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Justice, Tobacco, and Retroactive Law

March 25, 2003

In the midst of war and emergency declarations from the U.S. Department of Justice, we find that the government lawyers who dominate much of the national discourse have not been concentrating exclusively on "national security."

No, John Ashcroft's minions are trying to gain a new source of government revenue by again looting U.S. tobacco companies—and further destroying the U.S. Constitution in the process. It is not enough for the U.S. Government to be waging war against Iraq; it must also continue to war against Americans as well.

The newest demands from the DOJ accuse "Big Tobacco" of engaging in fraudulent schemes, yet, from our vantage point, the only entity that presently is committing fraud is the DOJ itself. Of course, the $289 billion that Ashcroft is demanding from tobacco companies comes on top of the $209 billion that 46 states attorneys general extorted from those companies in 1998.

In both cases, the tobacco suits have followed a perilous legal pattern in this country in which the common law protections that we once enjoyed are being systematically and violently stripped away. The states were able to accomplish their goals by passing what in legal terms are "bills of attainder," laws aimed at one set of individuals or a certain "class" of people, all of which are strictly prohibited not only by the U.S. Constitution, but also by most state constitutions.

By taking away the common law protections for tobacco companies, state governments were able to ensure that no tobacco company would be able to receive a fair trial in state court, a venue where before the governments began their litigation, tobacco firms had always been victorious in defending themselves in product liability lawsuits.

(Since the enactment of the "settlement"—one of the terms guaranteeing protection from future litigation—juries have slapped multi-billion dollar judgments on tobacco companies, even believing what can only be perjured testimony by smokers who claimed that they never had an inkling of the hazards of smoking.)

While state governments were attacking the rule of law through their own methods, the feds seem to have done them one better, applying retroactive law in seeking their own goals, something again expressly forbidden by the U.S. Constitution.  (The Constitution prohibits what it calls "ex post facto laws.") The original U.S. tobacco suit, filed in 1999 by the Clinton-Reno DOJ and continued by the Bush Administration, applies the Racketeer Influenced and Corrupt Organizations Act, better known as RICO.

Using RICO, the government contends that in 1953, tobacco executives met to create "a fraudulent scheme to deceive and defraud the public and consumers of cigarettes," which would be a violation of the very loosely-interpreted RICO statutes. However, Congress did not pass RICO (called the Nixon Administration’s "crime bill") until 1970.

To put it another way, the government is alleging that tobacco executives knowingly concocted a scheme to violate a law that would not be passed until 17 years later. In the past four decades, people have accused tobacco executives of being many things, but we do not recall the charges of their being clairvoyant.

In a free society, such a case never would make it to court. The imposition of retroactive law, along with bills of attainder, can only be called a tool of despotism, as those who founded the United States as a bulwark against tyranny expressly forbade these actions. Once these formerly prohibited paraphernalia of the state were used, with the blessings of the courts, there has been no real barrier to what can only be termed the rule of people over the rule of law. As Paul Craig Roberts recently wrote, the loss of the rule of law is also the loss of freedom and justice.[i]

American law, as Roberts and others have duly noted, was founded upon the "Rights of Englishmen," and was especially influenced by the great British 18th century jurist William Blackstone. The protections of the individual from predations of the state, enshrined in both the Constitution and the Articles of Confederation (and the short-lived constitution of the Confederate States of America as well) were not put there by accident. The founders of the United States knew well the bounds and effects of tyrannical rule and sought to keep government at bay.

While the "American Experiment" in law has been partially successful, the constitutional protections began to be eroded by the War Between the States when the Lincoln Administration managed to violate most of the Constitution. The adherents of the "Progressivist" movement of the late 19th and early 20th centuries continued the expansion of the central state, which ultimately ended in the disasters of the U.S. entry into World War I, prohibition, and the implementation of the income tax and creation of the Federal Reserve System.[ii]

The New Deal and World War II gave even greater powers to the national government and by the early 1970s, most of the original constitutional protections for individuals had disappeared. Replacing those rights has been a vast expansion of federal law, both criminal and civil, that defies the imagination.

On the criminal side, the federal government is a vast conviction machine, as federal prosecutors are armed with laws that leave those who are charged with little chance of being able to receive a fair trial. Furthermore, the DOJ has been responsible for the imprisoning of thousands of people convicted of what Roberts calls "crimes without intent. He uses the example of the Exxon Corporation, which plead guilty to criminal charges of "depositing refuse without a permit" and "illegally killing migratory waterfowl" in the wake of the huge Exxon Valdez oil spill in Alaska in 1989. While everyone knows that the spill was an accident, by charging that Exxon deliberately dumped "refuse" and killed birds, the meaning of criminal law was turned on its head.

On the civil side, federal law and the system of federal courts do not resemble the system of common law that we inherited from England. Instead, defendants are held responsible for things they did not cause, and the deep finances of the federal government insure that it is almost impossible to fight such charges.

For example, many people who have been sued by the federal government under the Superfund Act are not nor have been guilty of acting illegally. For example, the feds once sued a pizza shop because one of its boxes was found in a landfill that was being "cleaned" under Superfund. (The Superfund Act imposes retroactive law by permitting litigation against firms that legally deposited refuse into legal landfills that later became targets of environmental concern. Thus, firms that did not break any laws are sued as lawbreakers.)

In the case of the tobacco firms, the government contends that the marketing of tobacco products—something perfectly legal in 1953 (and even now, for that matter)—actually was a crime. Furthermore, any attempts to defend themselves from their critics also are considered to be criminal behavior, according to DOJ.

The possibilities for such litigation are endless. Should the tobacco companies lose this suit—and there is no reason to believe that they can receive a fair trial in federal court—then every other firm is open to the same treatment, from gun manufacturers to producers of alcoholic beverages, not to mention oil and chemical companies.

Whatever one might think of smoking, it is not a crime to smoke, nor has the manufacture and sale of cigarettes ever been illegal, unlike alcohol and certain kinds of drugs like cocaine. However, by creating unjust laws and by twisting legal reasoning, the government basically has undone centuries of jurisprudence.

Yes, the tobacco companies are unpopular, but that has never been illegal—at least until now. No doubt, the tobacco companies will settle with the federal government, the bill ultimately to be footed by tobacco users, but that will only further the injustice in this case.

Like previous administrations in modern America, the Bush Administration has openly declared itself an enemy of the rule of law. Under such a regime, perhaps the readers need to be reminded that such a government considers all of us to be enemies of the state. Moreover, if well-heeled corporations are unable to defend themselves from what essentially are illegal prosecutions, what chances will avail to the rest of us?


William Anderson, an adjunct scholar of the Mises Institute, teaches economics at Frostburg State University. Send him MAIL. See his Mises.org Articles Archive. Candice Jackson, a graduate of Pepperdine School of Law, works for Judicial Watch.

[i] Roberts, Paul Craig, "The Causes of Wrongful Conviction," The Independent Review, 7 (4) 567–74.

[ii] The income tax and prohibition, both seen as unconstitutional, came about only because of constitutional amendments. Modern federal prohibition of drugs—while just as unconstitutional as the forbiddance of alcohol—has passed muster with current courts, which tells us something about the commitment of modern federal judges to the original federalist system of law.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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