The NAM and the Washington Legal Foundation filed a joint brief on 8/17/07, urging the U.S. Court of Appeals for the D.C. Circuit to reverse a lower court ruling. Having failed to impose sweeping regulation on the tobacco industry through regulatory and legislative processes, the federal government took the litigation route, suing Philip Morris under RICO’s civil injunction provision, 18 U.S.C. § 1964(a). The government argued that tobacco companies ran an association-in-fact enterprise over the past half century to operate criminal racketeering schemes of fraud, consisting primarily of allegedly fraudulent statements about the nature of cigarettes.
Our brief argued that many of the allegedly offending statements, found in press releases, public statements, newspaper articles, academic literature and television appearances, addressed matters of public concern and thus fell squarely within the definition of fully protected speech under the First Amendment. We wanted to ensure that the federal government could not punish fully protected speech without proof that allegedly false statements were made with specific intent and were material to consumers.
We also argued that the statements at issue were not commercial speech, which might enjoy less protection, because they did not propose the sale of a product or any other commercial transaction.
By focusing on the speaker (a business) instead of the content of the speech (statements addressing matters of public concern), the district court wrongly viewed the speech as commercial. Such a view will have a chilling effect on public debate of important issues, as all speech made by corporations will be presumptively commercial and enjoy less First Amendment protection from liability.
On 5/22/2009, the D.C. Circuit ruled that the trial court offered comprehensive findings that were sufficient to identify fraudulent acts, that there was sufficient evidence supporting inferences that company executives intended to mislead, and that this specific intent by the executives can be imputed to the corporation to prove liability. The 3-judge panel dismissed the argument about protected speech, saying that the First Amendment does not protect fraud.
The court agreed with the trial court that there was a reasonable likelihood that the defendants would commit future RICO violations, and upheld the order calling for corrective statements. It held that generic discussions about cigarettes, without naming specific brands, still constitutes commercial speech that may be regulated, and that mandated corrective statements can be narrowly tailored to achieve a substantial governmental interest.