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March 1998

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Subject:
From:
Kent Schenkel <[log in to unmask]>
Reply To:
Academy of Legal Studies in Business (ALSB) Talk
Date:
Mon, 2 Mar 1998 13:29:39 -0500
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At 09:57 AM 3/2/98 -0400, Frank Cross wrote:
>This is off-list, I'm not sure the whole group is so interested
>in my opinion.  I think the public has mixed views about the ethics
>of tobacco advertising generally but is undivided about advertising
>aimed at children.  I assume the obvious reason is the protection
>of minors.
 
Since the purpose of this list, as I understand it, is to provide a forum
for ALSB members and interested others to discuss those issues that are
pertinent to our profession, I'm posting my reply to the list.  Those on the
list who are not interested in this particular thread can simply hit the
delete button (as I did during the discussion on "curling," whatever that is).
 
You say that the public, while divided on the issue of tobacco advertising
generally, is in general agreement that aiming such advertising at children
is unethical.  But why did such advertising go on so long before the public
expressed its collective opinion?  If the public thinks its unethical, why
didn't it put a stop to it 10 or 20 or more years ago?
My guess is that it never occurred to the public that cigarettes were being
actively marketed to minors until such time as the popular press brought
this fact to its attention.
 
>As to legality, I'm no expert on the unfair trade practices acts.
>Have they ever been applied to tobacco advertising?
 
On June 30, 1994, the California Supreme Court issued an opinion in Mangini
v. R.J. Reynolds, 31 Cal. Rptr. 2d 358 (1994), that allowed Janet Mangini to
proceed in a civil suit against R.J. Reynolds based on California's statute
regarding unfair competition and trade practices.  The case concerned the
issue of federal preemption in proceedings against tobacco companies for the
harm allegedly caused by cigarettes.
Ms. Mangini had contended that cigarette advertising targeting minors was
"unfair" within the meaning of the statute.
 The California Supreme Court found that state law attempts to prohibit
advertising were not preempted by the federal law regulating the labeling of
cigarettes, etc.
(You may remember that the first suits against the tobacco companies based
on state products liability issues were held to be preempted by the federal
law.)
Thus, Mangini successfully did an "end around" the preemption issue.
On September 8, 1997, Mangini entered into a settlement agreement with RJ
Reynolds pursuant to which the tobacco company agreed to stop using Joe
Camel, release to the public all "non-prvileged and non-work product
documents referring to persons under the age of 18...", pay  $10 million to
the city of San Francisco, etc, etc.
You can find a copy of this agreement at
www.tobacco.neu.edu/extra/hotdocs/MANGINI
 
 The Clinton
>Administration just suggested that restrictions on advertising
>might violate the First Amendment.
>
 
As you know, thankfully the Clinton Administration is not charged with the
interpretation of the First Amendment.
 
I bring the above to your attention not because I am an avid anti-tobacco
person (I'm not), nor because I would sympathize with those who would make a
moral issue of every personal preference.  Moralizing personal choices is
dangerous and very prevalent in this area.   I abhor the fact that the
anti-tobacco movement has, in many instances, taken the anti-smoking ban to
ridiculous extremes (no smoking at all in public places and even in bars in
some towns!).  There is, in my opinion, no logical explanation for this,
other than misplaced righteous indignation.
 
But I do believe that the tobacco issue is instructive.  Feigned outrage by
those (like Newt Gingrich) who would jump on the political bandwagon because
the mood of the country is anti-tobacco is so transparent that it's
laughable.  Only the very naive or unobservant would fail to realize that
not only the tobacco industry but just about any industry would do what it
takes to maximize profits within the perceived  limits of the law.   My hope
is that the tobacco debacle will wake people up to the fact that, for
purposes of corporate marketing, what's legal is ethical, and gray areas be
damned.
 
I drink as much beer as the next guy and probably more than most, but I'm
not so naive as to think that Louie the Lizard, the Budweiser frogs, and
Spuds McKenzie (remember him?) are not intended to create brand loyalty on
the part of any youngster who is old enough to associate the mascot with the
product.  Call it "pre-selling" the product.  Why don't we hear more about this?
 
Unfortunately, I think its because the smoking of cigarettes has been made
into moral issue, and that's why "the public" is on the bandwagon.  I think
the public would be better served if the issue was properly presented.  It's
not about whether smoking cigarettes or drinking beer is right or wrong.
I've done my share of both, and I don't consider myself immoral to have done so.
 
Instead, it's about the fact that large corporate interests will do whatever
is legal to hawk their product or increase their profits.  And this is where
the credit card companies and bankruptcy comes in (you knew I'd get back
there eventually).  Since they have the ability to influence what those laws
are, they will continue to effect changes in them that are favorable to
their profits.  And they will be successful.  If, in a particular situation,
those laws are also what's best for the rest of us, then let's not kid
ourselves--that's just fortuitous.
 
 If we want corporations to act morally, we have two choices:  First, we can
educate the executives, directors and stockholders about the difference
between law and ethics, and why they should follow the ethical route.  The
problem with this first choice is that it won't work.  The other choice is
to support changes in the laws that are best for the rest of us, and to be
vigilant about proposed changes that are only best for the industry pushing
for change.
 
And that's why the post regarding the proposal for changes to the bankruptcy
statutes pushed my button.  This proposal would make the bankruptcy laws
more favorable to the easy credit industry.  This is an industry  that has,
for several years, been making record profits off of those same debtors
whose access to legal  relief it wishes to further restrict.  And the easy
credit industry would make a moral issue of it!!  Please.
 
 
Kent Schenkel
University of North Carolina at Wilmington
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