Product Liability -- 2005



United States v. Philip Morris USA Inc.   (D.C. Circuit)

Disgorgement not a civil RICO remedy

The NAM and the U.S. Chamber filed a joint brief on 8/3/04 in this $280 billion government suit against the tobacco industry opposing the theory that disgorgement is a remedy available under the Racketeer Influenced and Corrupt Organizations Act (RICO). Such a claim improperly avoids the procedural safeguards in the criminal forfeiture provisions of RICO and conflicts with precedent under comparable provisions of another statute on which it was patterned -- the Clayton Act. We do not believe RICO was intended to provide disgorgement of profits as a remedy. The government is trying to do an end-run around the strict procedural requirements under RICO when it attempts to seize assets alleged to be the ill-gotten gains of racketeering activity.

On 2/4/05, the D.C. Circuit ruled that disgorgement is not a remedy in civil suits under RICO. The law is limited to forward-looking remedies that are aimed at future violations. These include divestment, injunctions and dissolution, but not disgorgement of past gains.