P. ex. rel. Lockyer v. R.J. Reynolds 10/30/03 CA2/2

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B160571

Case Date: 10/30/2003

Preview:Filed 10/30/03

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION TWO THE PEOPLE ex rel. BILL LOCKYER, as Attorney General, etc., Plaintiff and Respondent, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant and Appellant. B160571 (Los Angeles County Super. Ct. No. KC036109)

APPEAL from a judgment of the Superior Court of Los Angeles County. Conrad Richard Aragon, Judge. Affirmed. Howard, Rice, Nemerovski, Canady, Falk & Rabkin, H. Joseph Escher III, Marc C. Haber, and Chandra Miller Fienen for Defendant and Appellant. Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Dennis Eckhart, Senior Assistant Attorney General, Peter M. Williams and Michelle Fogliani, Deputy Attorneys General, for Plaintiff and Respondent. _________________________

Exercising independent review, we affirm summary judgment in favor of the People against R.J. Reynolds Tobacco Company (R.J. Reynolds) for violating Health and Safety Code section 118950. We hold: (1) the Federal Cigarette Labeling and Advertising Act (FCLAA) does not preempt section 118950's restriction on the distribution of free cigarettes; (2) the distribution of free cigarettes on public grounds violates section 118950 even if it is confined to an adult only area inside a private function; and (3) the $14,826,200 penalty levied against R.J. Reynolds for distributing free cigarettes to 14,834 people does not violate the excessive fines or due process clauses of the United States Constitution. 1. Background. Between February 1999 and October 1999, R.J. Reynolds operated tents through which it distributed 108,155 free packs of cigarettes to 14,834 people at the Pomona Raceway, the Del Mar Mile Motorcycle Championship, the Blessing of the Cars, the Sunset Junction Festival, the Long Beach Jazz Festival, and the San Jose International Beer Festival (the six events). At the six events, licensed security guards were stationed at the entrances to the tents. They admitted only adults who were 21 years of age or older and in possession of both a pack of cigarettes containing at least one cigarette and a completed survey card. Cigarettes were distributed to the admitted adults, but only after
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FACTUAL AND PROCEDURAL HISTORY

See Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476 (summary judgments are reviewed independently). All further statutory references are to the Health and Safety Code unless otherwise indicated. R.J. Reynolds challenges the constitutionality of the penalty under both the United States Constitution and the California Constitution. However, R.J. Reynolds analyzes only the federal issue. For purposes of this opinion only, we presume that the federal and state issues are coterminus. 2
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they provided personal identification information, brand and style preference, purchase information, and permission to be added to R.J. Reynolds's mailing list. 2. The proceedings below. The People sued R.J. Reynolds, alleging that the distribution of free cigarettes at the six events violated section 118950. After the parties stipulated to the facts pertaining to the six events, the People moved for summary judgment. R.J. Reynolds opposed by raising federal preemption as a bar to the complaint and by arguing that its conduct fell within the safe harbor provision set forth in section 118950, subdivision (f), which allows the distribution of free cigarettes on public grounds leased for private functions where minors are denied access by a peace officer or a licensed security guard. The trial court rejected both arguments. Following briefing and a hearing regarding the amount and constitutionality of the penalty under section 118950, subdivision (d), the trial court entered judgment for the People. Strictly calculated, the penalty provided by section 118950, subdivision (b) would have been over $108 million because every package of cigarettes distributed on public grounds was a violation. However, the trial court's order provided in relevant part: "JUDGMENT SHALL BE ENTERED IN FAVOR OF THE PEOPLE IN THE AMOUNT OF $14,826,200. The People agreed in open court . . . that the 9,600 cartons distributed at Pomona in 1999 and alleged in the 2nd Cause of Action, were to be considered as 9,600 single packages -- thus amounting to 9,600 violations -- for the limited purpose of calculating the statutory fine for that particular event. Further, the parties have stipulated that a total number of 14,834 people received free samples at the The People's pleading pertained to nine different events and alleged that R.J. Reynolds violated section 118950 by distributing nonsale cigarette coupons as well as by distributing nonsale cigarettes. The People sought statutory penalties, but also relief pursuant to Business and Professions Code section 17200 et seq. The People agreed to dismiss their claims related to the nonsale distribution of cigarette coupons and their unfair business practices claims. The summary judgment motion only pertained to the six events. 3
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events in question. The Court imposed a nondiscretionary fine of $200 for the 1st violation at each event, a nondiscretionary $500 fine for the 2nd violation at each event, and $1,000 fine for each subsequent violation at each event. The Court has calculated the amount of the fine pursuant to subdivision (d) of [section 118950] based on the number of recipients of the tobacco samples who received cigarettes in violation of [section 118950] for all the subject events." This timely appeal followed. DISCUSSION I. California's restriction on the distribution of free cigarettes on public grounds. For purposes of this opinion, we apply the prior version of section 118950, which was in effect during the six events in 1999.
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Pursuant to subdivision (b) of the prior version of section 118950, it was unlawful for persons engaged in the business of selling or distributing cigarettes to distribute free cigarettes to people "in any public building, park or playground, or on any public sidewalk, street, or other public grounds." Any person who violated this statute was "liable for a civil penalty of not less than two hundred dollars ($200) for one act, five hundred dollars ($500) for two acts, and one thousand dollars ($1,000) for each succeeding violation. Each distribution of a single package . . . to an individual member of the general public in violation of this section [was] considered a separate violation." (

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