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Tobacco Highlights 2006

  • People v. House of Prince, San Diego Superior Court. On December 22, 2006, the Attorney General announced a $55.4 million settlement of this MSA enforcement action against a Danish cigarette maker. Despite the fact that the MSA's terms apply to entities that act "in concert or participation with" MSA signatories, like House of Prince, billions of cigarettes manufactured by a Latvian subsidiary and later affiliate of House of Prince were sold in the U.S. without the required MSA payments being made. The cigarettes, which were sold by two U.S. importers, counted as non-participating manufacturer (NPM) cigarettes and, as such, contributed to the market share lost by participating manufacturers in 2000 to 2003 and the resulting NPM adjustment to MSA payments. We won a significant procedural victory in 2004, when the 4th DCA affirmed, in a published decision, that the trial court had properly denied House of Prince's motion to refer the dispute to arbitration. California's share of the settlement is $7.15 million and includes $309,000 as reimbursement for our attorneys' fees and costs. View the press release:
    Attorney General Announces California Receives $7.15 Million from $55.4 Million Tobacco Settlement with House of Prince and Affliliate
  • Press Release October 24, 2006
    The Office of the Attorney General Announces Weinstein Company Will Be First Movie Company to Add Anti-Smoking Messages to New DVD Releases.
  • The Office of the Attorney General and 38 other state attorneys general have petitioned the federal government to close a regulatory loophole that has increased youth and adult smoking of cigarettes disguised as "little cigars." The petition announced May 16 notes that the regulatory loophole allows manufacturers to evade marketing restrictions and higher taxes that apply to cigarettes. The federal Alcohol Tobacco Tax and Trade Bureau (TTB) is being asked to adopt rules revising the definitions of cigars and cigarettes to ensure that "little cigars" – which actually are cigarettes wrapped in brown paper – are classified, taxed and priced as cigarettes. View the press release:
    Attorney General's Petitions Federal Government to Crack Down on Cigarettes Masquerading as 'Little Cigars'
  • The Office of the Attorney General on May 8, 2006 announced R.J. Reynolds Tobacco Company (RJR) will pay $5 million to resolve a lawsuit in which the California Supreme Court found RJR liable for violating state law when it distributed 108,155 free packs of cigarettes on public grounds. Under the settlement, RJR will pay $1 million to the Public Health Institute, a nonprofit organization that administers the Public Health Trust and will use the money to fund tobacco control advocacy and education programs. Additionally, RJR will pay a $3.1 million civil penalty, and $900,000 to cover the Attorney General’s cost and fees. The settlement was filed today in Los Angeles County Superior Court. The court must approve the settlement before it becomes final. View the press release:
    Attorney General Announces $5 Million Settlement with R.J. Reynolds to Resolve Lawsuit Over Firm's Distribution of Free Cigarettes.
  • Press Release April 18, 2006
    The Office of the Attorney General Moves to Fight Tobacco Firms’ Attempt to Take Back from California $153.4 Million in Settlement Payments.
  • CVS Pharmacy, Inc., the nation’s largest retail pharmacy, agreed in March 2006 to adopt new procedures to reduce sales of tobacco products to minors at its 5,400 stores across the country, under an agreement reached with California, 42 other states and Washington D.C. CVS operates 5,400 pharmacies in 37 states and Washington D.C., including 21 stores in California. Attorneys General in six states without CVS outlets signed the agreement. If the company opens pharmacies in those jurisdictions, the outlets will be covered by the agreement.
  • Philip Morris USA in January 2006 agreed to implement landmark protocols to reduce the illegal sale of its cigarettes over the Internet and through the mail. Philip Morris voluntarily adopted the protocols pursuant to an agreement reached with the Office of the Attorney General and Attorneys General in 32 other states, Washington D.C. and three territories. Under the protocols, Philip Morris will: terminate shipments of cigarettes to any of its direct customers that Attorneys General have found to be engaging in illegal Internet and mail order sales; reduce the amount of products made available to direct customers found by the Attorneys General to be engaged in the illegal resale of Philip Morris cigarettes to Internet vendors; and suspend from the company’s incentive programs any retailer found by the Attorneys General to be engaging in such illegal sales.

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