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Attorney General Bill Lockyer Announces R.J. Reynolds Ordered to Pay $14.8 Million Fine

Company's Distribution of Free Samples Violates State Law
Thursday, May 2, 2002
Contact: (415) 703-5837

(SACRAMENTO) - Attorney General Bill Lockyer today announced R.J. Reynolds Tobacco Company has been ordered to pay almost $15 million in fines for illegally handing out more than 100,000 free packs of cigarettes at events where children were present. In a ruling this week, Los Angeles Superior Court Judge Conrad R. Aragon found in favor of the Attorney General's Office, which had sued R.J. Reynolds for violating state law prohibiting tobacco companies from giving out free product samples on public grounds.

"Marketing ploys designed to hook children on cigarettes are illegal and won't be tolerated in California," Lockyer said. "This case and others brought by my office should send a strong warning to tobacco product manufacturers that California will vigorously enforce laws enacted to control tobacco sales and distribution."

The fine is the largest to be levied against a tobacco company for violating California's law banning most tobacco product give-aways. California Health and Safety Code Section 118950 prohibits tobacco companies from giving away free tobacco products on public grounds where minors are allowed. The law was enacted after the California Legislature found that free distribution of tobacco product samples and coupons is a recognized source by which minors obtain tobacco products, beginning the addiction process.

In his ruling, Judge Aragon found that R.J. Reynolds had violated the law by handing out more than 100,000 packages of cigarettes at places such as street fairs and car races that were attended by minors. The court ordered R.J. Reynolds to pay $14,826,200 in penalties.

In 1999, Lockyer established the Tobacco Litigation and Enforcement Section to ensure compliance with state laws regarding the sale and marketing of tobacco products and the 1998 national Master Settlement Agreement that was entered into by the largest tobacco manufacturers and 46 states. In July 2001, the office reached a settlement in a similar case against Swedish Match North America. That agreement permanently prohibited the company from giving out free samples on public grounds in California, and required it to pay $375,000 to the Public Health Institute to monitor tobacco advertising and promotions and to spread awareness about the dangers of tobacco products.

The ruling comes in the latest of several cases the Attorney General's Tobacco Litigation and Enforcement Section has filed against R.J. Reynolds.

In December, a San Diego Superior Court judge ruled that the company's practice of posting outdoor advertising at stock car and drag racing events violated the MSA.

In January of 2001, the office reached a settlement with R.J. Reynolds over violations of the MSA and state consumer protection laws regarding the company's practice of mailing free cigarettes to consumers without determining if they were over the age of 18.

The office also spearheaded a successful multi-state effort to convince Philip Morris and other companies to cease advertising in magazines that have youth audiences of more than 15 percent of their readership. But negotiations with R.J. Reynolds were unsuccessful and the Attorney General filed a lawsuit alleging that the company's advertising in magazines and other publications targets children in violation of the terms of the MSA.

Opening arguments were held in San Diego Superior Court April 19, and the trial continues next week.

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