By Khorri Atkinson

Law360 (March 19, 2021, 11:03 PM EDT ) A D.C. federal judge and attorneys for the government and major tobacco companies and retailers were at a standoff Friday over whether the trial court should conduct a looming evidentiary hearing in their decades-long clash over health warnings on tobacco packages in person or virtually.

The sometimes contentious arguments presented during a remote status hearing in the case forced U.S. District Judge Paul L. Friedman to conclude that he cannot immediately decide whether to hold the July 12 proceeding virtually, as the government requested. Altria Group Inc., Philip Morris USA Inc. and others have asked for a three-month delay so their counsel and witnesses from across the country who wish to be vaccinated have sufficient time to prepare for travel.

"You all stated your views and it's complicated," Judge Friedman said. He didn't say when the matter will be resolved.

The judge hasn't held an in-person hearing for a year due to public gathering restrictions the district court enacted to limit the spread of the COVID-19. With vaccinations taking place and the court, like others nationwide, facing pressure to address a growing backlog of cases, the attorneys for the tobacco companies and retailers expressed an eagerness to argue their defense in person.

Jeffrey Mandell, a Wisconsin-based partner of Stafford Rosenbaum LLP, argued that denying in-court testimony for an evidentiary hearing in a litigation of this complexity with several parties, lawyers and expected witnesses would be "deeply problematic."

The attorney contended, among other things, that his clients prefer to present evidence through visual displays and that a virtual hearing will impede their ability to argue their defense effectively.

But Daniel K. Crane-Hirsch of the U.S. Department of Justice urged the judge to adhere to the court's current schedule. Crane-Hirsch said while attorneys generally prefer to argue their case in person, Judge Friedman must take into account that the novel public health crisis makes any prediction of a return to normalcy uncertain.

The DOJ asserted in a March 12 status report that virtual court proceedings, including trials, have become the norm since the COVID-19 outbreak and that there's no legitimate claim to a right to present evidence through live testimony.

Before wrapping up arguments on this matter, a conflicted Judge Friedman said there would be strict social distancing protocols if the hearing is held in person. The judge also said he sympathizes with the tobacco manufacturers and the retailer groups because "this [evidentiary hearing] is really about hearing from and giving due regard to the retailers."

"On the other hand, at the end of the day, no trial and no hearing and is ever perfect," Judge Friedman added. 

Thursday's hearing came in response to a directive Judge Friedman issued, in which he asked the parties for views on whether some or all aspects of the scheduled July hearing can be conducted virtually with witnesses and lawyers appearing by video from outside the courtroom.

The hearing will specifically examine the lawfulness of the government's proposal requiring tobacco companies to publish statements about the negative health effects of tobacco on their products' packaging.

The parties have been battling over the precise language of these statements for more than a decade. A former D.C. federal judge had first ordered the corrective statements in 2006, along with a series of other injunctive measures, after finding that major U.S. tobacco companies violated civil racketeering laws and deliberately deceived the American public about smoking's dangers.

The case has pingponged between the lower and appellate court since, most recently with the D.C. Circuit in April 2017 reaffirming that the companies are required to include corrective warning statements for their traditional cigarette products.

But a three-judge panel remanded the case after finding that the statements cannot include the phrase "Here is the truth," which the companies said violates the circuit's past mandate by implying the companies were lying beforehand. The panel agreed that the language suggests prior misconduct.

"Such language can only serve two purposes: either to attract attention that a correction follows, or to humiliate the advertiser ... neither of which is a permissible goal under" RICO's corrective statements, the panel added. "This problem is remedied by simply removing the phrase in dispute.

According to court documents, the government's revised proposal is similar to prior consent orders entered for other corrective statement remedies in this case. It includes details concerning the design and execution of the tobacco manufacturers' responsibilities to display the corrective statements, and an audit protocol "to ensure adequate accountability for the manufacturers' compliance with the court's permanent injunction."

The government is represented by Daniel K. Crane-Hirsch and Adam E. Lyons of the U.S. Department of Justice's Civil Division.

Altria Group Inc. and Philip Morris USA Inc. are represented by Miguel A. Estrada and Amir C. Tayrani of Gibson Dunn & Crutcher LLP and George C. Lombardi of Winston & Strawn LLP.

R.J. Reynolds Tobacco Co. is represented by Michael A. Carvin, Mark A. Belasic and Jon G. Heintz of Jones Day and Jeffrey A. Mandell of Stafford Rosenbaum LLP.

Remedies ITG Brands LLC, Commonwealth Brands Inc. and Commonwealth-Altadis Inc. are represented by Robert J. Brookhiser Jr. and Elizabeth B. McCallum of BakerHostetler.

National Association of Convenience Stores is represented by Michael J. Baratz and Douglas S. Kantor of Steptoe & Johnson LLP.

National Association of Tobacco Outlets Inc. is represented by Thomas Briant of Thomas A. Briant PA.

The case is U.S. v. Philip Morris USA Inc. et al., case number 1:99-cv-02496, in the U.S. District Court for the District of Columbia.

--Additional reporting by Jimmy Hoover. Editing by Jay Jackson Jr.

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