United States v. Philip Morris USA Inc.

In 1999, the United States (plaintiff) filed a suit against Phillip Morris USA Inc. (defendant). The suit alleged that Phillip Morris had illegally covered up tobacco’s dangerous effects with a marketing strategy aimed at minors. The government sought damages under provisions of the Social Security Act (SSA). The government also sought injunctive relief and disgorgement of proceeds pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO). Phillip Morris moved to dismiss the complaint. The district court dismissed the SSA claims but not the RICO claim on the ground that 18 U.S.C. § 1964(a) authorized it jurisdiction to prevent and restrain future conduct in violation of RICO. The district court relied on United States v. Carson, 52 F.3d 1173 (1995), in which the United States Court of Appeals for the Second Circuit held that disgorgements satisfy the future-conduct requirement if the proceeds are being used to fund or promote the illegal conduct. The district court held that it was too premature to answer this question. Discovery commenced. After discovery, the government sought disgorgement of $280 billion. Phillip Morris argued that disgorgement violated the future-conduct requirement and that, in the alternative, the Carson requirement was not met. The district court denied the motion. Phillip Morris moved for interlocutory appeal. The district court granted the motion and certified for review the memoranda in which it denied summary judgment.