October 14, 2008 / 7:40 PM / 11 years ago

Tobacco firms argue against US racketeering ruling

WASHINGTON, Oct 14 (Reuters) - Tobacco companies argued on Tuesday that a lower court erred in finding they had conspired to lie about the dangers of smoking, while public health groups urged an appeals court to force the companies to fund programs to help smokers quit.

Companies, including Altria Group Inc (MO.N) and its Philip Morris USA unit, were found to have violated federal racketeering laws in August 2006 by U.S. District Judge Gladys Kessler, who ruled the companies could no longer use expressions such as “low tar” or light” in their cigarette marketing.

But Kessler refused to force the industry to fund a multibillion-dollar anti-smoking education program, saying she did not have the authority. Her order was stayed by the appeals court in October 2006.

Other companies and trade groups appealing her ruling were the R.J. Reynolds Tobacco unit of Reynolds American Inc RAI.N, Brown & Williamson, Lorillard Inc LO.N, Vector Group Ltd’s (VGR.N) Liggett Group, British American Tobacco Ltd. (BATS.L), the Council for Tobacco Research and the Tobacco Institute.

Lawyers for the tobacco companies argued that the U.S. Justice Department had failed to prove conspiracy to deceive because they did not show that industry executives knew about scientific studies showing smoking was addictive and caused cancer, heart disease and emphysema.

“How do you make that person a liar when he’s saying exactly what he believes in good faith?” lawyer Michael Carvin told a three-judge panel of the U.S. Court of Appeals for the District of Columbia.

In response, Judge David Sentelle pointed to “compelling” evidence that corporate officials knew that tobacco was addictive but Carvin disagreed: “They (the Justice Department lawyers) didn’t connect the dots.”

Carvin added that the companies have now taken steps to ensure that no one believes that smoking is safe and non-addictive. “Let’s just concede we were wrong,” he said.

But the Justice Department’s Mark Stern said the dots were connected, and pointed to evidence that tobacco company officials sought to hide evidence of cigarettes’ dangers, including “having the executives get together and say ‘this research is bad,’ (and then) it gets shut down.”

“At every stage, it is the top people,” Stern said.

When pressed by Judge David Tatel to show a pattern of efforts to hide cigarettes’ dangers, Stern responded: “It’s not that I don’t know. It’s just that I’m at a loss at how to shorten the list.”

The panel of three judges could wait for a U.S. Supreme Court ruling before tackling the issue of whether the expressions “light” or “low tar” were deceptive because they implied the cigarettes were safer.

Earlier this month, the Supreme Court heard arguments in a lawsuit brought by three longtime smokers from Maine who want to seek damages from Altria and its Philip Morris unit.

Miguel Estrada, speaking on behalf of the tobacco companies on Tuesday, said “light”, in particular, indicated a milder flavor and was not intended to signify the cigarette was safer.

Judge Sentelle rejected a suggestion by Howard Crystal, speaking for the American Cancer Society and other public health groups, that cigarette companies should be forced to fund smoking cessation programs.

Sentelle said tobacco companies could not reasonably control consumers. “You shouldn’t have brought it (to us),” he said. (Reporting by Diane Bartz; Editing by Tim Dobbyn)

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