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R.J. Reynolds Settles Suit Alleging Accord Violation

Tobacco: Firm was accused of mailing free cigarettes without consent.

January 06, 2001|From Bloomberg News

SAN DIEGO — R.J. Reynolds Tobacco Co. settled a lawsuit alleging it violated the $206-billion national tobacco accord by mailing free cigarettes to Californians, said state Atty. Gen. Bill Lockyer.

The settlement, approved in San Diego Superior Court on Dec. 28 and announced Friday, lets R.J. Reynolds mail free cigarettes only to adults who have given their consent and after it verifies each recipient is an adult, Lockyer said. In addition, the company will reimburse California for the cost of the state's investigation in the case, he said.

R.J. Reynolds, a subsidiary of R.J. Reynolds Tobacco Holdings Inc., allegedly violated the 1998 national settlement by mailing about 900,000 free cigarette packs to the homes of 115,000 Californians in 1999, without independently verifying that recipients wanted them.

"The way the program was operated by Reynolds, it was basically a marketing program aimed at getting Marlboro smokers to switch to Winstons or Camels," said senior Assistant Atty. Gen. Dennis Eckhart.

The national agreement, reached between the tobacco industry and 46 states, compensated the states for the health costs of treating smokers. It prohibits the targeting of children in the advertising and distribution of cigarettes, but it allows free samples to be sent to adults as part of a consumer-testing or evaluation program.

R.J. Reynolds, the nation's second-largest tobacco company, relied on an outside vendor for a list of certified adult smokers in California, who agreed to receive cigarette-related material by mail, said Guy M. Blynn, deputy general counsel of the tobacco unit.

"We do not want to send cigarette-related materials to people under the legal age or adult smokers who do not want to receive material from us," he said.

Yet much of that information was inaccurate, Eckhart said. "They didn't know whether the name of the person they had was really a person who wanted them. They had no system for double-checking."

Shares of R.J. Reynolds, based in Winston-Salem, N.C., rose $3.56 to close at $49.25 on the New York Stock Exchange.

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