[00:00:00] Speaker 00: Case number 13-5028 at L. United States of America, United States Department of Justice at L versus Philip Morris, USA, Inc. [00:00:10] Speaker 00: Formerly known as Philip Morris Incorporated at L Appellants, American Tobacco Company directly and as successor to the Tobacco Interest of American Brands, Inc. [00:00:19] Speaker 00: at L, Appellees, Ultra Group, Inc. [00:00:21] Speaker 00: Formerly Philip Morris Companies, Inc. [00:00:23] Speaker 00: Appellant, Smith Klein B2 Corp. [00:00:26] Speaker 00: doing business as GlaxoSmithKline at L, Mr. Strada for the appellants, Ms. [00:00:31] Speaker 00: Patterson for Appellees United States of America at L, and Mr. Crystal for Appellees Tobacco Free Kids Action Fund at L. Thank you, Judge Natl, and may it please the Court? [00:00:55] Speaker 04: Miguel Estrada for the appellants. [00:00:58] Speaker 04: In keeping with the 2009 judgment of this court, the defendants stand ready to disseminate truthful, factual information about the health effects of their products. [00:01:09] Speaker 04: The main question in this appeal is whether they can also be compelled to tell the world that they deliberately deceive the American public or intentionally engage in other wrongdoing. [00:01:20] Speaker 04: We submit that the mandate of this court in the 2009 opinion, RICO and the First Amendment, require that the answer be no. [00:01:29] Speaker 04: Let me start by emphasizing that the compel statements that this Court authorized in 2009 must meet two distinct requirements. [00:01:39] Speaker 04: It must meet both of them. [00:01:41] Speaker 04: First, they must restrain future RICO violations rather than eradicate the effects of past violations. [00:01:51] Speaker 04: And second, as this court pointed out, they must be purely factual and uncontroversial and not unduly burdensome on disorder. [00:02:00] Speaker 04: The confessional preambles and the other admissions of wrongdoing in this case meet neither of those requirements. [00:02:09] Speaker 04: Let me start with the RICO part. [00:02:11] Speaker 06: Before we get there, it seems to me there are two rationales for imposing this kind of a requirement on a RICO defendant. [00:02:22] Speaker 06: One is to dispel a misimpression that the public has about the particular product as a result of the advertisements that went before. [00:02:33] Speaker 06: And the second is to deter future violations. [00:02:38] Speaker 06: I don't see anything about dispelling a public misperception about the safety of cigarettes. [00:02:46] Speaker 04: So it's just deterrence. [00:02:49] Speaker 04: Well, it's actually not even that. [00:02:52] Speaker 04: I think both of those theories have been [00:02:55] Speaker 04: rejected, as broadly stated as that, in two opinions of this court. [00:03:01] Speaker 04: The Discourseman case pointed out that you could not have just simply general deterrence or the theory that anything that hurts a RICO violator must be permitted by Section 1864A. [00:03:14] Speaker 04: And the 2009 opinion expressly compared this statute with the FTC Act, where all of these cases have come up in the past, and where it is a permissible government aim under the FTC Act to try to dispel the effect of past deception. [00:03:33] Speaker 06: The FTC Act is what you're saying? [00:03:35] Speaker 04: Yes, the FTC Act. [00:03:37] Speaker 04: The Federal Trade Commission Act. [00:03:39] Speaker 06: That's a total aside. [00:03:40] Speaker 06: I just read an opinion of the Seventh Circuit upholding an order by the FTC requiring Egg Manufacturers Association to tell the consuming public that eating eggs increases your cholesterol. [00:03:54] Speaker 04: Yes. [00:03:55] Speaker 06: And the latest report is that's not true. [00:03:59] Speaker 04: Well, so maybe it is not purely factual and uncontroversial, Judge Randall. [00:04:06] Speaker 04: But the point that I'm trying to emphasize is that you have to analyze the First Amendment issue here by first ascertaining what the permissible government interest is. [00:04:17] Speaker 05: In the 2009 opinion, this court acknowledged that the equity... Wait, before you go to the... I thought you were first talking about the RICO. [00:04:24] Speaker 04: Yes. [00:04:25] Speaker 05: Do you want to go on in the first minute? [00:04:28] Speaker 05: Could we stick with Rico for just a minute? [00:04:30] Speaker 04: No, sure. [00:04:30] Speaker 04: I was going immediately back to point out that in 2009, this court contrasted Rico with the FTC Act and concluded that unlike the FTC Act, it is not a permissible government interest under Section 19.4a to eradicate the effect of past wrongdoing. [00:04:52] Speaker 04: And it was expressly for that reason that this court turned down the government cross appeal, which looked to get essentially what the government is now trying to get in this preamble, which is to say a campaign of corrective advertising designed to educate the people about past wrongdoing. [00:05:13] Speaker 05: Right. [00:05:14] Speaker 05: I get your point about the pre-emptives. [00:05:17] Speaker 05: I see your point about that, and I have some questions for the government about it. [00:05:21] Speaker 05: But can I ask you to focus on just specifically the three bulleted points? [00:05:30] Speaker 05: Cigarette companies intentionally design cigarettes. [00:05:32] Speaker 05: One says, intentionally design cigarettes with enough nicotine to create and sustain addictions. [00:05:38] Speaker 05: did it to maintain addictions. [00:05:41] Speaker 05: And then the third one is, in other words, these three are not about the deception of the public, but they're about the company's actions with respect to their product. [00:05:54] Speaker 05: And, you know, we said in our 09 opinion that a requirement that they quote with [00:06:07] Speaker 05: about their products. [00:06:09] Speaker 05: will prevent and restrict. [00:06:11] Speaker 05: And isn't that what these three do? [00:06:13] Speaker 04: No, but I think it's very important to read that statement that you just quoted, Judge Tatel, in the context of this Court's ruling with respect to the cross-appeal. [00:06:24] Speaker 04: Because in the cross-appeal, you said that nearly to get rid of the effects of past wrongdoing was not sufficient. [00:06:32] Speaker 04: And that the only reason why the corrective statements that we are now talking about [00:06:37] Speaker 04: could be authorized under RICO is to keep the defendants in effect from speaking out of both sides of their mouth about the intrinsic qualities of their products. [00:06:50] Speaker 04: Now, the second bullet in B, which deals with the subject of addiction, and the first and second bullet of, I think, the manipulation standards, [00:06:59] Speaker 04: which I think are the ones that you're talking about right now, really say nothing about the defendant's products as such. [00:07:06] Speaker 04: They say something about the defendant's conduct. [00:07:08] Speaker 05: No, I understand what you're saying, but I'm just wondering whether that particular battle is over in view of the very specific language in the 09 opinion. [00:07:19] Speaker 05: Quote, requiring defendants to reveal the previously hidden truth about their products will prevent and restrain [00:07:30] Speaker 05: Right? [00:07:31] Speaker 05: That's exactly from our opinion, and that's the way that the Procurian panel described it. [00:07:38] Speaker 05: And you're right, we struck down other aspects of the remedy and other parts of the opinion in the cross-appeal, but this is law of the case language. [00:07:50] Speaker 04: But I think that it is not fair to the mandate of the court because the mandate of the court pairs that statement with a very specific requirement that these things had to be factual and uncontroversial and about the products on their solder as well. [00:08:05] Speaker 05: That's your First Amendment argument. [00:08:09] Speaker 05: I just wanted to focus on RICO. [00:08:11] Speaker 05: Then we'll talk about the First Amendment. [00:08:19] Speaker 04: The government has to come up with a way to overcome [00:08:22] Speaker 04: the more general ruling in the Discouragement opinion, which is also law of the case in this case, is not a separate case, that a theory of general deterrence is not one that can help deter and prevent future violations. [00:08:37] Speaker 04: And I could well read more consistent with both opinions, you know, the language that you quoted, by requiring defendants to reveal intrinsic qualities of their products that were previously hidden from the American public for the sole purpose, as this court said, of keeping them [00:08:56] Speaker 04: from restating the falsehoods in the future. [00:08:59] Speaker 04: This is not again a retrospective remedy. [00:09:02] Speaker 04: It has to be paired with the only purpose that this Court recognized, which was to keep us from speaking out of both sides of our mouth in the future. [00:09:11] Speaker 04: I mean, you could see a manufacturer of soda pop, for example, being told that it has to disclose that there is a [00:09:19] Speaker 04: color added or X added for taste, and that's an intrinsic quality of the product. [00:09:25] Speaker 04: But it doesn't necessarily imply a requirement that, you know, the manufacturer is intentionally trying to bamboozle you by having this look red. [00:09:34] Speaker 05: Okay, but I just want to, I want to get you to focus with me on this, on the language. [00:09:39] Speaker 05: I understand your point about the broader language in the disgorgement opinion and elsewhere, but [00:09:45] Speaker 05: It wasn't just that we said reveal the previously hidden truth. [00:09:52] Speaker 05: The record before us in that case, the district court's 06 order had expressly said that the defendants had to make corrective statements about their manipulation, their manipulation of the physical and chemical content of cigarettes. [00:10:11] Speaker 05: Right? [00:10:12] Speaker 05: Yeah. [00:10:14] Speaker 05: That, I don't recall the defendants challenging that before the court. [00:10:22] Speaker 05: And in our opinion, we specifically said that we recognize that the defendants would have to be under the district court's order. [00:10:31] Speaker 05: They would be required to make a statement regarding, quote, their manipulation of cigarette design and composition. [00:10:43] Speaker 05: So my only point about all this is that it seems like... [00:10:48] Speaker 05: These three, and I'm only talking about these three corrected statements, not the preamble. [00:10:55] Speaker 05: It sounds to me like if you read our previous opinion, both the language in the opinion and what was before us and what the defendants had raised, that this issue is essentially resolved as long as these three statements, quote, reveal the previously hidden truth about the product. [00:11:15] Speaker 04: I understand that argument to be a separate argument and my answer to that is that when you had the categories of statements in front of you, you expressly noted that the actual content of them was not actually in front of you and I don't think that you can fairly say that merely because [00:11:37] Speaker 04: one of the categories relates to manipulation, that it necessarily implies that there has to be a statement about the defendant's conduct, even on the recall, rather than a statement of the intrinsic design qualities of the product. [00:11:54] Speaker 04: But if I'm not able to persuade you on that, I would like to... I didn't say you hadn't. [00:11:58] Speaker 05: I was just asking you about that. [00:12:01] Speaker 04: I'm just trying to satisfy your concern while making economic use of my time as well, because at the end of the day, and with all due respect, given that the government has to meet a double-barrel standard, both RICO and the First Amendment, actually a three-barrel standard, RICO again the First Amendment and the mandate, but we can disagree on the third one, [00:12:21] Speaker 04: Ultimately, this court said that whatever meets RICO also must be factual and uncontroversial under disorder. [00:12:28] Speaker 04: And we know from this court's recent unbanked opinion in the American Meat Institute case, which was said multiple times in that case, that statements that pass muster under disorder must relate to the intrinsic qualities of the product itself, obviously not to the conduct of the defendant. [00:12:45] Speaker 04: So that even if there were room in the mandate of the court, both in the discouragement case, [00:12:50] Speaker 04: And the 2009 opinion for the proposition that RICO permits compel statements about our past conduct, and I don't think there actually is, you would still, the government would still have to overcome the separate burden on the disorder standard. [00:13:06] Speaker 05: Right. [00:13:06] Speaker 05: And the government says about that, the government says, yes, the standard is factual and uncontroversial. [00:13:15] Speaker 05: they point out or they argue that each of these three corrective statements, again, I'm not talking about the preamble, I'm just talking about these three bulleted statements, that each of these rests on specific district court findings that the defendants didn't challenge in the Oni case. [00:13:34] Speaker 05: Well, I think that, you know, the government has... And then they say, well, then, therefore, it's obviously factual. [00:13:42] Speaker 04: Well, let me take that point first, because I think it's very important to understand the break-taking character of the government's submission here. [00:13:53] Speaker 04: The government's view is that factual means what the district court found, and that that's sufficient to make it both factual and controversial under Zodiac. [00:14:02] Speaker 04: That is absolutely false. [00:14:03] Speaker 04: And it also would mean that every time the government wins a civil case- Not just factual, but factual findings that your clients did not tell you. [00:14:12] Speaker 04: Well, let me deal with the second part of that statement first. [00:14:18] Speaker 04: We actually dispute that. [00:14:21] Speaker 04: But let me deal with the bankruptcy of the theory first, which is to say courts of appeals, in fact, affirm and district courts find all sorts of disputable propositions. [00:14:34] Speaker 04: The applicable standard under Anderson v. City of Bessemer is that you are required to affirm any reasonable view of the evidence, even if there are multiple views of the evidence that the fact finder did not adopt. [00:14:46] Speaker 04: It is inherent in the standard that anything that is even affirmed in appeal is not necessarily factual and uncontroversial in the relevant sense, and I think the best [00:14:58] Speaker 04: measure of that is that since 2006 and it's now nine years, every state and federal court that has been presented with these findings, including on the question of [00:15:13] Speaker 04: manipulation and has been asked to give collateral as double effect to it, has declined expressly on the theory that other courts have come to different conclusions and that it would be unfair to the defendants to preclude them from having a new trial on the same issue. [00:15:29] Speaker 04: If federal and state courts in this country are willing to give us a new trial on these things that the government now says are so conclusive that we must broadcast them from the ceiling, [00:15:39] Speaker 04: from the rooftop, excuse me, it clearly cannot be fairly said that these things are factual and uncontroversial. [00:15:50] Speaker 04: As to the question as to whether we challenge these things on appeal or not, I think the government is the vast majority. [00:15:56] Speaker 06: Actually, your argument goes even further than the question of facts. [00:16:01] Speaker 06: It's also an argument that the disclosures required under this order are misleading. [00:16:08] Speaker 04: Well, right. [00:16:09] Speaker 04: And I was going to go to that point next, because it does imply first, to take my last point, that there is no side to the story, whereas we could truthfully say to people, eight courts, state and federal, think that this is not true or that this is not so clear after all. [00:16:29] Speaker 04: It implies that we're in, by [00:16:33] Speaker 04: not having a time frame at all, that we're still engaged in these very same aspects of wrongdoing, even though the evidence that gave rise to many of these findings is decades old. [00:16:50] Speaker 04: the essence of a time frame saying that the district court has found that this, that we deliver it. [00:16:55] Speaker 02: I mean, what, what statement do you think is factually wrong? [00:16:59] Speaker 02: There was no, there was no intentionally designed cigarettes with enough nicotine to create and sustain addiction? [00:17:06] Speaker 04: Well, I think that, you know, we, we do not think that that's what we do and other courts. [00:17:12] Speaker 02: No, no. [00:17:13] Speaker 02: Are you suggesting to us in light of our [00:17:16] Speaker 02: law of the case in the proceedings and what's in the record that that's not correct? [00:17:21] Speaker 04: Judge Edwards, to be perfectly clear, I accept that the law of the case for purposes of the judgment in this case is what you say. [00:17:29] Speaker 04: I'm not disputing that. [00:17:30] Speaker 02: Okay, but you're suggesting that that, for example, that statement is incorrect? [00:17:34] Speaker 04: What I'm saying is that what the court characterized as a manipulation of the nicotine content could be viewed as certain [00:17:49] Speaker 04: production steps to smooth out the taste of cigarettes and other things. [00:17:53] Speaker 04: But the point is not whether it is correct for purposes of the law of the case. [00:17:58] Speaker 02: I'm really confused. [00:18:00] Speaker 02: You cited this one bullet and I've been looking at it and I'm just really not sure what your argument is. [00:18:05] Speaker 02: Cigarette companies intentionally design cigarettes with enough nicotine [00:18:08] Speaker 02: to create and sustain addiction. [00:18:10] Speaker 02: Is that somehow? [00:18:12] Speaker 02: It's certainly not confusing to me. [00:18:14] Speaker 04: Well, our point has been that the implication is that we spike cigarettes with nicotine, which actually is not true. [00:18:19] Speaker 02: Well, who said that? [00:18:21] Speaker 02: That isn't what I read in it. [00:18:25] Speaker 02: I don't think that's naturally inferable that you spiked nicotine. [00:18:29] Speaker 02: I think it says what it says. [00:18:30] Speaker 02: You intentionally designed cigarettes with enough nicotine to create and sustain addiction. [00:18:34] Speaker 04: Under the court's... Is that wrong? [00:18:37] Speaker 04: I mean, you're saying that's wrong, or you're saying it's right, but... We do say that that's wrong, although we recognize it is law of the case, if that works. [00:18:43] Speaker 04: No, wait, wait, wait. [00:18:44] Speaker 02: Apart from that, I hear you in the law of the case. [00:18:46] Speaker 02: Are you saying it's right, but it says more than what appears to be there, and that's why you're offended? [00:18:54] Speaker 04: I think it implies to at least some reader, even if not to you, that we do things that we do not do. [00:19:01] Speaker 04: And I can see that my time is pretty. [00:19:04] Speaker 02: You can keep going because I have a few more questions. [00:19:06] Speaker 02: No, I'm done. [00:19:08] Speaker 02: I was just curious about that. [00:19:13] Speaker 05: You say the government's wrong that these are not supported by unchallenged findings. [00:19:21] Speaker 05: Let me just take the one you're talking about right now, OK? [00:19:25] Speaker 05: You say in your brief, and I'm looking at page [00:19:30] Speaker 05: 41, you say, this is one of your objections to these bulleted statements, you say, all cigarettes would be addictive. [00:19:39] Speaker 05: He says, even without any adjustments made by defendants, all cigarettes would be addictive, right? [00:19:46] Speaker 05: So, finding 1366, District Court finding 1366. [00:19:52] Speaker 05: Defendants have designed their cigarettes to precisely control nicotine level delivery levels and provide doses of nicotine sufficient to create and sustain addiction. [00:20:03] Speaker 05: Now, I look back, I did not see that defendants had challenged that finding in the O-9 proceeding. [00:20:11] Speaker 04: I understand what you're saying, and I think I will say again that whether the theory is law of the case or estoppel, it cannot be the case that as a matter of federal constitutional law, whatever may have been forfeited, waived, or found in one case, [00:20:33] Speaker 04: necessarily so conclusively binds an actor that the government is entitled to compel its disclosure from the rooftops even though federal courts and state courts elsewhere are prepared to view the question as open and allow a trial on the same matter. [00:20:52] Speaker 04: Because although I recognize that for certain litigation purposes, law of the case and estoppel and forfeitor and any other theory that is cognate to what the government is saying with these arguments may be a forceful way to preclude you from having another hearing on the question in the same case, it does not follow that as a matter of constitutional law, under Sartre, the government is thereby entitled to impose that as a statement of faith in media outside of the courtroom or elsewhere. [00:21:21] Speaker 04: Because at the end of the day, what the Supreme Court said in Sutter is that the reason Sutter allowed this sort of disclosure about the defendant's intrinsic qualities of the products is that the interest that the defendant has in not giving the disclosure about the product that he's marketing is minimal, and that the interest of the consumer, by contrast, is very high. [00:21:42] Speaker 04: But as you also said in American [00:21:44] Speaker 04: Amid Institute. [00:21:46] Speaker 04: It is an application of the central Hudson standard to a very narrow area. [00:21:52] Speaker 04: And the government cannot simply say that by winning a single litigation in one courtroom, although the defendant may be bound by the normal [00:22:04] Speaker 04: legal consequences of that, that it is always an add-on that the government gets to compel the defendant, whom he had beaten by a preponderance of the evidence, and obtain a judgment under the clear error rule, which allows for multiple reasonable views of the evidence. [00:22:20] Speaker 04: that the defendant is thereby compelled to accept this as incontestable truth, which is what this court said in Archie Reynolds was needed for the type of warning at issue here. [00:22:34] Speaker 02: Mr. Stroud, I'm really perplexed on the law. [00:22:38] Speaker 02: I think I hear what you're saying, but it's perplexing to me in light of how we do business. [00:22:44] Speaker 02: It may be that there are other district courts and courts of appeals who have their own separate litigations and are determining what to do or not to do and whether to give any respect to our judgments, but I don't know what that has to do with anything. [00:22:58] Speaker 02: That doesn't affect us. [00:22:59] Speaker 02: If we have law of the case, we're bound by it. [00:23:02] Speaker 02: This is at a remedial stage. [00:23:04] Speaker 02: And it would be a nightmare to think that the federal courts, having gone through a litigation, now at a remedial stage, had to stop to see whether other courts were taking a different approach, and if so, had to go back and re-litigate everything we'd already done over all these years? [00:23:21] Speaker 02: That's the thrust of your theory, which makes no sense to me. [00:23:24] Speaker 02: No, the point that I'm making is... In other words, let me be very stark and say, I really don't much care what these other courts are doing, because this is our case. [00:23:32] Speaker 02: And we owe them no deference. [00:23:36] Speaker 02: And I'm talking about a legal proposition. [00:23:39] Speaker 02: I don't mean to sound arrogant or we know it all, but we have business to do. [00:23:44] Speaker 02: And so I really don't care that there are other courts that are proceeding on a different court. [00:23:50] Speaker 02: And if we end up with split opinions, maybe the Supreme Court holds the seat, that it's worthwhile they're considering it. [00:23:55] Speaker 02: But we have business to do. [00:23:57] Speaker 02: We can't go back and re-litigate in light of [00:24:00] Speaker 02: matters that are going on in other courts. [00:24:03] Speaker 04: I am actually saying something entirely different, which is that whatever the findings are here, the legal standard for imposing compelled disclosure under Zauderer requires a level of certainty that is not ordinarily met. [00:24:18] Speaker 02: You mean you're switching to the constitutional issue? [00:24:19] Speaker 06: Yes, and I think I have been on this for a little bit. [00:24:26] Speaker 06: purely factual and uncontroversial, which described the disclosure in that case, Justice White, who is pretty precise, never mentioned that statement again. [00:24:39] Speaker 06: And you think that's a legal statement? [00:24:41] Speaker 04: Well, judging from the discourse on bank opinion in America and the Institute, the Sixth Circuit, as you're probably well aware, does not fully agree with that in the discount tobacco case. [00:24:56] Speaker 04: But I think for purposes of where we are today, we have to accept, because we are in the circuit, that the legal standard is purely factual and uncontroversial. [00:25:08] Speaker 04: And because we are in the circuit, we have to take the argument [00:25:11] Speaker 04: Reynolds' opinion from the proposition that certain things that might be described as factual, actually you said that in the conflict mineral case as well, do not necessarily entail with them the compelled disclosure of the facts. [00:25:24] Speaker 04: Because the freedom of speech includes the right not to avow facts that one disagrees with, even if they're incontestable. [00:25:32] Speaker 06: Well, what's your uncontroversial needs? [00:25:34] Speaker 06: And let me give you some background. [00:25:36] Speaker 06: When the in-bank case was pending for the disclosure of country of origin, [00:25:41] Speaker 06: there was a proceeding going on challenging that disclosure as a violation of the American treaty obligations. [00:25:53] Speaker 06: And the World Trade Organization has decided that the United States, by requiring those disclosures, upheld as uncontroversial, violated U.S. [00:26:05] Speaker 06: treaty obligations. [00:26:06] Speaker 06: I don't know what I'm controversial means. [00:26:09] Speaker 06: I'm with Judge Kavanaugh. [00:26:11] Speaker 04: Well, I think that it means, at least, that some things may be factual in certain senses, but that they are fairly debatable or likely to engage the emotions of other speakers to such an extent that it is not appropriate for the government to compel it under this very narrow safe harbor. [00:26:31] Speaker 04: It would be appropriate for the government then to compel them under central Hudson on a more harder coin. [00:26:36] Speaker 06: If there's a split of authority, [00:26:39] Speaker 06: Regarding a particular, take a scientific fact and the disclosure that's required is for all internal combustion engines, use of this product contributes to global warming. [00:26:52] Speaker 06: Is that controversial? [00:26:55] Speaker 04: I think that is controversial in the same sense as certain disclosures, say, for example, about getting an abortion. [00:27:02] Speaker 04: There was a second circle case on the subject of getting an abortion. [00:27:07] Speaker 04: And I think one could say that many of the disclosures about ultrasounds and whatnot are factual in some sense, and maybe not scientifically debatable, but still remains the question whether there is an appropriate role for the government to compel citizens to avow things that excite emotion and that give rise [00:27:24] Speaker 06: Is the statement in corrective statement E, there is no safe level of exposure to secondhand smoke? [00:27:35] Speaker 06: No. [00:27:36] Speaker 06: You know, if I walk through a crowd and somebody's smoking a cigarette, I'm in danger. [00:27:42] Speaker 06: Is that controversial? [00:27:43] Speaker 04: Well, I think that that's, I mean, we think that the entire subject is controversial. [00:27:48] Speaker 04: And if we were sort of trying to do what the government accuses us of doing, which is to prolong this, we would have a challenge a lot more of this, because on the broader theory, a lot of these things, even if [00:28:00] Speaker 04: by the just before judgment are not factual and controversial in the sense that you and I have been discussing. [00:28:06] Speaker 04: But in fact, we did not challenge some of the second-hand tobacco just because we wanted to target our challenges on the most objectionable aspects of the preambles and on those parts of B and D, the manipulation and the addiction, that I think unduly and unconstitutionally center on our conduct. [00:28:24] Speaker 04: when what was contemplated in our view by the mandate and by the very narrow focus of the recall law in the circuit was disclosures about the intrinsic qualities of our products. [00:28:35] Speaker 04: And again, just so that I'm not misunderstood as to where we are, [00:28:40] Speaker 04: If you fail to meet Sauter, which is a very narrow safe harbor for the government to compel speech when there is really no controversy about whether this should be disclosed, you might still, as in some of these orders that you see, Daniel chapter 1 and whatnot, [00:28:57] Speaker 04: where you have a remedial statute with broader aims, you might be able to compel it sometimes under central Hudson. [00:29:06] Speaker 04: We don't think that that's open based on the mandate of this court in 2009 because the mandate was limited specifically to his daughter, but we also have an argument that the confessional aspects of these things failed central Hudson because they're broader than necessary and certainly not tailored enough to achieve the only [00:29:23] Speaker 05: Let me just pursue the question Judge Randolph asked you a few minutes ago about what non-controversial means. [00:29:33] Speaker 05: AMI, which is an on-bank opinion, defines it, at least in that case, and I'm curious why it isn't applicable to this case, it says they weren't controversial in that case because AMI doesn't disagree with the facts to be disclosed. [00:29:52] Speaker 05: They don't disagree with the fact, to be disclosed. [00:29:55] Speaker 05: Quote, so there is no claim that they are controversial in that sense. [00:30:00] Speaker 04: That's for Ney and I. I may be misremembering, Your Honor, and maybe for interrupting, but I think that what the Court said is there is no claim that they are controversial, at least in that sense. [00:30:11] Speaker 04: But maybe I'm misremembering. [00:30:14] Speaker 05: Yeah, well, right. [00:30:16] Speaker 05: And so here, you have a situation where, if the government is correct, that these three, and I'm only talking about the three bulleted statements, not the preamble, okay? [00:30:31] Speaker 05: Government's position is that those rest on unchallenged factual. [00:30:38] Speaker 05: So if they're not controversial in that sense, in what sense are they controversial? [00:30:44] Speaker 04: You know, the government, just to take the broader assertion that we did not challenge all these things, and I know that they like... Well, I just asked you about one of them. [00:30:51] Speaker 04: No, no, no. [00:30:52] Speaker 04: I could go through all four of them before I... But I think it is important to point out that the opinion of the court reflects that we did challenge all of these things and that you have held it under clear error standards. [00:31:00] Speaker 04: So the notion that we did not challenge them when you found them not clearly erroneous upon our challenge is not really a very viable premise when it is apparent from the face of the 2009 opinion that we did challenge these things that the court considered. [00:31:13] Speaker 04: But going forward to the merits of your question, it seems to me that it has two answers. [00:31:18] Speaker 04: The first one is that we are once again debating the proposition of whether a procedural forfeiture, if that's what you think happened in 2009, [00:31:27] Speaker 04: is sufficient to compel speech in all other forums. [00:31:31] Speaker 04: And I do not agree with that for the reasons that I previously stated. [00:31:36] Speaker 04: But the second aspect of that, if I may just state it, is that I think what the Ombank court was saying was it is not controversial, at least in that sense. [00:31:47] Speaker 04: It was not important to give a guideline for what is always controversial. [00:31:52] Speaker 04: And it does seem to me that we... That's true. [00:31:54] Speaker 05: I agree with that reading. [00:31:56] Speaker 05: You're right about that. [00:31:59] Speaker 04: then say that when these same things are presented. [00:32:01] Speaker 05: Well, that's why I asked you the question, if it's not controversial in that sense, in what sense is it? [00:32:07] Speaker 05: That was my question. [00:32:08] Speaker 05: Because I agree with your reading of AMI. [00:32:11] Speaker 04: I will go back to the point that I made earlier, which is to say, when the same finding, including the manipulation finding that you have been highlighted, has been presented to the courts, like the HUSH court, which we cite in our case, [00:32:26] Speaker 05: All right, we're going over the same ground. [00:32:28] Speaker 05: I just want to ask you an extremely technical question that we might actually get some agreement on. [00:32:34] Speaker 05: One of your objections is to Statement C, low tar and filtered cigarette smokers inhale essentially the same amount, right? [00:32:45] Speaker 04: Yes. [00:32:45] Speaker 05: OK. [00:32:46] Speaker 05: And one of your objections to that is that [00:32:56] Speaker 05: is that it suggests that, you suggest that it says that regular cigarettes are not filtered, right? [00:33:05] Speaker 05: And that filtered cigarettes are no safer than non-filtered, right? [00:33:08] Speaker 05: That's your objection to that. [00:33:10] Speaker 05: But isn't that, do you think that's a typo? [00:33:14] Speaker 05: Do you think it should say, that it should say low tar, [00:33:22] Speaker 05: and light cigarette smokers, because that's what this, that's what the preamble's about, and that's what the previous bullet's about. [00:33:29] Speaker 05: And if it said that, setting aside your other objections to this, that is, your First Amendment objections, that would make that accurate. [00:33:38] Speaker 04: I agree that if you took out the filtered, and put in light, and put in that, that would take care of that, and yes. [00:33:47] Speaker 05: I understand all your other objections to it, but that would solve that problem. [00:33:53] Speaker 04: Just to make sure I have it on the record, it is unlawful for us to use law and life and all of these things. [00:34:00] Speaker 04: So now we're in a very odd world in which, by order of the federal court, we are required to engage in speech that otherwise would be unlawful for us [00:34:09] Speaker 04: to engage in under the FDA. [00:34:12] Speaker 04: And we live in a world in which these things are no longer sold or marketed as light, natural, et cetera, because federal law makes that unlawful. [00:34:22] Speaker 04: And there are no tar content warnings on the box anymore. [00:34:27] Speaker 04: But yet there is, under the guise of RICO, mind you, which is intended solely to affect our ability to make false statements about these things in the future, we're being told that we have to embrace this [00:34:39] Speaker 05: So what's your response to what the intervenors say? [00:34:46] Speaker 05: They say that the defendants switch from light and low tar to gold and other colors, telling them they can find their light by color. [00:34:58] Speaker 05: And then they have this very specific allegation about Marlboro, which put a note on the last pack of its cigarettes saying, your Marlboro light package is changing [00:35:10] Speaker 05: but your cigarette stays the same. [00:35:12] Speaker 05: And they cite, they actually, this is in the record. [00:35:16] Speaker 04: Oh no, they said it below, and I don't think that again. [00:35:21] Speaker 04: anywhere there either. [00:35:23] Speaker 04: They also said it, I think, to the FDA, which actually looked into this and nothing came to that. [00:35:28] Speaker 04: And the reason that nothing has come to it is because all that my client did, and Philip Morris is my client, was to tell consumers that if they buy these things for their taste and, you know, gold tastes different from regular Marlboro's, their brand will be called [00:35:48] Speaker 04: There was no representation that there was going to be any health benefit. [00:35:52] Speaker 04: It was done only for a transitional period of, I think, three months, and it hasn't been done since. [00:35:58] Speaker 04: And so in a world in which all we did was to make sure that brands that are different, in fact, would be viewed as different by the consumer, I don't think that that is a basis for the imposition of fraud that they're trying to say. [00:36:10] Speaker 04: But in any event, we go back to the mandate of the court, which rests on the proposition that the sole theory on which these disclosures are authorized is the proposition that by making us say them, we will be kept from saying the opposite in the future. [00:36:25] Speaker 04: And in a world in which saying the opposite in the future or saying anything on the subject in the future is unlawful under federal law, it seems to me that that's a little bit [00:36:37] Speaker 04: But I don't know what has to characterize it. [00:36:40] Speaker 04: It may be unnecessary. [00:36:41] Speaker 04: But you have been very generous with your time, and I thank you. [00:36:45] Speaker 05: OK, we're way over. [00:36:46] Speaker 05: Thank you. [00:36:54] Speaker 01: May it please the court, Melissa Patterson for the United States. [00:36:58] Speaker 01: I think it's helpful to start out by reviewing where we are in this litigation. [00:37:03] Speaker 01: The defendants have been found liable for committing a scheme to defraud the American public, a very particular type of scheme that involved subverting truthful information that was out there in the marketplace. [00:37:16] Speaker 05: Second, that they're likely to do it again. [00:37:20] Speaker 01: And third, that the district court was tasked with crafting a remedial order, crafting corrective statements that prevented and restrained these particular defendants from committing their particular type of fraud again. [00:37:35] Speaker 01: When we talk about the preambles, the district court explained what it was trying to do there. [00:37:40] Speaker 01: It was trying to prevent these defendants from again sowing doubt from suggesting later... But it said it was doing that by ensuring that consumers were not confused. [00:37:55] Speaker 05: That's what it said. [00:37:56] Speaker 01: Your Honor, it also said, I'm trying to prevent defendants from arguing in future that there's not really a consensus about these bullet points. [00:38:04] Speaker 01: No, wait. [00:38:05] Speaker 01: You just switched. [00:38:06] Speaker 05: I thought you were talking about the preambles. [00:38:08] Speaker 05: Yes, Your Honor. [00:38:09] Speaker 05: Let's divide our discussion into two parts. [00:38:13] Speaker 05: Let's start with the preambles, OK? [00:38:16] Speaker 05: OK. [00:38:16] Speaker 05: I understand your argument. [00:38:19] Speaker 05: I'm not saying I agree with it, but I understand your argument about the three bulleted points, that they reveal the hidden truth about the products. [00:38:27] Speaker 05: But I mean, they explain exactly what the defendants did, that they manipulated their product. [00:38:37] Speaker 05: But the preambles don't do that. [00:38:41] Speaker 05: They focus on the deception of the public. [00:38:46] Speaker 05: And that's different than focusing on the product. [00:38:53] Speaker 01: So, Your Honor, I think it's, in addition to dividing between preambles and bullets, I think it's helpful to divide between RICO and the First Amendment discussion. [00:39:01] Speaker 05: Let's stick with the preamble and RICO. [00:39:05] Speaker 05: The preamble and RICO. [00:39:06] Speaker 05: Just a minute, okay? [00:39:08] Speaker 05: Yes. [00:39:09] Speaker 05: Mike, I'm asking you this question because as I read our earlier decisions, the 09 decision, the discouragement decision, and the decision on the cross appeal, that these – all three of these opinions limit a RICO violation to preventing and restraining. [00:39:34] Speaker 05: And they very clearly say that discouraging is not part of it. [00:39:40] Speaker 05: that that isn't part of the remedy. [00:39:43] Speaker 05: It can't be. [00:39:46] Speaker 05: And I'd like you to explain to me how the only thing I could find in the district court decision was that it prevents and restrains by avoiding or preventing consumer misconception. [00:40:00] Speaker 05: And I understand that argument, and that argument was made by the dissent in the disgorgement decision, but it was the dissent. [00:40:08] Speaker 01: Your Honor, I don't think that's the only reason the district court gave, and I would point to pages 2, JA 211 through 213, where it reviewed the defendant's objections to the preambles. [00:40:21] Speaker 01: And the district court said, I need to let people know that they were misled because I don't want defendants to, in future, argue that there's not really a consensus about these bullet points. [00:40:32] Speaker 01: So let's just take a step back and review the type of fraud perpetrated here for so long. [00:40:38] Speaker 01: It's not as if some of the information in some of these bullet points had never been heard by the public before. [00:40:44] Speaker 01: The Surgeon General, public health groups were trying to get truthful information out there and defendants perpetrated what they called their open question strategy. [00:40:52] Speaker 01: They would take truthful information like that that's in the bullet points and subvert it, make people think [00:40:59] Speaker 01: It's not really final yet. [00:41:00] Speaker 01: You need future further research. [00:41:03] Speaker 01: They created faux independence scientific research to create what they called marketable science to put out there in the milieu with the truthful bullet points that the government and other people were trying to convey to the public. [00:41:16] Speaker 01: So the district court here, we think, did not abuse its discretion. [00:41:20] Speaker 01: And recall, if we're talking about RICO, this is an abuse of discretion standard. [00:41:24] Speaker 01: And thinking, I just can't put these naked bullet points out there. [00:41:29] Speaker 01: I need to provide what she called for. [00:41:31] Speaker 05: Why do you say? [00:41:33] Speaker 05: I'm asking whether or not there's a violation of this court's. [00:41:37] Speaker 05: Why is this abuse of discretion? [00:41:42] Speaker 05: We're not looking at this remedy for the first time. [00:41:44] Speaker 05: We're trying to understand whether these preambles are consistent with what this court has said in this case about the scope of a RICO remedy. [00:41:53] Speaker 05: I don't think that's abuse of discretion standard. [00:41:55] Speaker 05: Isn't that just a straight legal question that we're now deciding whether this remedy is consistent with our mandate? [00:42:02] Speaker 01: I think compliance with a mandate is a straight legal question. [00:42:05] Speaker 01: I don't think this court said one way or another that, or I certainly don't think this court suggested that any conduct-based statements were off the table. [00:42:15] Speaker 01: As you discussed with Defendants' Council, there was an entire statement devoted to conduct. [00:42:20] Speaker 05: I'd not say that it... Well, you're now slipping back to the three bulleted statements. [00:42:24] Speaker 05: I'm only talking at this part of our discussion about the preempt. [00:42:28] Speaker 05: Right, and to the extent that- And the preambles were not before this court. [00:42:31] Speaker 01: They were not. [00:42:31] Speaker 05: That is true. [00:42:33] Speaker 05: And in fact, and I'll just ask you about their argument about our rejection in the 09 decision of the program to reduce the number of smokers. [00:42:53] Speaker 05: And we rejected that under RICO. [00:42:58] Speaker 05: We said we reject general deterrence remedies, and then we relied on this Second Circuit decision, which says that prevent and restrain does not mean prevent, restrain, and discourage. [00:43:19] Speaker 05: I mean, in other words, explain to me why our rejection of that remedy. [00:43:26] Speaker 05: That is, that if you reduce the number of smokers, it will reduce the incentive of the defendants to violate RICO. [00:43:31] Speaker 05: How is that any different than the district court's rationale for the preamble? [00:43:36] Speaker 01: Because she wasn't simply trying to generally deter. [00:43:39] Speaker 01: She was trying to follow this court's mandate at 1140, page 1140 of its opinion, that said if at the same time you communicate opposite truthful messages about these matters, these matters were defendants, [00:43:54] Speaker 01: I'm looking up earlier in that sentence is false and misleading assurances about, for instance, smoking related diseases and addictiveness. [00:44:02] Speaker 01: And of course, all five of the particular statements were before the district court then. [00:44:06] Speaker 01: I think it was open as an exercise of her discretion to think about what context [00:44:12] Speaker 01: Do I need to give consumers in conveying these truthful product-based messages in order to prevent and restrain these defendants from again perpetrating their? [00:44:24] Speaker 06: I may have misheard you when you were answering Judge Patil's question about what the rationale of the district court was with respect to the preambles. [00:44:34] Speaker 06: You cited JA 211 to 213. [00:44:40] Speaker 06: Yes, Your Honor, I believe that's... That doesn't deal with the preamble. [00:44:43] Speaker 06: It deals with secondhand smoke in one of the bullets. [00:44:46] Speaker 06: So where is it? [00:44:49] Speaker 01: Let me find it. [00:44:55] Speaker 01: So I'm looking at 212. [00:44:59] Speaker 06: That's secondhand smoke. [00:45:04] Speaker 01: The district court says, the corrective statement submitted by defendants, i.e. [00:45:09] Speaker 01: without the preambles, would be less effective at preventing and restraining. [00:45:13] Speaker 01: It goes on to say later in the next paragraph, by ensuring consumers... No, no, no, we have to finish the sentence. [00:45:22] Speaker 06: It is talking about secondhand smoke, but I think that rationale... It's not talking about the preambles, it's talking about secondhand smoke. [00:45:28] Speaker 01: Your Honor, I think the analysis carries over. [00:45:31] Speaker 01: By ensuring consumers know that defendants have misled the public in the pack on the issue of secondhand smoke, but I think this rationale carries over to every statement, because again, every statement has the same preamble. [00:45:44] Speaker 01: In addition to putting forth the fact that a scientific consensus on this subject exists, defendants will be less likely to attempt to argue in the future that such a consensus does not exist. [00:45:54] Speaker 01: And I think that rationale is the same thread runs through all of the preambles. [00:46:01] Speaker 01: They're all the same preamble. [00:46:03] Speaker 01: The district court's trying to prevent and restrain this very type of fraud that created an open question. [00:46:09] Speaker 01: And the district court, I believe earlier, at 204, 205, [00:46:14] Speaker 01: Said I need to look at the entire. [00:46:16] Speaker 06: In other words, the district court says unless if the defendants simply say second, there's no safe level of secondhand smoke. [00:46:28] Speaker 06: exposure to secondhand smoke, which I think is a very doubtful proposition. [00:46:32] Speaker 06: It doesn't sound very solid. [00:46:36] Speaker 06: But if that's all they said, then people wouldn't believe it? [00:46:42] Speaker 06: You have to say, we've deceived you in the past, now we say secondhand smoke, no exposure is safe? [00:46:49] Speaker 01: Yes, sir. [00:46:51] Speaker 01: I'd like to note that statement is actually unchallenged by defendants. [00:46:54] Speaker 06: I understand. [00:46:55] Speaker 01: At page 205, J.A. [00:46:58] Speaker 01: 205, the District Court explained, I have to look to the entirety of defendants' deceptive schemes, and it contrasted to cases like Warner-Lamborg, where there had been a specific single misrepresentation over a number of years. [00:47:13] Speaker 01: The district court said, if I were dealing with a specific single misrepresentation, yeah, maybe the simpler sort of disclosure, maybe just the bullet point information would be enough. [00:47:24] Speaker 01: But here, I'm looking at the entirety of this record. [00:47:27] Speaker 01: I'm looking at the type of fraud these defendants perpetrated. [00:47:30] Speaker 01: And we need to do more. [00:47:31] Speaker 01: People need to understand it is important and necessary context, she said, to understand the truth of those bullet points, that they are not an open question. [00:47:41] Speaker 01: They are not [00:47:43] Speaker 01: an area in which further research is needed, because that was the way that this fraud worked before. [00:47:49] Speaker 01: Defendants, if we're turning to the First Amendment analysis. [00:47:54] Speaker 05: I got one more question about RICO. [00:47:56] Speaker 05: Did you have another question? [00:47:58] Speaker 06: They describe something that where no further research is needed. [00:48:02] Speaker 06: Did you say that? [00:48:03] Speaker 06: You don't mean that, do you? [00:48:04] Speaker 01: I'm suggesting that the prior fraud suggested that, hey, one scientist says this, maybe other scientists say this, and some of those scientists were faux independent science. [00:48:15] Speaker 01: Who really knows the answer? [00:48:16] Speaker 01: This is an open question as a health reassurance tactic to persuade to falsely deceive smokers and potential smokers. [00:48:27] Speaker 01: What the district court said is, I don't want the truth of these bullet points being seen as or being vulnerable to that type of undermining in the future. [00:48:42] Speaker 05: So my questions to you so far have been about, just as they were to Mr. Estrada, about the extent to which our three earlier decisions on this subject bind or control the way we think about this issue, right? [00:48:57] Speaker 05: That's my question. [00:48:59] Speaker 05: I haven't asked you yet about the disgorgement opinion. [00:49:03] Speaker 05: And I'd like you to explain to me again how [00:49:10] Speaker 05: The preambles, and I'm only focusing on the preambles here, are consistent with that. [00:49:15] Speaker 05: In that case, there was actual expert testimony, which there isn't here, actual expert testimony that discouragement would create an economic incentive that would prevent future RICO violations. [00:49:39] Speaker 05: The court over dissent, which relied on that, it acknowledged the expert testimony. [00:49:47] Speaker 05: It even acknowledged that discoursement could lead, here's its language, discoursement may act to prevent and restrain future violations by general deterrence. [00:49:58] Speaker 05: But it went ahead and very specifically rejected that rationale. [00:50:03] Speaker 01: I think my answer is the same as before, is that this isn't a general deterrence rationale. [00:50:08] Speaker 05: This court instructed, I'm looking at 1140- That's what the dissent argued in the disgorgement case, too. [00:50:13] Speaker 01: Well, Your Honor, the district court, again, the district court's trying to follow the mandate. [00:50:18] Speaker 01: It says, they need to communicate opposite truthful messages about these matters to consumers. [00:50:24] Speaker 01: How can the district court ensure- What's the next sentence? [00:50:27] Speaker 01: And it says opposite truth reveals a previously hidden truth about their products will prevent and restrain. [00:50:34] Speaker 01: And I think what the district court was doing is trying to make sure that those bullet points are understood correctly as the real truth, not simply as bullet points that are sort of out there in the competing marketplace of bullet points as they were before. [00:50:51] Speaker 01: The district court needed to prevent and restrain this particular type of fraud by these particular type of defendants. [00:50:57] Speaker 01: And that, I think, if we're talking about how necessary this is to prevent and restrain under RICO, is reviewed for an abuse of discretion. [00:51:05] Speaker 01: And I think the court was within her discretion to conclude, I just can't throw these bullet points out there. [00:51:10] Speaker 01: Some of this information has been out there before. [00:51:13] Speaker 01: I need to give consumers important and necessary context about how to understand the truthful information about defendants' products. [00:51:21] Speaker 05: Do you want to go on and say something about the First Amendment? [00:51:23] Speaker 05: I know I kept interrupting your efforts to get there. [00:51:26] Speaker 01: I do. [00:51:27] Speaker 01: I think there's this idea through defendant's briefing that simply requiring someone who's been adjudicated to do something wrong to disclose that fact is somehow just off the table for First Amendment purposes, that this is so inflammatory and self-vilifying that it just cannot be in our system. [00:51:45] Speaker 01: And I think that things like FTC orders, things like NLRB postings, show that this is hardly unprecedented. [00:51:53] Speaker 01: In a variety of contexts, we ask courts and agencies make people who have been fully adjudicated to have done something wrong to disclose that fact, as long as it's consistent with whatever the government purpose here is. [00:52:08] Speaker 01: As we've been discussing, this was consistent with the purpose of preventing and restraining. [00:52:14] Speaker 01: Defendants characterized the language in these statements a number of ways. [00:52:20] Speaker 01: We have to say we're reprehensible and untrustworthy wrongdoers. [00:52:23] Speaker 01: This is the Scarlet Letter. [00:52:25] Speaker 01: I refer the court to the actual statements here, which in context read like litigation notices. [00:52:30] Speaker 01: It's an accurate reporting of what happened in this litigation. [00:52:33] Speaker 01: A federal court has ruled that the defendant tobacco companies deliberately deceive the American public about the health effects of smoking and has ordered those companies to make this statement. [00:52:41] Speaker 01: Here is the truth, followed by bullet points. [00:52:44] Speaker 01: District court was not trying to shame, humiliate, punish any of those things. [00:52:49] Speaker 01: The district court was trying to prevent and restrain this type of fraud from happening again. [00:52:53] Speaker 01: I do see that I'm into intervenors' time. [00:52:55] Speaker 01: I don't want to deny them their time here. [00:52:57] Speaker 05: You won't deny them any time. [00:53:00] Speaker 05: Do you have any other questions? [00:53:02] Speaker 05: No, I'm OK. [00:53:03] Speaker 05: I have just two of my typo questions for you. [00:53:08] Speaker 05: One is, do you agree that filtered should mean light? [00:53:12] Speaker 01: I don't, Your Honor. [00:53:14] Speaker 01: You don't? [00:53:15] Speaker 01: If you look at the beginning of that statement, regular cigarettes is juxtaposed with light and low tar, so you kind of have two categories, light and low tar, and then you have regular cigarettes. [00:53:26] Speaker 05: Look at the preamble. [00:53:29] Speaker 05: By falsely selling and advertising low tar and light cigarettes. [00:53:33] Speaker 05: That's what the preamble says. [00:53:35] Speaker 01: It does. [00:53:35] Speaker 05: The bullet right before this one says, the previous bullet says the same thing. [00:53:42] Speaker 05: Many smokers switched to low tar and light cigarettes. [00:53:45] Speaker 01: I'm low to attribute this to a simple typo, Your Honor. [00:53:49] Speaker 01: There were a number of factual findings that filters played a role in the health reassurance strategies that defendants falsely pursued. [00:53:56] Speaker 01: I don't think it's saying anything about unfiltered cigarettes. [00:54:01] Speaker 05: Well, then if it's not a typo, aren't the defendants right? [00:54:05] Speaker 05: that this falsely says that regular cigarettes are not filtered and that filtered cigarettes are no safer than unfiltered? [00:54:19] Speaker 01: When it says regular cigarettes, it's clear from the preamble that regular is juxtaposed with light and low tar. [00:54:25] Speaker 01: So it's saying low tar and filtered cigarettes, smokers, inhale essentially the same amount of tar and nicotine as they would from cigarettes that are not light and low tar. [00:54:35] Speaker 01: I think that's a fair reading of the statement here. [00:54:39] Speaker 05: OK, my other typo question. [00:54:42] Speaker 05: Statement D, rate controlling the impact and ammonia. [00:54:49] Speaker 05: Everything else in this is in all the other bulleted statements about their conduct are in the past tense. [00:54:55] Speaker 05: This one's not. [00:54:56] Speaker 05: Shouldn't that be in the past tense also? [00:54:58] Speaker 01: Your Honor, I don't think there's any suggestion that somehow defendants have reverted to a cruder form of cigarette that don't do all of these things. [00:55:07] Speaker 05: I'm just asking you whether this one should, the others are in the past tense. [00:55:10] Speaker 05: Shouldn't this one be in the past tense? [00:55:11] Speaker 05: Is there some significance to it being in the present tense? [00:55:15] Speaker 01: I think the present tense formulation may have been delivered. [00:55:19] Speaker 01: The district court didn't opine on this particular point. [00:55:23] Speaker 01: Because the cigarettes in which they control the impact and delivery of nicotine, those are the same cigarettes that are on the market. [00:55:29] Speaker 01: Cigarette companies are still pushing the same product that have the same control features in them. [00:55:36] Speaker 06: Is there any evidence that electronic cigarettes cause cancer? [00:55:41] Speaker 01: I'm unaware of. [00:55:43] Speaker 01: I think that's beyond the scope of this case. [00:55:44] Speaker 01: I just don't know, Your Honor. [00:55:45] Speaker 06: This doesn't cover electronic cigarettes, does it? [00:55:48] Speaker 06: Well, it doesn't say that. [00:55:50] Speaker 01: I don't believe it does, Your Honor. [00:55:52] Speaker 01: It doesn't say anything about electronic cigarettes. [00:55:55] Speaker 05: Okay. [00:55:55] Speaker 01: Can I turn it over to intervenors now? [00:55:57] Speaker 05: Yes, we'll hear from the amicus. [00:55:59] Speaker 01: Thank you, Your Honor. [00:56:13] Speaker 03: Howard Crystal for the public health intervenors. [00:56:16] Speaker 03: The corrective statements must be considered in light of the district court's findings of massive fraud, which demonstrate that public health messages alone are not sufficient to restrain further fraud. [00:56:28] Speaker 03: Long after public health messages appeared on every cigarette pack and in many other places, [00:56:35] Speaker 03: The district court heard testimony from the defendant's highest executives, and she summarized many of her findings. [00:56:41] Speaker 03: This is on page 910 of her opinion. [00:56:43] Speaker 03: Quote, as defendant's senior executives took the witness stand at trial, one after another, it became exceedingly clear that these defendants have not, as they claim, ceased their wrongdoing, whereas they argued throughout the trial [00:56:56] Speaker 03: undertaken fundamental or permanent institutional change. [00:57:00] Speaker 03: The question is what language in corrective statements are appropriate under the various standards to restrain future fraud? [00:57:08] Speaker 06: What's the time frame of that? [00:57:11] Speaker 03: Well, Your Honor, the district court's judgment was in 2006. [00:57:14] Speaker 06: No, I know. [00:57:16] Speaker 06: She's talking about past events. [00:57:17] Speaker 03: Yeah, that's correct, Your Honor. [00:57:18] Speaker 06: When did they occur? [00:57:19] Speaker 03: Well, over many years. [00:57:20] Speaker 03: So it was a 50-year fraud, Your Honor, that the district court, and this is critical, and that this court also affirmed, is likely to continue. [00:57:27] Speaker 03: There's no suggestion that this fraud is not continuing. [00:57:30] Speaker 03: Judge Taito gave one example. [00:57:32] Speaker 06: Do you agree with the statement on page 40 of the appellant's brief that for more than a decade, Philip Morris has agreed [00:57:44] Speaker 06: that smoking causes damage to health and is addictive. [00:57:50] Speaker 03: Your Honor, there are certain findings in the opinion about Philip Morris changing its position to some degree. [00:57:55] Speaker 03: The district court, however, did find that Philip Morris and all of the defendants continue their fraud or likely to continue their fraud, and that's the premise for all of the remedies. [00:58:04] Speaker 03: All of the remedies are premised on the finding that fraud is likely to continue, which this court affirmed not only in the original appeal, but in the subsequent appeal when the defendants argued that the Tobacco Control Act [00:58:14] Speaker 03: somehow obviated future fraud. [00:58:16] Speaker 03: And not only with regard to other remedies, this court specifically addressed the lotar fraud, even though descriptors had been banned, and found in that appeal that remedies related to lotar were also likely to continue. [00:58:28] Speaker 03: Because on that score, it's important to recognize that the lotar fraud is not limited to the descriptors themselves. [00:58:33] Speaker 03: The court found that the fraud went far beyond that. [00:58:35] Speaker 03: And the product itself is still sold. [00:58:38] Speaker 03: Lights and lotar cigarettes are still sold under other names. [00:58:41] Speaker 03: And therefore the remedy is entirely appropriate. [00:58:44] Speaker 03: And with regard to Judge Taylor's specific question on the word filter, I just want to point out that there are findings, findings 1581 to 1584, which talk about filtered cigarettes. [00:58:57] Speaker 03: the filtering of cigarettes being a particularly important part of the low tar fraud. [00:59:01] Speaker 03: So in our view, reading that part of the bullet about low tar or light, I believe it is, and filtered cigarettes. [00:59:08] Speaker 05: Excuse me? [00:59:09] Speaker 05: What were the numbers of those? [00:59:10] Speaker 03: 1581 to 1584. [00:59:13] Speaker 03: Talk about filter design. [00:59:15] Speaker 03: Your Honor, with regard to the preambles, which has been a focus here this morning, I think it's important, in addition to the previously hidden truth language, which Judge Tatel pointed out, which we think is relevant, the court also used the words that the statements may address defendant's false assertions. [00:59:30] Speaker 03: And again, we would submit that that's exactly what these statements do in the preambles. [00:59:35] Speaker 03: They address the false assertions, and they're specifically designed to make sure that not just the public gets public health information, that was not enough. [00:59:43] Speaker 03: but that the public knows that these defendants deceived them, which will attract notice. [00:59:49] Speaker 03: In the Warner case, the court rejected that contrary to prior advertising preamble specifically because it said it wasn't necessary to attract notice. [00:59:57] Speaker 03: But given the public health information that's out there, it's absolutely [01:00:01] Speaker 03: In our view, uncontrovertible, but that preamble is necessary in order to sufficiently attract attention and in order to sufficiently detract from further fraud. [01:00:10] Speaker 03: Also, with regard to, there was some discussion of AMI. [01:00:14] Speaker 03: I think this is very important because the defendants seek to draw this firm distinction between conduct and the properties of cigarettes. [01:00:20] Speaker 03: And we don't think that distinction is borne out by the precedents. [01:00:23] Speaker 03: The conduct that's being talked about is conduct inextricably intertwined with the product. [01:00:30] Speaker 03: The court said on page 1143 of the affirmative's opinion that the statements may be related to the efficacy, safety, and quality of the product. [01:00:38] Speaker 03: And AMI itself [01:00:40] Speaker 03: I don't think it's a fair characterization to say that saying that the animals were slaughtered in Canada is just about the product. [01:00:48] Speaker 03: That's just something about what happened to the product. [01:00:50] Speaker 03: And saying that cigarettes were manipulated is similarly a statement about the product that is entirely appropriate in light of the court's findings. [01:01:01] Speaker 05: Thank you. [01:01:02] Speaker 05: Thank you. [01:01:03] Speaker 05: Let's see. [01:01:04] Speaker 05: Mr. Estrada, you are out of time, but you can take two minutes if you'd like. [01:01:12] Speaker 04: Thank you. [01:01:12] Speaker 04: Just let me make a few points. [01:01:14] Speaker 04: I mean, I do think that what the district court should have done with respect to uncontestable facts should have been to attribute them to health authorities where that's possible if they're indeed uncontestable. [01:01:27] Speaker 04: With respect to the bullets that are proper on the subject of manipulation, since we don't agree with them, I think the only appropriate thing would be to say that a federal district court has ordered us to say these things. [01:01:39] Speaker 04: And unlike Mr. Crystal, I do not believe that that necessarily implies a statement about the conduct of the defendants. [01:01:48] Speaker 04: I will point out that in the American meat case, this court actually passed on saying butchered or slaughtered, since the regulation did allow for the alternative use of the word harvested. [01:02:00] Speaker 04: And I think it's a fair inference from the Ombank opinion that you can compel me to say that I harvested the meat in my ranch in [01:02:09] Speaker 04: Romania, but you cannot constitutionally compel me to say that I am a butcher from Transylvania. [01:02:18] Speaker 04: On the point on whether we're likely to continue to engage in these things in the future, I think it is fair to say that the court concluded that court supervision was needed. [01:02:28] Speaker 04: I don't believe that is equivalent from the implication of any of these statements in the absence of a time frame that we are currently engaging in these things, where the evidence actually showed that they occurred decades ago. [01:02:38] Speaker 04: Thank you so much. [01:02:39] Speaker 05: Thank you. [01:02:40] Speaker 05: Yeah. [01:02:42] Speaker 05: Okay. [01:02:44] Speaker 05: Case is submitted and we'll take a brief recess.