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C-store retailers with cigarette programs should prepare to comply with corrective-statement sign requirements as they await a decision from the Federal District Court.
Thomas Briant • NATO
As the tobacco industry awaits word from the Federal District Court on whether a corrective-statement sign settlement is approved, c-store operators with cigarette programs are wise to learn what it means to be in compliance with corrective-sign requirements and the penalties for non-compliance.
At press time, a federal judge had not yet issued an order approving the settlement agreement entered into by the U.S. Department of Justice, Altria Group Inc., Philip Morris USA Inc., R.J. Reynolds Tobacco Co. and ITG Brands LLC regarding certain correctivestatement signage to be displayed in retail stores that have manufacturer cigarette programs in place. A court order regarding the settlement agreement was expected sometime in October or November of this year.
SETTLEMENT AGREEMENT BACKGROUND
In 1999, the U.S. government sued the major cigarette companies asserting claims under various federal laws. In 2006, a federal judge entered judgment in favor of the government on certain claims and, among other things, ordered Altria Group Inc., Philip Morris USA Inc. and R.J. Reynolds Tobacco Co. to make “corrective statements” on certain topics. ITG Brands LLC became a party to the litigation for purposes of the court-ordered remedies when it purchased four cigarette brands from R.J. Reynolds Tobacco Co. in 2015.
These manufacturers have now reached a settlement agreement with the federal government, through the U.S. Department of Justice, and several public health organizations that intervened in the case regarding how these court-ordered “corrective statements” will be displayed in retail stores. As part of the settlement agreement, these manufacturers will be required to amend their cigarette program agreements with retailers to require the placement of a corrective-statement sign or signs in retail stores.
AMENDMENTS PROGRAM AGREEMENTS
The settlement agreement states that the cigarette retail program agreements between retailers and the manufacturers will be amended to include the settlement agreement provisions. The settlement agreement provides that a retail store with a cigarette retail program agreement will need, depending on various circumstances, to display one, two or three corrective-statement signs for a 21-month period.
However, it is important to note the government had previously proposed that 25% of the cigarette display space and 25% of all off-set advertisements devoted to the manufacturers’ cigarette brands in each retail store be covered with corrective-statement signs for a 24-month period. The settlement agreement replaced the government’s 25% proposal with the one, two or three correctivestatement signs alternative and ensures that no signs will cover any portion of the main cigarette display.
CORRECTIVE-STATEMENT SIGNS
The following corrective-statement sign requirements are a part of the settlement agreement and apply to all
