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Posted on 04/02/2003 6:09:53 AM PST by SheLion

WINSTON-SALEM, N.C., April 2 /PRNewswire-FirstCall/ -- Two of the nation's largest cigarette manufacturers have sued the state of California to stop state-sponsored ads that exceed the authority granted to the state by voters and are intended to vilify the tobacco industry.

R.J. Reynolds Tobacco Company and Lorillard Tobacco Company filed the suit in U.S. District Court in Sacramento, seeking an injunction halting some of California's Prop 99 advertising. The lawsuit alleges that a substantial number of California's ads are a misuse of taxpayer funds, violate the companies' constitutional rights, and have a prejudicial effect on potential jurors who might be empanelled in lawsuits related to smoking.

The lawsuit alleges misuse of tax dollars collected under the California Tobacco Tax and Health Promotion Act (Prop 99) passed in 1988. Prop 99 imposes a 25-cent tax on each pack of cigarettes sold in the state.

"We're simply asking the court to direct the State of California to play by the rules that were set by Prop 99," says Daniel W. Donahue, senior vice president and deputy general counsel for Reynolds Tobacco.

"Reynolds Tobacco and Lorillard have no objection to ads intended for tobacco-related health education," Donahue says. "However, the state of California has taken it upon itself to essentially re-write Prop 99 and direct taxpayer dollars for uses the voters did not approve; namely, to attack legitimate businesses and their employees rather than provide tobacco-related health education."

As noted in the proposition itself, Prop 99 tax proceeds are to be used primarily for tobacco-related health education programs and medical care for indigent citizens. The plaintiffs claim that, instead, California inappropriately began a series of radio, TV, billboard and print ads, which California officials openly acknowledge are intended to vilify the tobacco industry.

In the lawsuit, the companies point out that in addition to the misuse of Prop 99 monies, they are asserting constitutional arguments in support for injunctive relief. First, it is clear that the U.S. Supreme Court ruled that requiring a person or company to pay for ads they disagree with, including those that ruin their reputations, violates their rights under the First Amendment to the U.S. Constitution.

Reynolds Tobacco and Lorillard also claim that California is denying the companies their Seventh Amendment right to a fair trial. The lawsuit alleges that many of the negative state-sponsored ads against the cigarette industry have a prejudicial effect on potential jurors who might be empanelled in lawsuits related to smoking.

R.J. Reynolds Tobacco Company (RJRT) is a wholly owned subsidiary of R.J. Reynolds Tobacco Holdings, Inc. (NYSE: RJR - News). R.J. Reynolds Tobacco Company is the second-largest tobacco company in the United States, manufacturing about one of every four cigarettes sold in the United States. Reynolds Tobacco's product line includes four of the nation's 10 best-selling cigarette brands: Camel, Winston, Salem and Doral. For more information about RJRT, visit the company's web site at www.rjrt.com.

Lorillard Tobacco Company, founded in 1760, is the oldest and fourth- largest manufacturer of cigarettes in the United States. Headquartered in Greensboro, N.C., it is a subsidiary of Loews Corporation. The company's major brands include Newport, Kent, True, Old Gold and Maverick.

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