R.J. Reynolds fights to market “light” cigarettes, but alerts retailers in case ban is upheld mp2

While it awaits a court ruling on its request to stay a ban on marketing of cigarettes as “lights,” ultra-lights,” “milds” and the like, R.J. Reynolds Tobacco Co. is continuing to market those products under those labels, a company spokesman told NPN MarketPulse.

U.S. District Judge Gladys Kessler ruled in August that R.J. Reynolds and other cigarette makers violated racketeering laws and misled the public about the health consequences of smoking. Kessler ordered them to stop marketing light and low-tar cigarettes and said the companies must make public statements about nicotine addiction and the health effects of smoking. The companies immediately asked Kessler to hold off on enforcing that order until the appeal was complete, a process that could take years. They said they would lose business to companies not affected by the ruling. Kessler rejected that request, saying the public would be harmed by a delay.

"Loss of market share, if it results from imposing an appropriate remedy to prevent and restrain past violations of the law, may well be the price defendants have to pay," Kessler wrote. The tobacco companies have appealed Kessler's judgment and they have also asked an appeals court in Washington, D.C., to stay the order banning the marketing of cigarettes as “lights,” “ultra-lights,” “milds,” “low-tar,” and so on, for the duration of the appeal, David Howard, a spokesman for R.J. Reynolds Tobacco told NPN MarketPulse.

Asked whether Kessler’s order banning the labeling of cigarettes as “lights” and so on is effectively in limbo until the appeals court rules on the motion to stay it, Howard said, “In our opinion it is.”

Howard said R.J. Reynolds hopes the D.C. Court of Appeals will rule by the end of this month or early November on the motion to stay Kessler’s order banning marketing of “light” cigarettes.

“We have filed a motion to stay the order,” Howard said. “This is a textbook case of a ruling that should be stayed because the losses that we would suffer from that could not be undone. R.J. Reynolds should not be compelled to suffer irreparable harm while we pursue [an] appeal.”

At the same time, R.J. Reynolds has been preparing in case the order to stop marketing “light” cigarettes is upheld, according to a copy of a letter the tobacco company sent to its retail customers. Thomas Briant, executive director of the National Association of Tobacco Outlets, Minneapolis, Minn., provided a copy of the letter to NPN MarketPulse. Dated Oct. 13, 2006, and addressed to “Valued Retail Trade Customers,” the letter reads, in part:

“As you may know, the U.S. District Court for the District of Columbia entered an order on August 17, 2006, as a result of a lawsuit filed by the U.S. Department of Justice (DOJ). This ruling applies to RJRT and certain other major tobacco companies including Philip Morris USA Inc. and Lorillard Tobacco Company.

As that ruling pertains to retail, it requires those manufacturers only to remove certain flavor descriptors from their packaging and advertising on January 1, 2007, and to place court-ordered corrective statements concerning smoking and health at retail beginning February 1, 2007. RJRT and the other major tobacco companies have asked the U.S. Court of Appeals to issue a ‘stay’ of that order, which would place a hold on the effect of the order until the full appeal is heard. We anticipate that the U.S. Court of Appeals will rule on the request for a stay by October 31, 2006, but that date is in the Court of Appeals’ control.

“Following are some of the key particulars in the order:

  • “Bans companies subject to the order from using descriptors, such as “low tar”, light”, “ultra-light”, “mild” and “natural”, or any other descriptors that “could be expect to result in a consumer believing that smoking the cigarette brand using that descriptor may result in a lower risk of disease or be less hazardous to health than smoking other brands of cigarettes.”

    “This would require companies subject to the order to remove the banned descriptors on their products and advertising by January 1, 2007.

  • “Requires the companies subject to the order to make corrective statements, regarding the following topics: a) adverse health effects of smoking; b) the addictiveness of smoking and nicotine; c) the lack of any significant health benefit from smoking “low tar”, light”, “ultra-light”, “mild” and “natural” cigarettes; d) manipulation of cigarette design and composition to ensure optimum nicotine delivery; and e) the adverse health effects of exposure to second-hand smoke.
“Placement of correction statements at retail:
  1. For each tobacco company subject to the order that has a retail merchandising program, a countertop display measuring no less than 18” x 30” carrying the corrective statements must be placed in a position of prominent visibility. This sign must be maintained for two years.
  2. In header displays on the top of backbar cigarette units, a corrective statement must be placed measuring at least the same size as the header brand advertising provided by each manufacturer.
“The retail corrective statements (countertop displays and headers) would be required beginning February 1, 2007. Note that if a retailer refuses to place the corrective statements, the manufacturer(s) must cancel the retail merchandising program for one year.”

Another paragraph, near the end of the letter, reads:

“Over the next several weeks, we will continue to communicate with you on this issue, because as partners we both have significant interest in the final outcome of this ruling. In the meantime, we felt it was important for you to have some understanding of the potential impact to your operation if a stay is not granted.”