Retro style: redefining yesterday's green light as red.

• Author: Olson, Walter

I'm no fan of the Prohibitionists of yore, but they're starting to look better all the time. The Anti-Saloon League inveighed mightily against the "Rum Trust" of distillers and tavern keepers. But at least it didn't propose to jail these persons or seize their businesses as punishment for having enslaved drunkards for so long before the nation turned against boozing. Instead the 18th Amendment prohibited the sale of intoxicating liquors from a certain day forward, providing an orderly period of a year in which to convert distilling assets to other uses. The endeavor, in short, proceeded with a nod to the basic rule-of-law precept that, whatever government may choose to ban as a prospective matter, it may not punish people for behavior they engaged in before it got around to enacting its law.

Their moral successors today, the anti-tobacco crusaders, have fewer scruples. They could of course push Congress to pass a huge tax increase on cigarettes or an outright ban. But instead they cheerlead for lawyers seeking punitive damages against Philip Morris, RJR, Lorillard, and Brown & Williamson, for having sold and advertised cigarettes in past decades. And it seems to matter not a whit that in 1967, 1977, and 1987 the activity of selling and advertising cigarettes was thought by nearly all relevant authorities to be perfectly legal - or that to this day neither lawmakers nor courts have provided any clear sign that it's not still so.

The idea behind retroactive application of law is simple: Remember that green light you sped through 10 years ago? We've decided it should have been red. Law must be creative, must grow and change in response to social needs, and we've found ample reasons to revise our former policy on the sequencing of traffic signals. So here's your traffic ticket; make it payable to us, please.

Trial lawyers have made this technique work again and again in the vast expansion of liability law that started in the 1950s and continues to this day. When the process starts, Defendant D has for ages been thought to owe nothing to Plaintiff P. Then lawyers float creative theories that such liability would really serve the public interest, and they convince some court somewhere. Other courts follow, and before long defendants are paying not merely compensatory but even punitive damages for conduct that was considered lawful when they acted.

Prosecutors use the same ploy. The Securities and Exchange Commission is notorious for pushing...