Justice Dept Lawyer Fixes Tobacco Case for RJR

Senior Justice Department officials, under fire for a 90% reduction in sanctions sought in the government’s racketeering case against the tobacco industry, had pushed for even deeper cuts, people close to the situation say.

Government lawyers, who were ordered to slash their demand for a $130-billion industry-funded smoking cessation program, had been planning to propose a $16-billion campaign as closing arguments in the marathon case got underway last week, according to people close to the trial team, who spoke on condition of anonymity.

But on the morning of June 7, the day of the government’s summation, the trial team was told to cut the demand still further, to $6 billion, the sources said. After a heated lunch-hour meeting — at which lawyers told senior staff that they couldn’t credibly propose $6 billion — they were cleared to ask federal Judge Gladys Kessler for a $10-billion program, the sources said.

Justice Department lawyers gave the New York Times a copy of a memo they wrote to an agency head complaining of his slashing penalties in a major tobacco suit.
The May 30 memo was sent from Sharon Eubanks and Stephen Brody to Justice’s No. 3 officer, Robert D. McCallum, the newspaper reported Thursday.

In the seven-page memo the pair stated that cutting the penalty from $130 billion to $10 billion would look political and weaken the department’s ability to negotiate future settlements with industry defendants.

Their objections were overruled by McCallum, associate attorney general of the department.

Before his appointment in the Justice Department in 2001, McCallum had been a partner at Alston & Bird, an Atlanta-based firm that has done trademark and patent work for R.J. Reynolds Tobacco. In 2002, McCallum signed a friend-of-the-court brief by the administration urging the Supreme Court not to consider an appeal by the government of Canada to reinstate a cigarette smuggling case against R.J. Reynolds that had been dismissed. The department’s ethics office had cleared McCallum to take part in that case.

Acting on a request from 50 Democratic lawmakers, the Justice Department’s Professional Responsibility Advisory Office has launched an investigation into whether political interference tainted the case.

A group of senators has also asked Attorney General Alberto Gonzales to remove Associate Attorney General Robert McCallum Jr. from involvement in the case.

The judge presiding over the government’s troubled racketeering case against the tobacco industry summoned cigarette companies’ chief executives, their lawyers and Justice Department attorneys for a closed-door meeting yesterday and urged both sides to settle the case.

U.S. District Judge Gladys Kessler explained in a court order late in the day that she closed the meeting to the public because she considered it “a routine, informal discussion with the parties urging them, once again, to consider the advantages of settling the case rather than the risks of litigating it.”

Philip Morris Chief Executive Michael Szymanczyk and R.J. Reynolds Tobacco CEO Susan Ivey and their lawyers were ushered into the private meeting yesterday through a secured entrance at the back of the federal courthouse. Both executives left the courthouse through a back entrance 2-½ hours later and declined to comment, as did their lawyers and spokesmen.

“The judge put this meeting under seal,” Dan Webb, lead attorney for Philip Morris, said as he left the session. “We’ve been instructed by the judge not to talk about our meeting. We’re just not going to discuss it, period.”