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

• Decision Date: 30 October 2003
• Docket Number: No. B160571,B160571
• Citation: 112 Cal.App.4th 1377,6 Cal.Rptr.3d 58
• 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.

6 Cal.Rptr.3d 58

112 Cal.App.4th 1377

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

No. B160571

Court of Appeal, Second District, Division Two

October 30, 2003

Review Granted January 28, 2004.

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, H. Joseph Escher III, Marc C. Haber, and Chandra Miller Fienen, San Francisco, 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.

ASHMANN-GERST, J.

Exercising independent review,¹ 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 118950.² 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.³

FACTUAL AND PROCEDURAL HISTORY

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 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 118950.⁴ 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 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 1999.⁵

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." (§ 118950, subd. (d).) The statute did not apply to "any public building, park, playground, sidewalk, street, or other public grounds leased for private functions where minors are denied access by a peace officer or licensed security guard on the premises." (§ 118950, subd. (f).)⁶

In section 118950, subdivision (a), the Legislature declared, inter alia: "(1) Smoking is the single most important source of preventable disease and premature death in California. [¶] (2) Smoking is responsible for one-quarter of all death caused by fire. [¶] (3) Tobacco-related disease places a tremendous financial burden upon the persons with the disease, their families, the health care delivery system, and society as a whole. [¶] (4) Despite laws in at least 44 states prohibiting the sale of tobacco products to minors, each day 3,000 children start using tobacco products in this nation. Children under the age of 18 consume 947 million packages of cigarettes in this country yearly. [¶] (5) The earlier a child begins to use tobacco products, the more likely it is that the child will be unable to quit. [¶] (6) More than 60 percent of all smokers begin smoking by the age of 14, and 90 percent begin by the age of 19.[¶] ... [¶] (9) Tobacco product advertising and promotion are an important cause of tobacco use among children. More money is spent advertising and promoting tobacco products than any other consumer product. [¶] (10) Distribution of tobacco product samples and coupons is a recognized source by which minors obtain tobacco products, beginning the addiction process. [¶] (11) It is the intent of the Legislature that keeping children from beginning to use tobacco products in any form and encouraging all persons to quit tobacco use shall be among the highest priorities in disease prevention for the State of California."

II. California law is not preempted.

R.J. Reynolds posits that the trial court erred when it ruled that section 118950 is not preempted by the FCLAA. We disagree.

A. The FCLAA.

As a preamble, the FCLAA provides: "It is the policy of the Congress, and the purpose of this Chapter to establish a comprehensive Federal Program to deal with cigarette labeling and advertising with respect to any relationship between smoking and health, whereby — [¶] (1) the public may be adequately informed about any adverse health effects of cigarette smoking by inclusion of warning notices on each package of cigarettes and in each advertisement of cigarettes; and [¶] (2) commerce and the national economy may be (A) protected to the maximum extent consistent with this declared policy and (B) not impeded by diverse, nonuniform, and confusing cigarette labeling and advertising regulations with respect to any relationship between smoking and health." (15 U.S.C. § 1331.)

To further the FCLAA's policy, title 15 United States Code section 1333 establishes that it is unlawful for any person to manufacture, package, or import for sale or distribution within the United States any cigarettes the package of which fails to bear specified Surgeon General's warnings. Similarly, manufacturers or importers of cigarettes must include the specified Surgeon General's warnings when they advertise via outdoor billboards or other mediums.

Relevant to this appeal, the FCLAA preempts any state requirement or prohibition "based on smoking and health ... with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of [the FCLAA]." (15 U.S.C. § 1334(b).)

B. Preemption law.

Article VI of the United States Constitution provides that the laws of the United States shall be the supreme law of the land. (Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (Cipollone).) It is axiomatic that any state law that conflicts with federal law has no effect. (Ibid.) "State action may be foreclosed by express language in a congressional enactment, [citation], by implication from the depth and breadth of a congressional scheme that occupies the legislative field, [citation], or by implication because of a conflict with a congressional enactment, [citation]." (Lorillard Tobacco Co. v. Reilly (2001) 533 U.S. 525, 541, 121 S.Ct. 2404, 150 L.Ed.2d 532 (Lorillard).)

When analyzing a preemption issue, a reviewing court "'start[s] with the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress.' [Citation.] Accordingly, "`the purpose of Congress is the ultimate touchstone'" of pre-emption analysis. [Citation.]" (Cipollone, supra, ...