California AG Sues R.J. Reynolds Over Mailed Samples

California Attorney General Bill Lockyer filed a lawsuit in San Diego Superior Court earlier this month to stop the R.J. Reynolds Tobacco Co., Winston-Salem, NC, from violating the terms of the national tobacco settlement that restricts the ability of tobacco companies to distribute free cigarettes in California.

The master settlement agreement was approved by the San Diego Superior Court in December 1998 and resolved lawsuits filed against the tobacco industry by California and 45 other states, the District of Columbia and four U.S. territories.

In addition to placing significant restrictions on advertising and distribution, the agreement requires the tobacco industry to pay the settling states more than $206 billion over the next 23 years. Each year, California will receive approximately $1 billion, or 12.8 percent of the total settlement money. State and local jurisdictions will equally split California's share of the settlement.

The agreement prohibits tobacco manufacturers from distributing any free samples of tobacco products in California, except in age-restricted venues such as bars and nightclubs. Tobacco companies also can give samples away as part of legitimate consumer testing programs and coupon-style offers — as long as participants have certified their names and are not underage.

The prohibition was included in the settlement agreement partly to prevent tobacco companies from using marketing strategies that target children.

However, according to the action filed by Lockyer, R.J. Reynolds distributed free cigarettes through the mail to California residents in 1999.

The action accuses R.J. Reynolds of mailing an estimated 900,000 packs of free cigarettes in multiple-pack mailings to the homes of 115,000 Californians “under the guise of consumer testing or evaluation in order to market its products” and claims the survey questionnaire is “unlikely to yield data or information useful for legitimate consumer testing.”

The suit claims R.J. Reynolds mailed up to 10 packs of cigarettes to people at their homes, sometimes repeatedly to the same person and, in some cases, to people who didn't request them and don't smoke. The mailing received an 11 percent return.

The action alleges that the company's distribution program violates the settlement terms by, among other things, mailing samples to individuals who had not certified their names or the fact that they are over the age of 18; distributing free packs of cigarettes to people who had not agreed to receive them at their home; and failing to employ procedures that reasonably ensure that the product will actually reach the intended recipient.

In general, Lockyer said the testing was “phony … and just an excuse to mail a lot of samples.”

Before filing the action, he made repeated demands that R.J. Reynolds stop mailing free cigarettes to California residents but the company refused to do so, he said.

“The agreement reached with tobacco companies blocks their harmful, tried-and-true strategies for addicting Californians to their products,” Lockyer said. “By vigorously enforcing the terms of the tobacco settlement, I intend to hold the industry accountable for its mischievous acts.”

In a written statement, R.J. Reynolds said its free cigarette mailings were part of a consumer testing program and therefore were “within the letter and the spirit of the settlement agreement.”

A hearing on this action is set for July 10 before Judge Ronald S. Prager of San Diego Superior Court.

The case marks the first time an attorney general has taken a tobacco company to court in an effort to enforce terms of the settlement agreement, which prohibits numerous activities, including:

* Direct or indirect targeting of youth in advertising, marketing and promotions;

* Brand-name sponsorship of concerts, sports events, events with an intended audience containing a significant percentage of youths and events at which youths are paid participants;

* Payments for placement of tobacco products in the media;

* Outdoor advertising of tobacco products;

* Transit advertising on or in public or private vehicles;

* Using cartoons to advertise tobacco products and tobacco brand-name merchandise.

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