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Whether it was blowing smoke or not, the California Supreme Court seemed ready Wednesday to give R.J. Reynolds Tobacco Co. a big break in a case involving the regulation of cigarette advertising. Rather than directly deciding whether federal laws pre-empt state regulation, the justices indicated during oral arguments that they might simply remand the case to the trial court to give the tobacco giant an opportunity to prove it had a good-faith belief it was acting lawfully when representatives distributed free cigarettes at six separate events statewide in 1999. That would let the company challenge a fine of more than $14.8 million imposed by Los Angeles County Superior Court Judge Conrad Aragon. “What do we do with our cases — I refer to the magic word ‘precedent’ — that have said good faith is, indeed, relevant?” Justice Joyce Kennard asked Sacramento-based Senior Assistant Attorney General Dennis Eckhart, who argued against R.J. Reynolds. Justice Ming Chin followed up by asking if there were “triable issues of fact on good faith for which we need to remand?” The justices convened in Redding City Hall as part of a yearly effort to meet in various parts of the state to give local residents a chance to watch the state’s highest court in action. About 700 high school and college students came and went during the day’s five cases, with thousands more watching via the California Channel. Shasta County Presiding Judge William Gallagher announced it was the first time the Supreme Court had ever held oral arguments north of Sacramento. In the past few years, the court has traveled to San Diego, San Jose, Fresno and Anaheim. In People ex rel. Lockyer v. R.J. Reynolds Tobacco, S121009, the cigarette maker had challenged lower court rulings saying it violated state Health & Safety Code �118950, which makes it unlawful for any business to distribute cigarettes for free in public buildings or on public parks and grounds. Company representatives had handed out more than 108,000 packs of Camels or Winstons to nearly 15,000 adults at the Sunset Junction State Fair in Los Angeles, a motorcycle race at the Del Mar Fairgrounds, an auto race at the L.A. County Fairgrounds, a car show at L.A.’s Verdugo Park, the San Jose International Beer Festival and the Long Beach Jazz Festival. R.J. Reynolds argued that state regulations were pre-empted by the federal Cigarette Labeling and Advertising Act, which prohibits state control over the advertising and promotion of cigarettes that are labeled in conformity with federal law. The company also relied on an exception in California’s law that prevents state regulation of promotions on public sites where minors are prohibited or on leased private property manned by security guards. The state, meanwhile, argued that Congress never meant to exclude states from regulating cigarette handouts. “There is a critical difference between cigarette advertising and promotion, which attempt to stimulate desire for cigarettes,” Eckhart wrote in court papers, “and activities involving cigarettes themselves, such as sales, distribution and use.” During arguments, the justices tried to examine the legislative language used in the state statute, focusing on the meaning of certain words, such as “promotion.” “Does promotion include distribution?” Justice Kathryn Mickle Werdegar asked H. Joseph Escher III, the Dechert partner who represents R.J. Reynolds. “Some distributions are promotions,” Escher responded, “but not all promotions are distributions.” Kennard tackled the manufacturer’s argument that it had met state concerns by providing samples in enclosed tents to which security guards allowed only adults who professed to be smokers. “Why shouldn’t this court agree with the attorney general’s position [prohibiting free sampling on public grounds altogether]?” she asked Escher. “Why shouldn’t this court hold that minors would have to be excluded from the entire event?” Moments later, however, Kennard told Eckhart that the plain language of the state statute — which allows distributions on “public grounds leased for private functions where minors are denied access by peace officers” — seemed to favor R.J. Reynolds. Justice Carlos Moreno piled on by noting Rockwood v. City of Burlington, 21 F.Supp.2d 411, and Jones v. Vilsac, 272 F.3d 1030 — two federal court rulings that said state regulations on cigarette advertising are pre-empted by federal law. “Why,” he asked, “isn’t that the same here?” However, Kennard, Chin and, to some extent, Werdegar seemed to give weight to R.J. Reynolds’ good-faith argument that it had gone to great lengths to comply with state law by taking steps aimed at ensuring that no minors acquired any free samples. They questioned whether the trial judge erred in refusing to take into account the company’s belief in the lawfulness of its actions when he evaluated the proportionality of the $14.8 million fine. “It’s very clear,” Escher said, “that the superior court made a mistake that good faith was irrelevant as to culpability.” A decision is expected within 90 days.

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