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United States v. Philip Morris USA Inc.

United States Court of Appeals, District of Columbia Circuit

November 1, 2016

United States of America, United States Department of Justice, et al., Appellees
Philip Morris USA Inc., Formerly known as Philip Morris Incorporated, Appellee R.J. Reynolds Tobacco Company, Appellant Brown & Williamson Tobacco Corporation, Directly and as successor by merger to American Tobacco Company, et al., Appellees

          Argued September 13, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:99-cv-02496)

          Jeffrey A. Mandell argued the cause for appellant. With him on the briefs were Noel Francisco and Peter J. Biersteker. David M. Bernick entered an appearance.

          Lewis S. Yelin, Attorney, U.S. Department of Justice, argued the cause for appellee United States of America. With him on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Mark B. Stern and Alisa B. Klein, Attorneys. Melissa N. Patterson, Attorney, entered an appearance.

          Howard M. Crystal and Katherine A. Meyer were on the brief for plaintiff-intervenors-appellees Tobacco-Free Kids Action Fund, et al.

          Before: Tatel, Circuit Judge, and Edwards and Sentelle, Senior Circuit Judges.

          Tatel Circuit Judge

         This is the latest appeal in the government's long-running RICO case against the nation's major cigarette manufacturers. Ten years ago, the district court issued a comprehensive remedial order, which included a requirement that defendants and their successors televise "corrective statements" about the dangers of smoking. Eight years later, one defendant, R.J. Reynolds Tobacco Company (RJR), sought to dissolve that order as void under Federal Rule of Civil Procedure 60(b)(4) and unjust under Rule 60(b)(6). The district court denied RJR's motion, and we affirm. As the Supreme Court made clear in United States Student Aid Funds, Inc. v. Espinosa, relief under Rule 60(b)(4) is available "only in the rare instance where a judgment is premised either on a certain type of jurisdictional error or on a violation of due process." 559 U.S. 260, 271 (2010). None of those defects exists here. And although RJR could have challenged its remedial obligations under Rule 60(b)(6), its failure to do so in a timely manner dooms its motion now.


         In 1999, the United States sued RJR, Brown & Williamson Tobacco Corporation, and several other cigarette manufacturers under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68, alleging a conspiracy to deceive the American public about the dangers of cigarettes. The history of this case is described in our many prior decisions. See, e.g., United States v. Philip Morris USA, Inc., 566 F.3d 1095, 1105-10 (D.C. Cir. 2009) (Remedial Opinion) (affirming most aspects of the district court's liability finding and remedial order); United States v. Philip Morris USA Inc., 801 F.3d 250, 252-56 (D.C. Cir. 2015) (Corrective Statements Opinion) (largely upholding the content of the corrective statements). For purposes of this appeal, the relevant facts are as follows.

         Prior to trial, Brown & Williamson merged its domestic tobacco operations with RJR and reconstituted itself into a passive holding company called Brown & Williamson Holdings (BWH). The district court then conducted a nine-month bench trial followed by a two-week remedial hearing. In 2006, the court found defendants liable and ordered a complex set of remedies, including a prohibition on the use of misleading terms such as "ultra light" and "low tar, " a ban on deceptive statements about the addictiveness of cigarettes, and the remedy at issue here: a requirement that each defendant televise corrective advertisements about the health consequences of smoking. United States v. Philip Morris USA, Inc., 449 F.Supp.2d 1, 938-45 (D.D.C. 2006). The remedial order required the ads to be run in primetime on one of "three major television networks" at least once a week for a year. Id. at 941. Central to this case, the order expressly stated that the injunction applied to "each of the Defendants, except [three], and to each of their . . . successors." Id. at 937.

         The tobacco manufacturers appealed, challenging many aspects of the order, including the corrective statements remedy and its application to BWH. Relying on an earlier opinion in which we held that RICO's remedial provision, 18 U.S.C. § 1964(a), authorizes only forward-looking remedies aimed at preventing future violations of the Act, the manufacturers argued that the district court lacked authority to require corrective statements. They also argued that the district court had no basis for subjecting BWH to the remedial order given its status as a passive holding company. In 2009, we upheld the corrective statements remedy and remanded for fact finding on "the extent of BWH's control over tobacco operations" and its "current capabilities" to "commit future RICO violations." Remedial Opinion, 566 F.3d at 1135, 1140. On remand, the parties agreed that BWH was not a defendant and thus not subject to the injunction, including the obligation to televise corrective ads. See United States v. Philip Morris USA, Inc., No. 99-2496, ECF No. 5846 (D.D.C. Dec. 22, 2010) (approving the parties' agreement concerning BWH).

         Two years later, the district court issued an order setting forth the final text of the corrective statements, which the manufacturers appealed. See United States v. Philip Morris USA, Inc., 907 F.Supp.2d 1, 27 (D.D.C. 2012). While that appeal was pending, the parties began to negotiate how the statements would be disseminated. Although they agreed on most issues, they disagreed about whether RJR had to televise two sets of ads, one as an original defendant and another in its capacity as Brown & Williamson's successor. In RJR's view, requiring it to run two sets of ads exceeded the court's remedial authority. For its part, the government insisted that double ads were required because the injunction, by its plain terms, applies to "each of the Defendants . . . and to each of their . . . successors." See Philip Morris, 449 F.Supp.2d at 937. In June 2014, the district court entered a consent order outlining the implementation plan and explaining that by agreeing to the order RJR had not "waiv[ed] [its] . . . challenge to the requirement that it publish Corrective Statements on television in its capacity as successor to Brown & Williamson." United States v. Philip Morris USA, Inc., No. 99-2496, 2014 WL 2506611, at *10 (D.D.C. June 2, 2014).

         Shortly after entry of the consent order, RJR filed a Rule 60 motion seeking "relief from those provisions of [the remedial order] . . . that require corrective statements on behalf of [Brown & Williamson]." Philip Morris, No. 99-2496, ECF No. 6103, at 1 (D.D.C. June 11, 2014). Specifically, RJR invoked Rule 60(b)(4), which allows courts to reopen final orders that are "void, " and Rule 60(b)(6), which allows courts to revisit final orders for "any other reason that justifies relief." See Fed. R. Civ. P. 60. In other words, RJR sought to modify the injunction so that it would have to run only one set of ads. In May 2015, we largely upheld the order specifying the text of the corrective ...

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