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Calif judge fines Reynolds $20 million

SAN DIEGO, June 6 (UPI) -- A California judge Thursday fined cigarette maker R.J. Reynolds Tobacco $20 million for violating the nationwide legal agreement between the tobacco industry and 46 states to point cigarette advertising away from teenagers and other minors.

San Diego County Superior Court Judge Ronald Prager ruled that Reynolds, the nation's second-largest tobacco company, did not make any changes to its advertising campaign in order to reduce youth exposure to its advertising.

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"When hundreds of your customers die every day, the only way to stay in business is to hook new ones," California Attorney General Bill Lockyer declared in statement. "Targeting children in the quest for new customers is unlawful and will not be tolerated in California."

Lockyer, along with his counterparts in New York, Connecticut, Pennsylvania and Maryland, alleged in its case that Reynolds violated the prohibition of the 1998 Master Settlement Agreement with the tobacco industry by placing cigarette ads in magazines with large numbers of teenage readers, including Sports Illustrated, Spin, Hot Rod and Rolling Stone.

Shares of R.J. Reynolds lost $1.08, or 1.55 percent, to close Thursday at $68.71 on moderate volume of 470,500 shares traded on the New York Stock Exchange. Based in Winston-Salem, N.C., the company's brands include Winston, Camel and Doral.

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A Reynolds executive called Lockyer's action "politically correct," but also called it an act of censorship aimed at undermining the company's ability to use legitimate marketing to reach adult smokers.

"The state did not produce any evidence that Reynolds Tobacco 'targets' minors," said Reynolds Vice President Tommy Payne. "Quite the contrary. The state conceded in sworn statements that Reynolds Tobacco has no specific intent to target cigarette advertising to youth, and does not purposefully attempt to expose youth to cigarette advertising."

"It defies common sense for a court to find that Reynolds Tobacco's placement of cigarette ads in magazines with a minimum of 75 percent adult readership 'targets' kids simply because they might see the publication," he added, declaring that the companies will appeal the ruling unless the decision is set aside.

"This lawsuit and today's decision unilaterally rewrite that contract and establish the precedent of censorship of legitimate information and competition for adults who choose to smoke cigarettes," Payne said. "Should this decision stand, we intend to appeal."

But anti-smoking activists hailed the ruling for upholding provisions in the master agreement that prohibit both direct and indirect efforts to market tobacco to juveniles.

"Since the 1998 settlement, there has been growing evidence that the tobacco industry has systematically violated both the spirit and the intent of the prohibition on targeting youth through continued advertising in youth-oriented magazines, convenience stores, and other venues effective at reaching kids," said Matthew L. Myers, president of the Campaign for Tobacco Free Kids.

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(Reported by Hil Anderson in Los Angeles)

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