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Commonwealth v. Philip Morris

August 17, 2010

COMMONWEALTH OF PENNSYLVANIA BY MICHAEL FISHER, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE COMMONWEALTH OF PENNSYLVANIA
v.
PHILIP MORRIS, INC; R.J. REYNOLDS TOBACCO COMPANY; BROWN & WILLIAMSON TOBACCO CORPORATION; B.A.T. INDUSTRIES, P.L.C.; THE AMERICAN TOBACCO COMPANY, INC. C/C BROWN & WILLIAMSON TOBACCO CORPORATION; LORILLARD TOBACCO COMPANY; LIGGETT GROUP, INC.; UNITED STATES TOBACCO COMPANY; THE TOBACCO INSTITUTE, INC.; THE COUNCIL FOR TOBACCO RESEARCH-U.S.A., INC.; SMOKELESS TOBACCO COUNCIL INC.; AND HILL AND KNOWLTON, INC.,
APPEAL OF: R.J. REYNOLDS TOBACCO COMPANY



The opinion of the court was delivered by: Judge Pellegrini

Argued: June 24, 2010

BEFORE: HONORABLE DAN PELLEGRINI, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE JIM FLAHERTY, Senior Judge.

OPINION

R.J. Reynolds Tobacco Company (Reynolds) appeals from an order of the Court of Common Pleas for Philadelphia County (trial court) finding it violated the Tobacco Master Settlement Agreement and was in contempt of court for violation of the Consent Decree because it used cartoons in the promotion and advertising of its tobacco products. Because the trial court erred in determining Reynolds was liable for a third-party's use of cartoons in an independently produced editorial and that Reynolds' own advertisements included cartoons, we reverse.

In 1997, the Commonwealth of Pennsylvania commenced suit against several major tobacco manufacturers, including Reynolds, as part of a nationwide litigation strategy to, inter alia, recover medical expenses resulting from tobacco-related diseases and halt the marketing of tobacco products to minors. In November of 1998, the Commonwealth and 45 other states entered into a Master Settlement Agreement (MSA) and Consent Decree with Reynolds which prohibited the manufacturer from "using or causing to be used within the Commonwealth of Pennsylvania any Cartoon in the advertising, promoting, packaging or labeling of Tobacco Products." (Consent Decree § V(B)). The MSA defined "Cartoon" as follows:

"Cartoon" means any drawing or other depiction of an object, person, animal, creature or other similar caricature that satisfies any of the following criteria:

(1) the use of comically exaggerated features;

(2) the attribution of human characteristics to animals, plants or other objects, or the similar use of anthropomorphic technique; or

(3) the attribution of unnatural or extrahuman abilities, such as imperviousness to pain or injury, X-ray vision, tunneling at very high speeds or transformation.

The term "Cartoon" includes "Joe Camel."

(MSA § II(1)).

Beginning in 2007, while still subject to the MSA and Consent Decree, Reynolds engaged in an advertising campaign known as the Camel Farm which sought to promote independent rock music and record labels in connection with its Camel® cigarette brand. The Camel Farm campaign used an agricultural theme which depicted the growth and nurturance of independent music rising from the underground. The campaign included a multi-page butterfly or barn door gatefold advertisement*fn1 in Rolling Stone magazine's 40th Anniversary issue published on November 15, 2007.*fn2 The gatefold was spread out over nine pages with Camel Farm ads on pages one, three, four and nine and a Rolling Stone editorial entitled "Indie Rock Universe" covering pages two and five through eight. The latter pages were wrapped in the gatefold Camel Farm ad.

The Camel Farm advertisements consist of actual photographs of plants, birds, farm animals, farm equipment, televisions, speakers and radios arranged in a retro-styled collage. While most of the images are typical photographs, the ad does contain an image of a radio with a propeller flying through the air and several radios, televisions and speakers perched on stems as if growing out of the ground. It also contains printed type explaining the Camel Farm concept, the Camel® logo, and mandatory Surgeon General's Warnings. The Rolling Stone editorial, on the other hand, consists of hand-drawn illustrations of rockets, alien creatures, robots, a planet with a mouth and arms, a kilted headless man with bagpipes protruding from his side, and a rocket-powered guitar. While the parties disagree as to whether the images in Reynolds' Camel Farm ad constitute cartoons under the MSA definition, they agree that many of the Rolling Stone editorial images clearly meet the MSA definition of cartoons.

After the magazine was published, the Commonwealth filed a Motion to Enforce the Consent Decree with the trial court and sought monetary sanctions arguing that the images in the Camel Farm ads constituted cartoons and that Reynolds was liable for the cartoons contained within the adjacent Rolling Stone ...


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