Friday, January 30, 2004
S.C. to Review Nearly $15 Million Penalty in Cigarette Giveaways
By a MetNews Staff Writer
The California Supreme Court has agreed to decide whether R.J Reynolds Tobacco Company was properly ordered to pay more than $14.8 million in penalties for violating state law by distributing free cigarettes at various public events.
The justices voted 6-0 at Wednesday’s conference to review an Oct. 30 ruling by Div. Two of this district’s Court of Appeal, which upheld the fines. Chief Justice Ronald M. George was absent from the conference.
The Court of Appeal rejected a contention by the tobacco manufacturer that Health and Safety Code Sec. 118950, which generally prohibits the free distribution of cigarettes in public places, is preempted by federal law. The appellate panel also rebuffed the company’s claim that distribution of its products in special tents to which only persons who were over 21 years of age, already had cigarettes in their possession, and completed surveys were admitted did not violate the statute.
The panel held that the penalties, amounting to nearly $1,000 for each person who received free cigarettes, did not violate the constitutional prohibition against excessive fines.
The giveaway program was implemented in 1999 at several motor sports events and at the Sunset Junction Festival, the Long Beach Jazz Festival, and the San Jose International Beer Festival. The state Attorney General’s Office, which brought the action in Los Angeles Superior Court, presented evidence that more than 108,000 packs of cigarettes were given away.
Judge Conrad Aragon rejected the company’s claim that it fell within a “safe harbor” provision that allows cigarette giveaways on public grounds leased for private functions if minors are denied access by a peace officer or licensed security guard.
The judge noted that each pack of cigarettes given away constitutes a separate violation, and that the statute mandates a penalty of $200 for the first violation at a particular event, $500 for the second, and $1,000 for each additional violation.
This would have meant a total of more than $108 million, the Court of Appeal noted, but for a stipulation that the free distribution of 9,600 cartons at the Pomona Raceway be treated as one alleged violation per carton rather than per pack, reducing the total number of violations to 14,834.
In rejecting the tobacco maker’s constitutional arguments, Justice Judith Ashmann-Gerst said the penalty was proportionate to the defendant’s culpability, was reasonable in relation to the harm at which the penalty was levied, was not disproportionate to penalties usually imposed for similar violations, and did not exceed the defendant’s ability to pay.
The justice also rejected the claim that the Federal Cigarette Labeling and Advertising Act preempts the statute.
Justice Michael Nott concurred, while Justice Kathryn Doi Todd dissented, arguing that giving away cigarettes at a public event is a “promotional activity” and thus falls within the federal preemption.
The case is People ex rel. Lockyer v. R.J. Reynolds Tobacco Company (2003) 107 Cal. App. 4th 516.
Copyright 2004, Metropolitan News Company