Five States Sue RJR

AGs contend ads, matchbooks still target kids.

Five attorneys general filed suit against R.J. Reynolds Tobacco Co. in March for allegedly violating the Master Settlement Agreement which curbs tobacco marketing.

Arizona, California, New York, Ohio, and Washington charged RJR with reaching children via print ads, branded matchbooks, and billboards at NASCAR racetracks.

The suits came just days after the FTC issued its annual report on tobacco marketing. In 1999 — the first year affected by the Master Settlement Agreement — the top five manufacturers spent $8.24 billion on ads and promotion, a 22.3 percent increase over 1998 (see chart). But sales fell: Manufacturers reported selling only 411.3 billion cigarettes domestically, down 11.5 percent.

The suits are separate, but coordinated, with each state pursuing different alleged infractions. New York, California, Arizona, and Washington want to prevent year-round billboards at racetracks. (The MSA imposes a 100-day limit timed to events.) California also challenges RJR’s print ads, and Ohio pursues ads on matchbooks, contending that they violate MSA rules against branded merchandise.

All five filers and 18 additional states signed a 30-day notice to the company, warning that lack of a settlement would result in legal action.

RJR called the suits “an attempt to renegotiate the MSA through the courts by imposing new restrictions.”

AGs say they’ve mediated compliance over other tobacco companies’ occasional infractions in recent months, but RJR won’t fall in line. “R.J. Reynolds, unlike the rest of the industry, continues to push the envelope on what is allowed under the Master Settlement Agreement,” says Ohio AG Betty Montgomery, who sits on the National Association of Attorneys General (NAAG) Tobacco Enforcement Committee. “After months of trying to talk this out, it’s now time to ask the courts to set some ground rules.”

Print Ads

California claims that RJR print ads reached 95 percent of teens 12-17 an average of 50 times last year, and that over two years, ads reach as many youths as adult smokers.

RJR responds that it chooses magazines with at least 75 percent adult readership, which is more stringent than the FTC’s 60 to 70 percent guideline for alcohol advertising.

Anti-tobacco groups cried foul last May, with two reports that tallied tobacco ads in publications with 15 percent or more readership among kids under 17 (July PROMO). The reports prompted Philip Morris to pull out of 40 publications.

Matchbooks

Ohio’s suit takes issue with matchbooks containing an RJR brand name or logo on the cover. The MSA considers matchbooks to be “merchandise,” which is prohibited from being branded.

RJR contends matchbooks are an “adult-oriented communications medium” in compliance with the MSA. Since matchbooks usually are given only with a cigarette purchase, “they provide us with an efficient, highly targeted way to reinforce loyalty among adult smokers,” says RJR executive vp-general counsel Charles Blixt in a statement.

Racetrack Billboards

This may prove the trickiest piece of the dispute. The MSA restricts outdoor advertising of brand sponsorships to 90 days before and 10 days after a sponsored event. The four states contend that Reynolds keeps ads up year-round with signs that read “NASCAR Winston Cup Series” or “NHRA Winston Drag Racing.” California complains that such signs are visible during events such as youth races that Reynolds is prohibited from sponsoring.

RJR’s response is that its sponsorship of NASCAR and NHRA — whose seasons run from February through late November — entitles it to post signage from 90 days before the first sponsored event until 10 days after the last sponsored event.

Just a week after the suits, the U.S. Surgeon General blamed tobacco marketing for contributing to an increase in smoking among high schoolers. A Surgeon General study reported that last year, nearly 30 percent of high school senior girls and 33 percent of high school senior boys said they smoked in the last 30 days.

“Tobacco industry marketing is a factor influencing susceptibility to smoking among girls … [with] ads and promotions targeted to women, dominated by themes of social desirability and independence,” the report concludes.