United States v. Philip Morris USA Inc. , 840 F.3d 844 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 13, 2016 Decided November 1, 2016
No. 15-5210
UNITED STATES OF AMERICA,
UNITED STATES DEPARTMENT OF JUSTICE, ET AL.,
APPELLEES
v.
PHILIP MORRIS USA INC.,
FORMERLY KNOWN AS PHILIP MORRIS INCORPORATED,
APPELLEE
R.J. REYNOLDS TOBACCO COMPANY,
APPELLANT
BROWN & WILLIAMSON TOBACCO CORPORATION,
DIRECTLY AND AS SUCCESSOR BY MERGER TO AMERICAN
TOBACCO COMPANY, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:99-cv-02496)
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Jeffrey A. Mandell argued the cause for appellant. With
him on the briefs were Noel Francisco and Peter J.
Biersteker. David M. Bernick entered an appearance.
Lewis S. Yelin, Attorney, U.S. Department of Justice,
argued the cause for appellee United States of America. With
him on the brief were Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, and Mark B. Stern and Alisa B.
Klein, Attorneys. Melissa N. Patterson, Attorney, entered an
appearance.
Howard M. Crystal and Katherine A. Meyer were on the
brief for plaintiff-intervenors-appellees Tobacco-Free Kids
Action Fund, et al.
Before: TATEL, Circuit Judge, and EDWARDS and
SENTELLE, Senior Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: This is the latest appeal in the
government’s long-running RICO case against the nation’s
major cigarette manufacturers. Ten years ago, the district
court issued a comprehensive remedial order, which included
a requirement that defendants and their successors televise
“corrective statements” about the dangers of smoking. Eight
years later, one defendant, R.J. Reynolds Tobacco Company
(RJR), sought to dissolve that order as void under Federal
Rule of Civil Procedure 60(b)(4) and unjust under Rule
60(b)(6). The district court denied RJR’s motion, and we
affirm. As the Supreme Court made clear in United States
Student Aid Funds, Inc. v. Espinosa, relief under Rule
60(b)(4) is available “only in the rare instance where a
judgment is premised either on a certain type of jurisdictional
error or on a violation of due process.” 559 U.S. 260, 271
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(2010). None of those defects exists here. And although RJR
could have challenged its remedial obligations under Rule
60(b)(6), its failure to do so in a timely manner dooms its
motion now.
I.
In 1999, the United States sued RJR, Brown &
Williamson Tobacco Corporation, and several other cigarette
manufacturers under the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. §§ 1961–68, alleging a
conspiracy to deceive the American public about the dangers
of cigarettes. The history of this case is described in our many
prior decisions. See, e.g., United States v. Philip Morris USA,
Inc., 566 F.3d 1095, 1105–10 (D.C. Cir. 2009) (Remedial
Opinion) (affirming most aspects of the district court’s
liability finding and remedial order); United States v. Philip
Morris USA Inc., 801 F.3d 250, 252–56 (D.C. Cir. 2015)
(Corrective Statements Opinion) (largely upholding the
content of the corrective statements). For purposes of this
appeal, the relevant facts are as follows.
Prior to trial, Brown & Williamson merged its domestic
tobacco operations with RJR and reconstituted itself into a
passive holding company called Brown & Williamson
Holdings (BWH). The district court then conducted a nine-
month bench trial followed by a two-week remedial hearing.
In 2006, the court found defendants liable and ordered a
complex set of remedies, including a prohibition on the use of
misleading terms such as “ultra light” and “low tar,” a ban on
deceptive statements about the addictiveness of cigarettes, and
the remedy at issue here: a requirement that each defendant
televise corrective advertisements about the health
consequences of smoking. United States v. Philip Morris
USA, Inc., 449 F. Supp. 2d 1, 938–45 (D.D.C. 2006). The
remedial order required the ads to be run in primetime on one
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of “three major television networks” at least once a week for a
year. Id. at 941. Central to this case, the order expressly stated
that the injunction applied to “each of the Defendants, except
[three], and to each of their . . . successors.” Id. at 937.
The tobacco manufacturers appealed, challenging many
aspects of the order, including the corrective statements
remedy and its application to BWH. Relying on an earlier
opinion in which we held that RICO’s remedial provision, 18
U.S.C. § 1964(a), authorizes only forward-looking remedies
aimed at preventing future violations of the Act, the
manufacturers argued that the district court lacked authority to
require corrective statements. They also argued that the
district court had no basis for subjecting BWH to the remedial
order given its status as a passive holding company. In 2009,
we upheld the corrective statements remedy and remanded for
fact finding on “the extent of BWH’s control over tobacco
operations” and its “current capabilities” to “commit future
RICO violations.” Remedial Opinion, 566 F.3d at 1135, 1140.
On remand, the parties agreed that BWH was not a defendant
and thus not subject to the injunction, including the obligation
to televise corrective ads. See United States v. Philip Morris
USA, Inc., No. 99-2496, ECF No. 5846 (D.D.C. Dec. 22,
2010) (approving the parties’ agreement concerning BWH).
Two years later, the district court issued an order setting
forth the final text of the corrective statements, which the
manufacturers appealed. See United States v. Philip Morris
USA, Inc., 907 F. Supp. 2d 1, 27 (D.D.C. 2012). While that
appeal was pending, the parties began to negotiate how the
statements would be disseminated. Although they agreed on
most issues, they disagreed about whether RJR had to televise
two sets of ads, one as an original defendant and another in its
capacity as Brown & Williamson’s successor. In RJR’s view,
requiring it to run two sets of ads exceeded the court’s
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remedial authority. For its part, the government insisted that
double ads were required because the injunction, by its plain
terms, applies to “each of the Defendants . . . and to each of
their . . . successors.” See Philip Morris, 449 F. Supp. 2d at
937. In June 2014, the district court entered a consent order
outlining the implementation plan and explaining that by
agreeing to the order RJR had not “waiv[ed]
[its] . . . challenge to the requirement that it publish Corrective
Statements on television in its capacity as successor to Brown
& Williamson.” United States v. Philip Morris USA, Inc., No.
99-2496, 2014 WL 2506611, at *10 (D.D.C. June 2, 2014).
Shortly after entry of the consent order, RJR filed a Rule
60 motion seeking “relief from those provisions of [the
remedial order] . . . that require corrective statements on
behalf of [Brown & Williamson].” Philip Morris, No.
99-2496, ECF No. 6103, at 1 (D.D.C. June 11, 2014).
Specifically, RJR invoked Rule 60(b)(4), which allows courts
to reopen final orders that are “void,” and Rule 60(b)(6),
which allows courts to revisit final orders for “any other
reason that justifies relief.” See Fed. R. Civ. P. 60. In other
words, RJR sought to modify the injunction so that it would
have to run only one set of ads. In May 2015, we largely
upheld the order specifying the text of the corrective
statements. Corrective Statements Opinion, 801 F.3d at 252–
62. A week later, the district court denied RJR’s Rule 60
motion, prompting this appeal.
RJR argues, as it did in the district court, that the order
requiring it to run ads as Brown & Williamson’s successor is
void under Rule 60(b)(4) because it is punitive rather than
preventive, and thus exceeds the district court’s RICO
authority. RJR also argues that the double-ad requirement is
unjust under Rule 60(b)(6).
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II.
We begin, as we must, with our jurisdiction. Steel Co. v.
Citizens for Better Environment, 523 U.S. 83, 94 (1998) (“On
every writ of error of appeal, the first and fundamental
question is that of jurisdiction . . . .” (quoting Great Southern
Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453 (1900))).
Invoking 28 U.S.C. § 1292(a), which authorizes review of
orders “refusing to dissolve or modify injunctions,” RJR
argues that we may hear this appeal because the district court
denied its request to eliminate the double-ad requirement.
Although the government agrees, intervenors, a group of six
public health organizations, question our jurisdiction on the
ground that the district court’s denial of RJR’s Rule 60
motion “did not change [RJR’s] relationship” to the
injunction. Intervenors’ Br. 18 n.7.
Section 1292(a) creates an exception to the general rule
that appellate courts may review only “final decisions.”
Salazar ex rel. Salazar v. District of Columbia, 671 F.3d
1258, 1261 (D.C. Cir. 2012) (quoting Carson v. American
Brands, Inc., 450 U.S. 79, 83 (1981)). This circuit construes
section 1292(a) narrowly in order to avoid the “debilitating”
problems engendered by piecemeal appeals. Id. (quoting
Coopers & Lybrand v. Livesay, 437 U.S. 463, 471 (1978)). As
we explained in a 2012 decision in this very case, section
1292(a) jurisdiction exists in only two circumstances: where
the district court order “clearly grants or denies a specific
request for injunctive relief,” such as a request to dissolve an
injunction; or, if the order does not clearly grant or deny such
relief, where the appellant can show that it has the “practical
effect” of doing so. United States v. Philip Morris USA, Inc.,
686 F.3d 839, 844 (D.C. Cir. 2012); see also Salazar, 671
F.3d at 1261–62. In the latter situation, the appellant must
show that the order “might have a serious, perhaps
irreparable, consequence” and can be “effectually challenged
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only by immediate appeal.” Philip Morris, 686 F.3d at 844
(quoting Salazar, 671 F.3d at 1262) (internal quotation marks
omitted). An order that “merely clarifies” an injunction fails
this test and is therefore unreviewable. Washington
Metropolitan Area Transit Commission v. Reliable Limousine
Service, LLC, 776 F.3d 1, 9 (D.C. Cir. 2015).
Intervenors contend that the district court’s Rule 60 order
merely clarified RJR’s existing obligations and thus lacks the
practical effect required for appellate jurisdiction. But this
argument overlooks the first step of section 1292(a) analysis.
Although it is true that the denial of RJR’s Rule 60 motion
left its remedial obligations intact, an order’s “practical
effect” comes into play only if it is unclear whether the order
denied a specific request for injunctive relief. Philip Morris,
686 F.3d at 844. Here, the remedial order expressly applies to
“each of the Defendants . . . and to each of their . . .
successors,” Philip Morris, 449 F. Supp. 2d at 937, RJR
sought to dissolve its successor obligations, and the district
court refused to do so. Because the district court clearly
denied “a specific request to dissolve an injunction,” Salazar,
671 F.3d at 1261, we have section 1292(a) jurisdiction.
III.
Rule 60(b)(4) authorizes relief from a final order if “the
judgment is void.” Fed. R. Civ. P. 60(b)(4). We review a
district court’s Rule 60(b)(4) decision de novo. Bell
Helicopter Textron, Inc. v. Islamic Republic of Iran, 734 F.3d
1175, 1179 (D.C. Cir. 2013).
The Supreme Court addressed Rule 60(b)(4)’s scope in
United States Student Aid Funds, Inc. v. Espinosa, 559 U.S. at
260. That case concerned a provision of the Bankruptcy Code
that permits discharge of student loan debts only after the
bankruptcy court finds that failure to discharge the debt would
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impose “undue hardship on the debtor and his dependents.”
Id. at 263 (citing 11 U.S.C. §§ 523(a)(8), 1328). In Espinosa,
the bankruptcy court discharged a student debt without
making the requisite “undue hardship” finding. Id. at 265.
Holding that this error did not render the confirmation order
void, the Supreme Court explained that Rule 60(b)(4) applies
“only in the rare instance where a judgment is premised either
on a certain type of jurisdictional error or on a violation of
due process that deprives a party of notice or the opportunity
to be heard.” Id. at 271. Although the Court did not specify
which types of jurisdictional infirmities make a judgment
void, it did cite a First Circuit case and two treatises limiting
voidness to defects in personal jurisdiction, subject matter
jurisdiction, and due process. Id. None of those defects is
present here. As RJR concedes, “the district court had subject
matter jurisdiction in this action,” Appellant’s Br. 1, and RJR
neither challenges personal jurisdiction nor asserts a due
process violation.
Instead, RJR contends that the injunction is void because
it exceeds the district court’s “remedial jurisdiction.”
Appellant’s Br. 26. In support, RJR notes that both RICO’s
remedial provision, 18 U.S.C. § 1964(a), and our prior
opinions speak in terms of the district court’s “jurisdiction” to
prevent RICO violations, see, e.g., Corrective Statements
Opinion, 801 F.3d at 256. RJR also points out that the Court
in Espinosa nowhere limited “jurisdictional error[s]” under
Rule 60(b)(4) to subject matter and personal jurisdiction. 559
U.S. at 271. This is true. Indeed, Espinosa contains a footnote
in which the Court declined to decide whether other errors—
specifically, the discharge of certain tax and child support
debts, which the Bankruptcy Code prohibits—might also
render a judgment “void” for Rule 60(b)(4) purposes. Id. at
273 n.10. Espinosa thus left the exact boundaries of voidness
uncharted.
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In our view, however, mere use of the word “jurisdiction”
is insufficient to turn a remedial error into a basis for Rule
60(b)(4) relief. As the Supreme Court has made clear,
jurisdiction is “a word of many, too many, meanings,” Steel
Co., 523 U.S. at 90—a proposition all too evident in this case.
In section 1964, the term “jurisdiction” refers to a court’s
authority to impose certain remedies. 18 U.S.C. § 1964(a).
That authority is fundamentally different from a court’s
subject matter jurisdiction over a case and from its personal
jurisdiction over the parties, both of which concern the power
to proceed with a case at all.
Extending Rule 60(b)(4) relief beyond such “fundamental
infirmit[ies],” Espinosa, 559 U.S. at 270, would raise serious
finality concerns. Because remedial authority is by nature
broad, allowing Rule 60(b)(4) challenges to allegedly
unauthorized remedies could produce an endless series of
interlocutory appeals, especially in complex, long-running
cases. Under RICO, for example, even though district court
remedial authority is limited to “preventing and restraining”
violations of the statute, courts nonetheless retain expansive
power to craft remedies within that stricture, as the
comprehensive injunction in this case well illustrates.
This finality problem, moreover, is not limited to RICO
cases. The Sherman Act, like RICO, grants district courts
“jurisdiction to prevent and restrain violations” of the Act. 15
U.S.C. § 4. Under RJR’s conception of voidness, litigants
could upend complex remedial orders in any antitrust case
years or even decades after those orders became final. The
same holds true for litigation arising under any statute that
grants courts remedial “jurisdiction.” See, e.g., 15 U.S.C. §
378(a) (granting “jurisdiction to prevent and restrain
violations” of cigarette tax laws); 31 U.S.C. § 5365(a)
(granting “jurisdiction to prevent and restrain” internet
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gambling violations). And if remedial overreach renders an
order void, a statute need not even say “jurisdiction” for
remedial errors to trigger Rule 60(b)(4) relief. Complex
remedial schemes in voting rights, securities fraud,
affirmative action, prison conditions, and scores of other cases
could all be challenged on the ground that the remedies
imposed were, in one litigant’s view, unauthorized by the
statute at issue.
This is precisely the outcome the Supreme Court in
Espinosa warned us to avoid. Although the Court never
delineated the precise limits of voidness, it did make clear that
the list of defects that render a judgment void must be
“exceedingly short,” lest “Rule 60(b)(4)’s exception to
finality . . . swallow the rule.” 559 U.S. at 270. Heeding that
guidance, we hold that Rule 60(b)(4) does not permit relief
where a court has exceeded its remedial authority. Cf. United
States v. Boch Oldsmobile, Inc., 909 F.2d 657, 662 (1st Cir.
1990) (“Consent decrees that run afoul of the applicable
statutes lead to an erroneous judgment, not to a void one.”).
Such errors are simply not the type of fundamental defects the
Court had in mind in Espinosa.
Nothing in our prior opinions forecloses this
understanding of Rule 60(b)(4). Invoking law of the case,
RJR points out that our rulings in this case establish that
RICO “constrains the district court’s remedial jurisdiction.”
Appellant’s Br. 26. But as we have just explained, remedial
jurisdiction differs significantly from subject matter and
personal jurisdiction. Although we have confined district
court remedial jurisdiction to remedies that “prevent and
restrain” violations of the Act, see Corrective Statements
Opinion, 801 F.3d at 256, we have never held that an order
exceeding the court’s section 1964 authority falls within Rule
60(b)(4).
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RJR also leans on Karsner v. Lothian, 532 F.3d 876
(D.C. Cir. 2008). In that case, the district court denied a state
Securities Commissioner’s motion to intervene in an action to
confirm an arbitration proceeding. Id. at 879. On appeal, the
Commissioner asserted that if the case were remanded to the
district court she would “move under Rule 60(b)(4) to void”
the confirmation order on the ground that the district court
had confirmed an arbitrator’s “recommendation” when the
statute authorized it to confirm only arbitration “award[s].” Id.
at 886. In response, we observed that “before a judgment may
be deemed void . . . it must be determined that the rendering
court was powerless to enter it.” Id. (quoting Combs v. Nick
Garin Trucking, 825 F.2d 437, 442 (D.C. Cir. 1987)). We also
noted that if “the Commissioner successfully move[d] under
Rule 60(b)(4) to void the district court’s confirmation order,”
the court would need to identify a source of authority for its
revised order. Id. at 887. Seizing on this dicta, RJR contends
that voidness applies any time a court has “acted outside of its
authority.” Appellant’s Br. 18. Karsner concerned the
erroneous denial of a motion to intervene. Although the court
discussed Rule 60(b)(4) and even implied that such relief
might be available, it never held that Rule 60(b)(4) relief was
warranted on remand. In any event, Karsner preceded
Espinosa by two years.
Our conclusion, which flows from Espinosa’s instruction
that voidness is “rare,” 559 U.S. at 271, does not leave parties
unable to challenge remedies that exceed a district court’s
remedial authority. They may do so by filing a motion to alter
or amend the judgment under Rule 59(e) and they can appeal
pursuant to 28 U.S.C. § 1291 (authorizing direct appeal of
final decisions). See Fed. R. Civ. P. 59(e). They may also seek
relief under Rule 60(b)(6)—the issue we address next.
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IV.
Rule 60(b)(6) “grants federal courts broad authority to
relieve a party from a final judgment upon such terms as are
just.” Salazar ex rel Salazar v. District of Columbia, 633 F.3d
1110, 1116 (D.C. Cir. 2011) (quoting Liljeberg v. Health
Services Acquisition Corp., 486 U.S. 847, 863 (1988)). To
obtain relief under this provision, a party must file its motion
within a “reasonable time” and demonstrate “extraordinary
circumstances justifying the reopening of a final judgment.”
Id. (quoting Gonzalez v. Crosby, 545 U.S. 524, 534 (2005)).
In this case, the district court determined that RJR failed on
both counts. We review its decision for abuse of discretion.
Id. at 1119.
Although this circuit has rejected a strict limit to the
reasonable time requirement, id. at 1118–19, we have held
that in “a long-running institutional reform case . . . it would
be an abuse of discretion to rule that a Rule 60(b)(6) motion is
not filed within a reasonable time without finding that the
movant’s delay has prejudiced the non-moving party,” id. at
1119. The district court made no such finding in this long-
running, complex case. That, however, does not end the
matter, as the district court also denied the motion on the
ground that the “circumstances presented in [RJR’s] Motion
[were] not extraordinary.” Philip Morris, No. 99-2496, ECF
No. 6147, at 3 (D.D.C. May 28, 2015); see also Salazar, 633
F.3d at 1122 (affirming the denial of a Rule 60(b)(6) motion
for lack of “extraordinary circumstances” notwithstanding the
district court’s failure to address prejudice).
“Extraordinary circumstances” is a high bar. We
explained in Kramer v. Gates that Rule 60(b)(6) cannot be
used “to rescue a litigant from strategic choices that later turn
out to be improvident.” 481 F.3d 788, 792 (D.C. Cir. 2007)
(quoting Good Luck Nursing Home, Inc. v. Harris, 636 F.2d
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572, 577 (D.C. Cir. 1980)). As the district court in this case
observed, RJR failed to raise the double-ad issue in its 2006
appeal of the remedial order. Moreover, when appealing the
order specifying the text of the corrective statements, RJR
chose not to challenge the double-ad requirement; instead it
merely mentioned its Rule 60 motion in a footnote. Under our
precedent, failure to raise a ripe issue precludes a finding of
extraordinary circumstances unless that failure was essentially
“involuntary.” Salazar, 633 F.3d at 1121 (quoting Twelve
John Does v. District of Columbia, 841 F.3d 1133, 1141 (D.C.
Cir. 1988)).
RJR believes it meets this standard. It argues that the
earliest opportunity to challenge its successor obligations
came in 2014 when, during the parties’ negotiations over how
to disseminate the corrective ads, the government took the
position that the injunction required RJR to run double ads.
This argument suffers from a fatal flaw.
Recall that we have section 1292(a) jurisdiction because
the district court denied RJR’s request to dissolve—rather
than clarify—part of the injunction. See supra Part II. Indeed,
RJR conceded in its Rule 60 motion that the 2006 remedial
order requires it to run two sets of ads. See Mot. for Relief,
Philip Morris, No. 99-2496, ECF No. 6103, at 1 (D.D.C. June
11, 2014) (asserting that RJR, “in its capacity as successor to
Brown and Williamson,” sought to dissolve “those provisions
[of the remedial order] . . . that require corrective statements
on behalf of [Brown & Williamson] . . . in addition to
publication of the corrective statements by [RJR]”). Given the
standard for appellate jurisdiction, supra Part II, this was a
wise concession. But it undercuts RJR’s assertion that its
remedial obligations were unclear until 2014 and undermines
its argument for Rule 60(b)(6) relief. Simply put, RJR cannot
have it both ways. Either the remedial order imposes a
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double-ad requirement, in which case we have appellate
jurisdiction but RJR has no excuse for its untimeliness, or the
order is unclear, in which case we would lack jurisdiction to
entertain this appeal.
Having failed to challenge its successor obligation at any
earlier stage of this litigation, RJR now finds itself trapped
between this circuit’s narrow construction of section 1292(a),
which prevents piecemeal appeals, and the high bar for Rule
60(b)(6) relief, which protects the finality of judgments.
Together, these settled principles compel the conclusion that
RJR’s challenge to the double-ad requirement comes too late.
V.
For the foregoing reasons, we affirm.
So ordered.