People ex rel. Lockyer v. R.J. Reynolds

• Decision Date: 27 March 2003
• Docket Number: No. D039485.,D039485.
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE ex rel. Bill LOCKYER, as Attorney General, etc., Plaintiff and Respondent, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant and Appellant.

132 Cal.Rptr.2d 151

107 Cal.App.4th 516

The PEOPLE ex rel. Bill LOCKYER, as Attorney General, etc., Plaintiff and Respondent, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant and Appellant.

No. D039485.

Court of Appeal, Fourth District, Division 1.

March 27, 2003.

Review Denied June 25, 2003.^*

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, H. Joseph Escher III, Ethan P. Schulman, Pamela T. Johann and Evan S. Nadel, San Francisco, for Defendant and Appellant.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Dennis Eckhart, Assistant Attorney General, Amy J. Hertz, Michelle Fogliani and Peter Williams, Deputy Attorneys General, for Plaintiff and Respondent.

Milberg Weiss Bershad Hynes & Lerach, Patrick J. Coughlin, Frank J. Janecek, Jr., Christopher Collins, Emeryville; National Center for Tobacco-Free Kids, Inc. and Matthew L. Myers for the American Cancer Society, the American Lung Association, the American Heart Association, the American Public Health Association, the American Academy of Family Physicians, the American College of Chest Physicians and the National Center for Tobacco-Free Kids, Inc. as Amici Curiae on behalf of Plaintiff and Respondent.

Janet Napolitano, Attorney General (Arizona), and Craig W. Soland, Assistant Attorney General, for State Attorneys General as Amici Curiae on behalf of Plaintiff and Respondent.

KREMER, P.J.

Defendant R.J. Reynolds Tobacco Company (Reynolds) appeals a summary judgment favoring plaintiff the People of the State of California on the People's complaint for enforcement of a master settlement agreement (MSA). Reynolds contends the court erred in concluding Reynolds violated an MSA provision limiting outdoor advertising of tobacco Products. Since Reynolds has not demonstrated reversible error, the summary judgment must be upheld.

I INTRODUCTION

We review the summary judgment de novo. (Sambrano v. City of San Diego (2001) 94 Cal.App.4th 225, 235, 114 Cal. Rptr.2d 151.) Further, the "interpretation of a contract is subject to de novo review where the interpretation does not turn on the credibility of extrinsic evidence." (Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843, 102 Cal.Rptr.2d 468; Centex Golden Construction Co. v. Dale Tile Co. (2000) 78 Cal.App.4th 992, 996, 93 Cal. Rptr.2d 259.)¹

Tobacco product manufacturer Reynolds promoted its tobacco products in California.² As part of Reynolds's promotion of its Winston brand of cigarettes, Reynolds sponsored the NASCAR³ Winston Cup Series, a series of races characterized by Reynolds as a "year-long points competition" where competitors in various venues in the United States vied for points needed to win awards. Events comprising a portion of the Reynolds-sponsored NASCAR Winston Cup Series were held at the Sears Point Raceway (Sears Point) in northern California.⁴

In November 1998 Reynolds and the People signed the MSA that settled the People's litigation against various tobacco product manufacturers, including Reynolds.⁵ Further, the parties stipulated to entry of a consent decree and final judgment. As part of the consent decree, the Superior Court of San Diego County approved the MSA (People v. Philip Morris, Inc. (1998, No. JCCP4041)). The court also retained exclusive jurisdiction for purposes of implementing and enforcing the MSA.

The placed various detailed express restrictions on Reynolds's advertising and marketing practices. However, despite generally banning all billboard and other outdoor advertising of tobacco products, the MSA expressly permitted Reynolds to continue to promote and advertise its NASCAR Winston Cup Series as a "Brand Name Sponsorship." Eventually, a dispute arose between the parties about whether by not removing some outdoor advertising signs mentioning Winston at Sears Point, Reynolds violated the MSA's limitation on outdoor advertising.

In March 2001 after communications between the parties failed to resolve the matter, the People brought this litigation against Reynolds to enforce the MSA and obtain relief for Reynolds's alleged violation of the MSA's restrictions on outdoor advertising. Ultimately, the superior court granted the People's motion for summary judgment against Reynolds. Reynolds appeals.

II

LANGUAGE OF THE MSA

A Outdoor Advertising Limited

The MSA's subsection 111(d), entitled "Elimination of Outdoor Advertising and Transit Advertisements," provided in relevant part: "Each Participating Manufacturer shall discontinue Outdoor Advertising⁶ ... advertising Tobacco Products within the Settling States as set forth herein. [¶] (1) Removal. Except as otherwise provided in this section, each Participating Manufacturer shall remove from within the Settling States within 150 days after the MSA Execution Date all of its (A) billboards (to the extent that such billboards constitute Outdoor Advertising) advertising Tobacco Products; (B) signs and placards (to the extent that such signs and placards constitute Outdoor Advertising) advertising Tobacco Products in arenas, stadiums, shopping malls an+d Video Game Arcades.... [¶] (2) Prohibition on New Outdoor Advertising and Transit Advertisements. No Participating Manufacturer may, after the MSA Execution Date, place or cause to be placed any new Outdoor Advertising advertising Tobacco Products ... within any Settling State."

B

Some Tobacco Brand Name Sponsorships Allowed

(1)

Brand Name Sponsorships Defined

In relevant part, the MSA's subsection II(j) defined "`Brand Name Sponsorship'" as "an athletic, musical, artistic, or other social or cultural event as to which payment is made (or other consideration is provided) in exchange for use of a Brand Name⁷ or Names (1) as part of the name of the event or (2) to identify, advertise, or promote such event or an entrant, participant or team in such event in any other way. Sponsorship of a single national or multi-state series or tour (for example, NASCAR (including any number of NASCAR races)), or of one or more events within a single national or multi-state series or tour, or of an entrant, participant, or team taking part in events sanctioned by a single approving organization (e.g., NASCAR or CART), constitutes one Brand Name Sponsorship."

(2)

Tobacco Brand Name Sponsorships Limited

The MSA's subsection III(c), entitled "Limitation of Tobacco Brand Name Sponsorships," provided in relevant part: "(1) Prohibited Sponsorships. After the MSA Execution Date, no Participating Manufacturer may engage in any Brand Name Sponsorship in any State consisting of: [¶] (A) concerts; or [¶] (B) events in which the intended audience is comprised of a significant percentage of Youth; or [¶] (C) events in which any paid participants or contestants are Youth; or [¶] (D) any athletic event between opposing teams in any football, basketball, baseball, soccer or hockey league. [¶] (2) Limited Sponsorships. [¶] (A) No Participating Manufacturer may engage in more than one Brand Name Sponsorship in the States in any twelve-month period (such period measured from the date of the initial sponsored event). [¶] ... [¶] (3) Related Sponsorship Restrictions. With respect to any Brand Name Sponsorship permitted under this subsection (c): [¶] (A) advertising of the Brand Name Sponsorship event shall not advertise any Tobacco Product (other than by using the Brand Name to identify such Brand Name Sponsorship event); [¶] ... [¶] (E) nothing contained in the provisions of section 111(d) [eliminating most outdoor advertising] shall: ... (ii) apply to Outdoor Advertising advertising the Brand Name Sponsorship, to the extent that such Outdoor Advertising is placed at the site of a Brand Name Sponsorship no more than 90 days before the start of the initial sponsored event, is removed within 10 days after the end of the last sponsored event, and is not prohibited by subsection (3)(A) above." (Italics added.)

III DISCUSSION

Reynolds contends its advertising in California of the NASCAR Winston Cup Series complied fully with the MSA's restrictions on outdoor advertising. However, the People contend Reynolds violated the MSA's provisions involving the length of time that Reynolds's advertising signage was allowed to be posted at Sears Point. In particular, the parties dispute the meaning of the phrase "initial sponsored event" as used in the MSA's subsection III(c)(2)(A) and later in the MSA's subsection III(c)(3)(E)(ii).

Specifically, Reynolds contends that since the phrase "initial sponsored event" in the MSA's subsection III(c)(2)(A) undisputedly referred to the first event in Reynolds's Brand Name Sponsorship series in a 12-month period, the phrase "initial sponsored event" in the MSA's subsection III(c)(3)(E)(ii) should be interpreted as conveying the same meaning, to wit, that Reynolds's outdoor advertising could be placed at any site where a Brand Name Sponsorship event took place as long as such advertising was placed no more than 90 days before the first event in the Brand Name Sponsorship series as a whole and was removed no later than 10 days after the last event in the entire series. Thus, applying its proffered interpretation, Reynolds concludes the protracted schedule of the NASCAR Winston Cup Series from February to November allowed for uninterrupted signage at Sears Point.

However, though concurring in Reynolds's interpretation of the meaning of the phrase "initial sponsored event" as used in the MSA's subsection III(c)(2)(A), the People contend the phrase "initial sponsored event" as used in the MSA's subsection III(c)(3)(E)(ii) referred to the first event at each particular race track where a portion of the Brand Name Sponsorship series took place. Hence, applying their proffered interpretation, the People conclude Reynolds's outdoor advertising at each of those particular sites was temporally limited to the period between 90 days before and 10 days after the events at each such respective site.

In sum, Reynolds contends the...