United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 14, 2017 Decided April 25, 2017
No. 16-5101
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
BROWN & WILLIAMSON TOBACCO CORPORATION, DIRECTLY
AND AS SUCCESSOR BY MERGER TO AMERICAN TOBACCO
COMPANY, ET AL.,
APPELLEES
Consolidated with 16-5127
Appeals from the United States District Court
for the District of Columbia
(No. 1:99-cv-02496)
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Michael A. Carvin argued the cause for appellants. On the
briefs were Noel J. Francisco, Peter J. Biersteker, Miguel A.
Estrada, Amir C. Tayrani, Jeffrey A. Mandell, and Robert J.
Brookhiser Jr.
Melissa N. Patterson, Attorney, U.S. Department of
Justice, argued the cause for federal appellees. With her on the
brief were Benjamin C. Mizer, Principal Deputy Assistant
Attorney General, and Mark B. Stern and Alisa B. Klein,
Attorneys.
Eric R. Glitzenstein argued the cause for appellees
Tobacco-Free Kids Action Fund, et al. With him on the brief
was Katherine A. Meyer.
Before: BROWN, Circuit Judge, and SENTELLE and
RANDOLPH, Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge
SENTELLE.
SENTELLE, Senior Circuit Judge: In 2006, the district
court found that Appellant cigarette manufacturers had for
decades conspired to deny the health effects of smoking in
violation of RICO. United States v. Philip Morris USA, Inc.,
449 F. Supp. 2d 1 (D.D.C. 2006) (“Liability Opinion”). As a
remedy, the court ordered Appellants to disseminate
“corrective statements” relating to the health effects of
smoking in newspapers, on television, on cigarette packages,
and on websites. Id. at 938-41. For more than a decade since,
the parties have battled over the precise language of these
statements—both in and out of court. Appellants claim the
most recent language proposed by the government is conduct-
focused and is backward-looking beyond the scope of RICO
and, for other reasons, violates the First Amendment. The
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district court approved the government’s proposed language.
We affirm in part and reverse in part.
BACKGROUND
In August 2006, a district court found that Appellant
cigarette manufacturers (“Defendants”) had violated RICO by
associating together to misinform the public about smoking.
Liability Opinion, 449 F. Supp. 2d at 851-906. The district
court found that “an injunction ordering Defendants to issue
corrective statements is appropriate and necessary to prevent
and restrain them from making fraudulent public statements on
smoking and health matters in the future.” Id. at 926. The court
identified five topics about which it would order Defendants to
make corrective statements but deferred deciding the wording
of the statements pending further briefing. Id. at 928, 939-40.
On appeal, we upheld the concept of a corrective-
statements remedy against RICO and First Amendment
challenges because “[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.” United
States v. Philip Morris USA Inc., 566 F.3d 1095, 1140 (D.C.
Cir. 2009) (“2009 Opinion”). Still, we noted, such statements
must be “confine[d] . . . to ‘purely factual and uncontroversial
information,’ geared toward[] thwarting prospective efforts by
Defendants to either directly mislead consumers or capitalize
on their prior deceptions by continuing to advertise in a manner
that builds on consumers’ existing misperceptions.” Id. at
1144-45 (quoting Zauderer v. Office of Disciplinary Counsel,
471 U.S. 626, 651 (1985)).
On remand from the 2009 Opinion, the district court
formulated the text of the corrective statements, including
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bullet points containing factual statements on each topic
preceded by a preamble stating: “A Federal Court has ruled that
[Defendants] deliberately deceived the American public about
[the topic of the statement], and has ordered those companies
to make this statement. Here is the truth[.]” United States v.
Philip Morris USA, Inc., 907 F. Supp. 2d 1, 8-9 (D.D.C. 2012).
Defendants appealed.
This Court held that the “district court exceeded its
authority under RICO because the preambles reveal nothing
about cigarettes; instead, they disclose defendants’ prior
deceptive conduct.” United States v. Philip Morris USA Inc.,
801 F.3d 250, 261 (D.C. Cir. 2015) (“Corrective Statements
Opinion”) (emphasis in original). While the bulleted
statements “reveal[ed] the previously hidden truth about
[Defendants’] products,” the preambles did not and could “not
be justified on grounds of general deterrence.” Id. at 263
(quoting 2009 Opinion, 566 F.3d at 1140) (emphasis in
original). The Court did not address Defendants’ constitutional
challenges to the preambles. See id. at 256. The Court
remanded for further proceedings. The United States filed a
petition for panel rehearing, seeking clarification regarding
which portions of the preambles the Court expected to be
altered. We denied the petition, stating that the Government
sought “relief that the district court may consider in the first
instance on remand.” Orders, United States v. Philip Morris
USA Inc., Nos. 13-5028 & 14-5161 (D.C. Cir. Aug. 5, 2015).
Subsequently, the district court granted two Defendants
permission to sell certain cigarette brands to non-Defendant
ITG Brands, LLC, and to make ITG and its affiliates (“ITG
Entities”) parties to this case for limited purposes. The order
specified that the ITG Entities would be responsible for
publishing corrective statements with “slightly modified
preamble language.” Order Authorizing Transfer of Certain
5
Cigarette Brands and Businesses to ITG Brands, LLC, 6-7,
United States v. Philip Morris USA, Inc., No. 99-2496 (D.D.C.
June 8, 2015), ECF No. 6151.
On remand, the district court ordered the preambles to read
as follows:
A Federal Court has ordered [Defendants] to
make this statement about [the topic of the
statement]. Here is the truth: . . . .
United States v. Philip Morris USA Inc., 164 F. Supp. 3d 121,
124-25 (D.D.C. 2016) (“Revised Preamble Opinion”). The
district court explained that the new preambles “do not in any
way send a message to the public that Defendants deceived
them in the past, nor that Defendants are being punished for
their previous conduct.” Id. at 125-26. The district court also
rejected Defendants’ First Amendment arguments. Id. at 126-
27. Defendants appealed.
DISCUSSION
A. Standard of Review
This Court reviews de novo the district court’s conclusions
that the corrective statements comport with RICO and the First
Amendment. 2009 Opinion, 566 F.3d at 1110, 1147.
B. RICO
In a civil RICO action, the statute provides district courts
with jurisdiction to impose remedies that “prevent and restrain”
future RICO violations, not to punish prior violations. 18
U.S.C. § 1964(a). Thus, the district court’s remedy requiring
Defendants to issue corrective statements complied with RICO
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because Defendants would be “impaired in making false and
misleading assurances” about cigarettes if simultaneously
required to tell the truth. 2009 Opinion, 566 F.3d at 1140. “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.’” Corrective Statements
Opinion, 801 F.3d at 261 (quoting 2009 Opinion, 566 F.3d at
1140) (emphasis in original). However, the district court’s
“jurisdiction is limited to forward-looking remedies that are
aimed at future violations.” United States v. Philip Morris USA
Inc., 396 F.3d 1190, 1198 (D.C. Cir. 2005) (“Disgorgement
Opinion”).
Defendants allege that the preambles approved by the
district court exceed its RICO jurisdiction because the
preambles “convey the unequivocal message that Defendants
previously deceived the American public and, further, that they
are being compelled by a court to make the corrective
statements as a sanction for prior wrongdoing.” Defendants’
Br. at 30. Defendants point to five elements that they believe
demonstrate the backward-looking nature of the preambles,
both individually and cumulatively: (1) the “Here is the truth”
tagline; (2) the declaration that “A Federal Court has ordered
[Defendants] to make this statement”; (3) that different
preambles are permitted for the ITG Entities; (4) the
description in the preamble of two of the specific topics; and
(5) the district court’s rejection of Defendants’ proposed
alternative preambles.
Defendants assert that the “Here is the truth” tagline
conveys the unambiguous message that Defendants have
previously withheld “the truth” about the effects of smoking
because “[n]o one affirms that a message is ‘the truth’—or is
ordered by a court to tell ‘the truth’—for no reason.”
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Defendants’ Br. at 31-32. There was no evidence that the
public would doubt the truth of the bullet points without this
tagline and Defendants urge that “[t]he imprimatur of a federal
court unequivocally validates the veracity of the bullet points.”
Id. at 41. Similarly, Defendants allege that the declaration “A
Federal Court has ordered [Defendants] to make this
statement” is backward-looking. Because courts do not
ordinarily order companies to disseminate information absent
prior wrongdoing, Defendants allege that this phrase
communicates that they are being compelled to speak as
punishment for prior wrongdoing. Ultimately, they argue,
these aspects of the tagline reveal nothing about cigarettes and
focus only on prior deceptive conduct.
We agree that, read together, these two phrases most
naturally suggest prior misconduct by Defendants. Such
language “can serve only two purposes: either to attract
attention that a correction follows or to humiliate the
advertiser,” Warner-Lambert Co. v. FTC, 562 F.2d 749, 763
(D.C. Cir. 1977), neither of which is a permissible goal under
civil RICO, Corrective Statements Opinion, 801 F.3d at 262
(“Correcting consumer misinformation, which ‘focuse[s] on
remedying the effects of past conduct,’ is . . . an impermissible
objective under RICO.” (quoting Disgorgement Opinion, 396
F.3d at 1198)); id. at 256 (noting that RICO’s civil-remedy
provision does not provide for remedies that “seek to punish
prior wrongdoing”).
This problem is remedied by simply removing the “Here
is the truth” line such that the preambles read only:
A Federal Court has ordered [Defendants] to
make this statement about [the topic of the
statement].
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This modified preamble is aimed “toward[] thwarting
prospective efforts by Defendants” to commit future RICO
violations. 2009 Opinion, 566 F.3d at 1144-45. It consists of
only two parts, one that Defendants cannot challenge and one
that Defendants largely do not challenge.
First, the preambles attribute the subsequent statements to
a federal court. Defendants have consistently failed to
challenge—and some specifically requested—language
attributing the corrective statements to a court. See, e.g., JA
219 (Defendant Lorillard requesting preamble language
stating, “The following statement is made by Lorillard Tobacco
Company pursuant to a Court Order”); JA 138 (Defendants R.J.
Reynolds and Brown & Williamson requesting that statements
include the phrase “This message is furnished by [Defendant]
pursuant to a Court Order”); JA 91 (Defendant Philip Morris
requesting that it be allowed to disassociate itself from any
statement with which it disagreed by attributing the statement
to the Court); JA 417-19 (Defendants failing to object to
language stating that the corrective statement was “Paid for by
[Cigarette Manufacturer Name] under order of a Federal
District court”). Even assuming it is true, as Defendants urge,
that each of these instances involved proposals for a footer
indicating that statements were issued “pursuant to a Court
Order,” it is not clear why this particular language in a
preamble suggests past misconduct while their own slightly
different proposals did not.
Second, the modified preamble introduces the topic of the
statement to follow. The topic statements are largely
unchallenged, with the exception of Statements C and D. See
infra Section II(D).
The modified preambles satisfy RICO notwithstanding
Defendants’ additional arguments. Defendants point to the fact
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that different preambles are permitted for the ITG Entities.
Specifically, ITG Entities may include on package onserts and
websites that “[a] Federal Court has ordered . . . [Defendant]
(the previous maker of [insert brand]) to make this
statement . . . .” J.A. 1127-29. Defendants urge that if the
revised preambles did not suggest that Defendants engaged in
past misconduct, there would be no need for such
differentiation. However, this sort of language was anticipated
and ordered long ago without opposition from the Defendants.
Defs.’ Statement in Support of Unopposed Mot. For an Order
Authorizing Transfer of Certain Cigarette Brands and
Businesses to ITG Brands, LLC, 12-13, Philip Morris, No. 99-
2496 (D.D.C. Apr. 30, 2015), ECF No. 6143 (ITG Entities
representing that “ITG Brands will provide Corrective
Statements on the packaging for the Acquired Brands, with the
preambles tailored slightly to reflect truthfully that ITG Brands
was not named as a defendant and was not found liable”); Order
at 6-7, Philip Morris, No. 99-2496 (D.D.C. June 8, 2015), ECF
No. 6151 (ordering that ITG Entities would be responsible for
publishing Corrective Statements with “slightly modified
preamble language for each Corrective Statement”). Indeed,
such a distinction is necessary to preserve the accuracy of the
corrective statements. The bullet points in Statement D—no
longer challenged—specifically refer to Defendants’ past
actions regarding nicotine manipulation. The modified
preambles preserve the accuracy of this statement by clarifying
that the ITG Entities were not defendants and were not
themselves originally ordered to make statements.
Because we hold that the modified preambles satisfy
RICO, it cannot be true, as Defendants argue, that “the only
reason to prefer the Government’s proposal is to taint
Defendants with implications of past wrongdoing.”
Defendants’ Br. at 39.
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C. First Amendment
Although we have determined that the modified preambles
do not exceed the statutory authority granted under RICO, the
question remains as to whether this compelled speech is
violative of Defendants’ First Amendment rights. The
threshold question for this court is what standard applies to
guide us in making that determination.
Traditionally, First Amendment questions arising in the
arena of “commercial speech” have occasioned scrutiny under
the standard of Central Hudson Gas & Electric Corp. v. Public
Service Commission, 447 U.S. 557 (1980). Under Central
Hudson, protected speech may be regulated if the
governmental interest is “substantial.” Id. at 566. Any such
regulation must “directly advance[] the governmental interest
asserted.” Id. When analyzing this requirement, the Supreme
Court “has commonly required evidence of a measure’s
effectiveness.” Am. Meat Inst. v. Dep’t of Agric., 760 F.3d 18,
26 (D.C. Cir. 2014) (en banc) (“AMI”) (citing Edenfield v.
Fane, 507 U.S. 761, 770-71 (1993)). Finally, any regulation
cannot be “more extensive than is necessary to serve that
interest,” Cent. Hudson, 447 U.S. at 566, a standard the
government cannot satisfy “if it presents no evidence that less
restrictive means would fail,” Nat’l Ass’n of Mfrs. v. SEC, 800
F.3d 518, 555 (D.C. Cir. 2015). Appellants argue that that
standard is applicable to the present controversy.
The government argues that the present controversy is
governed by Zauderer v. Office of Disciplinary Counsel, 471
U.S. 626 (1985). Zauderer teaches that the careful “evidentiary
parsing” mandated by Central Hudson “is hardly necessary
when the government uses a disclosure mandate to achieve a
goal of informing consumers about a particular product trait,
assuming of course that the reason for informing consumers
11
qualifies as an adequate interest.” AMI, 760 F.3d at 26 (citing
Zauderer, 471 U.S. at 650). “[B]y acting only through a
reasonably crafted disclosure mandate, the government meets
its burden of showing that the mandate advances its interest in
making the ‘purely factual and uncontroversial information’
accessible to the recipients.” Id. (quoting Zauderer, 471 U.S.
at 651). Under Zauderer, then, as long as a disclosure
requirement is not “unjustified or unduly burdensome,” a
company’s rights “are adequately protected as long as
disclosure requirements are reasonably related to the State’s
interest in preventing deception of consumers.” 471 U.S. at
651.
The parties agree that this Court previously held that
Zauderer controlled the First Amendment issues in this case.
See 2009 Opinion, 566 F.3d at 1144-45 (citing Zauderer as the
test under which the corrective statements would be judged);
see also Revised Preamble Opinion, 164 F. Supp. 3d at 126
(noting that this Court did not question the district court’s
ruling that Zauderer was the appropriate standard in this case).
Because “a court 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), we continue to analyze
the preambles under Zauderer. Contrary to Defendants’
assertion, nothing in this Court’s en banc decision in AMI
compels a contrary result. See AMI, 760 F.3d at 20 (holding
that Zauderer applies “to disclosure mandates aimed at
addressing problems other than [consumer] deception”).
Indeed, the Corrective Statements Opinion, which continued to
analyze the First Amendment issues in this case under the
Zauderer standard, was decided after AMI. See Corrective
Statements Opinion, 801 F.3d at 260 (applying AMI’s
discussion of the Zauderer test to the First Amendment issues
in this case). Defendants also argue that National Association
of Manufacturers, 800 F.3d at 519-20, directs us to apply
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Central Hudson scrutiny to the preambles because they are
unconnected to advertising or labeling at the point of sale. But
another panel of this Court cannot overrule the law-of-the-case.
See Laffey v. Nw. Airlines, Inc., 740 F.2d 1071, 1077 n.2 (D.C.
Cir. 1984) (“A decision of one panel of this court may not be
overruled by another panel; a panel’s decision may be rejected
only by the court en banc.”).
We find that the preamble requirements are “reasonably
related to the [government’s] interest in preventing deception
of consumers.” Zauderer, 471 U.S. at 651. The preambles are
confined to “‘purely factual and uncontroversial information,’
geared toward[] thwarting prospective efforts by Defendants to
either directly mislead consumers or capitalize on their prior
deceptions by continuing to advertise in a manner that builds
on consumers’ existing misperceptions.” 2009 Opinion, 566
F.3d at 1144-45 (quoting Zauderer, 471 U.S. at 651). The
modification discussed above, see supra Section II(B),
removes any inference of past misconduct such that the
preambles no longer “convey a certain innuendo,” AMI, 760
F.3d at 27, or “moral responsibility,” Nat’l Ass’n of Mfrs., 800
F.3d at 530. Finally, mandating the inclusion of a one-sentence
preamble is not unduly burdensome. “To the extent that the
government’s interest is in assuring that consumers receive
particular information (as it plainly is when mandating
disclosures that correct deception), the means-end fit is self-
evidently satisfied when the government acts only through a
reasonably crafted mandate to disclose ‘purely factual and
uncontroversial information’ about attributes of the product or
service being offered.” AMI, 760 F.3d at 26.
D. Statement C and D topic descriptions
Defendants also challenge the topic descriptions in the
preambles to Statements C and D, asserting that they exceed
13
the remedial scope of civil RICO because they convey past
wrongdoing. The Statement D topic description explains that
Defendants are required to make the statement “about
designing cigarettes to enhance the delivery of nicotine.” J.A.
922. Defendants cannot challenge the preamble language in
Statement D. As this Court previously held, Defendants
waived any challenge to language that they “manipulate[d]
[the] design of cigarettes in order to enhance the delivery of
nicotine” or “intentionally designed cigarettes to make them
more addictive.” Corrective Statements Opinion, 801 F.3d at
258-59 (first alteration added).
The Statement C topic description states that Defendants
are required to make the following statement “about selling and
advertising low tar and light cigarettes as less harmful than
regular cigarettes.” J.A. 922. This language was not
previously considered and is indeed backward-looking, as it
implies that Defendants previously sold and advertised
cigarettes in such a way. Alternatively, a topic description
requiring Defendants to make the statement “about low tar and
light cigarettes being as harmful as regular cigarettes,” “the
harmfulness of low tar and light cigarettes,” or “the lack of
significant health benefit from smoking low tar and light
cigarettes” would be permissible under both RICO and the First
Amendment.
CONCLUSION
For the reasons set forth above, the district court’s opinion
and order establishing the preamble language in its corrective-
statement remedy is affirmed in part and reversed in part.
In short, while we remand this matter for further
proceedings, we see no reason why extensive proceedings will
be required in the district court. With the minor revisions
14
mandated in this opinion, the district court can simply issue an
order requiring the corrected statements remedy to go forward.