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California Lawyer
November 1998
The Last Days of Joe Camel: How a team of lawyers defeated big tobacco.

By Nina Siegal

One late afternoon in December 1991 San Francisco sole practitioner Janet C. Mangini took a break from her work to read the newspaper. Scanning the pages, her eyes focused on an article about R.J. Reynolds Tobacco Company's cigarette advertising.

The article quoted three studies published in the Journal of the American Medical Association (JAMA) that concluded Camel's popularity with teen smokers increased 66-fold after Joe Camel came on the scene in 1988. Children as young as six recognized the cartoon character.

Mangini recalled seeing Joe Camel's image riding motorcycles and playing pool with his female comrades, Josephine Camels. He hung out with other hip young camels-dressed suavely and lit dramatically in bars and clubs. Joe seemed to be always on the move, periodically dabbling in racing tournaments or jamming with a jazz band.

"It bothered me that little kids recognized Joe Camel the same way I recognized Mickey Mouse when I was a kid," says Mangini.

The following weekend at a Christmas party she was discussing legal cases with Alan M. Caplan and Philip Neumark, lawyers with the five-attorney firm of Bushnell & Caplan LLP who rent out an office to her. Mangini mentioned she wanted to take on bigger issues. She had been practicing law for ten years, handling primarily family law and personal injury cases. "I said to them, 'If we want to do something good, we should go after Joe Camel'." Everyone was intrigued.

At a meeting a few days later the three lawyers discussed a possible cause of action. They were well aware that traditional personal injury suits hadn't worked. They remembered a statute they had used to sue a company that manufactured baby bottles that allowed lead to leach into the liquid. Under California's Business and Professions Code §17200 et seq, also known as the Unfair Business Practices Act (or Unfair Competition Act), any individual can act as a private attorney general for the state of California and file a suit against a company to halt a harmful or unfair business practice. This law also provides for attorneys fees. Mangini thought they had a chance at succeeding against R.J. Reynolds if they focused on the company's business practices - in particular, their marketing strategy, which she believed directly targeted minors.

At the time, Mangini and the other lawyers did not know whether any of the marketing documents that were about to become part of a new wave of lawsuits that would finally break the lawsuit-proof tobacco industry.

While Mangini, Caplan, and Neumark were huddled in their offices trying to figure out what to do, other plaintiffs attorneys were doing the same. Forty years of tobacco litigation had led nowhere. Tobacco companies had asserted with impunity that health hazards related to smoking were unknown. Individual litigation against cigarette manufacturers for health problems ended disastrously. The tobacco companies had an ironclad defense: If a person chose to smoke, the tobacco companies could hardly be blamed for resulting illnesses. But around this time, plaintiffs lawyers began taking a different approach. Bushnell Caplan along with the firm of Milberg Weiss Bershad Hynes & Lerach had already begun examining whether the tobacco industry had hidden damaging evidence about the health hazards and addictive nature of their products. (Their research would eventually turn into a lawsuit filed in 1992, Cordova v Liggett Group, in San Diego County Superior Court. The suit would charge the tobacco companies with "manipulating nicotine to addict smokers and with conspiring not to develop or market safer cigarettes.")

Before Cordova was filed, however, Mangini and others began fashioning a different attack, one that would take away the tobacco industry's best defense because it didn't require an injured plaintiff.

Since California has prohibited the sale of cigarettes to minors for almost a hundred years, Mangini figured it was probably unlawful for the cigarette company to sell their wares with minors in mind. Caplan and Neumark agreed. Mangini knew that it would take enormous resources to fund the legal fight that lay ahead, and she couldn't afford to mount such an attack herself. Instead, she volunteered to be the plaintiff. She also wanted some involvement with the case and a particular result: the termination of the Camel campaign. The attorneys from Bushnell Caplan stepped in as lead counsel.

Caplan and Neumark tried to collect data on the effects of cigarette advertising on youth and to compile studies on the harmful health effects of both firsthand and secondhand smoke. They quickly discovered that the tobacco industry had done a good job in preventing its own studies of the product's harmful effects from reaching the public. The attorneys shifted their focus to Joe Camel promotional advertising, such as caps, jackets, and mugs that could be "bought" with redeemed "Camel Cash."

Sensing that they were in over their heads, Mangini and Caplan needed someone who knew how to take on big corporate power and influence. They enlisted Milberg Weiss, the most well-known firm for filing shareholder class actions.

Patrick J. Coughlin, a partner with that firm in San Diego, was interested. His father had died of lung cancer in 1985, and his mother had recently been diagnosed with emphysema; both had been lifelong smokers. His mother had suffered from a terrible cough, but she said she couldn't give up the addiction. "My mom was saying, 'I always knew that they were bad for me, but I didn't know that I'd never be able to quit,'" remembers Coughlin. "I looked at the age which most people start smoking, and I realized that most of them can't make those lifelong decisions at that age." Coughlin was particularly concerned about his young nieces and nephews who were getting to the age where they pick up the habit.

As a securities litigation specialist, Coughlin brought to the team. He had expertise documentation in hard-to-reach places, and he had money behind him. He also thought there might be some crossover between Mangini and the pending Cordova case. Milberg Weiss ultimately invested more than $13 million in expenses and attorneys fees on the case, far beyond what the small San Francisco firm had in its coffers.

The work was divvied up: 8o percent went to Milberg Weiss and about 10 to 20 percent went to Bushnell, Caplan. But that didn't mean the San Francisco team had a small workload. "That 10 percent is probably bigger than any case another firm of their size would have," says Coughlin. Caplan and Neumark sorted through reams of documents and handled loads of paperwork. They also developed ever more complex strategies for overcoming obstacles set up by R.J. Reynolds. Mangini took a back seat. She wanted to be apprised of new developments, while maintaining distance from the case.

In a lawsuit filed in December 1991 in the Superior Court of San Francisco, Mangini v. R.J. Reynolds Tobacco Co., the plaintiffs argued that the Joe Camel material violated the Federal Cigarette Labeling and Advertising Act because the required warning labels were not printed on the promotional materials. They also argue that the companies were targeting minors.

The lawsuit was admittedly skimpy. Their claim that young people chose to smoke Camels because of the cartoon figure was based on circumstantial evidence, such as the JAMA article that originally infuriated Mangini and the studies by the California Department of Health about the health effects of smoking. But the plaintiffs didn't have direct evidence that the company specifically created the Joe Camel campaign to attract young people to the brand. They certainly didn't have any company documents stating that R.J. Reynolds was specifically targeting the youth market.

Caplan said he was sure he would find a lot more evidence to support the claim once they filed the suit and began discovery. They figured R.J. Reynolds wasn't going to just hand over such damaging evidence. But they were prepared to fight. "After we began to do the research, we knew we would have to devote a significant amount of time to it," says Caplan. The attorneys quickly got their first real glimpse that this was not going to be an easy case.

When the lawsuit landed on the desk of R.J. Reynolds lead counsel H. Joseph Escher, a partner at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, he didn't think much of it. He had handled unfair business practice cases in the past, but "usually, they're about a real business practice and not challenges to advertising," he says. "This seemed like a 'softer' kind of theory. The lawsuit didn't say the company did something it didn't do. It was about establishing a theory of what kinds of advertising are legal."

From a legal perspective, Escher thought the complaint shouldn't go anywhere. "Can you hold an advertiser liable because the advertising might encourage someone to break the law?" he asks. "Is there anyone who thinks that no advertisement for beer is appealing to 20-year-old men who can't legally purchase beer? Does anyone think that an ad for a sports car speeding along the Bonneville Salt Flats might suggest to a future buyer of that vehicle that the car is capable of going over the speed limit, in violation of the law?"

Escher filed for summary judgment. He argued that because the Federal Cigarette Labeling and Advertising Act provides that the federal government regulates all tobacco advertising and promotions, any individual or state claim was preempted by federal law. The San Francisco trial court agreed. The plaintiffs appealed to the First District Court of Appeal. Associate justice Donald B. King of that court ruled that they could proceed under their theory-that R.J. Reynolds was targeting minors and encouraging kids and vendors to break the law. R.J. Reynolds appealed the decision to the California Supreme Court.

"I thought justice King's decision was the most wonderfully well-reasoned opinion ' " says Mangini. "Of course, we were concerned because you never know what is going to happen on appeal, but we were all fairly confident that we should have been able to pursue our claim, and we felt we would win."

Following justice King's decision, news of the suit spread across the country. Twenty-three state attorneys general, then-Surgeon General C. Everett Koop, the American Lung Association, the American Cancer Society, and the American Heart Association filed amicus briefs in support of Mangini's claim.

Milberg Weiss partner Bill Lerach argued the case in front of the California Supreme Court, stating that R.J. Reynolds' Joe Camel campaign constituted an unfair, unlawful, and fraudulent business practice because it targeted minors and induced minors and cigarette sellers to break the law. The team gathered evidence culled from widely circulated news accounts, surgeon general reports, studies from the Centers for Disease Control, tobacco industry trade journals, and samples of advertising in magazines popular with young people.

In a unanimous decision in 1994, the California Supreme Court affirmed the court of appeal decision, ruling that Mangini should be able to pursue her claims. It quoted the lower court in saying "the targeting of minors is oppressive and unscrupulous, in that it exploits minors by luring them into an unhealthy and potentially life-threatening addiction before they have achieved the maturity necessary to make an informed decision whether to take up smoking despite its health risks."

The California Supreme Court decision made it clear to Escher that politics were going to get in the way of his client's shot at a fair trial. "Emotionally, for me, what this case was about was trying to apply the rule of law impartially to a very unpopular client," he says. The defense sought review by the U.S. Supreme Court, but the request was declined.

With the courtroom door finally open, the most important part of the case could begin. But the plaintiffs legal team wasn't sure what documents the company had and where to start looking. Coughlin collected data on the effects of cigarette advertising on youth. This time, they were more successful because Milberg Weiss was further along in its discovery in Cordova. During that case they retrieved some early cigarette marketing documents, including information about ad campaigns going back to the early 1970s in France. Those documents seemed to indicate that the cigarette manufacturers did, in fact, specifically target youth.

The plaintiffs showed those documents to the judge, arguing that because this evidence existed, they should have the right to any other documents that were created in the 1970s. Escher countered that much of that material was irrelevant to the ad campaign. The plaintiffs argued that such data would help them establish the company's history of targeting youth. The judge agreed.

Next, the two sides got stuck on the thorny issue of defining "youth." The plaintiffs argued that R.J. Reynolds had intentionally changed the terminology in internal company documents in the 1970s to avoid references to minors. Instead, they referred to underage consumers as "young adult smokers," or "first usual brand young adult smokers," and sometimes simply "Marlboro smokers" since Marlboro had cornered the youth market. In 1996 and 1997 the mediating judge and court began ruling against the defense. The judge ordered the defense to turn over everything that came under any of those alternate headings.

Mangini, who had limited personal involvement with the harrowing discovery process, thought the defense's arguments were simply dilatory tactics. "Papering to death is a well-established tradition among big firms," says Mangini. "The rigor with which they fought and defended their actions was no surprise to any of us."

After the judge forced R.J. Reynolds to open its files, the plaintiffs were deluged with paper. Mangini was excited. "We always thought that there wouldn't be any smoking guns. But when I had a chance to review some of the documents, I was surprised with the clarity that these documents set out our case," she says.

Ten attorneys from Milberg Weiss sifted through some 700 boxes of R.J. Reynolds documents sent directly to their San Diego offices, and other attorneys reviewed millions of pages elsewhere. Ultimately, the team reviewed more than 30 million pages of documents over nearly a 5-year period. Most of these internal documents had never been seen by anyone outside the company. Coughlin saw a 20-year practice of studying and targeting teenagers emerging from the mountain of paper. It began with loss of market share to Philip Morris Companies, Inc. Documents show that the company conducted tests in Canada and finally mounted a full-throttle campaign in. the United States. "Finding those documents was chilling," he says. Though some of the memos, studies, and company notes were obviously helpful to the plaintiffs, others were more complicated and elusive.

"You didn't just look at a document and say 'WOW'" he adds. "You had to go over it a few times to understand what they were saying. You would read it a second and a third time and then say, 'so that's what they were doing.'"

In one document the vice president of marketing for R.J. Reynolds in 1974 told company executives of the importance of 14- to 24-year-old smokers, or the "young adult market." According to the document, "They represent tomorrow's cigarette business. As this 14-24 age group matures, they will account for a key share of the total cigarette volume-for at least the next 25 years."

This document also stated that, "Both Philip Morris and Brown & Williamson [Tobacco Corp.], and particularly their fast growing major brands, Marlboro and Kool, have shown unusual strength among these younger smokers.... With strong young adult franchises and high cigarette brand loyalties, this suggests continued growth for Philip Morris and B&W as their smokers mature."

A March 1982 confidential memorandum read by an R.J. Reynolds outside consultant outlined a search for "existing data pertaining to incidence and consumption among youth age 12-17."

The New York-based advertising agency Young & Rubicam offered its Camel advertising overview, concluding that the "'evolution' of Joe continues to build the Brand's vitality, increasing Camel's momentum as reflected in both awareness and share-of-smoker data."

A 1984 confidential report outlined the importance of attracting "presmokers" ages 12 to 24. "Younger adult smokers are the only source of replacement smokers," an R.J. Reynolds market research analyst summarized in the appendix to her report. "Less than one-third of smokers (31%) start after age 18. Only 5% of smokers start after age 24."

Joe Camel was tailor-made to attract that market. "In view of the need to reverse the preference for Marlboros among younger smokers, I wonder whether comic strip type copy might get a much higher readership among younger people in any other type of copy," pondered an executive from R.J. Reynolds's advertising agency in 1973.

Coughlin says the low point for him was learning about famous claim that cigarette companies spend millions of dollars a year on antismoking campaigns. There is no federal state law requiring tobacco companies to create such advertising, but R.J. Reynolds often pointed to expenditures on antismoking ads as evidence that they are stopping young people from trying their product.

In 1987 RJR McDonald, a Canadian subsidiary of R.J. Reynolds, commissioned a study called "Youth Target 1987," which categorized 15- to 24-year-olds into seven distinct groups: big city independents, tomorrow's leaders, transitional adults, quiet conformers, T.G.I.F. group, insecure moralists, and small town traditionalists. According to the study, members of the T.G.I.F. group were the "most prominent supporters of smoking," while the "squeaky clean tomorrow's leaders" tended to be "low consumers." Many of the ads used in R.J. Reynolds antismoking campaigns feature images of so-called tomorrow's leaders counseling the TG.I.F-ers not to pick up the habit. Coughlin's experts explained that those campaigns were directed at a group they determined would smoke anyway. The images of goody-goodies telling other kids to "just say no" made most kids want to try it even more.

As far as Escher was concerned, these documents and data didn't prove much, He argued that R.J. Reynolds had a right to advertise and that the First Amendment protects speech and image advertising, even if those who see the company's billboards or magazine ads later decide to break the law. "When you get into the reality of the situation, the link between the Camel campaign and the smoker just isn't there," he says. "But because the tobacco companies are very unpopular, it's hard for people to accept that they are entitled to the same protections as everybody else."

In 1997 settlement talks began in a serious way. Milberg Weiss, Bushnell Caplan, and Mangini all agreed on basic ground rules for the negotiations. "There was no amount of money they would have offered to settle the case if they were not going to stop the campaign," says Caplan.

According to Escher, however, the decision to end the Camel campaign had already been made by top R.J. Reynolds management. "It had been publicly announced by RJR Nabisco [Holding Corp.]'s [the parent company] president last June," he says. Escher said the company decided to begin settlement talks because various states were already negotiating a national settlement with all the tobacco companies, and R.J. Reynolds hoped to make the Mangini case part of that arrangement. The focus, says Escher, was to "get some more of these controversial issues behind us."

In July 1997 the company agreed to most of the terms and prepared to terminate the Joe Camel campaign. Because any magazine containing the cartoon character could cross state lines into California, the company was forced to drop Joe not only in the state but across the nation. The company also agreed to pay $10 million for antismoking campaigns throughout California. The plaintiffs also argued for, and won, the right to publicly disclose the information they had gleaned. The defendants fought this last requirement, but the plaintiffs said there would be no agreement if they didn't get disclosure rights.

No arrangement has yet been made about payment of plaintiffs' costs and attorneys fees. That matter will be arbitrated this December.

"If there is a lesson to be learned, it's that you have to stick to your guns if you really feel strongly about your position," says Mangini. "Financial gain was not our ultimate goal. As a result, it was easy not to be swayed by financial gain arguments and to stick to our guns and get what we wanted, which was the termination of the campaign."

The settlement agreement also acknowledges the plaintiffs' tenaciousness. "[T]he Mangini action, and the way that it was vigorously litigated, was an early, significant and unique driver of the overall legal and social controversy regarding underage smoking that led to the decision to phase out the Joe Camel Campaign," wrote R.J. Reynolds officials in the settlement.

On January 15, 1998, Rep. Henry A. Waxman (D-Calif.) held a press conference in Washington, D.C., and released thousands of pages of previously secret documents. He said they were the first detailed revelations of "how the tobacco industry exploits our children."

After finishing the press conference with Congressman Waxman, Mangini -and the rest of the legal team went to a restaurant to celebrate. They asked the bartender to turn on the television set. They heard President Clinton say that he was confident that every member of Congress who reviewed the documents unearthed in the case would "resolve to make 1998 the year that we actually pass comprehensive legislation to protect our children and the public health."

"The documents that came to light today show more than ever why it is absolutely imperative that Congress take action now to get tobacco companies out of the business of marketing cigarettes to children," said Clinton from the Whit House lawn in a brief statement. Two days later the preside devoted his morning radio address to the subject of tobacco advertising and minors.

"I realized at that point," says Mangini, "that we were the leading edge of this whole public awareness that the tobacco industry was focusing on our children, on hooking them for their profits-and here was President Clinton recognizing that."

Escher believes that in the country's zeal to reduce smoking, many people have lost sight of First Amendment an individual rights. "I think it's completely out of control," he says, "and some day society is going to look back and ask, Why did we compromise so many of our values to snuff out tobacco? The danger is the hostility to other peoples' choices. It's a loss of freedom and individualism. Some people can't seem to recognize that the choice to smoke may be a sensible one, and not one that's theirs."

After Joe Camel disappeared, Milberg Weiss and Bushnell Caplan still weren't through. They are now heavily involved with Cordova, filed against all of the nation cigarette manufacturers, alleging that the companies are engaged in a massive public relations fraud in California. The suit alleges that "[t]he tobacco industry knew from studies they sponsored that smoking was hazardous and was [and is] worried that public acknowledgment of this hazard would adversely impact cigarette sales." The suit uses a claim based on the Unfair Business Practices Act employed by Mangini.

In late March Milberg Weiss and Bushnell Caplan filed a new suit against four tobacco companies, including R.J. Reynolds, charging them with violating California's new antismoking law. This law, instituted on January 1, 1998, bars cigarette billboard advertising within 1,000 feet of schools and playgrounds. Once again the attorneys used the Unfair-Business Practices Act. And once again Mangini was the plaintiff.

The case settled in June, with the company agreeing to comply with the statute

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