Advertisements Violate the Master Settlement

In November 1998, the Attorney General of California and the attorneys general of nearly every other state entered into a Master Settlement Agreement (MSA) with the major cigarette manufacturers to resolve a substantial number of lawsuits brought by various states against the tobacco companies. All the major tobacco companies, including R.J. Reynolds, signed the agreement. The MSA contained a proscription against advertising to minors enumerated as "Prohibition on Youth Targeting." This provision of the MSA does not specifically mention magazine advertising, but it bars tobacco companies from taking "any action, directly or indirectly, to target youth."

The court found that R.J. Reynolds' advertising violated the terms of the MSA, reasoning that after the company entered into the MSA, it did not change its advertising campaigns, failed to incorporate the goal of reducing youth exposure to tobacco advertising in its marketing plans, and failed to investigate whether it was meeting its goal of reducing youth smoking. The court found that the prohibition on advertising tobacco products to youths in the MSA was "clear as well as broad." By publishing advertisements in magazines that had youth readerships of up to 25 to 50 percent, such as Vibe, Spin and Rolling Stone, R.J. Reynolds "succeeded in exposing Youth at essentially the same levels as it targeted young adult smokers and violated the provisions of the MSA," which proscribes "any action, directly or indirectly, to target Youth . . ."

R.J. Reynolds States that the Ruling is "Akin to Censorship"

In response to the action and fine against it, R.J. Reynolds issued a statement that it believes the decision is "akin to censorship." In a strongly worded press release, R.J. Reynolds stated that the decision "might be politically correct, but it disregarded the facts, the law, the First Amendment and the relevant provisions of the Master Settlement Agreement. This lawsuit and today’s decision unilaterally rewrite that contract and establish the precedent of censorship of legitimate information and competition for adults who choose to smoke cigarettes. Should this decision stand, we intend to appeal."

Defending its practices, R.J. Reynolds stated that it advertises cigarettes in magazines with at least 75 percent adult readership, a policy that it notes is more stringent than what the federal government recommends for the alcohol industry. The Federal Trade Commission suggests that alcohol companies select magazines where 60 to 70 percent of readers are of legal drinking age. R.J. Reynolds said it would appeal the judge's decision, which company officials said unfairly impinges on the company's First Amendment rights. Company attorney Jeh Charles Johnson said. "No court can tell a company not to advertise in People magazine, Sports Illustrated or TV Guide."

Anti-Tobacco Group Supports the Decision

Matthew Myers, president of the Campaign for Tobacco-Free Kids, a tobacco control advocacy group, supported the decision and said it should "spur other state attorneys general to aggressively pursue any violations by the tobacco industry of the settlement's prohibition on 'any action, directly or indirectly, to target youth.' "

Mr. Myers said that since the 1998 settlement, there "has been growing evidence that the tobacco industry has systematically violated both the spirit and the intent of the prohibition on targeting youth through continued advertising in youth-oriented magazines, convenience stores and other venues effective at reaching kids."

Anti-Tobacco Advertising Efforts to Continue

In 1999, the California attorney general's office began a multistate campaign to urge tobacco companies to stop advertising in magazines that have a youth readership of more than 15 percent. When negotiations with R.J. Reynolds failed, the state filed suit.

The ruling was Lockyer's fourth successful prosecution against R.J. Reynolds since establishing a Tobacco Litigation and Enforcement section in 1999. In May 2001, a Los Angeles court fined R.J. Reynolds $14.8 million for distributing more than 100,000 packs of free cigarettes on public grounds in violation of state law. In December 2001, another court found that R.J. Reynolds had violated the MSA by advertising at outdoor sporting events. Further, R.J. Reynolds also recently settled a case for distributing free cigarettes through the mail without first verifying the age of the recipients.

The various actions and judgments against R.J. Reynolds show that the states will continue to vigorously enforce the MSA in an attempt to curb, if not eliminate, tobacco advertising directed at youths.