Gov't Seeks $14B in Tobacco Case

The government has asked a federal judge to require cigarette makers to fund a $10 billion quit-smoking program and $4 billion for an anti-smoking education campaign to remedy decades of alleged fraud by the industry.

Lawyers for the Justice Department (search) told U.S. District Judge Gladys Kessler in a motion with the court late on Monday that the smoking cessation program and other remedies should be imposed if the judge rules in favor of the government in its landmark racketeering case, which accuses the industry of conspiring to downplay the dangers of smoking.

The remedies were in line with sanctions government lawyers outlined in closing arguments before Kessler earlier this month. That plan, however, has drawn criticism because it is only a fraction of the $130 billion, 25-year program recommended by a government witness.

The $10 billion would pay for a nationwide program that would run for five years if Kessler concludes that the tobacco companies violated racketeering laws.

The $4 billion education program would be spread over 10 years and run through the American Legacy Foundation, an anti-smoking campaign created as part of the cigarette makers' 1998 settlement with state attorneys general.

Among the other remedies listed by the government were:

-- A system that would impose heavy fines on the companies if rates of youth smoking fail to drop in line with pre-set targets.

-- A ban on the use of "health descriptors" in cigarette ads, such as "light" or "mild."

-- Appointment of an "investigations officer" with the authority to monitor and investigate the tobacco companies and to recommend removal of company executives if warranted.

The department said the court should be allowed to extend the cessation program if warranted.

Lawyers for Altria Group Inc. and its Philip Morris tobacco unit, maker of Marlboro cigarettes, said in a press briefing on Tuesday that they plan to ask Kessler to throw out the government's remedy proposal. They said it contradicts an appeals court ruling that required remedies in the case to be "forward-looking," rather than punishment for past misconduct.

"It doesn't really matter whether the amount the government is seeking is $1 billion, $10 billion or $100 billion," Altria associate general counsel William Ohlemeyer said. "The law and the facts just don't entitle the government to these remedies."

Industry critics repeated long-standing charges that the penalties are too weak and that the Bush administration was catering to the tobacco industry.

"It is a serious breach of the Justice Department's responsibility to the American people and an abuse of power on behalf of the tobacco companies," Sen. Edward Kennedy, D-Mass., said in a statement.

Targeted in the 1999 lawsuit are: Altria Group Inc. (MO) and Philip Morris USA (search); Loews Corp.'s (LTR) Lorillard Tobacco unit, which has a tracking stock, Carolina Group (CG); Vector Group Ltd.'s (VGR) Liggett Group; Reynolds American Inc.'s (RAI) R.J. Reynolds Tobacco unit and British American Tobacco Plc unit British American Tobacco Investments Ltd.

The companies deny they illegally conspired to promote smoking and say the government has no grounds to pursue them or impose additional restrictions after they drastically overhauled marketing practices as part of a 1998 settlement.

Kessler has repeatedly urged the government and cigarette makers to settle the case. The two sides held meetings earlier this year at Kessler's request in an unsuccessful effort to reach a settlement.