we approved those topics across the board,
concluding that such disclosures would “prevent and restrain
[defendants] from disseminating false and misleading
statements, thereby violating RICO, in the future.” Id. at 1140.
Having thus decided the issue in the earlier appeal, we will not
revisit it here. See Crocker, 49 F.3d at 739.
Of course, as the manufacturers point out, when we
reviewed the remedial order in 2009, the district court had yet
to determine the precise wording of the corrective statements.
Given this, the manufacturers’ challenge to these statements
would be barred by neither law-of-the-case nor waiver doctrine
if the statements the district court drafted went beyond the
defendants’ manipulation of cigarette design. But the
manufacturers have identified no way in which they do, and
none is apparent to us. Statement B asserts that “[c]igarette
companies intentionally designed cigarettes with enough
nicotine to create and sustain addiction.” Likewise, Statement
D says that “[d]efendant tobacco companies intentionally
designed cigarettes to make them more addictive.” Both
16
statements fit squarely within the bounds of the district court’s
order directing defendants to reveal that they “manipulat[e] []
cigarette design and composition to ensure optimum nicotine
delivery.” This is also true of Statement D’s description of just
how cigarette companies design cigarettes to “ensure optimum
nicotine delivery.” That statement simply explains that
“[c]igarette companies control the impact and delivery of
nicotine in many ways, including designing filters and
selecting cigarette paper to maximize the ingestion of nicotine,
adding ammonia to make the cigarette taste less harsh, and
controlling the physical and chemical make-up of the tobacco
blend.”
The manufacturers have likewise waived their First
Amendment challenge. Statements B and D fall within the
scope of the district court’s remedial order requiring
defendants to disclose their manipulation of cigarette design,
and the manufacturers failed to challenge that requirement on
any ground—statutory or constitutional—in their appeal
leading to our 2009 opinion. See Crocker, 49 F.3d at 739
(explaining that “prior rulings of the trial court that could have
been but were not challenged on an earlier appeal” fall within
“subsidiary waiver principle” of law-of-the-case doctrine). At
oral argument, counsel for defendants insisted that “the normal
legal consequences” of “law of the case and estoppel and
forfeiture” do not apply to the constitutional standard for
compelled commercial speech. Oral Arg. Recording at
20:20–24:21. But counsel offered no authority for this novel
claim, nor are we aware of any. Indeed, “[n]o procedural
principle is more familiar . . . than that a constitutional right
may be forfeited in criminal as well as civil cases by the failure
to make timely assertion of the right before a tribunal having
jurisdiction to determine it.” Yakus v. United States, 321 U.S.
414, 444 (1944).
17
We are left with a few loose ends.
First, the manufacturers maintain that because the Family
Smoking Prevention and Tobacco Control Act, passed shortly
after our 2009 opinion, now prohibits them from using
descriptors such as “light” and “low-tar,” Statement C “cannot
possibly ‘prevent and restrain’ future RICO violations.” Defs.
Br. 55–56. In other words, because the statute now prohibits
the manufacturers from using such descriptors, they contend
that Statement C is unnecessary and will do nothing to prevent
RICO violations. The manufacturers, however, previously
pressed a broader version of this argument, and we rejected it.
In 2012, in yet another appeal in this case, they argued that the
new Act’s stringent marketing restrictions “eliminated any
reasonable likelihood they would commit future RICO
violations,” thus depriving the district court of any remedial
authority and rendering moot its 2006 injunctive orders. United
States v. Philip Morris USA Inc., 686 F.3d 832, 835 (D.C. Cir.
2012) (internal quotation marks omitted). We disagreed given
“defendants’ history of non-compliance with various legal
requirements” and the fact that the new law “does not provide
for penalties as sweeping as those available under RICO.” Id.
at 836–37. Concluding that the manufacturers were “not likely
to comply with” the new law, we held that the district court
retained its remedial authority even with respect to those
“portions of the injunctions that overlapped with certain
restrictions in the Act.” Id. at 837 & n.1. The new law’s
prohibition on misleading descriptors like “light” and
“low-tar” does not, then, deprive the district court of authority
to order remedies under RICO on the same subject. And for
good reason: consumers know that cigarettes once dubbed
“light” and “low-tar” remain on the market. The manufacturers
made sure of this. For example, Altria Group placed notes on
the last packages of Marlboro Lights informing purchasers that
“Your Marlboro Lights package is changing, but your cigarette
18
stays the same”—just “ask for Marlboro in the gold pack.” See
Intervenors’ Supplemental Br. on Corrective Statements
(Docket No. 5986) (filed Sept. 24, 2012) (citing Duff Wilson,
FDA Seeks Explanation of Marlboro Marketing, N.Y. TIMES,
June 18, 2010, at B6). Statement C therefore prevents and
restrains defendants from making false health assurances about
these cigarettes, whatever their new look.
Next, the manufacturers argue that some of the bulleted
statements run afoul of the First Amendment. According to the
manufacturers, the statements find no support in the district
court’s findings of fact and thus are not “purely factual.” See
American Meat Institute v. U.S. Department of Agriculture,
760 F.3d 18, 27 (D.C. Cir. 2014) (en banc) (explaining that
compelled commercial disclosures must constitute “purely
factual and uncontroversial information”). One such
disclosure, the second bullet point in Statement C, reads:
“‘Low tar’ and filtered cigarette smokers inhale essentially the
same amount of tar and nicotine as they would from regular
cigarettes.” According to the manufacturers, this claim
erroneously suggests that “regular” cigarettes are unfiltered.
We take their point, but believe that the word “filtered” is
probably a typo. Indeed, both the preamble to statement C and
the first bullet point contrast regular cigarettes with their
low-tar and light counterparts, not with filtered cigarettes, and
counsel for the manufacturers conceded at oral argument that
changing “filtered” to “light” would fix the problem. Although
“loathe to attribute this to a simple typo,” Oral Arg. Recording
at 53:46–50, government counsel offered no plausible
alternative reading. We therefore direct the district court to
correct the statement on remand.
The manufacturers also contend that Statement C’s claim
about compensation—a phenomenon by which many smokers
who switch to lower-yield cigarettes unconsciously “inhale
19
essentially the same amount of tar and nicotine as they would
from regular cigarettes”—lacks support in the district courts’
findings of fact. The statement, they say, suggests that all
smokers compensate yet the district court found merely that the
phenomenon is “substantial.” Defs. Br. 43. In fact, however,
the district court found that “[v]irtually all smokers, over 95%,
compensate for nicotine,” 449 F. Supp. 2d at 438 (finding
2072), and that the compensation evidence “as a whole” shows
that “compensation for daily nicotine is substantial if not
complete,” id. at 444 (finding 2103) (emphasis added). The
statement thus finds ample support in the district court’s
findings of fact.
Finally, the manufacturers complain that the second bullet
point in Statement D, which explains that “[c]igarette
companies control the impact and delivery of nicotine in many
ways, including . . . adding ammonia,” is inaccurate since one
manufacturer, Lorillard Tobacco Company, adds no ammonia
at all. But the manufacturers had an opportunity to challenge
this claim in the district court and failed to do so. “It is well
settled that issues and legal theories not asserted at the District
Court level ordinarily will not be heard on appeal.” District of
Columbia v. Air Florida, Inc., 750 F.2d 1077, 1084 (D.C. Cir.
1984). Besides, the district court found that “[b]y 1993, all the
cigarette company Defendants used some form of ammonia
technology in some of their cigarette products,” 449 F. Supp. at
356 (finding 1611) (emphasis added), and even if Lorillard
does not do so now, it could resume the practice in the future.
Indeed, the district court found that “[a]mmonia compounds
are among the most frequently used additives, measured by
volume, in the industry.” Id. (finding 1610). Accordingly, as
with Statement C, we are satisfied that the district court’s
findings of fact support this disclosure.
20
B.
This, then, brings us to the preambles. Each preamble
announces that “[a] Federal Court has ruled that [the
manufacturers] deliberately deceived the American public”
about the dangers of cigarettes and has “ordered [them] to
make this statement.” Unlike the corrective-disclosure topics,
the preambles were nowhere presaged in the district court’s
2006 remedial order. Nor obviously were they before us in
2009. Accordingly, neither waiver nor law-of-the-case
doctrine bars the manufacturers’ challenge. We must therefore
address their argument that the district court, in ordering the
manufacturers to disseminate what they call
“backward-looking” language that condemns their “past
wrongdoing,” exceeded its limited remedial authority under
RICO. Defs. Br. 53–55.
As mentioned above, we explained in our 2009 opinion
that the corrective-disclosure remedy complied with RICO
because the manufacturers would be “impaired in making false
and misleading assurances” about cigarettes if simultaneously
required to tell the truth. See supra at 12. In other words, we
held, disseminating corrective statements on the proposed
topics would prevent and restrain future RICO violations by
“[r]equiring Defendants to reveal the previously hidden truth
about their products.” 2009 Opinion, 566 F.3d at 1140
(emphasis added). But unlike the bulleted statements, which do
just that, the preambles reveal nothing about cigarettes;
instead, they disclose defendants’ prior deceptive conduct.
Accordingly, they cannot be justified on the basis of our 2009
opinion. See id. (holding that corrective statements, in
revealing the truth about cigarettes, will prevent and restrain
defendants from again violating RICO).
21
The government nonetheless insists that the district court
did have authority under RICO to order defendants to publish
the preambles. Quoting the district court, the Government
maintains that the preamble is essential to “protect consumers
from deception,” as it “alert[s] [] consumer[s] to the fact that
they have been misinformed, and then provide[s] the accurate
information.” Govt. Br. 42 (quoting Philip Morris, 907 F.
Supp. 2d at 19); see also Amicus Br. of Tobacco Control Legal
Consortium 27–31 (arguing that preambles are necessary to
correct and prevent consumer deception). In support, the
government submitted to the district court a 500-page expert
report demonstrating that introductory language along the lines
of the preambles would play an important role in inoculating
consumers against future misinformation. See Executive
Summary, Expert Report of Kelly Blake, Feb. 3, 2011 (Docket
No. 5875) (filed Feb. 23, 2011). Similarly, the district court
concluded that “the preamble is reasonably related to
correcting and preventing future consumer deception.” 907 F.
Supp. 2d at 23.
This may be true. The preamble might provide an
effective—perhaps even the very best—means of curing
consumer misconception and preventing consumer deception
going forward. Were this an enforcement proceeding brought
by the Federal Trade Commission, an action that permits
remedies intended to “dissipate future effects of a company’s
past wrongful conduct,” Warner-Lambert Co. v. FTC, 562
F.2d 749, 761 n.60 (D.C. Cir. 1977), the preamble might well
represent a proper exercise of the court’s remedial power. But
this is a civil RICO case, and as we have explained, that statute
empowers district courts to issue injunctions for one purpose
and one purpose only: to prevent and restrain future RICO
violations. 18 U.S.C. § 1964(a). Correcting consumer
misinformation, which “focuse[s] on remedying the effects of
past conduct,” is thus an impermissible objective under RICO.
22
Disgorgement Opinion, 396 F.3d at 1198 (emphasis added).
Seeking to prevent consumer deception is similarly
impermissible because, although forward-looking, it focuses
not on restraining the RICO violator, but on safeguarding
consumers against RICO violations.
To be sure, although the district court’s reasoning was
largely consumer focused, see, e.g., Philip Morris, 907 F.
Supp. 2d at 20, it did at one point suggest that the preambles
might also discourage the manufacturers from again violating
RICO. “By ensuring that consumers know that Defendants
have misled the public in the past on the issue of secondhand
smoke . . . ,” the district court stated, “Defendants will be less
likely to attempt to argue in the future that such a consensus
does not exist.” Id. at 26. But even were we to extend this
deterrence rationale beyond secondhand smoke to every
corrective statement, our case law makes clear that when it
comes to RICO remedies, it fails.
As we explained when rejecting disgorgement as an
available remedy, district courts may order injunctions under
section 1964(a) only to “prevent and restrain” RICO
violations, not to discourage such violations through “any
remedy that inflicts pain.” Disgorgement Opinion, 396 F.3d at
1200 (citing Carson, 52 F.3d at 1182). Indeed, the dissent in
that case, like the district court here, embraced the deterrence
rationale, pointing out that “[t]he government offer[ed] expert
testimony to the effect that a disgorgement order [would] deter
the tobacco companies from violating RICO in the future.” Id.
at 1223 (Tatel, J., dissenting); see also id. at 1222–27. But the
court rejected the dissent’s reasoning. Acknowledging that
“disgorgement may act to ‘prevent and restrain’ future
violations by general deterrence insofar as it makes RICO
violations unprofitable,” the court nonetheless concluded that
“this argument goes too far.” Id. at 1200. After all, the court
23
pointed out, the statute reads “prevent and restrain,” not
“prevent, restrain, and discourage.” Id. (quoting Carson, 52
F.3d at 1182).
We said the same thing in our 2009 opinion when
affirming the district court’s rejection of the counter-marketing
and smoking-cessation programs, both of which had been
sought by the government and intervenors. By “shrinking
Defendants’ customer base,” we recognized, these programs
might reduce defendants’ “incentive to market their products”
in general, and thus to falsely market their products as well.
2009 Opinion, 566 F.3d at 1148. But we nonetheless rejected
such “general deterrence remedies aimed so wide of the
statutorily-ordained mark.” Id. A remedy, we reiterated, “may
not be justified simply on the ground that whatever hurts a civil
RICO violator necessarily serves to ‘prevent and restrain’
future RICO violations.’” Id. (quoting Carson, 52 F.3d at
1182).
So too here. Even if the preambles would discourage
cigarette manufacturers from falsely marketing cigarettes by
arming consumers against misinformation, thus making RICO
violations unprofitable—something the government never
even attempted to prove—“[s]uch a remedy [would] reach[]
beyond the bounds of section 1964(a), which authorizes the
district court to order injunctions [only] to prevent and restrain
fraudulent statements about smoking and health and
addiction.” Id. at 1149. The bulleted statements will achieve
this goal because they “reveal[] the previously hidden truth
about [the manufacturers’] products.” Id. at 1140 (emphasis
added). The preambles, however, do no such thing and may not
be justified on grounds of general deterrence.
24
III.
In addition to objecting to the corrective statements’
content, the manufacturers challenge on First Amendment
grounds the requirement that they publish the disclosures on
their company websites and cigarette packages, as well as in
newspaper and television ads. These “overlapping channels of
communication,” they say, are “needlessly duplicative” and
thus unduly burden their First Amendment rights. Defs. Br.
45–46; see Zauderer v. Office of Disciplinary Counsel of
Supreme Court of Ohio, 471 U.S. 626, 651 (1985) (cautioning
against “unduly burdensome disclosure requirements” that
chill protected commercial speech).
As explained above, however, the district court’s 2006
remedial order required defendants to disseminate the
corrective statements by each of these means, in addition to
retail point-of-sale displays. The manufacturers objected only
to the point-of-sale-display requirement (which we
invalidated) and publication via cigarette-package onserts
(which we upheld). See 2009 Opinion, 566 F.3d at 1140–42.
This question is thus settled. See Thomas, 572 F.3d at 949.
The manufacturers insist that five years later, in a 2014
consent order providing for implementation of the
corrective-statement remedy, they “reserve[d] the right to
challenge . . . the requirement that the court-ordered corrective
statements appear in the multiple media[.]” Defs. Reply Br. 23.
Such a reservation, however, cannot operate retroactively or
otherwise resurrect waived claims. See Crocker, 49 F.3d at
739.
25
IV.
For the reasons set forth above, we affirm in part, reverse
in part, and remand for further proceedings consistent with this
opinion.
So ordered.