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Attorney General Lockyer Announces Settlement with R.J. Reynolds to Reduce Tobacco Ads Targeting Youths

RJR Will Curb Ads In Magazines With Large Teen Audience, Pay $11.4 Million Penalty
Wednesday, December 22, 2004
Contact: (415) 703-5837

(SAN DIEGO) – Attorney General Bill Lockyer today announced court approval of a lawsuit settlement with R.J. Reynolds Tobacco Co. (RJR) under which the firm will significantly reduce its advertising in magazines with large teen readerships.

"This settlement is an important victory in the ongoing effort to end tobacco advertising that targets our children and helps get them hooked on a deadly product,” said Lockyer. “After almost four years of hard-fought litigation and appeals, R.J. Reynolds finally has agreed to adopt serious, effective limits for advertising in magazines that have disproportionately large numbers of young readers.”

The settlement approved today by San Diego County Superior Court Judge Ronald S. Prager ends a lawsuit Lockyer filed against RJR in March 2001. The complaint alleged the firm’s placement of cigarette ads in magazines with large numbers of underage readers violated the Master Settlement Agreement (MSA) reached in 1998 between state attorneys general, and RJR and other tobacco companies. The MSA banned marketing of tobacco products to youths.

Under the settlement’s terms, if a publication’s teen audience comprises 15 percent or more of its total readership, RJR will be prohibited from advertising in the publication, except under limited circumstances. Additionally, the total number of teens exposed to RJR tobacco ads must always stay at least 30 percent below the adult exposure level. The settlement also prohibits RJR from skewing the advertising for any of its brands to appeal to youths. RJR will pay the state more than $11.4 million in civil penalties under the settlement, and about $5.85 million to cover costs.

The settlement applies to all RJR cigarette brands, including Camel, Winston, Salem and Doral. It also covers Kool, Lucky Strike, Pall Mall and the other brands RJR acquired in July 2004 when it merged with Brown & Williamson Tobacco Co.

Following a four-week trial, Prager in June 2002 ruled RJR had targeted minors by exposing millions of California youths on multiple occasions to thousands of ads for Camel, Winston, Salem and Doral cigarettes. RJR placed these ads in magazines popular with teens, such as Sports Illustrated, Spin, Vibe, Rolling Stone, Hot Rod and Car and Driver. Prager issued a permanent injunction requiring RJR to take reasonable measures to reduce teens’ exposure to its advertising, relative to adults’ exposure. Prager also ruled R JR had to pay a $20 million civil penalty.

?RJR appealed Prager’s ruling, but in February 2004 lost a unanimous decision from the 4th District Court of Appeal (4th DCA). In upholding Prager, the appeals court found that the fact youths were exposed to RJR magazine ads at substantially similar levels as adults showed Reynolds intended to target teens. The appeals court did, however, order Prager to recalculate the fine and tie it more specifically to the effect the targeted advertising had on California teens. RJR asked the California Supreme Court to review the 4th DCA ruling, but the high court declined.

Protecting children from tobacco use has been one of Lockyer’s top priorities. Aside from enforcing the MSA prohibition on marketing to youths, he also has focused on reducing tobacco-product sales to minors. Lockyer helped lead a multi-state enforcement effort focused on retailers with poor records of such sales to minors. Launched in 2000, the initiative by a group of 30 Attorneys General has produced six voluntary compliance agreements with major retailers to reduce tobacco-product sales to minors at more than 40,000 retail outlets across the country.

These “Assurances of Voluntary Compliance” cover the nation’s top retail chain (Wal-Mart), number one drug store chain (Walgreens) and largest oil company (ExxonMobil). The other agreements cover stores and gas stations operated by Rite Aid, BP, ARCO and Amoco.

In addition, Lockyer on December 2, 2004 announced a lawsuit settlement with Safeway, Inc. which requires California’s second-largest grocery chain to implement policies to reduce tobacco-product sales to minors at its 538 Safeway, Vons, Pavilions and Pak N’ Save stores in the state.

In 1999, Lockyer established a full-time Tobacco Litigation and Enforcement Section to enforce the MSA and California laws regarding the sale and marketing of tobacco products. Californians who suspect violations of tobacco laws or the MSA may file complaints by calling (916) 565-6486 at anytime, or by writing to the Tobacco Litigation and Enforcement Section at P.O. Box 944255, Sacramento, CA 94244-2550. Additional information is available on the Attorney General's web site at http://www.ag.ca.gov/tobacco/.

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04-147.pdf45.67 KB

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