CEI Applauds Court Ruling Against Gov’t Tobacco Suit

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Richard Morrison, 202.331.2273

Washington, D.C., February 4, 2005—The Competitive Enterprise Institute applauds today’s court ruling against the federal government’s tobacco racketeering suit.

“The federal government’s lawsuit to squeeze $280 billion out of the tobacco industry was nothing more than an effort to milk a politically disfavored industry,” said Sam Kazman, general counsel for the Competitive Enterprise Institute.

“Tobacco may be addictive, but tobacco money is even more addictive,” Kazman observed. “First came the states with the attorney general lawsuits and $250 billion settlement in the 1998. Then the <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Clinton administration wanted a cut of the action.

“Unfortunately, smokers were the big losers in the 1998 state settlement, since they paid the settlement costs,” said Kazman. “At least with the ruling in the federal case, consumers won’t be hit with a new lawsuit-driven tax,” Kazman concluded.

On Friday afternoon, a three judge panel of the Court of Appeals for the District of Columbia Circuit ruled in a 2-to-1 vote that the federal government lacks statutory power to use monetary “disgorgement” as a penalty. The U.S. Department of Justice, in a suit initiated by the Clinton administration, had accused major tobacco companies of violating the federal RICO Act by illegally conspiring (over a 50-year period) to deceive the public about the health hazards of smoking.