- The Washington Times - Tuesday, January 11, 2000

Copycat anti-tobacco lawsuits filed by 19 union health trust funds were snuffed out yesterday when the Supreme Court rejected attempts to use federal racketeering laws to recoup triple what they paid for smoke-related illnesses.

The justices’ first action in the nationwide wave of tobacco lawsuits based on health costs also doomed any effort by commercial health insurers to sue cigarette-makers, union lawyers told the court.

“Four courts of appeals have held unanimously that these third-party cases are without merit. Hopefully, this will put an end to them,” said Herbert Wachtel, a lawyer for Philip Morris Inc.

“What this is, is a small victory that sends a message to all the other people on the sidelines who were thinking about doing the same thing: that it’s not worth their time or effort,” said Patrick Kittredge, Philadelphia lawyer for the Council for Tobacco Research USA, also a defendant in the case.

John Banzhaf of Action on Smoking and Health said the denial “sounds the death knell for these types of lawsuits.”

“The tobacco industry gets to keep its ill-gotten gain and the public health loses,” Mr. Banzhaf said.

In separate action yesterday, the court also rejected these appeals:

c A claim by two Chicago-area HIV-positive men that Mutual of Omaha’s financial limit on health care coverage for AIDS-related illnesses illegally discriminates against the disabled. Their policies set $25,000 and $100,000 lifetime coverage limits for AIDS-related illnesses but provided up to $1 million for other conditions.

c Dairy farmers’ efforts to avoid paying for ads showing famous people with milk mustaches asking “Got Milk?” The court has upheld similar compulsory marketing schemes for other farm products, including a 5-4 ruling two years ago for an ad campaign backing California peaches, plums and nectarines.

c Pennsylvania’s effort to reinstate a law subjecting “sexually violent predators” to lifetime registration and public notice of their address.

In an abortion protest case, Justices Antonin Scalia and Clarence Thomas dissented from the court’s refusal to review a civil conspiracy judgment against the Rev. Michael Cloer, senior pastor of Siloam Baptist Church in Easley, S.C., and founder of Pastors for Life Inc.

They berated a ban on protesting abortions at Palmetto State Medical Center in Greenville as an illogical, unconstitutional and “terrifying deterrent to legitimate, peaceful” dissent.

“If seeking to harm an abortion clinic’s business through persuasion is indeed unlawful in South Carolina, why does the injunction permit such harm so long as it is inflicted at a distance of 12 feet from the driveway?” the dissent said.

Federal circuit court decisions left unscathed by yesterday’s order in the cigarette case are binding in 15 states.

Whether or not they pre-empt similar lawsuits, the rulings provide powerful support for cigarette companies against efforts to collect billions of dollars in damages elsewhere, including the District and New York City.

The unions charged that Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., and Liggett Group Inc., and others committed fraud on the unions by withholding facts about cigarette smoke hazards that may have sparked aggressive health crusades among their memberships.

Separate cases from Pennsylvania, Oregon and New York argued by the same legal team were based on the strategy of state lawsuits that resulted in a $246 billion settlement.

Four appeals courts ruled that any harm to the health funds themselves was remote and indirect, as it would be for other third-party payers seeking repayment for illness of their insureds. They said individuals could sue, but union lawyers insisted individuals generally don’t pay bills themselves and cannot invoke the federal antitrust laws or the RICO law, both of which allow triple damages.

“This court has never countenanced dismissal of a RICO or antitrust claim as too indirect without identifying a more directly injured party,” the union appeals said.

Their briefs claimed the dismissals bar the entire health-care industry from suing the tobacco industry under antitrust law or racketeering laws.

“There is a clear national interest in holding tobacco companies accountable for the public health devastation they have wreaked,” said one brief arguing the side of a Steamfitters Union local, Oregon Laborers-Employers Health & Welfare Fund, and Laborers Local 17 Health and Benefit Fund.

Cigarette-makers “feel like they are on pretty strong ground here,” said Mark McMinimy, a tobacco analyst at Schwab Capital Markets & Trading Group in Washington. “So far, they’ve basically prevailed in all of them, at least the appellate level.”

The decisions left standing by yesterday’s Supreme Court rejection will not affect separate RICO lawsuits by the Justice Department which, like the states, has explicit enforcement powers under the law, without showing the type of direct injury that private parties must prove.

The court also is preparing to decide if the Food and Drug Administration has the power to regulate cigarettes and smokeless tobacco. That case was argued Dec. 1.

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