State Suits Accuse Tobacco Firm of Violating Ad Curb

R.J. Reynolds Tobacco Co., the nation’s second-largest cigarette manufacturer, violated key provisions of the national tobacco settlement’s restrictions on advertising that targets children, and on the use of billboards, according to a pair of lawsuits filed Monday by California Atty. Gen. Bill Lockyer.

In one suit, Lockyer contends that the firm is trying to evade the provision of the 1998 tobacco agreement that prohibits cigarette makers from taking “any action, directly or indirectly, to target youth . . . in the advertising, promotion or marketing of tobacco products.”

Lockyer said that while the nation’s three other leading tobacco makers--Philip Morris, Brown & Williamson Tobacco Co. and Lorillard Tobacco Co.--had taken “meaningful first steps to reduce or eliminate their advertising in magazines having a substantial youth readership, Reynolds has continued to thumb its nose” at the settlement.

Reynolds vigorously denied the charges Monday.

Studies by an anti-smoking foundation, created as a result of the $206-billion settlement, demonstrate that Reynolds’ expenditures on advertising in youth-oriented publications has increased significantly since the settlement was signed, the suit contends. Advertising in 2000 for Reynolds’ brands in 42 major magazines was projected to reach 95% of America’s youth ages 12 to 17, and to reach them an average of 50 times during the year, according to research cited by the suit.

Magazines with high youth readership--more than 15% of the magazine’s total readers--where Reynolds has placed ads include Allure, Guns & Ammo, Hot Rod, In Style, People, Rolling Stone, Sports Illustrated and Vibe, according to the suit filed in San Diego Superior Court.

The suit was filed a week after the Federal Trade Commission issued a report saying that the nation’s cigarette companies had dramatically increased their overall advertising and promotion to $8.2 billion in 1999, up 22% from 1998.

“RJR has been the most brazen and egregious violator, taking the most extreme position on each of the settlement provisions that is the subject of the lawsuits filed today,” said Matthew L. Myers, president of the Campaign for Tobacco Free Kids in Washington.

Reynolds, based in Winston-Salem, N.C., issued a defense of its practices, saying that it is “complying with both the letter and the spirit” of the settlement. “We are confident that our cigarette advertising and marketing fully comply,” with the 1998 agreement, said Andrew J. Schindler, the firm’s chairman and chief executive officer.

Schindler said the suit contends that the firm has violated the agreement, although most of the magazines cited are “published for and predominantly read by adults.”

He also asserted that state officials are seeking restrictions beyond what the settlement calls for and if the suit succeeds it “would reduce competition for adult smokers. When competition is reduced, the market leader, in this instance Philip Morris, and its Marlboro brand, is the likely beneficiary.”

California’s lawsuit charges that Reynolds could have known that many young people read the magazines at issue, since the company hires marketing firms that calculate the publications’ reader bases.

In the last two years, the suit contends, Reynolds’ ads have reached about as many young people as the claimed target audience--adults who smoke--according to the suit.

The suit seeks a judgment that the firm is in violation of the settlement and a consent decree embodying the settlement, which was signed by San Diego Superior Court Judge Ronald Prager. The suit also asks Prager to hold the firm in contempt and to impose monetary sanctions on the firm, which manufactures brands including Camel, Winston, Salem and Doral.

The second suit contends that Reynolds has violated the settlement provision regarding outdoor advertising of brand name sponsorships before and after sponsored events, such as car races.

The 1998 settlement states that the cigarette companies can advertise a branded event--such as a NASCAR or a National Hot Rod Assn. race--for 90 days before and 10 days after the event. The suit alleges that Reynolds has violated the agreement by maintaining continuous outdoor advertising about such events at the Sears Point Raceway in Northern California and the Pomona Raceway. The attorneys general of Arizona, New York and Washington joined Lockyer in filing similar suits about the sporting events.

Ohio filed a separate suit contending that the firm was violating another provision of the settlement through its use of advertising on matchbooks. Reynolds General Counsel Charles A. Blixt said the company’s actions with regard to matchbooks and the car races also were in compliance with the settlement.