• RJR Gets Smoked in Settlement
  • January 15, 2005
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • RJ Reynolds Tobacco Company "will significantly reduce" advertising in publications with large teenage readerships as part of a settlement with the state of California that was approved December 22, 2004, by a California state court. The company will also pay $11.4 million in civil penalties and $5.8 million to cover the state's costs.

    According to an announcement by California Attorney General Bill Lockyer, if a publication's teenage readership is 15% or more of its total audience, RJR will be forbidden by the settlement from advertising in the publication, except under limited circumstances. Also, the total number of teens exposed to RJR tobacco ads must always stay at least 30% below the adult exposure level. The settlement also prohibits RJR from skewing the advertising for any of its brands to appeal to youths.

    San Diego Superior Court Judge Ronald S. Prager approved the settlement, ending a lawsuit that Lockyer filed against RJR in March 2001. The complaint said the firm had violated the Master Settlement Agreement reached in 1998 between 46 state attorneys general and the four major tobacco companies by placing cigarette ads in magazines that had a large number of teen readers. The Master Settlement Agreement banned marketing tobacco products to youths. RJR fought the lawsuit for almost four years before finally agreeing to settle.

    The settlement applies to all RJR cigarette brands, including Camel, Winston, Salem, and Doral, and such brands as Kool, Lucky Strike, and Pall Mall, which RJR acquired in a 2004 merger with Brown & Williamson Tobacco Co.

    As reported in the October 25, 2004, issue of [email protected]anatt, the settlement comes on the heels of an earlier settlement with three states in which RJR agreed to shut down a controversial promotional campaign for Kool cigarettes.

    Significance: Tobacco companies can expect that they will continue to be a favorite target of state attorneys general, who will wield the power accorded them by the Master Settlement Agreement and public opinion to curtail tobacco's marketing practices, especially where minors are involved.