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CALIFORNIA EXTINGUISHES JOE CAMEL [9.17.2]
Text Of Settlement And Consolidated Agreement
SETTLEMENT AND CONSOLIDATION AGREEMENT
This Settlement and Consolidation Agreement ("Agreement") is entered into by and among plaintiffs Janet C. Mangini ("Mangini") and The People of the State of California through the prosecuting entities the City and County of San Francisco, the City of Los Angeles, and the City of San Jose, and the Counties of Alameda, Contra Costa, Marin, Riverside, Sacramento, San Bernardino, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura ("Prosecuting Entities") (collectively "Plaintiffs"), and Defendants R.J. Reynolds Tobacco Company ("Reynolds") and Mezzina/Brown, Inc. (collectively "Defendants"). Plaintiffs and Defendants are collectively referred to as the "Parties."
WHEREAS, on December 30, 1991, Mangini filed a civil action in the San Francisco County Superior Court entitled Janet C. Mangini v. R.J. Reynolds Tobacco Company, et al. (No. 939359), seeking injunctive and other relief regarding the Reynolds Joe Camel Campaign (the "Mangini action"). The trial court granted defendants' motion for summary judgment on the ground that the action was preempted by the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1334). The Court of Appeal, First Dist., Div. Five, No. A059253, reversed as to a possible amended complaint containing a cause of action for an unfair business practice of allegedly targeting minors; and
WHEREAS, the California Supreme Court affirmed the judgment of the Court of Appeal and determined that Mangini could state a cause of action that was not preempted by the Federal Cigarette Labeling and Advertising Act based on allegations that an advertising campaign targeting minors for the purpose of inducing their illegal purchase of cigarettes constituted an unlawful and unfair business practice under Bus. & Prof. Code 17200, et seq. Mangini v. R.J. Reynolds Tobacco Co., 7 Cal. 4th 1057; 31 Cal. Rptr. 2d 358; 875 P.2d 73 (1994). Mangini filed the second amended complaint which has remained the operative complaint from on or about March 14, 1995. On or about May 23, 1995, the Court granted defendant RJR Nabisco's motion to quash service of summons for lack of personal jurisdiction. Mangini dismissed defendants McCann-Erickson, U.S.A. and Young & Rubicam Inc. without prejudice on or about December 6, 1995. The Prosecuting Entities and other parties filed against Reynolds and other parties another action, The People of the State of California v. Philip Morris, et al. (No. 980864) (the "People Action No. 980864"), seeking injunctive and other relief with respect to, inter alia, the same conduct alleged in the Mangini action on or about September 5, 1996. The People of the State of California (the "People"), through the Prosecuting Entities, filed a Complaint in Intervention ("Complaint in Intervention") herein on or about June 2, 1997, and Defendants have demurred to said Complaint in Intervention. The Mangini action and The People's Complaint in Intervention are collectively referred to herein as the "Litigation." The Litigation does not refer to the People Action No. 980864.
WHEREAS, the Parties desire to enter into the following agreement with respect to the Litigation.
THEREFORE, the Parties agree as follows:
Consideration For Dismissal. A substantial factor in the phase-out of the "Joe Camel" Campaign was the public controversy surrounding Joe Camel. The Mangini action, including its vigorous litigation, was an early force in creating and driving this controversy. The Prosecuting Entities' filed People Action No. 980864 and subsequently intervened in Mangini to further drive this controversy. The Mangini action, coupled with the Prosecuting Entities' intervention in Mangini, was integral to the phase-out of Camel brand cigarette marketing using the illustrated Camel character called "Joe Camel" and other illustrated Camel characters (the "Joe Camel Campaign"). Defendants' acknowledgement of these facts will be the principal consideration for dismissing Mangini. Additional immediate consideration will be as follows:
Reynolds will immediately: issue all necessary instructions to effect the removal of all billboards in California containing materials from the Joe Camel Campaign; cease placement of Joe Camel materials in newspapers and magazines distributed in California; and stop retail distribution of promotional items containing images from the Joe Camel Campaign in California. In the event such materials from the Joe Camel Campaign are not completely removed by December 31, 1997, Reynolds will have 5 business days after receiving notice of the exact location from Plaintiffs to cure any such omission. Curing such omission in the context of Joe Camel materials on billboards will be deemed accomplished when Reynolds instructs the outdoor advertising company that maintains the affected billboards to remove the Joe Camel materials. If Reynolds agrees to a more stringent schedule with respect to the phase-out of Joe Camel billboards, advertisements or promotional items with any other individuals or entities it will abide by such schedule as part of this Agreement. Jurisdiction to enforce this Agreement will be retained by the court having jurisdiction over the People Action No. 980864 with which the Complaint in Intervention will be consolidated. Any breach of this Agreement will be determined by said court and any remedy will be limited to remedies legally and equitably available for breach of a settlement agreement. With respect to Mangini and the Prosecuting Entities there shall be no action pursuant to Bus. & Prof. Code 17200, et. seq., for breach of this Agreement.
Defendants acknowledge that they have no plan to reinstitute the Joe Camel Campaign or commence a new Joe Camel Campaign.
Defendants hereby authorize the immediate release to the public of all non-privileged and non-work product documents referring to persons under the age of 18 and/or the Joe Camel Campaign produced in Mangini, except that it is understood that Defendants wish to keep confidential documents directly relating to Reynolds' current marketing strategies and plans, which would not include any document that might refer to smoking by minors. Any disputes as to documents to be released will be resolved by the discovery referee Judge Roy L. Wonder. Prior to any release Plaintiffs will provide Defendants with copies or a listing of the documents planned to be released, and Defendants will within five business days object in writing to the production of any documents contended to be current marketing strategies and plans. No such documents objected to will be released until the objection is resolved or determined not to be proper.
Within ten (10) business days after receipt of an entered and filed Order of Consolidation and Dismissal as described in paragraph 5 herein, Reynolds will hand deliver to Louise H. Renne, counsel for the City and County of San Francisco, on behalf of all Prosecuting Entities who are participating in the monetary aspects of this Agreement, a check in the amount of ten million dollars ($10,000,000) made payable to the "City and County of San Francisco for distribution pursuant to the terms of the Mangini Agreement," representing one million dollars ($1,000,000) in attorneys' fees for the Prosecuting Entities and nine million dollars ($9,000,000) to finance education, enforcement and/or advertising campaigns by California cities and counties to discourage smoking by minors. The $9,000,000 will be allocated as follows: The City and County of San Francisco, the City of Los Angeles, and the City of San Jose will each receive $1,500,000; $2,500,000 will be divided among the eleven county Interveners in proportion to each county's allocation of Proposition 99 advertising funds (California Health & Safety Code 104380), provided that each county shall receive at least $100,000; and the remaining $2,000,000 will be set aside for grants administered by the Prosecuting Entities, and made to other California cities and counties to fund youth anti-tobacco education, enforcement and/or advertising programs. If any of the above funds are unallocated or unclaimed six months after entry of an Order of Consolidation and Dismissal, such funds will be divided among the Prosecuting Entities in proportion to each Prosecuting Entities' original receipt of funds hereunder. Nothing in this Agreement shall constitute a license, implied or express, to use any copyrighted, trademarked, or other intellectual property of Defendants in connection with such campaign. It is understood by the Parties that the Prosecuting Entities might need to obtain the approval of various public agencies, including their City Councils or County Boards of Supervisors. The process of obtaining such approvals is expected to take several weeks at a minimum. It is nevertheless the intention of Plaintiffs and Defendants to enter into a binding agreement at the time of execution of this Agreement. If any Prosecuting Entity fails to send notice to the San Francisco City Attorney of its intent to participate in the monetary aspects of the settlement within ninety (90) days of entry of an Order of Consolidation and Dismissal, such Prosecuting Entity will not be entitled to participate in the monetary aspects of the settlement. It is further understood by the Parties that in the event the Prosecuting Entities receive a final judgment in the People Action No. 980864 as consolidated with the Complaint in Intervention as provided in paragraph 5 herein, on issues relating to the Joe Camel Campaign, this ten million dollar ($10,000,000) payment shall be credited toward any amount otherwise payable by Defendants to the Prosecuting Entities in regard to the Joe Camel Campaign. If it cannot be fairly determined from any judgment or findings of fact or law in the People Action No. 980864 what amount is attributable to issues relating to the Joe Camel Campaign, such amount shall be determined by a mutually agreed arbitrator. If the parties cannot agree on an arbitrator, the Court will appoint such arbitrator.
Attorneys' Fees. This Litigation constituted a major part of the litigation pressure on tobacco issues. As a result, counsel for Mangini and counsel for the Prosecuting Entities shall be permitted to participate in any national "public benefit" fee award or arbitration process created by a "national settlement" or "Congressional Resolution" based upon Reynolds' acknowledgement that the Mangini action, and the way it was vigorously litigated, was an early, significant and unique driver of the overall legal and social controversy regarding underage smoking that led to the decision to phase out the Joe Camel Campaign. If for any reason a national public benefit fee award/arbitration process is not implemented by December 31, 1998 or counsel for Mangini and counsel for the Prosecuting Entities elect not to or are not allowed to participate therein for any reason, Reynolds agrees to binding arbitration on fees and expenses before a panel of three arbitrators. Milberg Weiss Bershad Hynes & Lerach LLP ("MWBH&L") will choose one arbitrator, Reynolds will choose the second and MWBH&L and Reynolds will jointly decide on the third arbitrator. If an agreement cannot be reached regarding the third arbitrator between MWBH&L and Reynolds, the two arbitrators chosen by MWBH&L and Reynolds will select the third arbitrator to fill out the panel.
Maintenance Of The Prosecuting Entities' Claims In Consolidated Parallel Action. The Prosecuting Entities' claims regarding the Joe Camel Campaign as asserted in the Complaint in Intervention, including injunctive relief, disgorgement and penalties, will be consolidated into the People Action No. 980864. Dismissal of Mangini's complaint will not prejudice prosecution or constitute res judicata or collateral estoppel of any issue or remedy relating to the claims of the Prosecuting Entities in the People Action No. 980864, including the Prosecuting Entities' claims that Defendants have violated California Business & Professions Code 17200 and 17500 through the Joe Camel Campaign. It is the intent of the Parties that the Prosecuting Entities will retain the same claims in the People Action No. 980864 that were brought in the Complaint in Intervention, and that the Complaint in Intervention will be consolidated for all purposes including trial with the People Action No. 980864.
Release of Liability. Mangini and Defendants, and their attorneys and agents, hereby fully release and discharge each other, and their officers, directors, shareholders, employees, partners, attorneys, affiliates, agents, representatives, executors, trustees, spouses, heirs, insurers, licensees, advertising agencies and former advertising agencies and their employees, agents, successors and assigns, including without limitation RJR Nabisco, Inc., RJR Nabisco Holdings, Inc., Young & Rubicam Inc., and McCann-Erickson, U.S.A., from any and all claims (including claims for costs and attorneys' fees), damages, demands, actions or causes of action of any kind, known or unknown, that relate to the Litigation, exclusive of any claim by Mangini's counsel for payment of attorneys' fees and costs as described in paragraph 3 of this Agreement. The Prosecuting Entities and Reynolds are not releasing each other with respect to the substance of the claims in the Complaint in Intervention, which will be consolidated with and litigated in the People Action No. 980864.
Dismissal And Consolidation Of Action. Upon receipt of fully executed counterparts of this Agreement, Mangini will execute and file a request for dismissal with prejudice of the Mangini complaint, and the Prosecuting Entities and Defendants will execute and file a stipulated order for consolidation of the Complaint in Intervention with the People Action No. 980864 for all purposes including trial pursuant to Code of Civil Procedure 1048(a), in the form attached hereto. It is expressly understood that a material term of this Agreement is the dismissal of the Mangini complaint, the consolidation of the Complaint in Intervention with the People Action No. 980864, and the vacation of the trial date in the Mangini action of December 8, 1997, and that if such dismissal, consolidation and vacation of trial date are not accomplished this Agreement will not take effect. The Prosecuting Entities further agree not to request a trial date for the Complaint in Intervention different from that in the People Action No. 980864.
Applicable Law. This Agreement shall be construed and interpreted in accordance with the laws of California.
Entire Agreement. This Agreement constitutes the only existing and binding Agreement among the Parties, and the Parties acknowledge that there are no other warranties, promises, assurances or representations of any kind, express or implied, upon which the Parties have relied in entering into this Agreement. This Agreement shall not be modified except by written agreement signed by the party against whom modification is sought.
Acknowledgment Of Terms. The Parties have read and understood the terms of this Agreement, and understand and acknowledge the significance and consequence of each such term.
Parties Affected. This Agreement shall be binding upon and inure to the benefit of the officers, directors, shareholders, employees, partners, attorneys, affiliates, agents, representatives, executors, trustees, spouses, heirs, insurers, licensees, advertising agencies and former advertising agencies and their employees, successors and assigns of the Parties.
No Admission Of Liability. In entering into this Agreement, Defendants are not admitting in any fashion any wrongdoing, culpability or liability.
Authority To Enter Into Agreement. The Parties warrant that the person executing this Agreement on its behalf has the authority to do so and that any claims released have not been assigned or otherwise transferred to any other person or entity.
Construction. This Agreement will not be construed against the party preparing it but will be construed as if prepared by all Parties.
Counterparts. This Agreement can be executed in telecopied counterparts, and each telecopied counterpart shall be deemed an original.
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the date of the last signature herein.
DATED: ____________, 1997
BY: _________________________ JANET C. MANGINI On Behalf of the General
Public
DATED: ____________, 1997 BY: _________________________ LOUISE H. RENNE Fox Plaza 1390 Market Street 6th Floor San Francisco, CA 94102 Telephone: 415/554-3932
On Behalf of the People of California R.J. REYNOLDS TOBACCO CO.
DATED: ____________, 1997 BY: _________________________ MEZZINA/BROWN, INC.
DATED: ____________, 1997 BY: _________________________ HOWARD, RICE, NEMEROVSKI, CANADY, FALK, & RABKIN, A Professional Corporation
DATED: ____________, 1997 BY: _________________________ H. JOSEPH ESCHER III Three Embarcadero Center 7th Floor San Francisco, CA 94111 Telephone: 415/434-1600
Attorneys for Defendants MILBERG WEISS BERSHAD HYNES & LERACH LLP
DATED: ____________, 1997 BY: _________________________ PATRICK J. COUGHLIN 600 West Broadway Suite 1800 San Diego, CA 92101 Telephone: 619/231-1058
Attorneys for Plaintiffs BUSHNELL, CAPLAN & FIELDING, LLP
DATED: ____________, 1997 BY: _________________________ ALAN M. CAPLAN 221 Pine Street, Suite 600 San Francisco, CA 94104 Telephone: 415/217-3800
Attorneys for Plaintiffs McCUE & McCUE
DATED: ____________, 1997 BY: _________________________ JONATHAN D. McCUE 600 West Broadway Suite 2880 San Diego, CA 92101 Telephone: 619/338-8136
Attorneys for Plaintiffs LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP
DATED: ____________, 1997 BY: _________________________ RICHARD HEIMANN 275 Battery Street 30th Floor San Francisco, CA 94111 Telephone: 415/956-1000
Attorneys for Plaintiffs THE CUNEO LAW GROUP, P.C.
DATED: ____________, 1997 BY: _________________________ JONATHAN W. CUNEO 317 Massachusetts Ave.,N.E. Suite 300 Washington, D.C. 20002 Telephone: 202/789-3960
Attorneys for Plaintiffs