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The Philip Morris Plan

Friedman was not the only one making plans for 1994. In November 1993, conceding that it would likely be unsuccessful at “blowing AB 996 out of Senate Health,”[68] Philip Morris started planning an initiative modeled on AB 996:

Simply filing [a proposed initiative] has some advantages because it may force the legislature to act in a way we can help channel (e.g.: if they believe a less onerous bill would pass on the ballot, we can give them the opportunity to pass something a little more restrictive, but less than a total ban, then not turn in any signatures). Conversely, if we believe we can win with something more moderate than the legislature might pass, we should turn in signatures and go to the ballot.[68]

Thus, the filing of an initiative might give the industry some leverage in the Legislature against AB 13. This strategy was similar to the one that the industry had traditionally used at the local level—the threat of a referendum to force counties and municipalities into more moderate ordinances (see chapter 9).

On November 1 David Laufer of Philip Morris laid out the California “situation.”[68] The San Francisco Board of Supervisors had just passed an ordinance similar to AB 13. According to Laufer, “It is no coincidence that the bill resembles AB 13, since Terry Friedman has spent the last several weeks in SF lobbying the Board.” He went on to say, “Barring a miracle or a decision to take this to the ballot, it is a done deal.” He noted that the smoke-free ordinance in Los Angeles had gone into effect and, “while perhaps not enforced,” was “being complied with on the whole.” He added that the Tobacco Institute “has no more funds this year to continue to pursue the case, so we will need to decide if we want to continue and pick up the tab.” In San Jose, the City Council had directed the city attorney to draft a law making all public places and worksites smoke free (which passed on December 30, 1993), and San Diego was discussing strengthening its ordinance. Sacramento had been smoke free for several years. Laufer offered this summary: “In 4 of the 5 largest population centers in the state, a ban is, or will likely be the reality, making AB 13 (a statewide ban) all the more appealing and easy to enact when session reconvenes in early January 1994. …In conjunction with whatever remaining allies we have, I believe we must launch a simultaneous counterattack on several different fronts: legislative, initiative, regulatory


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and legal.”[68] Ellen Merlo, Philip Morris's vice president of state activities, agreed: “If the four largest cities in California go, it is a very dangerous precedent and I think we have to throw as many resources at at least some sort of a compromise that we can live with. Let's do ASAP.”[72]

On January 12, 1994, Merlo wrote to Geoff Bible, president of Philip Morris, to bring him up to date on “the steps that we will take in California over the next several weeks in order to achieve state-wide preemption with accommodation for smokers.”[73] California clearly warranted attention at the tobacco giant's highest levels. Four steps were outlined:

  1. We will file a lawsuit on February 1st against the City of San Francisco over the jurisdictional issue of whether or not San Francisco has the authority to ban workplace smoking. We will be a co-plaintiff along with local business people in this lawsuit and based on precedent and legal advice, we think we have an excellent chance of prevailing.
  2. At the state level, we will create “a flurry of legislative activity to confound the antis by introducing various bills and measures to put them on the defensive, including asking for an audit of the Proposition 99 trust fund, an investigation of political abuses of the Proposition 99 fund and a resolution to ask U.S. OSHA to establish Indoor Air Quality Standards within the state.
  3. We will create the same level of local activity in cities like Anaheim, South San Francisco, Stockton, Palm Desert, Rancho Mirage, etc. by introducing smoking accommodation bills.
  4. Finally, on or about January 17th, we will file a ballot initiative seeking a state preemption bill that provides for smoker accommodation. The Initiative will be filed by three independent business and/or association members. Simultaneous with our filing of the ballot initiative, we will conduct additional polling to ensure that we thoroughly probe voter reaction to this bill, which preliminary polling indicates we have a very good chance of winning.[73]

Merlo added that if the company had the “opportunity to reach a negotiated settlement through the Legislature for preemption and accommodation, we will do so.”[73]

RJ Reynolds did not share Merlo's optimism about an initiative. On January 17 Tim Hyde wrote to Tom Griscom and Roger Mozingo about the proposed initiative, saying, “Overall, I think this is a bad approach,” referring to a survey conducted for Philip Morris.[74] He offered the following arguments to support his view:


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  • A. I am doubtful we could prevail on such a ballot question. We haven't seen the whole survey, yet, but Q57 [the head-to-head comparison of AB 996 and AB 13], in the deck, shows that almost as many people would vote for a total ban as for designated areas (44-46%). And that's before the other side has had a chance to propagandize about out-of-state tobacco companies spending big money to protect their interests.
  • B. There are tremendous down sides if we lose. It would establish the official position of the California electorate on this issue, making it much more difficult for legislators and local public officials to resist the anti's call for public bans. It would also have obvious national fallout.
  • C. Even if we should win, it doesn't solve the problem. The real problem is the hundreds of millions that other side has in Prop. 99 money to fight us. I suspect that if they weren't spending their efforts trying to enact local ordinances, as they are now, they would be up to worse activities: such things as harassing private employers, even more egregious studies and pilot intervention programs, and who knows what else.

If we were going to mount a proactive initiative, why not one that would divert these funds to prison construction and emergency rooms? That has immediate public appeal, is a “get” for the voters, and would have precedential value for other states.

I also think we need to be careful with what the other side has identified as “front” organizations. A California chapter of the National Smokers' Alliance, for example, will be quickly seen as PM's grassroots arm. The group we have fostered—California Smokers' Rights—has 8,000 paid members and money of their own in the bank, but the [sic] are still frequently accused of being a front for the industry.

Finally, five million dollars is a lot of money.[75] [emphasis added]

RJ Reynolds was clearly not interested in an initiative battle over smoke-free workplace laws, preferring instead to try to kill off the Proposition 99 Health Education and Research Accounts once and for all. Local ordinances were causing problems for the industry, but the root cause of the problem was Proposition 99. Philip Morris ignored RJ Reynolds and continued with its initiative.


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