May 8, 2006

RJ Reynolds to pay $5 mln to settle Calif. lawsuit

SAN FRANCISCO (Reuters) - R.J. Reynolds Tobacco Company
will pay $5 million to resolve a state lawsuit charging the
cigarette maker with illegally distributing free tobacco
samples at public events, California's attorney general said on

Under the settlement, the unit of Reynolds American Inc.
will pay $1 million to a nonprofit group that will use the
money to fund tobacco control advocacy and education programs,
Attorney General Bill Lockyer said in a statement.

The company -- whose brands include Camel, Kool and Winston
-- will also pay a $3.1 million civil penalty and $900,000 to
cover the attorney general's costs and fees, according to the
settlement filed in Los Angeles Superior Court.

A court must still approve the settlement.

California sued the company in 2001 for distributing more
than 100,000 free packs of cigarettes at events held on public
property. The attorney general charged this violated a state
law prohibiting tobacco product giveaways on public grounds
where minors are allowed.

The trial court originally imposed a $14.8 million civil
penalty in a ruling but the tobacco maker appealed, arguing
only adult smokers had access to its promotions and that the
fine was too high. The company also said it believed it did not
violate state law.