State v. R.J. Reynolds Tobacco Co.

• Decision Date: 13 July 2009
• Docket Number: No. 61873-3-I.,61873-3-I.
• Citation: 211 P.3d 448,151 Wn. App. 775
• Court: Washington Court of Appeals
• Parties: STATE of Washington, Appellant, v. R.J. REYNOLDS TOBACCO COMPANY, Respondent.

211 P.3d 448

151 Wn. App. 775

STATE of Washington, Appellant, v. R.J. REYNOLDS TOBACCO COMPANY, Respondent.

No. 61873-3-I.

Court of Appeals of Washington, Division 1.

July 13, 2009.

Rene D. Tomisser, Office of the Attorney General, Olympia, WA, for Appellant.

Bradley S. Keller, Attorney at Law, Seattle, WA, for Respondent.

ELLINGTON, J.

¶ 1 After extensive national litigation, R.J. Reynolds Tobacco Company (Reynolds) and other cigarette manufacturers entered into a master settlement agreement with 46 states, including Washington. Stipulated consent decrees were entered in each state. The agreement contains a strict prohibition against the use of cartoons in advertising tobacco products. The chief question here is whether a Reynolds advertisement in the November 15, 2007 edition of Rolling Stone violated this prohibition. A secondary question is whether Reynolds had a duty to ensure the adjacent content within the magazine did not violate the cartoon prohibition.

¶ 2 The trial court ruled the Reynolds advertisement did not violate the cartoon ban and that Reynolds did not cause Rolling Stone's use of cartoons in the editorial content enfolded by the advertisement. The court also ruled that because the Rolling Stone cartoon material was unforeseeable, Reynolds had no duty to prohibit its use.

¶ 3 The State appeals. We affirm the ruling that Reynolds is not liable for the Rolling Stone content. But we hold that Reynolds' advertisement violated the settlement agreement. We therefore reverse.

BACKGROUND

¶ 4 In November 1998, the attorneys general of 46 states reached a landmark agreement with major manufacturers in the cigarette industry, including Reynolds.¹ The signatory states settled their claims against these companies in exchange for monetary payments and permanent injunctive relief. The injunction includes a "Ban on the Use of Cartoons"² that prohibits the cigarette companies from advertising or promoting tobacco products using cartoons, as defined by the master settlement agreement (MSA).

¶ 5 In approximately 2006, Reynolds began an advertising campaign known as the Camel Farm promotion, aimed at fans of rock music. The campaign uses an agricultural theme to make a metaphorical connection between the Camel Farm and bringing independent music up from the underground. As part of the campaign, Reynolds sponsored performances around the country by regional bands, distributed a DVD with their music, launched a Camel Farm web site (TheFarmRocks.com) promoting "free range" music,³ and sent e-mails or direct mail to adult smokers on its consumer database.

¶ 6 In late 2006, Rolling Stone magazine approached Reynolds about placing a high impact gatefold advertisement in the last of three special fortieth anniversary issues. Believing that its independent music theme was a good fit with the third issue's focus on the future of music, representatives from Reynolds met with counterparts from Rolling Stone to discuss the proposal. Reynolds representatives were shown a gatefold advertisement for Patron tequila from the first of the anniversary issues, which opened out to reveal a Rolling Stone editorial on 40 influential songs. Reynolds purchased four pages of gatefold format advertising in the November 15, 2007 issue of the magazine.

¶ 7 On each page of the ad, the lower third is a green field. The first page depicts the head and shoulders of a woman with a "retro" hairstyle. She is surrounded by flowers and a floating gramophone with a butterfly in its fluted speaker and a bird sitting next to the wind-up arm. A second bird perches on the extended forefinger of a disembodied hand emerging from beneath the turntable. The Camel logo is above, and a banner below announces "Welcome to The Farm."⁴

¶ 8 The adjacent page is editorial content from Rolling Stone announcing a special foldout inside. It consists of a facsimile of a spiral notebook cover entitled "Indie Rock Universe, An Alternate Dimension Where Everyone Wears Black Converse."⁵

¶ 9 The gatefold pages are next. They consist of photographic images assembled to depict a surreal pastoral scene with a retro look. A woman drives a tractor that appears to float. A rooster rides on top, with a bird on his back. The gramophone hovers nearby. The woman on the tractor looks about the same size as the hitchhiking rooster, and the tractor has enormous film reels for wheels and a telephoto camera lens protruding from the engine. Old style audio speakers, a television and radios (one with helicopter rotors) appear to grow on plant stalks. In the blue sky above, another radio with helicopter blades appears to fly above an eagle carrying a picture frame through which a human hand protrudes.

¶ 10 Above these images is the Camel logo and the heading "The Farm Free Range Music, Committed To Supporting And Promoting Independent Record Labels."⁶ To the side, under a banner titled "The Best Music Rises From The Underground," appears the following:

The world of independent music is constantly changing. New styles and sounds emerge daily. That's why we're bringing you The FARM. A collaboration between Camel and independent artists and record labels. It's our way of supporting these innovators as they rise up to bring their sounds to the surface. We give them more opportunities to be heard through online music and countless events across the nation.

Visit TheFarmRocks.com

Free shows, great bands and more![⁷]

¶ 11 These pages open butterfly style to reveal four pages of the "Indie Rock Universe" foldout, which consists of drawings categorizing indie artists and bands prepared for Rolling Stone by illustrator Benjamin Marra. The illustrations include a rocket powered audio speaker, a planet with human features, a robot playing a guitar, and a headless, armless bagpipe.⁸

¶ 12 Closing the foldout and turning the page reveals the last page of the Camel Farm advertisement, which depicts the rooster, a pointing man, and a banner stating "For The Best New Sounds Visit TheFarmRocks.com."⁹

¶ 13 The Rolling Stone advertisement prompted immediate litigation around the country,¹⁰ including this action filed by the State of Washington seeking to enforce the MSA by way of injunctive relief and sanctions. The State alleges the advertisement violated the cartoon ban and also contends Reynolds violated the agreement by permitting Rolling Stone to use cartoon material inside the gatefold.

¶ 14 The court rejected the State's request for sanctions of $100 per issue of the magazine as constituting punitive damages not available in Washington. Trial was had on the question of whether the advertisement or the adjacent editorial content violated the MSA. The court ruled that Reynolds' Camel Farm advertisement did not contain prohibited cartoons, and that because Reynolds could not have foreseen that the Rolling Stone editorial content would include cartoons, Reynolds did not violate the MSA by failing to prevent the improper adjacent material. The court warned Reynolds, however, that in future, lack of foreseeability would not be a viable defense and Reynolds would be held to answer for "a similar layout of advertisement and cartoon content."¹¹

¶ 15 The State appeals.

ANALYSIS

¶ 16 The MSA contains a strict prohibition against the use of cartoons in cigarette advertising, and the consent decree includes a permanent injunction. The MSA defines "cartoon" as follows:

(1) "Cartoon" means any drawing or other depiction of an object, person, animal, creature or any 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.[¹²]

¶ 17 The trial court found it "arguable" that the Camel Farm advertisement violated the cartoon ban. Ultimately however, the court concluded it did not:

[T]he court has been asked to (and will) apply two devices not normally associated with cartoons: common sense and the doctrine of ejusdem generis. The ban on the use of cartoons in tobacco ads is rooted in the allure that traditional cartoons hold for children. Instead of humor, cuteness or gee-whiz wonder, the images before the court employ a simplistic but rather more thought-provoking metaphor regarding the growth and nurturance of artistic creativity. They are as different from the sunglasses-wearing, saxophone-playing, comically hip Joe Camel as Renee Magritte is from Walt Disney. The Court would find that the photographic images in the RJR-prepared ad campaign do not constitute cartoons.[¹³]

The State contends the trial court effectively ignored the MSA's definition and substituted its own.

¶ 18 A consent decree has a contractual nature; therefore, contract principles of construction apply.¹⁴ The touchstone of contract interpretation is the intention of the parties,¹⁵ which Washington courts attempt to determine by focusing on the objective manifestations of agreement.¹⁶ We give words their ordinary, usual, and popular meaning unless the entirety of the agreement evidences a contrary intent.¹⁷ If relevant for determining mutual intent, surrounding circumstances and other extrinsic evidence may be used to determine the meaning of specific words and terms used, but not to show an intention independent of the instrument or to vary, contradict or modify the written word.¹⁸ Where, as here, interpretation does not depend on the use of extrinsic evidence, interpretation of a contract provision is a question of law¹⁹ reviewed de novo.²⁰

¶ 19 The parties center their arguments on the third paragraph of the definition,²¹ which prohibits the "attribution of unnatural or extrahuman abilities, such as imperviousness to pain or injury, X-ray vision, tunneling at very high...