Judge fines tobacco company $20 million

Friday, June 7, 2002

SAN DIEGO -- A judge fined R.J. Reynolds Co. $20 million Thursday, ruling that the maker of Winston and Camel cigarettes violated terms of the 1998 tobacco settlement by running magazine ads aimed at teen-agers.

The California attorney general's office had sued the nation's No. 2 tobacco company last year, demanding it be punished.

The $206 billion settlement between the industry and 46 states does not specifically mention magazine advertising but bars tobacco companies from taking "any action, directly or indirectly, to target youth."

And Superior Court Judge Ronald Prager on Thursday found Reynolds violated that agreement.

By advertising in magazines such as Spin, Vibe, Hot Rod and Rolling Stone, Reynolds reached teens as often as or more often than adults, the judge said.

Reynolds said it will appeal. "We think it disregards the facts, the law and the master settlement agreement," spokesman Tommy J. Payne said.

Charles A. Blixt, Reynolds' general counsel, said the ruling may violate the company's First Amendment right to free expression.

Prager said Reynolds saw itself losing market share to other companies and fought back with a more aggressive ad campaign "even though the likely effect of these efforts was to cause significant exposure to youth."

"It was, or should have been apparent to the skillful and bright people who managed RJR's multimillion-dollar, sophisticated print advertising campaign that youth were exposed to tobacco advertising at levels substantially similar to targeted adult smokers," Prager said.

The attorney general's office had asked judge to fine Reynolds $25 million and ban it from advertising in 50 magazines often read by teens.

The judge did not go so far as to ban advertising in specific magazines but ordered Reynolds to take "reasonable measures" to reduce its reach to teen-agers.

Reynolds denied deliberately targeting teens in its $200 million magazine ad campaigns for Camel cigarettes and other brands following the 1998 settlement.

At Reynolds, company policy forbids ads in magazines with youth readership of more than 25 percent. However, Reynolds lawyers conceded that an unintended consequence of targeting young adults is that some teens are likely to see its ads.

Deputy Attorney General Karen Leaf declared Thursday's ruling "a victory for the teens in California."

Although it applies only to California, the ruling will force Reynolds to change its practices in magazines with a nationwide circulation, Leaf said.

Reynolds had U.S. sales of $8.6 billion in 2001. It has about 25 percent of the American market, with brands such as Camel, Winston, Doral and Salem.


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