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Excerpts from: Calif. Court Dismisses Tobacco Ad Lawsuit

Source Reuters [09/13/02]

By Deena Beasley

A California judge dismissed a class-action lawsuit filed against major U.S. cigarette manufacturers over children's exposure to cigarette advertising during the 1990s, citing freedom-of-speech protections, R.J. Reynolds said on Friday.

The San Diego law firm representing the plaintiffs, Blumenthal & Markham, said it would appeal the decision.

"This is a common-sense decision recognizing that our advertising is lawful and protected by the First Amendment," Daniel Donahue, the No. 2 tobacco company's deputy general counsel, said in a statement.

"Reynolds Tobacco does not want kids to smoke, and we advertise our brands only to adult smokers."

The Winston-Salem, North Carolina-based cigarette company, a unit of R.J. Reynolds Tobacco Holdings Inc. (RJR) ,in 1988 launched the controversial ad campaign featuring cartoon character Joe Camel, leading anti-smoking activists to accuse the company of illegally targeting ads to young teenagers.

RJR, which makes cigarette brands including Winston and Camel, voluntarily pulled the ads several years ago.

"We do not believe that the law allows tobacco companies to target their ads to kids. If it isn't a crime, it is open season on kids for new tobacco companies," said attorney Norman Blumenthal, referring to a multi-state settlement agreement with existing cigarette makers that prohibits marketing to minors.

San Diego Superior Court Judge Ronald Prager dismissed the suit, which was filed by Devin Daniels on behalf of all California minors who smoked between April 2, 1994, and Dec. 31, 1999, and were exposed to cigarette marketing and advertising in California during that time.

"The dismissal is a setback," said Edward Sweda, senior attorney for the Tobacco Products Liability Project in Boston.

Prager cited a U.S. Supreme Court decision that the First Amendment constrains state efforts to limit advertising of legal tobacco products, a Congressional ban on electronic advertising of cigarettes and the Federal Trade Commission's regulatory authority as reasons for dismissing the case.

"Defendants' speech, including the advertisement at issue, is neither deceptive nor related to an unlawful activity and is therefore entitled to First Amendment protection," the judge said in his decision.

The FTC in 1999 dropped a case against R.J. Reynolds over the Joe Camel advertising campaign after key tobacco companies reached a huge $206 billion settlement with 46 states.

Shares of RJR, down 7 percent year-to-date, were up 31 cents at $52.26 on the New York Stock Exchange. Shares of Philip Morris, the world's No. 1 tobacco company, were down 46 cents at $52.35 in late afternoon trading on the New York Stock Exchange.