California's Proposition 5 (1978)

Proposition 5, the California Clean Indoor Air Act of 1978, was the first attempt in the nation to pass a statewide clean indoor air law through the initiative process. Proposition 5 would have required smoking and no-smoking sections in workplaces, public places, and restaurants. The initiative petitions were circulated in late 1977 and early 1978, and the initiative was voted on in the November 1978 election. Brown and Williamson, working with the other tobacco companies, played a major role in defeating Proposition 5. In fact, the tobacco companies financed the effort to defeat Proposition 5 in direct proportion to their market shares of the California market (1).

The tobacco industry recognized the importance of the Proposition 5 campaign early in the initiative process. Since (as shown by its own polling) the industry knew that it had virtually no public credibility, it decided to act through a nominally independent campaign committee known as Californians for Common Sense (CCS). Even though CCS was created and controlled by the tobacco companies through a closely coordinated effort, it attempted to minimize and, in some respects, even hide its industry connections. The industry wanted the public to believe that CCS was a group of concerned California citizens.

Ernest Pepples wrote a detailed analysis of the industry's strategy for defeating Proposition 5 in a report dated January 11, 1979. Pepples's report summarizes the campaign from the industry's point of view and provides important insights into the organization and structure of the industry's campaign as well as the strategies employed.

Two decisions made in 1977 account for the victory that was achieved on November 7, 1978:

The foregoing decisions were made before the terms of Proposition 5 were even known or concepts to combat it had been developed. Because of the early start a California Action Plan was presented to the chief executive officers within three weeks of the time the sponsors filed their "Clean Indoor Air Act" initiative and its provisions became known for the first time. That Action Plan became the basic blue print of the campaign concepts, strategy, organization and tactics for the entire campaign to defeat Proposition 5. The Tobacco Institute made Jack Kelly a full time employee—he had been the paid executive of California's tobacco distributors group—to devote all his efforts to the campaign [emphasis added]. {2302.05, p. 1}

The tobacco companies' sponsorship of the CCS campaign is indicated by a memo dated February 15, 1978, from Pepples to the managers of B&W's major cigarette brands. Pepples stated that the industry had formed a campaign committee called Californians for Common Sense, Inc., to run the campaign against Proposition 5, and asked the brand managers to give him the names of any people they knew in California who could be recruited to participate in the campaign {2301.01}. This active role of the tobacco companies contrasts sharply with the industry's public position during the campaign: that Proposition 5 was a local California matter and that Californians for Common Sense was a campaign organization established by local citizens as a free-standing, autonomous organization. The tobacco industry's approach contrasted sharply with that of national voluntary health organizations, which did, in fact, stand back and treat Proposition 5 as a local California matter.

Pepples's "Campaign Report" continues:

The first step was to form a California-based campaign organization, Californians for Common Sense.

The concept: A broad based citizen membership, operating under the bipartisan co-chairmanship of prominent and respected Californians who had no past or present connection with the tobacco industry. That the proponents would attack the presence of tobacco money in the campaign was obvious. The answer was a non-tobacco organization with leadership so prestigious and membership so broad that its composition clearly belied the charge that only the tobacco companies opposed Proposition 5. {2302.5, pp. 1–2}

Although the tobacco industry sought local people to appear on behalf of the campaign, control rested firmly with the tobacco companies. In addition, in contrast to most initiative campaigns, the nominal local leaders were not required to contribute their own money or raise money. Like all campaigns involving the tobacco industry since then, more than 99 percent of the money came from the industry itself (1).

The industry conducted benchmark surveys in December 1977 and January 1978 which showed that the "vote no" side was a staggering underdog: California voters favored smoking restrictions by 68 percent to 24 percent {2302.05, p. 2}. Overcoming this significant voter deficit was the essence of the industry's (ultimately) successful plan. Indeed, the tobacco industry started its research well before the initiative had even qualified for the ballot; Pepples's "Campaign Report" states:

The first Tarrance data [from the tobacco industry's pollster V. Lance Tarrance and Associates of Houston, Texas] came in June 1977 . It showed that more than 82% of the electorate approved the idea of a new state law requiring smoking and nonsmoking sections in public places.

...

The same survey showed that the California voters' perception of the tobacco industry's credibility was very low. It removed all doubts that this campaign had to be a [sic ] California-grounded, with the Tobacco Institute as far in the background as possible and with tobacco industry involvement limited to financial contributions to a California citizens committee [emphasis added]. {2302.05, p. 10}

As soon as Californians for Common Sense was established, the tobacco industry began an active campaign for securing local endorsement, with particular emphasis on union leadership.

Perhaps the most significant achievement during this period was the amazing sign-up of California labor leaders first as individuals and later with official anti-Proposition 5 positions by their trade union organizations. Brown & Williamson's labor relations group, especially C. H. Teague and C. R. Baumgardner and Wilson Wyatt in Corporate Affairs, encouraged the TWIU [Tobacco Workers International Union] and other labor organizations to get in touch with labor officials in California on behalf of the NO-On-5 position. Lorillard and Philip Morris were similarly active in rounding up labor support. {2302.05, p. 3}

Having the union leadership on their side proved to be of tremendous benefit to the tobacco industry, not only because it gave the campaign an air of legitimacy but also because the union's connections in Democratic party politics were useful in neutralizing efforts to get prominent politicians to support the initiative. In particular, then-governor Jerry Brown was persuaded to take a neutral position on the initiative through the efforts of people in the union movement {2302.05}. The tobacco industry also used the industry's mailing lists of customers to provide direct mail access to smokers in the state {2302.05}. This technique was

expanded in later years as part of the effort to develop the smokers' rights movement (25).

The tobacco industry knew that, since it had very low public credibility, identification of the industry with the No-on-5 campaign would hurt it. Thus, it established several important guiding principles to keep its profile as low as possible. In his description of how the tobacco industry defeated Proposition 5, Pepples lists these guiding principles:

All campaign functions would be operated through the citizens committee, Californians for Common Sense.

Tobacco company visibility would be confined to financial contributions to CCS. There would be no attempt to disclaim or discount the amount of tobacco contribution.

Tobacco company personnel would not make campaign appearances, occupy campaign positions or make public statements relative to the campaign.

No campaign events, programs or advertising would be directed to college campuses, specifically, or to youth in general. {2302.05, p. 8}

Although Pepples says that "there would be no attempt to disclaim or discount the amount of tobacco contribution," the tobacco industry kept a low profile during the campaign and campaign spokesmen denied the industry's role until campaign disclosure statements proved that the industry was financing the campaign. On one occasion CCS issued a press release that misstated the amount of tobacco industry contributions to the campaign by leaving out approximately $270,000 of in-kind campaign contributions (38, 39).

The documents make it clear, however, that the tobacco companies maintained tight control of CCS activities from behind the scenes. Pepples's "Campaign Report" notes,

Extreme caution was exercised in preparation of the publicity. Company legal counsel approved all releases prior to dispatch [emphasis added]. {2302.05, p. 17}

In addition, high-level tobacco industry officials maintained contact with CCS throughout the campaign:

A group of 5 tobacco company representatives consisting of Jim Dowdell who was succeeded by Charles Tucker from RJR, Ed Grefe from Philip Morris, Arthur Stevens from Lorillard, Joe Greer from Liggett & Myers and Ernest Pepples from B&W kept in constant contact with the operation of CCS. Visits were made at least once a month by the group to the CCS headquarters in both San Francisco and Los Angeles. Also frequent telephone conferences were held between Woodward & McDowell [the firm hired to manage the campaign] and the five company people. During the final month of the cam-

paign, almost daily conferences were held by telephone including Woodward & McDowell and Jack Kelly together with Lance Tarrance [the pollster] in Houston conferring with the five company representatives. Occasionally it was necessary for the five company people to meet to iron out differences. At one point, for example, Reynolds insisted on launching a campaign to deal affirmatively with the nonsmoker issue in newspaper advertising. This was a clear deviation from the California Action Plan as originally submitted to the company CEO's. The RJR proposal was contrary to the advice of the professional campaign advisors who had been employed in California. RJR finally retreated from its insistence on a separate campaign.

...

As a rule, however, the injection of company views into the operation of the campaign was kept to a minimum, while at all times retaining in the companies complete control over legal approval both as to advertising copy and general operation of the campaign [emphasis added]. {2302.05 pp. 27–29}

Despite the tight control of the campaign by the tobacco industry, the public face of the campaign was very different. CCS sought to present opposition to Proposition 5 as a purely local matter involving prominent local opposition:

Public attention was focused on the three carefully chosen and prestigious cochairmen of the Californians for Common Sense campaign:

John F. Henning, Secretary Treasurer of the California Labor Federation (AFL-CIO), a University of California regent, former U.S. Undersecretary of Labor, former U.S. Ambassador to New Zealand and an active and prominent Democrat (a nonsmoker).

Houston I. Flournoy, Vice President Governmental Affairs, University of Southern California, former California State Controller, former member of the Legislature. In 1974, Republican candidate for governor (a heavy smoker).

Katherine D. Dunlap, President of the California Council for Environmental and Economic Balance, Director of the Metropolitan Water District of Southern California, a prominent civic leader and conservationist (a nonsmoker). {2302.05, pp. 13–14}

The campaign that the tobacco industry ran against Proposition 5 was to become the industry's classic three-phase approach to tobacco control measures, whether at the local or state level, which is still in use today. Pepples continues:

Pepples's discussion of the industry's strategy of equating the "right" to smoke with the constitutionally guaranteed rights of assembly and free speech is particularly ironic, given statements he had made in a memorandum only five months earlier that there is no constitutionally protected "right" to smoke and that regulating smoking is a legitimate government activity {2201.01, pp. 3–4} (see chapter 7).

The tobacco industry made the cost of implementing the initiative—primarily the posting of signs and the expenses of enforcement—a pivotal issue in the campaign. The supporters of Proposition 5 had obtained a copy of an industry-funded poll showing that there was a direct relationship between this cost and the percentage of people who would vote against the measure. Specifically, the poll indicated that a majority of voters would vote "no" if the costs were to exceed $60 million (1). A consulting firm hired by the tobacco industry, San Francisco-based Economic Research Associates, produced a study concluding that implementation of the initiative would cost $63 million. The proponents of the initiative, who had also obtained a copy of the calculations used to reach this conclusion, discovered an arithmetic error in the calculations that, when corrected, reduced the actual projected cost to only a few thousand dollars. Although the proponents attempted to publicize the error to undercut the industry's cost claims, as Pepples noted, the industry successfully shifted the debate into terms favorable to itself {2302.05}.

The tobacco industry's polling showed that the issues of health in general and secondhand smoke in particular were dangerous ones for the

industry. It therefore worked very hard to steer the campaign away from these questions and was largely successful at doing so.

The Tarrance [polling firm] tracking showed that it was not necessary to change our game plan; the health issue and the nonsmoker issue had not become dominant. Indeed the best issue for the Yes side was not health, despite the strong propaganda push by ACS and the lung and heart associations. Only 25% of those favoring the Yes position cited Health as their reason for voting Yes. The best issue for the Yes side was Smoke Bothers (50%). Tobacco smoke is seen by persons in the Smoke Bothers category as a nuisance and as an annoying invasion of their "life space". {2302.05, p. 36}

At the same time, the industry realized that the health effects of passive smoking might be introduced as an issue:

Lance Tarrance's organization kept a close watch on the effect of the pro-5 advertising. If other people's smoke became a dominant issue in the closing days of the campaign, we had an alternate ad campaign which was prepared and kept in the can in case it was needed. It had been tested in Madison, Wisconsin. It was based on work done by BBD&O [Batten, Barton, Durstine, and Osborne, an advertising firm with long-standing tobacco accounts]. The testing at Madison showed no perceptible improvement in attitudes about "other people's smoke," but it seemed to be bombproof. {2302.05, p. 35}

These advertisements were never needed.

Nevertheless, the industry did make use of a number of physicians to contest the evidence that passive smoking is a cause of disease.

Also we furnished witnesses such as Dr. Cosentino, who appeared before a legislative hearing that had been stimulated by the proponents of Proposition 5. Also Dr. Albert H. Niden was prevailed on to write a piece for the Los Angeles Times opinion page. It appeared on Sunday, October 29, 1978 in opposition to a similar article by Dr. Luther L. Terry [former Surgeon General; responsible for first report on smoking and health]. Niden's comment was simply "little is known about the effects, if any, of ambient tobacco smoke on people suffering from lung disease." In short the nonsmoker issue has not been conclusively decided. What little is available does not support the claims by the anti-cigarette lobby. This was in direct contradiction to the wild statements by Luther Terry. {2302.05, pp. 35–36}

At the time, in radio debates with one of the authors (Glantz), Dr. Cosentino denied that he had any financial involvement with the tobacco industry and stated that his testimony was based on his views as a libertarian and physician concerned about the misrepresentation of science. The documents show that he was paid an estimated $2,500 for "preparation of statement re: public smoking" by the tobacco industry through

its special accounts, although the date of payment is not specified (table 8.1). Similarly, Dr. Niden was paid on several occasions (the documents show no dates) through the industry's special accounts to prepare testimony on smoking-related issues. Niden's quote is typical of the way in which the tobacco industry spokesmen muddied the issue by carefully constructing restrictive clauses: he stated that little was known about the effects of ETS "on people suffering from lung disease," implying that lung disease was the only disorder associated with exposure to ETS. He did not mention what was known about the effects of ETS on other diseases or the implications of the weight of scientific evidence when examined as a whole.

Pepples's "Campaign Report" also notes the weaknesses of the pro-Proposition 5 campaign:

The reaction of the proponents was belligerent. They falsely accused Californians for Common Sense of deceit and misrepresentation. They challenged the accuracy of the cost estimates—with a variety of conflicting versions of their own. Their unfounded accusations influenced some broadcast station managers to remove certain of our spots. Most of them did so temporarily. Once the backup material supporting the claims was presented, the spots were allowed to resume. In presenting the backup for our claims, CCS took the opportunity to point out that the stations were offering free time for ACS and lung association PSA's [public service announcements] which were clearly pro-Proposition 5. As a result, several stations declined to continue running the PSA's until after November 7.

But most importantly the proponents abandoned their own battleground and came to fight on the battleground staked out by CCS.

The attacks by the opposition were troublesome and presented many concerns and additional work burdens on the campaign management and its legal defenses. They were major problems but in most cases they were overcome.

As troublesome as these battles were it meant that the proponents of Proposition 5 were now on CCS' turf arguing about the amount of costs, the degree of infringement, the technicalities of arrests and fines and trying to explain away such ridiculous inconsistencies as the Proposition's exemption of rock concerts and the smoking prohibition it would impose during jazz concerts in the same auditorium. {2302.05, pp. 5–6}

Pepples also notes that the tobacco industry had considered the long term as well as the short term when it planned the campaign.

On another occasion, Woodward & McDowell [the political campaign management firm that ran the day-to-day operations of the No-on-5 campaign] very much wanted to carry a theme in the advertising which was a parody on the legislature. The opinion surveys indicated that the voters currently hold the legislature in very low esteem. The proponents had begun to respond to

our original message that this was a bad law, poorly drafted. They conceded that it had some flaws but said not to worry, the legislature will take care of any flaw by amendment. Woodward & McDowell, therefore, urged a direct attack on the legislature to take advantage of the negative voter attitudes toward the legislature and to crowd the proponents into a corner. The companies differed in their reaction but after internal discussion, it was agreed that the tobacco industry must live with the California legislature for years to come and should not damage its relations by supporting advertising which made fun of the legislature [emphasis added]. {2302.05, p. 28}

This caution proved to be a wise move, since the California Legislature consistently supported the tobacco industry on a wide range of issues in succeeding years (40, 41).

Although the tobacco industry won the battle over the Proposition 5 campaign, Pepples notes in his report that the industry has not necessarily won the war:

Indeed the findings of the post-election survey indicate that a majority of California voters would still approve smoking regulations that they consider reasonable.

After election surveys show that 71% of the electorate say they would support "some regulation" of smoking in public places. Those who would stand for "no restrictions" numbered only 26%. Those numbers are not greatly different from the early 68–24 reading taken in 1977 and in January 1976. {2302.05, p. 40}

The report points to the need for a more active role in the Legislature to protect the tobacco industry's interests:

In California there has been little legislative equity of the type available to the tobacco industry. Strong personal relationships with legislators developed over the years by the companies were beneficial but should be reinforced more realistically in California and in other states where the industry may face problems. {2302.05, p. 41}

Passive smoking, Pepples realizes, is an ongoing issue that requires addressing, albeit carefully:

In the post-election survey 72% of the voters agreed with the belief that secondhand smoke is "hazardous" to nonsmokers; only 16% disagreed.

A measurement of the voting citizens who believe that secondhand smoke can "cause disease" in nonsmokers continues to be discouraging:

Agree 49%

Disagree 31%

Not Sure 21%

Perhaps the industry should consider a program of public education in hope of shifting this ratio of misconception.

Any program, however, must be cautiously designed and should be tested in selected markets before being applied nationally. The lesson of California is that such a program must never be part of—or coincide with—an election campaign in which smoking regulation is an issue. Credibility will be diminished or destroyed in a competitive atmosphere of a political campaign [emphasis added]. {2302.05, p. 42}

The fact that the tobacco industry viewed Proposition 5 as a potentially serious economic threat is underscored in a letter sent from Pepples to Jack S. Swaab of BAT on January 23, 1979 {2302.01}. Pepples notes that he is sending Swaab a copy of his report on the Proposition 5 campaign in response to Swaab's request.

We ask that you maintain the strictest sort of confidence for this report because it does contain our battle plan. {2302.01, p. 1}

Pepples clearly recognized that the financial stakes for the tobacco industry were very high in the Proposition 5 campaign. In the letter he attempts to quantify the effects of the initiative and to justify the expenses the industry paid to defeat it:

Although it is obviously conjectural to try to quantify the results of [B&W'S] expenditures [of over $1 million to defeat Proposition 5], we have looked at it from several points of view. ...

If it is assumed that the passage of Proposition 5 would have caused a decline in volume of just one cigarette per California smoker per day, the chart attached to this letter shows the industry would have suffered an after tax loss equal to $5.9 million in the first year. On that basis, it can be said that the industry [which spent $6.6 million to defeat the proposition] will recover its "investment" over a period of one year. If it is assumed that the passage of Proposition 5 would have caused a decline of 2 cigarettes per day per smoker, then the industry can expect to recover the $5.9 million expense in only 6 months.

California represents about 10% of the population of the United States or 20 million people. California is regarded as a trendsetter and theoretically if Proposition 5 had passed it would have had an impact on sales elsewhere in the United States.

...

A University of California study reported that the volume decline from the passage of Proposition 5 in California would be in the 15–20% range due to inconvenience. At 15% the annual incremental after-tax loss by the industry would be $24.6 million, and at 20% it would be $32.4 million. The 15–20% range translates into 4–6 fewer cigarettes per day per California smoker. In the 4–6 range, the payback period is less than three months. Limited strictly to the cigarette market in California, if Proposition 5 had resulted in a decline of 1–6 cigarettes, the industry can be said to recover its

costs for preventing that loss within 1–12 months' time [emphasis added]. {2302.01, pp. 2–3}

Ironically, the University of California report used by Brown and Williamson for its analysis was written by Stanton Glantz, one of the authors of this book, as part of material prepared to analyze the potential costs and benefits of Proposition 5. While the health community may have been slow to recognize the economic impact of smoking restrictions, the tobacco industry was acutely aware of how much even a small decline in smoking would affect its profits.

The Proposition 5 campaign also provided evidence that smokers could be motivated to vote for the industry's political and economic interests. At the beginning of the campaign, before the tobacco industry's massive advertising campaign, most smokers supported the initiative. However, the tobacco industry was successful in its attempt to sway them. In his letter to Swaab, Pepples observes:

Close to 90% of the smokers who voted on Proposition 5 voted against its enactment. They stood up against a restriction on their smoking pleasure. The opinion sampling indicates that smokers were in fact quite enthusiastic in support of the position of Californians for Common Sense [that Proposition 5 represented unnecessary government intrusion].

This contrasts with the pre-campaign mood which even among a majority of smokers was solidly in favor of restricting public smoking. Verbatims [comments?] from the early public opinion surveys had the smokers saying that Proposition 5 might help them quit or cut back and for that reason, at that early point in time, they expected to vote for it .

As the campaign progressed and as these smokers heard the messages which Californians for Common Sense put on radio and television, the attitudes of the smokers toward the right to smoke in public underwent a favorable change. Verbatims from focus groups held toward the end of the campaign demonstrated that smokers became much less defensive in the sessions and would actually pull out their packages of cigarettes and proudly display them on the conference table. The health issue was never addressed in the "Vote NO" messages; they raised instead the basic economic and freedom issues. It is possible to theorize, therefore, that in addition to avoiding a negative sales impact from the legislative restrictions which Proposition 5 would have represented, the industry may have achieved a positive effect among smokers in support of their custom of smoking [emphasis added]. {2302.01, pp. 2–3}

Since that time, the tobacco industry has continued to use this strategy, not only to oppose local and state clean indoor air laws but also in its attacks on the efforts of the federal Occupational Safety and Health

Administration to regulate passive smoking in the workplace and the Food and Drug Administration to regulate cigarettes and smokeless tobacco products as drug delivery devices.

The Proposition 5 campaign was only the first in a large number of initiative and referendum measures throughout the country, most notably in California, Colorado, and Florida, in which the tobacco industry became intimately involved. Just as in the Proposition 5 campaign, the industry usually formed local campaign committees with names designed to mask industry involvement. For example, in an effort to defeat a ballot measure in Dade County, Florida, the industry formed an organization named "Floridians Against Increased Regulation," or "FAIR" for short.

Tobacco industry executives appear to have expected that initiatives similar to Proposition 5 would be proposed in other localities. A memo from B. D. Cummins [affiliation unknown] to a group of tobacco industry lawyers and executives, dated August 24, 1979, suggests that money be set aside for voter referendums (a term sometimes used synonymously with "initiatives"):

[A]n amount of $500,000 should be budgeted for "Smoking Voter Referendum" and included in General Corporate as a separate line item. This is budgeted for any state or city referendums on smoking that may come up in 1980. {1503.12}

It is possible that the tobacco companies were already aware that tobacco control activists were planning to sponsor another initiative to restrict smoking in California, Proposition 10.