Cornered (27 page)

For Kessler, the proposed rules amounted to a first step only. They could be amended or blocked by congressional action, or rejected by the courts. Indeed, immediately after Clinton's August 10 news conference, congressmen from tobacco states voiced opposition. “My farmers lost out to the zealots. I am not only disappointed. I am hurt,” said Senator Wendell Ford, a Democrat from Kentucky. North Carolina's Democratic governor, Jim Hunt, warned Clinton there would be a “big fight” over the rules. “Just getting into a fight that will get us into court is not the way to do it,” he had told Clinton when the president visited Charlotte the day before the announcement.

Meanwhile, the industry pounded Kessler. He was “an unelected bureaucrat,” part of an “antismoking cabal” on a “power grab.” It should be obvious to everyone, they said, that he was using the youth-smoking issue as a “Trojan horse” with the ultimate aim of prohibition. Steve Parrish, the boyish-looking senior vice president of corporate affairs for Philip Morris, had emerged as the most frequently quoted industry spokesman. Parrish, who had started his tobacco career as a lawyer for Shook, Hardy & Bacon, claimed the youth market was really of no great consequence. “If there were no more kids in this country who were smoking,” he said, “that would be great and it would not materially affect our business.” Of course, studies of smoking suggested quite the opposite: that 90 percent of smokers start in their teens and that without the youth market, the industry would decline rapidly as old smokers died off.

After Clinton's news conference, it took only hours for the tobacco industry to respond with a lawsuit. Contending that the FDA had no jurisdiction over cigarettes, the five biggest companies—Philip Morris, R. J. Reynolds, Brown & Williamson, Lorillard, and Liggett—filed to block the proposals in federal district court in Greensboro, North Carolina, the heart of tobacco country where the industry expected to get the most favorable hearing. And it looked as though they would succeed. Out of seven possible judges who might examine the case, William Osteen was appointed. Osteen was a conservative who, since his appointment to the federal bench in 1991, had made several rulings in favor of the industry. Even before joining the bench he'd worked for the industry. In 1974, he was hired by a group of North Carolina tobacco growers to go to Washington, D.C., to lobby the then secretary of Agriculture, Earl Butz, not to proceed with a plan to scrap the federal tobacco production-quota program. (He had also successfully represented an R. J. Reynolds tobacco heir in a criminal matter in 1979.) As a federal judge, Osteen had ruled that the tobacco companies had legal standing to bring a lawsuit challenging the Environmental Protection Agency's 1993 classification of secondhand smoke as a carcinogen. Kessler and the antitobacco forces expected a rough ride in his courtroom.

Madison Avenue joined the tobacco industry in Judge Osteen's courtroom. The new FDA would kill off Joe Camel and the Marlboro Man by banning “romantic images” in ads. And the black and white “tombstone” ads Kessler demanded would kill off most of the other tobacco ads, as presently designed. Hal Shoup, the executive vice president of the four A's, the American Association of Advertising Agencies, showed an example of the “tombstone” format at a press conference. An ad for Carolina cigarettes had been appearing against a pine-covered hillside with the headline “Carolina on My Mind.” Shoup had made a mock-up of a Kessler-type ad with the letters in black against a white background. “No advertiser in this category would pay anything to run an advertisement such as this,” said Shoup.

Hardest hit under the FDA plan would be the billboard advertisers. In 1994, the tobacco industry spent $122 million on billboards—12 percent of the billboard business revenue. The industry spent $284 million on magazines, or 3.3 percent of that industry's revenue. The ad and promotion agencies would also be affected because of the proposed ban on brand-name promotional items, such as lighters, T-shirts, and baseball caps.

But the billboard industry complained that they had already imposed voluntary restrictions and were not placing tobacco and liquor ads within 500 feet of schools and churches. If the limit was extended to 1,000 feet from schools, as Kessler proposed, that would eliminate billboard advertising in cities, the industry complained. “If tobacco is so bad, why not ban it entirely,” said Kent Brownridge, senior vice president of Wenner Media and general manager of
Rolling Stone.
“How can you have something that is legal and yet can't be advertised?” He forecast that the government would go after ice cream next because it contains cholesterol.

The advertisers filed suit in the same North Carolina court, claiming Kessler's advertising ban would violate the “commercial free speech” interpretation of the First Amendment. Longtime tobacco foe John Banzhaf, the George Washington University law professor who had led the fight to get antismoking ads on TV free of charge, observed wryly, “The liquor industry doesn't protest its inability to sell spirits in vending machines. It's funny, things only become unconstitutional when it applies to the tobacco industry.”

Under the federal regulatory process, the FDA was required to take public comment for ninety days—but the agency extended the period for two more months to January 1996. More than 700,000 comments came pouring into FDA headquarters, including 30,000 form letters provided by the tobacco companies. Philip Morris put its 300-page argument against the FDA rules on the Internet. Meanwhile, retailers and distributors joined in the lawsuit. The vending-machine owners were upset, as well. About $2 billion worth of tobacco products are sold through 400,000 vending machines each year. Sponsored events such as motor sports, stock-car and hot-rod racing, power-boat racing, and tennis tournaments would also have to find other backers.

Teenagers scoffed at the proposals, saying they thought it would always be possible to bypass any new laws on the sales of cigarettes, just as they had the old ones. Some suggested that the new enforcement effort would only lead to minors being more, rather than less, intrigued by cigarettes.

In the backlash, however, came a surprising and important voice in favor of Kessler's plan. In a letter to
The Wall Street Journal,
former Senator Barry Goldwater said he had devoted his life to fighting for limited government, but on this occasion there was a “social role” for government in protecting children from tobacco. “It is hard to think of a more compelling case for government action,” he said. “Cigarette companies say such action is unnecessary because they will solve the problem of youth smoking on their own. Hogwash. I've watched the tobacco industry make promise after promise to avoid government oversight for the past forty years. With every promise they give an inch, grudgingly, and buy enough time to hook another generation.… It's time to stop kidding ourselves. Backroom deals and gentlemen's agreements never have worked with this industry and never will.”

Goldwater said times had changed and it was time to move with them. North Carolina now produced more poultry and eggs than tobacco. Public opinion on tobacco had changed, too. You only had to look at his own home state of Arizona, which had raised cigarette taxes by forty cents a pack. “The tobacco industry used every trick in the book and spent millions to try and confuse the voters, but in the end they understood that the issue was protecting children,” wrote Goldwater. It was a powerful statement from a once powerful and still respected figure, the kind of signal that was making the untouchable tobacco barons suddenly start to look vulnerable.

Wall Street analysts remained optimistic that the companies would evade regulation. Analysts did not believe the FDA's proposals would ever pass Congress and they forecast many years of legal challenges to the proposed rules. Still, investors were edgy.

*   *   *

W
HILE THE TOBACCO INDUSTRY
compiled their dossier on what they called Kessler's “reckless distortion” of FDA powers, the tobacco wars continued in the courts. In New Orleans, Gauthier's nationwide Castano class action had been certified by Judge Okla Jones two months after the dinner at Antoine's. Judge Jones ordered a two-step process where the plaintiffs would first determine if the tobacco companies had committed negligence and fraud in not revealing their knowledge of nicotine addiction, and then proceed to separate minitrials seeking damages for addicted smokers. The tobacco companies complained it was an attempt to extend the class-action rule beyond the limits authorized by law and appealed Judge Jones's ruling to the Fifth Circuit Court of Appeals. Meanwhile, the Medicaid cases in Mississippi, Minnesota, and Florida were leading the pack of states now suing the industry.

Throughout the summer, rumors spread that ABC was going to settle the $10 billion libel suit brought against them by Philip Morris and R. J. Reynolds. They turned out to be true. On the August 24 evening news, eighteen months after the program in which they had accused the industry of “spiking” cigarettes with nicotine from outside sources, the network apologized. While conceding it should not have said the industry adds nicotine from outside sources, ABC's settlement agreement was quite narrow. The apology said, “ABC believes that the principal focus of the reports was whether cigarette companies use the reconstituted tobacco process to control levels of nicotine in cigarettes in order to keep people smoking.… ABC thinks the reports speak for themselves on this issue and is prepared to have the issue resolved elsewhere.” In the end, it was an expensive adventure; the network paid $15 million in legal costs to Philip Morris and R. J. Reynolds, and there would be no reopening of the case.

During the fall of 1995, the tobacco companies launched a counter-offensive. In newspaper ads around the nation they asked, “Who should be responsible for your children, a bureaucrat, or you?” Under the picture of a grinning, tripled-jowled, snaggle-toothed, unidentified man, another ad asked, “Can We Really Make the Underage Smoking Problem Smaller by Making the Federal Bureaucracy Bigger?” And the ad declared piously, “We all agree we must do something to keep cigarettes out of the hands of children under the age of eighteen. A proven solution is to teach young people how to resist peer pressure and to enforce existing laws.”

Meanwhile, the Third Wave lawsuits were uncovering a series of confidential documents showing how concerned the industry was, starting in the 1970s, about maintaining their youth sales. The documents put the lie to the notion, promoted by the companies, that they do not target youth. The simple reason was laid out in a 1974 RJR marketing interoffice memorandum: “Over 50 percent of main smokers start smoking fairly regularly before the age of 18 and virtually all start by the age of 25.” A second 1974 RJR memo, from the company's marketing department, spoke of the high incidence—40 percent—of smoking in the sixteen-to-twenty-four age group, and why this should be so—adventure, peer pressure, providing confidence in stressful situations. “To some extent the young smokers ‘wear' their cigarettes and it becomes an important part of the ‘I' they wish to be, along with their clothing and the way they style their hair.” RJR was particularly concerned about the success of Marlboro among teenagers.

In a 1973 memo entitled “Research Planning Memorandum on Some Thoughts About New Brands of Cigarettes for the Youth Market,” Claude Teague, who was then R. J. Reynolds's assistant director of research and development, urged that more be done to attract the “twenty-one-year-old and under group.” Teague wrote, “Realistically, if our company is to survive and prosper, over the long term, we must get our share of the youth market. In my opinion this will require new brands tailored to the youth market.” New products should be marketed as a way to fight pressures of the teenage years, such as “stress … awkwardness, boredom,” and as a way of achieving “membership in a group.” Teague's view was that “there is certainly nothing immoral or unethical about our company attempting to attract these smokers to our products. We should not in any way influence nonsmokers to start smoking; rather we should simply recognize that many or most of the ‘21 and under' group will invariably become smokers, and offer them an opportunity to use our brands.”

Teague recommended, in his convoluted way, that “now is the time to launch the next brand to become the ‘in' cigarette with the next generation as Marlboro ages from ‘in' to hopefully ‘out' and over thirty status, [and] hence becomes something for youth to avoid.” The next question, of course, was what to call this new youth cigarette. Teague had some ideas about that, as well.

“Ideally, the name should have a double meaning; that is, one desirable connotation in ‘straight' language and another in the jargon of youth. A current example may be Kool.… A careful study of the current youth jargon, together with a review of currently used high school American history books and like sources for valued things might be a good start at finding a good brand name and image theme.” This was really a matter for the marketing division, admitted Teague. He could supply expertise in scientific research, however.

The memo discussed the precise level of nicotine in a cigarette aimed at the youth market. As the beginning smoker had a low tolerance for “smoke irritation” (an industry phrase for nicotine level), the smoke in the cigarette aimed at such groups should be as “bland as possible.” Teague suggested, “The rate of absorption [of nicotine] should be kept low by holding pH [acidity] down, probably below 6.” On the pH scale anything below 7 is acid and anything above 7 is alkali. The more alkaline the tobacco mix, the greater the rate of absorption of nicotine. The implication of the memo was that the company manipulates the levels, something they still deny doing. John Schwartz, The
Washington Post
reporter who first wrote up the memo, called Teague at home to ask him about it. “I wouldn't care to talk to you, I don't talk to strangers,” said Teague. “Why would I want to talk to you, what earthly gain would it be?” A Reynolds company spokesman called the memo a “draft document that reflects preliminary thoughts of one individual in research and development. We have seen nothing that indicates that it was ever reviewed or acted upon in any way.” Shortly thereafter, the company made great inroads into the youth market with its reborn Camel brand, accompanied by the new cartoon character, Joe.