Court Opinion

ID: 9323230
Source: CourtListenerOpinion
Date Created: 2022-12-06 19:01:02.052376+00
Date Added: 2024-06-11T17:14:46.368124
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

 

 

i)
UNITED STATES OF AMERICA, )
Plaintiff, )
) Civil Action No. 99-CV-2496 (PLF)
and ) Next scheduled court appearance:
) None
TOBACCO-FREE KIDS )
ACTION FUND, et al. )
Plaintiff-Intervenors, )
)
Vv. )
)
PHILIP MORRIS USA INC., et al., )
)
Defendants, )
)
and )
)
ITG BRANDS, LLC, et al. )
Post-Judgment Parties Regarding )
Remedies. )
)
)
ORDER # Pre mand

FOURTH SUPERSEDING CONSENT ORDER IMPLEMENTING THE
CORRECTIVE-STATEMENTS REMEDY AT POINT OF SALE

Upon consideration of the Joint Motion for Fourth Superseding Consent Order
Implementing the Corrective-Statements Remedy at Point of Sale, the entire record herein, and
following extensive negotiations among the parties to this action, including the United States of
America as well as the non-party Retailer Groups, it is hereby ORDERED that:

The corrective-statements remedy under Order #1015 (Dkt. No. 5733; issued Aug. 17,

2006), published as United States v. Philip Morris USA Inc., 449 F. Supp. 2d 1, 938-41 (D.D.C.
2006), aff'd in part & vacated in part, 566 F.3d 1095 (D.C. Cir. 2009) (per curiam), cert. denied,

561 U.S. 1025 (2010), is hereby MODIFIED as set forth below:

REVISED IMPLEMENTATION SPECIFICATIONS FOR CORRECTIVE
STATEMENTS AT POINT OF SALE

I. Definitions.
A. “Acquired Brands” means the Winston, Salem, Kool, and Maverick brands.
B. “Adjudicator” means a third-party engaged to expeditiously hear appeals from

(i) Working Group decisions on Noncompliance Appeals in the circumstances provided in Section
V.7, below; and (ii) tie breaking decisions of the Mediator. The Adjudicator’s costs and fees shall

be paid for by Manufacturers.

C. “Audit Period” means a nineteen-week period during which In-Person Audits take
place.

D. “Auditor” means one or more firms unaffiliated with and independent of any
Manufacturer and acceptable to Plaintiffs that are retained by a Manufacturer or the Manufacturers
to conduct In-Person Audits, review the Photo Database, administer the Tip Line, address and
monitor audit results, and report on the same to the Working Group as required by this Order,
either itself or through one or more subcontracts.

E. “Corrective-Statement Signs” means signs to be displayed in Participating Retailer
Locations as provided mm this Order and designed in accordance with the Style Guide attached
hereto as Exhibit A, with the image files used for printing signs provided by the Government.

F, “Court-Ordered Corrective Statements” means the messages prescribed by Order

#72-Remand.
G. “Covered Brand” means any brand of cigarette marketed by a Defendant and any
Acquired Brand.

H. “Defendant” means each of the following: Altria Group, Inc., R.J. Reynolds
Tobacco Company, Lorillard Tobacco Company, and Philip Morris USA Inc. To the extent any
obligations under this Order pertainmg to Lorillard Tobacco Company have been transferred to
R.J. Reynolds Tobacco Company, as contemplated by the Notice of Transaction Involving
Defendants R.J. Reynolds Tobacco Company and Lorillard Tobacco Company (Dkt. No. 6141;
filed Apr. 7, 2015), such obligations shall apply to R.J. Reynolds Tobacco Company.

I, “Effective Date” means the date on which this Order is entered.

J. “Final Determination of Noncompliance” means a determination that a
Participating Retailer Location is out of compliance with the Participating Retailer’s contractual
obligations to Manufacturers under this Order after (i) the timelines for contesting an In-Person
Noncompliance Notice have expired without the filing of a timely Noncompliance Appeal, (ii) if
a Noncompliance Appeal is timely filed, the Working Group has affirmed the Auditor’s findings
of noncompliance and no appeal is permitted, or the timelines for contesting that determination
have expired, or (ii) the Adjudicator affirmed the Auditor’s findings of noncompliance and no
appeal is permitted, or the timelines for contesting that determination have expired.

K. “Implementation Period” means the twenty-one month period beginning on the first
day of the first month following the Posting Period.

lez “In-person Audit” means a visit to a Participating Retailer Location by the Auditor
during which the Auditor shall photograph (i) the main cigarette Merchandising Set, (ii) any

displayed Corrective-Statement Signs, and (iii) an example of Off-Set Promotional Signage for
Covered Brands displayed by the Participating Retailer Location, if any, in as many images as are
sufficient to show compliance with this Order or to adequately document noncompliance with this
Order.

M. “In-person Noncompliance Notice” means a letter issued by the Auditor notifying
the Participating Retailer Location and the Working Group that the Auditor conducted an In-person
Audit of the Participating Retailer Location and found the Participating Retailer Location not
compliant with the terms of this Order, and specifically identifying the basis for the Auditor’ s
finding of noncompliance, as well as whether the Auditor deemed the Participating Retailer
Location to be in Major Noncompliance or Minor Noncompliance. The In-person Noncompliance
Notice shall be sent to the Participating Retailer Location at the email address provided for notice
in the Participating Retailer Contract, and shall also be sent to each member of the Working Group
by email. If no email address is available and/or the sender receives a bounce-back or failed
delivery message, the In-person Noncompliance Notice shall be sent via overnight delivery.

N. “Kiosk Store” means (1) a Store that does not allow customers to enter and that has
a selling window in front of one or more selling counters between the customer and Store
personnel, or (2) a Store that is no more than 325 square feet in area, not including restrooms,
regardless of whether customers are allowed to enter the Store.

O. “Major Noncompliance” means a failure to post a required Corrective-Statement
Sign, or an obstruction of a Corrective-Statement Sign in a manner that results in the Preamble,

message, or icon not being visible from the customer’s vantage point, including, but not limited

to, the examples given in Exhibit B.
P. “Major Noncompliance Notice” means an In-person Noncompliance Notice that
identifies the noncompliance with the terms of this Order to be Major Noncompliance.

Q. “Manufacturer” means a Defendant or ITG Brands, LLC.

R. “Mediator” means a third-party engaged to assist in expeditiously resolving
disputes of the Working Group and to casta tie breaking vote in the event of a tie of the Working
Group. The Mediator’s costs and fees shall be paid for by Manufacturers.

S. “Merchandising Set” means any rack, shelving, display, or fixture at a Store,
including any canopy or header, used in whole or in part to merchandise one or more Covered
Brands of cigarettes that are visible to customers.

T. “Minor Noncompliance” means noncompliance with this Order’s provisions for the
Corrective-Statement Sign other than Major Noncompliance, and is defined to include, but is not
limited to, the examples given in Exhibit B.

U. “Minor Noncompliance Notice” means an In-person Noncompliance Notice that
identifies the noncompliance with the terms of this Order to be Minor Noncompliance.

V. ‘“Noncompliance Appeal’? means a written appeal by a Participating Retailer
Location or Working Group member to the Working Group, submitted by email within 14 days
after the In-Person Noncompliance Notice is sent by the Auditor, setting forth the basis for
challenging the Auditor’s finding. A Noncompliance Appeal may accept the finding of
noncompliance, but challenge whether the noncompliance constitutes Major Noncompliance. A
Noncompliance Appeal may include supporting evidence, which may include photos.

W. “Non-Kiosk Store” means a Store other than a Kiosk Store.
Xx “Off-Set Corrective-Statement Sign” means a Corrective-Statement Sign required
because of Off-Set Promotional Signage.

hi. “Off-Set Promotional Signage” means Promotional Signage that is not placed
withm the four corners of the Merchandising Set, which for the avoidance of doubt, includes any

canopy or header.

Z. “Participating Retailer” means a retailer that is a party to a Participating Retailer
Contract.

AA. “Participating Retailer Contract” means a contract with a retailer that permits the
Manufacturer (i) to choose the placement of Covered Brands of cigarettes in or on a Merchandising
Set related to Covered Brands or (ii) to approve, place, remove, or require the placement or
removal of advertismg, marketing, promotional or other informational material that advertises,

markets, or promotes its Covered Brands in a Store.

BB. “Participating Retailer Location” means a Store with respect to which a

Manufacturer has a Participating Retailer Contract.
CC. “Plaintiffs” means the United States and the Public Health Intervenors.

DD. “Photo Database” means the database maintained and reviewed by the Auditor to
which Manufacturer representatives will and Participating Retailers can submit photos of
Corrective-Statement Signs as posted in a Participating Retailer Location.

EE. “Photo Noncompliance Notice” means a written letter issued by the Auditor

notifymg the Participating Retailer Location that the photo submitted of its Participating Retailer

Location suggests noncompliance with the terms of this Order.
FF. “POS Corrective Statements” means a modified version of the Court Ordered
Corrective Statements using the POS Preamble and dividing the Court Ordered Corrective
Statements among 17 distinct messages as reprinted in attached Exhibit A at p. 9.

GG. “POS Preamble” means a modified version of the sourcing language from the
Court-Ordered Corrective Statements. In approximately one-half of the Corrective-Statement
Signs the shortened preamble text will read “A FEDERAL COURT HAS ORDERED R.J.
REYNOLDS TOBACCO & PHILIP MORRIS USA TO STATE:” and in approximately one-half
of the Corrective-Statement Signs the shortened preamble text will read “A FEDERAL COURT
HAS ORDERED PHILIP MORRIS USA & R.J. REYNOLDS TOBACCO TO STATE:”.

HH. “Posting Period” means the three-month period beginning on the first day of the
first month following the Ramp-Up Period.

Il. “Price Promotion” means any Manufacturer-provided discount on the price of
cigarettes that the Participating Retailer must apply to reduce the retail price of cigarettes (e.g.,a
Manufacturer pays a Participating Retailer an amount equal to $0.50 per pack of cigarettes to
reduce the price of specific Covered Brands of cigarettes by $0.50 per pack of cigarettes).

JJ. “Promotional Signage” means material displayed at a Participating Retailer
Location that advertises, markets, or promotes one or more Covered Brands, but does not include
the products themselves or signage that solely identifies brand and price (without using an
advertising slogan, tagline, or imagery other than a brand logo or image of a branded cigarette

package).
KK. “Public Health Intervenors” means the Tobacco-Free Kids Action Fund, American
Cancer Society, American Heart Association, American Lung Association, Americans for

Nonsmokers’ Rights, and the National African American Tobacco Prevention Network.

LL. “Qualifying Census Tract” means a U.S. Census tract where (a) twenty percent
(20%) or more of the total population of the U.S. Census tract is of Hispanic origin, and (b) twenty
percent (20%) or more of the population of Hispanic origin in that U.S. Census tract speaks a
language other than English at home and speaks English less than “very well.” U.S. Census tracts
shall be determined using the most recent available five-year estimates from the American
Community Survey that have been released by the United States Census Bureau as of the Effective
Date.

MM. “Ramp-Up Period” means the six-month period beginning on the first day of the
first month following the Effective Date.

NN. “Remedies Party” means each of the following: ITG Brands, LLC, Commonwealth

Brands, Inc., and Commonwealth-Altadis, Inc.
OO. “Representative Sample” means a sample of Participating Retailer Locations
selected using the following method:
1. Sort a list of all Participating Retailer Locations according to the following
strata:
a. According to the Participating Retailer Location’s presence in one

of the four United States Census Regions or its presence in any United States

Territory taken as a fifth group;
b. Then within each of those strata, by the volume of Covered Brands

of cigarettes shipped to the Participating Retailer Location in the previous 12

months, from most to least.

2. Then draw a sample of 6,000 from the sorted list of Participating Retailer

Locations in 19 distinct replicates, as follows:

PP.

a. Calculate a sampling interval (SI) using the formula SI = (19 x N’)
/ 6,000 (rounding SI if necessary down to the next integer), where N’ is the total
number of Participating Retailer Locations in the sorted list;

b. Draw 19 unique random numbers from the interval inclusive of 1 to
SI;

c. Create 19 sets of numbers (seeded sets) by using each of the 19
unique random numbers asa seed (S), as follows: { S,S + SI, S+2xSI, S +3xSI,
... S+ixSI }, where i is 315 [[ie., (6,000/19) - 1]]; and

d. Create 19 distinct replicates by using the 19 seeded sets to draw from
the sorted list the Participating Retailer Locations at the positions corresponding to

the numbers in the set.

“Representative Sample Noncompliance Rate” means the noncompliance rate of

the Representative Sample calculated as follows:

 

Total Sampled retailers . :
A, P Retailer_NC; x Retailer_sales;
Total Sampled retailers :
ind pee’ Retailer_sales;

This calculation uses the below definitions:
° “Sales” means volume of Covered Brands of cigarettes shipped to the
Participating Retailer Location in last 12 months.

e sep?

shall be used to denote | to the total number of sampled Participating

Retailer Location.

“Retailer_sales;” equals sales for each sampled Participating Retailer
Location “?’
7 “Retailer_ NC?’ equals (i) 1 if the Participating Retailer Location is found
to have one of more incidences of Major Noncompliance or (ii) 0 if
Participating Retailer Location is found to have no incidences of Major
Noncompliance.
QQ. ‘Representative Sample Pool’ means an audit pool that includes all Participating
Retailer Locations nationwide, including those in the Suspected Noncompliance Pool.
RR. “Retailer Groups” means the National Association of Convenience Stores

(“NACS”) and the National Association of Tobacco Outlets (“NATO”).

SS. “Rotation Period” means the three-month window comprismg months 10, 11, and

12 of the 21-month Implementation Period, after the first two Audit Periods and before the final

two Audit Periods.

TT. “Semi-Permanent Display” means an advertising, marketing, or promotional
display that requires specialized labor or more expense to install or remove than does a standard

Promotional Signage.
UU. “Set-Adjacent Corrective-Statement Sign” means a Corrective-Statement Sign

posted because of the presence of a Merchandising Set at a Participating Retailer Location.

10
VV. “Spanish Version” means the text of the Corrective-Statement Signs translated into
Spanish, as set forth in the Style Guide attached to this Order as Exhibit A.

WW. “Store” means a premises where cigarettes are offered for sale to consumers.

XX. “Suspected Noncompliance Pool’ means an audit pool consisting of Participating
Retailer Locations (a) for which no photo showing compliance has been submitted (to be included
in this pool im only the first Audit Period and third Audit Period), (b) that have been flagged as
suspected of noncompliance by the Tip Line and not previously been audited based on the Tip
Line communication that triggered its inclusion in the Suspected Noncompliance Pool, or (c) that
were found in Major Noncompliance via In-Person Audit in the immediately prior Audit Period.

YY. “Tip Line” means a system designed to accept telephonic and online submissions
from members of the public concerning incidences of suspected noncompliance with this Order
for review by the Auditor.

ZZ. “Working Group” means a group consisting of ten individuals: three individuals
appointed by the Department of Justice, two individuals appomted by the Public Health
Intervenors, one individual appomted by each of (i) Altria Group, Inc., or Philip Morris USA Inc.
(u) R.J. Reynolds Tobacco Company and (ii) ITG Brands, LLC, and one individual appointed by
each of the two Retailer Groups.

Il. Dis play of Corrective-Statement Signs.

1. At each Participating Retailer Location, the Manufacturers shall, during the

Implementation Period, communicate the POS Corrective Statements to customers through

Corrective-Statement Signs to be displayed in the sizes and locations and on the terms described

in Section III, below.

1]
on The Corrective-Statement Signs displayed m Participating Retailer Locations shall
use the POS Preamble and follow the Style Guide attached to this Order as Exhibit A.

Bs The Manufacturers shall communicate a Spanish Version of the Corrective-
Statements Sign following the Style Guide attached as Exhibit A in each Participating Retailer
Location that (1) requires two or more Corrective-Statement Signs under the terms of Section III,
below and (ii) is located in a Qualifying Census Tract that Plaintiffs have identified and disclosed
to the Manufacturers, the Retailer Groups, and the Auditor within 60 days of the Effective Date.
In such Participating Retailer Locations, the Set-Adjacent Corrective-Statement Sign shall be in
English and any second Corrective-Statement Sign shall be in Spanish. If a Participating Retailer
Location must display more than two signs, the additional sign(s) beyond the first two shall be in
English and the Participating Retailer Location may choose which sign to display in Spanish.
Where there are two signs in a Participating Retailer Location in Puerto Rico, the Set-Adjacent
Corrective-Statement Sign shall be in Spanish and any second Corrective-Statement Sign shall be
in English and, if a Participating Retailer Location in Puerto Rico must display more than two
signs, the additional sign(s) shall be in Spanish and the Participating Retailer Location may choose
which sign to display in English.

II. Set-Adjacent and Off-Set Corrective-Statement Signs.

1, During the Ramp-Up Period, each Manufacturer shall amend or supplement its

Participating Retailer Contracts to require, during the Implementation Period, display of a Set-

Adjacent Corrective-Statement Sign for Non-Kiosk Stores from one of the Manufacturers as

follows:

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a. A single 348 sq. in. Corrective-Statement Sign shall be displayed in one of
the following locations:

i. The sign shall be: (1) attached to and above, or hung above, the main
cigarette Merchandising Set with a space of not more than 6” between the top of
the main Merchandising Set and the bottom edge of the sign; and (2) in the same
plane as the front of the Merchandismg Set unless the configuration of the
Merchandising Set and sign attachment or hanging hardware or ceiling attachment
point does not allow the sign to be affixed in the same plane as the front of the
Merchandising Set and, in sucha case, the sign shall be affixed vertically but offset
from the front plane of the Merchandising Set;

il. If @ is not possible given the existing placement of the
Merchandising Set within a Participating Retailer Location, then the sign shall be
(1) attached and adjacent, or hung adjacent, to the main cigarette Merchandising
Set with a space of not more than 6” between the side of the main Merchandising
Set and the side edge of the sign; (2) in the same plane as the front of the
Merchandising Set unless the configuration of the Merchandising Set and sign
attachment hardware or ceiling attachment point does not allow the sign to be
affixed in the same plane as the front of the Merchandising Set and, in such a case,
the sign shall be affixed vertically but offset from the front plane of the
Merchandising Set; and (3) at least 48” above the floor;

iii. If (i) or (ii) are not possible given the existing placement of the

Merchandising Set within a Participating Retailer Location, then in a highly visible

13
location either (a) within 48” of the main customer entrance, that can be seen by

customers as they enter the store, and at least 48” above the floor, or (b) within 48”

of the cash register, that can be seen by customers as they approach or are standing

at the cash register/point of sale, and at least 48” above the floor, with the choice
between (a) and (b) at the Participating Retailer Location’s discretion;

iv. If (@), (ii), and (Gi) are not possible, then (a) perpendicular to the
main cigarette Merchandising Set, at least 48” above the floor, or (b) on a wall.in
front of a recessed main cigarette Merchandising Set but in a plane parallel to the
front of the Merchandising Set, and at least 48” above the floor, with the choice
between (a) and (b) at the Participating Retailer Location’s discretion; and

V. If (a), (ii), (iti) and (iv) are not possible, then the retailer may request
the Working Group for permission to use an alternative placement.

b. In addition, Non-Kiosk Stores with more than 9-horizontal linear feet of
visible Merchandising Set space devoted to Covered Brands (which Manufacturers have
represented as being approximately 10% of all Participating Retailer Locations), at any
given time during the Implementation Period, shall post a second 348 sq. in. Set-Adjacent
Corrective-Statement Sign, with placement following the hierarchy of Paragraph a, above,
recognizing that it may not be possible to place asecond Set-Adjacent Corrective Statement
Sign in the same placement as the first Set-Adjacent Corrective Statement Sign.

2. During the Ramp-Up Period each Manufacturer shall amend or supplement its
Participating Retailer Contracts to require Non-Kiosk Stores displaying Off-Set Promotional

Signage to display during the Implementation Period, in addition to any required Set-Adjacent

14
Corrective-Statement Signs, a single 144 sq. in. Off-Set Corrective-Statement Sign from one of
the Manufacturers placed in a highly visible location within 48” of the main customer entrance of
the Store, that can be seen by customers as they enter the store, and at least 48” above the floor.
Plaintiffs acknowledge Manufacturers’ Participating Retailer Contracts do not require
Participating Retailer Locations to place Off-Set Promotional Signage. A Participating Retailer
Location is not subject to the contractual requirement to place an Off-Set Corrective-Statement
Sign if it does not choose to display Off-Set Promotional Signage.

3. The Manufacturers represent that some Participating Retailer Locations have
expended costs for existing Semi-Permanent Displays that feature brand imagery. Any
Participating Retailer Location that has such a semi-permanent display that would not otherwise
be required to display an Off-Set Corrective Statement Sign may seek an exemption from the
requirements of Section II.2 from the Working Group. The Working Group shall grant an
exemption if it determines that (1) but for the semi-permanent display an Off-Set Corrective
Statement Sign would not be required in the Participating Retailer Location, and (2) it would be
unreasonable to expect the Participating Retailer Location to remove the semi-permanent display.
The request may be accompanied by evidence in addition to any statement that demonstrates these
points.

4. During the Ramp-Up Period each Manufacturer shall amend or supplement its
Participating Retailer Contracts to require Kiosk Stores to post during the Implementation Period
a single 144 sq. in. Corrective-Statement Sign near the sellng window, highly visible to the
customer, and that can be seen by customers as they approach or are standing at the selling window.

Placement of this Corrective-Statement Sign as a Set-Adjacent Corrective-Statement Sign will not

15
satisfy this requirement. If a Kiosk Store does not have a selling window, then the Corrective-
Statement Sign shall be placed in a highly visible location, that can be seen by customers as they
approach or are standing at the cashregister/point of sale, or in a location approved by the Working
Group prior to the start of the Implementation Period.

5. The Manufacturers represent that the forms of Participating Retailer Contracts most
recently provided to the Plaintiffs on March 30, 2022 and June 17, 2022 remain in use and will not
be amended or supplemented before the Implementation Period begins to diminish the
Manufacturer’s rights to (i) require Corrective-Statement Signs and noncompliance remedies in
accordance with this Order or (i) require any Participating Retailer Location to cooperate with In-
Person Audits. During the Implementation Period, all Participating Retailer Contracts shall contain
the provisions required by this Consent Order that (i) require Corrective-Statement Signs and
noncompliance remedies in accordance with this Order, and (ii) require any Participating Retailer
Location to cooperate with In-Person Audits, and the Manufacturers shall terminate any
Participating Retailer Contract as to which a Participating Retailer refuses to accept such
provisions.

6. Within 14 days of the Effective Date, each Manufacturer shall provide Plaintiffs
with all of its then-current Participating Retailer Contract forms. Thereafter, until the end of the
Implementation Period, any time a Manufacturer revises any Participating Retailer Contract form
or establishes a new form, the Manufacturer shall provide Plaintiffs with a copy of that
Participating Retailer Contract form no later than the first day such new or revised form takes

effect.

IV. Implementation Timeline and Signage Rotation.

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1. During the Ramp-Up Period, the Manufacturers shall print an equal number of each
of the 17 distinct POS Corrective Statements and begin to distribute Corrective-Statement Signs
to Participating Retailer Locations. The Manufacturers shall not distribute the Corrective-
Statement Signs in a manner that results in the concentration of any particular POS Corrective
Statement in any geographic region, chain of stores, or type of Participating Retailer Location. The
Manufacturers shall ensure that each Participating Retailer Location is provided with each
Corrective-Statement Sign(s) that it must display in order to comply with its contract and that no
Participating Retailer Location receives duplicate Corrective-Statement Sign(s).

Zs Manufacturers shall provide appropriate traming to their representatives who visit
Participating Retailer Locations, covering the existence and provisions of this Order. Manufacturer
representatives shall assist Participating Retailer Locations they visit in properly displaying
required Corrective-Statement Signs.

3. When a Corrective-Statement Sign is placed by a Manufacturer representative, the
Manufacturer representative shall submit photos to the Photo Database of (i) the main cigarette
Merchandising Set, (ii) any displayed Corrective-Statement Signs, and (iii) an example of Off-Set
Promotional Signage for Covered Brands displayed by the Participating Retailer Location, if any,
in as many images as are sufficient to show compliance with this Order.

4, For those Participatng Retailer Locations that a Manufacturer representative does
not visit during the Posting Period, the Manufacturers shall mail or otherwise deliver required
Corrective-Statement Signs to the Participating Retailer Location for posting. Upon posting the

required Corrective-Statement Sign(s) during the Posting Period, a Participating Retailer Location

17
not visited by Manufacturer representatives may, but shall not be required to, submit a photo of
the as-posted Corrective-Statement Sign(s) to the Photo Database.

5. Durmg the Rotation Period, each Corrective-Statement Sign required to be posted
in a Participatng Retailer Location shall be replaced with another Corrective-Statement Sign
bearing a different POS Corrective Statement than any POS Corrective Statement previously
displayed in that Participating Retailer Location. The Manufacturers shall not distribute the
Corrective-Statement Signs m amanner that results in the concentration of any one POS Corrective
Statement in any geographic region, chain of stores, or type of Participating Retailer Location. The
Manufacturers shall ensure that each Participating Retailer Location is provided with each
Corrective-Statement Sign(s) that it must display in order to comply with its contract.

a. When a Corrective-Statement Sign is rotated by a Manufacturer
representative, the Manufacturer representative shall submit photos to the Photo Database
of (i) the main cigarette Merchandising Set, (ii) any displayed Corrective-Statement Signs,
and (ii) an example of Off-Set Promotional Signage for Covered Brands displayed by the
Participating Retailer Location, if any, in as many images as are sufficient to show
compliance with this Order.

b. For those Participating Retailer Locations that a Manufacturer
representative does not visit durmg the Rotation Period, a Participating Retailer Location,
upon posting the required replacement Corrective-Statement Sign(s), may, but shall not be

required to, submit a photo of the new as-posted Corrective-Statement Sign(s) to the Photo

Database.

18
6. Any time that a Manufacturer representative visits a Participating Retailer Location
and determines that the location is not in compliance with the terms of this Order, the
representative shall counsel that Participating Retailer Location into compliance.

V. Audits of Manufacturer Compliance.

1. The Manufacturers shall contract at their own expense with an Auditor to conduct
audits of compliance with this Order in a manner consistent with the audit specifications set forth
below.

2. Prior to the start of the Implementation’ Period, each Manufacturer shall amend or
supplement its Participating Retailer Contracts to notify Participating Retailers that: (a) audits will
be conducted of compliance with this Order; (b) in connection with these audits, an Auditor may
visit the Participating Retailer Location one or more times to conduct an In-Person Audit; and (c)
the Participating Retailer Location has a contractual obligation to the Manufacturer to refrain from
interfermg with the In-Person Audit.

3. During the Implementation Period, there shall be four Audit Periods. Two Audit
Periods shall occur before the Rotation Period, and two Audit Periods shall occur after the Rotation
Period. No In-Person Audits shall occur during the Rotation Period. At the beginnmg of each Audit
Period, each Manufacturer shall provide a list of all Participating Retailer Locations to the Auditor
and shall provide copies of its list to Plaintiffs. The list shall specify which Participating Retailer
Locations are Kiosk Stores and, for all Participating Retailer Locations shall provide the name,
address, number of signs provided, and a unique identifier. The list shall also specify which
Participating Retailer Locations are Non-Kiosk Stores with more than 9-horizontal lear feet of

visible Merchandising Set space devoted to Covered Brands.

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4, Photo Audits.

a. The Auditor shall review photos submitted to the Photo Database during the
Posting Period and the Rotation Period on a rolling basis, and within 14 days of the
submission of a photo that suggests noncompliance with this Order, issue a Photo
Noncompliance Notice to the Participating Retailer Location and the Working Group
detailing the basis for such suspected noncompliance, and whether such noncompliance, if

confirmed through an In-Person Audit, would be Major Noncompliance or Minor

Noncompliance.
{
b. For a period of 30 days following the issuance of a Photo Noncompliance

Notice, the notified Participating Retailer Location may correct any compliance deficiency
by submittmg a new photo (subject to audit) to the Photo Database showing compliance or
by otherwise demonstrating to the Auditor that its display of Corrective-Statement Sign(s)
is compliant with this Order. If the Participating Retailer Location fails to demonstrate
compliance during the 30-day period following the issuance of a Photo Noncompliance
Notice, the Participating Retailer Location shall be added to the list for an In-Person Audit

im the Suspected Noncompliance Pool (subject to the limits on the audit sample set forth in

Section V.6.b, below).
5. Tip Line.

a. The Manufacturers shall require the Auditor to create a Tip Line for the
general public to report suspected noncompliance with this Order. The Auditor shall review
tips received from the Tip Line, and, if the Auditor determines that a Participating Retailer

Location may not be complying with this Order, the Auditor shall notify the Participating

20
Retailer Location and the Working Group of such suspected noncompliance and provide a
monthly report to the Working Group of all tips received.

b. Any Participating Retailer Location identified through the Tip Line as
suspected of noncompliance with this Order shall be added to the Suspected
Noncomplance Pool for the current Audit Period on a rolling basis (subject to the limits
on the audit sample set forth in Section V.6.b, below). Once the limit of the audit sample
set is reached or when there are less than 4 weeks remaining in the then current Audit
Period, whichever occurs first, a Participating Retailer Location identified through the Tip
Line shall be added to the list of Participating Retailer Locations eligible to be selected by
Plaintiffs for an In-Person Audit from the Suspected Noncompliance Pool for the next
Audit Period. Any Participating Retailer Location identified through the Tip Line and
suspected of noncompliance during the Rotation Period, and selected by Plaintiffs for an
In-Person Audit in the Suspected Noncompliance Pool, shall be added to the list for an In-
Person Audit in the Suspected Noncompliance Pool for the third Audit Period (subject to
the limits on the audit sample set forth in Section V.6.b, below).

Cr Any Participating Retailer Location identified through the Tip Line that
does not later receive an In-Person Audit during the current Audit Period shall be sent a
warning letter from the Auditor notifying the Participating Retailer Location that it was
identified through the Tip Line as suspected of noncompliance and reminding the

Participating Retailer of its obligations under its Participating Retailer Contract.

21
6. In-Person Audits. During each Audit Period, the Auditor shall conduct In-Person
Audits of Participating Retailer Locations drawn from two separate pools: the Representative
Sample Pool and the Suspected Noncompliance Pool.

a. Representative Sample Pool. The Auditor shall designate a Representative
Sample of 6,000 Participating Retailer Locations for In-Person Audit during each Audit
Period.

b. Suspected Noncompliance Pool. During each Audit Period, the Auditor
shall provide the Working Group notice of the Participating Retailer Locations included in
the Suspected Noncompliance Pool. In each Audit Period, the Auditor shall conduct an
In-Person Audit of up to 4,000 Participating Retailer Locations drawn from the Suspected
Noncompliance Pool. If there are more than 4,000 Participating Retailer Locations in the
Suspected Noncompliance Pool in any Audit Period, then prior to the beginning of each
Audit Period, Plaintiffs shall select the Participating Retailer Locations from the Suspected
Noncompliance Pool to be subject to In-Person Audit.

ce If the Auditor determmes that any Participating Retailer Location in the
audit sample is no longer a Participating Retailer Location, that Participating Retailer
Location shall be replaced in the audit sample with a Participating Retailer Location that
is (1) in the same United States Census Region or United States Territory and (ii) was
shipped a volume of Covered Brands of cigarettes in the last 12 months that is similar to
the Participating Retailer Location being replaced.

d. When conducting an In-Person Audit, the Auditor shall make all reasonable

efforts not to interfere with the Participating Retailer Location’s business activities and, in

22
any event, shall not interfere with the Participating Retailer Location’s business activities
any more than is necessary in order to take photos.

: The Auditor shall evaluate those photos taken during an In-Person Audit to
determine whether the Participatng Retailer Location is displaymg the Corrective-
Statement Signs required for that Participating Retailer Location by its revised
Participating Retailer Contract. The Auditor shall record any criteria that the Auditor
determined in good faith were not satisfied and, in the event of noncompliance, issue an
In-Person Noncompliance Notice to the Participating Retailer Location and Working
Group by email within 21 days of the In-Person Audit.

f. Once a Participating Retailer Location is selected for an In-person Audit,
either in the Representative Sample Pool or the Suspected Noncompliance Pool, the
Auditor shall not disclose the identity of selected Participating Retailer Locations to anyone
until after the completion of the In-person Audits, at which time the Auditor shall provide
a report to the Working Group on the findings of the audit, including the evidence
supporting such findings for each audited Participating Retailer Location.

7. Noncompliance Appeals.

a. An In-Person Noncompliance Notice will become a Final Determination of
Noncompliance 15 days after it is issued, unless there is a Noncompliance Appeal.

b. Within 14 days of issuance of an In-Person Noncompliance Notice, a
Participating Retailer Location or member of the Working Group may submit a

Noncompliance Appeal of the Auditor’s decision by email to the Working Group.

23
C. Within 7 days of receivmg Noncompliance Appeal, the Working Group
shall decide whether to affirm, vacate, or modify the In-Person Noncompliance Notice. If
the Working Group decides by the vote of a majority of the members of the Working Group
in attendance, mclding by proxy, to affirm, vacate, or modify the In-Person
Noncompliance Notice, it shall immediately, by email, notify the Participating Retailer
Location and the Auditor of its decision.

d. A decision on a Noncompliance Appeal of Minor Noncompliance Notice
made by the vote of a majority of the members of the Working Group in attendance,
including by proxy, ata meeting of the Working Group is final and not subject to appeal.

e. A Working Group decision adverse to the Participating Retailer Location
on a Noncompliance Appeal of Major Noncompliance Notice by the vote of a majority of
the members of the Working Group mm attendance, including by proxy, at a meeting of the
Working Group, may be appealed to the Adjudicator by the Participating Retailer Location
or a member of the Working Group by email within 7 days following the decision of the
Working Group.

f. If there is a tie vote of the members of the Working Group in attendance,
including by proxy, ata meeting of the Working Group regarding a Noncompliance Appeal
following either a Major Noncompliance Notice or Minor Noncompliance Notice, such
decision may be appealed by the Participating Retailer Location or a member of the
Working Group by email within 7 days following issuance of the decision of the Working

Group. A decision made by the Adjudicator following a tie at the Working Group of

24
Noncompliance Appeal of a Minor Noncompliance Notice shall be final and not subject to
appeal.

g. The Adjudicator’s decision on a Noncompliance Appeal of a Major
Noncompliance Notice is appealable to the Court by the Participating Retailer Location or
amember of the Working Group. Any such appeal shall be submitted within 7 days of the
Adjudicator’s decision. If the Adjudicator’s decision on a Noncompliance Appeal of a
Major Noncompliance Notice is adverse and the result of the Major Noncompliance Notice
is that the Participating Retailer Location must post an additional Corrective Statement
Sign or be subject to other non-monetary consequences, such sign shall be posted or other
non-monetary consequences shall occur during any appeal. No required financial payment
resulting from a Major Noncompliance Notice shall be due while an appeal is pending.

h. The Court’s standard of review for a Noncompliance Appeal decision made
by the Adjudicator shall be clear error, regardless of the basis for the appeal.

L Any Adjudicator decisions under this section must be issued within 14 days
of the conclusion of briefing to the Adjudicator.

j If a Participating Retailer Location establishes that it did not receive
Corrective-Statement Sign(s) from a Manufacturer at all, or in insufficient number to fulfill
the requirements of Section III above, or that the Corrective-Statement Sign(s) received
did not comply with this Consent Order, the Participating Retailer Location shall be
deemed compliant with the Participating Retailer’s contractual obligations to
Manufacturers under this Order. The Manufacturers shall immediately correct the issue

that caused the finding of noncompliance. Ifthe noncompliance was discovered during an

25
In-Person Audit of the Representative Sample Pool, the Participating Retailer Location
shall count as noncompliant for purposes of calculating the Representative Sample

Noncompliance Rate. This paragraph does not preclude considering contempt against a

Manufacturer.
VI. Result of Audit.
1. Minor Noncompliance. With respect to any Participating Retailer Location:

a. Upon the first Final Determination of an incidence of Minor
Noncompliance, the noncompliant Participating Retailer Location shall be counseled into
compliance by the Manufacturers.

b. Upon the second Final Determination of an incidence of Minor
Noncompliance upon, the noncompliant Participating Retailer Location shall be counseled
into compliance by the Manufacturers and receive a warning letter from the Auditor that
the third finding of Minor Noncompliance will result in the consequences described in
Section VI.1.c, below, as shall be set forth in all Participating Retailer Contracts.

ch Upon the third Final Determination of an imcidence of Minor
Noncompliance, the noncompliant Participating Retailer Location shall be counseled into
compliance by the Manufacturers and ‘shall be required to post an additional 144 sq. in.
Corrective-Statement Sign for 120 days in one of the locations provided in Section III.1.a

or III.2, above.

2. Major Noncompliance. With respect to any individual Participating Retailer

Location:

26
a. Upon the first Final Determination of an incidence of Major
Noncompliance, the noncompliant Participating Retailer Location shall be (i) counseled
into compliance by the Manufacturers and (ii) required to post an additional 144 sq. m.
Corrective-Statement Sign in one of the locations provided in Sections IJI.J.a or II1.2,
above, with such additional sign to be posted for the remainder of the Implementation
Period. Notwithstanding the foregomg, for Participating Retailer Locations that
Manufacturer representatives do not regularly visit and have not visited since the begmning
of the Posting Period, upon the first finding at such a Participating Retailer Location of
Major Noncompliance after an In-Person Audit, the noncompliant Participating Retailer
Location shall (i) be counseled into compliance by the Manufacturers and (ii) receive a
warning letter from the Auditor that subsequent findings of Major Noncompliance will
result in required payments.

b. Upon the second Final Determination of an incidence of Major
Noncompliance, the noncompliant Participating Retailer Location shall (i) be counseled
into compliance by the Manufacturers and (ii) owe to each Manufacturer with which it is
contracted a payment equal to any Price Promotion for Covered Brands owed to the
Participating Retailer Location by each contracted Manufacturer for a period of 4 weeks.
The Participating Retailer Location will have 4 weeks to either (1) make the payment to
each contracted Manufacturer or (ii) elect to have future payment under its Participating
Retailer Contract withheld until the amount of the payment is fully satisfied. In choosing
between paying the payment and having future payments withheld, a Participating Retailer

Location need not make the same choice with regard to each contracted Manufacturer. If

27
the Participating Retailer Location does not make the payment by the end of this four-week
period or elect to have payments withheld, the unpaid Manufacturers shall withhold future
payments owed to the Participatmg Retailer Location under the Participating Retailer
Contract(s) until the payment is satisfied. Once the payment is fully offset, the
Manufacturer(s) shall resume payments to the Participating Retailer Location, including
the remaining balance of any payment partially offset by the payment. The Participating
Retailer Location may pay the outstanding balance at any time even if Manufacturers have
started to withhold future payments.

C. Upon the third Final Determmation of an incidence of Major
Noncompliaance, the noncompliant Participating Retailer Location shall (i) be counseled
into compliance by the Manufacturers and (ii) owe to each Manufacturer with which it is
contracted a payment equal to any Price Promotion for Covered Brands owed to the
Participating Retailer Location by each contracted Manufacturer for a period of 13 weeks.
The Participating Retailer Location will have 4 weeks to either (i) make the payment to
each contracted Manufacturer, or (ii) elect to have future payment under its Participating
Retailer Contract withheld until the amount of the payment is fully satisfied. In choosing
between paying the payment and having future payments withheld, a Participating Retailer
Location need not make the same choice with regard to eachcontracted Manufacturer. If
the Participating Retailer Location does not make the payment by the end of this four-week
period or elect to have payments withheld, the unpaid Manufacturers shall withhold future
payments owed to the Participating Retailer Location under the Participating Retailer

Contract(s) until the payment is satisfied. Once the payment is fully offset, the

28
Manufacturer(s) shall resume payments to the Participating Retailer Location, including
the remaining balance of any payment partially offset by the payment. The Participating
Retailer Location may pay the outstanding balance at any time, even if Manufacturers have
started to withhold future payments.
d. Upon the fourth Final Determination of an incidence of Major
Noncompliance, the noncompliant Participating Retailer Location shall (i) be counseled
into compliance by the Manufacturers and (ii) be suspended for 17 weeks from the
Participating Retailer Contracts of each Manufacturer with which it is contracted. This
suspension period will begin 45 days after the Final Determination of such noncompliance.
3. The Manufacturers shall provide proof of satisfaction of additional signage required
by Section VI.1.c and Section VI.2.a, the monetary payments required by Section VI.2.b and
VI.2.c, and the suspension from the Participating Retailer Contracts required by Section VI.2.d to
the Auditor and the Working Group within 30 days after such actions were required to be
completed.

4, Monetary Penalty. If the Auditor finds a Representative Sample Noncompliance
Rate greater than fifteen percent (15%) in any of the first, second, or third Audit Periods, and such
finding is not subsequently revised below that threshold by challenges to the audit results, then the
Manufacturers shall pay a civil penalty to the U.S. Treasury of Three Million Five Hundred
Thousand Dollars ($3,500,000) to be apportioned among the Manufacturers as determined by the
Manufacturers. If the Auditor finds a Representative Sample Noncompliance Rate greater than
fifteen percent (15%) in the fourth Audit Period, and such finding is not subsequently revised

below that threshold by challenges to the audit results, then the Manufacturers shall pay a civil

29
penalty to the U.S. Treasury of Seven Million Five Hundred Thousand Dollars ($7,500,000) to be
apportioned among the Manufacturers as determined by the Manufacturers. The results of the In-
Person Audits of the Suspected Noncompliance Pool shall not be considered in determming

whether this monetary penalty provision has been triggered. Any payments under this Section shall

be made within 30 days of the penalty accruing.

VII. Working Group.

1. Plaintiffs and Manufacturers shall establish a Working Group to address
implementation and compliance questions and any individual circumstances that do not meet this
Order’s terms. The Working Group may begin fielding implementation questions upon the
Effective Date, shall continue providing assistance through the end of the remedy, and is
authorized to resolve Noncompliance Appeals as described herein.

2. Attendance of six members of the Working Group, with at least one member
representing, including by proxy, each of the Department of Justice, the Public Health Intervenors,
the Manufacturers, and the Retailer Groups, and attendance of the Mediator constitutes a quorum
for the transaction of business. By unanimous consent of the members of the Working Group
otherwise constituting a quorum, the absence of the Mediator may be excused. At any point during
any meeting, if less than a quorum is present, the meeting shall adjourn without further notice. A
member of the Working Group may participate in a meeting by conference telephone or other
remote communications equipment by means of which all persons participating in the meetmg can
communicate with one another. Participation in a meeting in this manner constitutes presence in
person at the meeting. A member of the Working Group may appoint a proxy, including another

member of the Working Group, to attend, participate, vote, or otherwise act for the member.

30
3. At any meeting of the Working Group at which a quorum is present, the vote of a
majority of the members of the Working Group in attendance, including by proxy, shall be the act
of the Working Group. A written record shall be kept of all acts of the Working Group.

4. The Mediator shall serve and the Adjudicator shall issue decisions, as follows:

a. The Mediator shall attempt to facilitate informal resolution of Working
Group disputes. If there is a tie vote of the members of the Working Group in attendance,
including by proxy, at a meeting of the Working Group, the Mediator shall vote on the
issue to break the tie.

b. The Adjudicator may be asked to hear Noncompliance Appeals on the terms
provided in Section V.7 above and to hear appeals from tie-breaking decisions of the
Mediator. The Participating Retailer Location, or the member of the Working Group
seeking the Adjudicator’s appellate review, may submit a brief at the same time as the
notice of appeal provided for in Section V.7.e-fabove. Any other member of the Working
Group or the Participating Retailer Location (if it is not the appellant) may submit a brief
in support of the appellant’s position within 3 business days of the appellant’s notice of
appeal. Any other member of the Working Group may submit a brief in opposition to the
appellant’s position within 7 business days of the appellant’s notice of appeal. Briefs
submitted to the Adjudicator pursuant to this paragraph may be no more than 5 pages. Any
Adjudicator decisions under this section must be issued within 14 days of the conclusion
of briefing to the Adjudicator.

c. Linda Singer, Esq. shall serve as the initial Mediator. The Honorable

Richard A. Levie (ret.) shall serve as the initial Adjudicator. Should the Mediator or

31
Adjudicator resign by notice to the Court and members of the Working Group or otherwise
become unavailable to serve, the Mediator or Adjudicator may be replaced by unanimous
agreement of the members of the Working Group to nominate a new Meditator or
Adjudicator, or, if the Working Group cannot so agree, by a replacement appointed by the
Court.

d. In the event that one of the Mediator or Adjudicator is temporarily unable
to serve, the other shall fill in for the unavailable individual on that issue; in such a
circumstance where the Adjudicator fills in for the Mediator on a specific issue, the
Mediator shall fill the Adjudicator’s role, if any, with respect to that specific issue. For the
avoidance of doubt, the Mediator shall not fill the Adjudicator’s role with respect to a
specific issue in which the Mediator issued a tie breaking vote at the Working Group level.

€. Manufacturers shall pay all fees and costs of the Mediator and Adjudicator,

allocated amongst Manufacturers as they see fit.

5. The Retailer Groups’ participation in the Working Group will be voluntary, and

their status as non-parties mvited by the Court to provide input will not change by virtue of this

Order or their participation in the Working Group. In the event either or both Retailer Groups opt

out of the Working Group, the Manufacturers shall fill the remaining spots on the Working Group

by appomting additional individuals to bring the total membership to 10.

VIII. Additional Provisions.

1. This Fourth Superseding Consent Order Implementing the Corrective-Statements

Remedy at Point of Sale modifies certain provisions of Order #1015. Where the terms of this

Fourth Superseding Consent Order differ from Order #1015, this Fourth Superseding Consent

Order will govern.

32
2. The Corrective-Statement Sign formats specified above and illustrated in Exhibit
A are intended to be comprehensive. No Manufacturer shall alter, modify, or add to the specified
elements of these formats, and no additional text, images, or other elements may be included,
absent approval of a majority of the Working Group or further Order of this Court.

3) The parties agree that, if the parties’ (Proposed) Fourth Superseding Consent Order
Implementing the Corrective-Statements Remedy at Point of Sale is approved by this Court
without modification, then the parties will not challenge on appeal this Fourth Superseding
Consent Order, and the specific implementation executions will commence on the schedule
specified herein, unless this Court orders otherwise. However, should the Court modify any term
or requirement in the parties’ (Proposed) Fourth Superseding Consent Order Implementing the
Corrective-Statements Remedy, no party waives or abandons any appeal or appellate rights or
argument, and the parties reserve the right to seek different requirements than those stated herein.

4. The parties agree to refrain from soliciting or supporting in any way any opposition
to this Order from any other person or entity, except by voluntarily providing requested relevant
information to another person or entity.

5. Defendants and the Remedies Parties’ agreement to these terms and to these
executions of the POS Corrective Statements prescribed by Order #72-Remand shall not be
deemed or construed as an admission of Defendants or the Remedies Parties, collectively or
individually.

6. Nothing in this Order shall be construed as precluding any other relief provided by

law, including a finding of contempt.

33
7. Should there be any stay of the implementation of this Order, any party may petition

the Court to vacate this Order and nullify the settlement. Should the Court do so, it will then set

this matter for the evidentiary hearing that was previously scheduled to begin on June 13, 2022, at

the soonest opportunity.

8. This Fourth Superseding Consent Order is the complete agreement of the parties as

to the point of sale remedy and supersedes any prior negotiations, agreements, or understandings

of the parties as to the parties’ agreement. The terms of this Order cannot be modified or amended

without written consent by all parties.

SO ORDERED.

DATED: Dser~wby- & 2029

Oi Zhe

PAULL. FRIEDMAN
US. District Judge

We consent to entry of the above superseding consent order:

Respectfully submitted,

34

BRIAN M. BOYNTON

Principal Deputy Assistant Attorney General
Civil Division

LISA K. HSIAO, Assistant Director
Consumer Protection Branch

/s/

 

ADAM E. LYONS

Assistant Director

DANIEL K. CRANE-HIRSCH
JAMES T. NELSON

Senior Trial Attorneys
ZACHARY A. DIETERT
MEREDITH B. HEALY
35

Trial Attorneys

Civil Division

United States Department of Justice
PO Box 386

Washington, DC 20044-0386
Telephone: 202-532-4406 (Lyons)
adam.e.lyons@usdoj.gov

Attorneys for Plaintiff United States of
America

/s/

Scott P. Lewis (pro hac vice)
slewis@andersonkreiger.com

Melissa C. Allison (pro hac vice)
mallson@andersonkreiger.com

Christma S. Marshall (D.C. Bar # MA0022)
cmarshall@andersonkreiger.com
ANDERSON & KREIGER LLP

50 Milk, 21st Floor

Boston, MA 02109

Telephone: 617-621-6500

Fax: 617-621-6660

Attorneys for the Public Health Plaintiff-
Intervenors

/s/

Miguel A. Estrada (D.C. Bar No. 456289)
Amir C. Tayrani (D.C. Bar No. 490994)
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5306
Telephone: (202) 955-8257

Fax: (202) 530-9016
mestrada@gibsondunn.com

atayrani@ gibsondunn.com

George C. Lombardi
WINSTON & STRAWN LLP
35 W. Wacker Drive

Chicago, IL 60601
36

Telephone: (312) 558-5969
Fax: (312) 558-5700
glombard@wmston.com

Attorneys for Defendants Altria Group, Inc.
and Philip Morris USA Inc.

/s/

John M. Gore (D.C. Bar No. 502057)
Jon G. Heintz (pro hac vice)

Jones Day

51 Louisiana Avenue, N.W.
Washington, D.C. 20001-2113
Telephone: (202) 879-3939

Fax: (202) 626-1700
jmgore@jonesday.com
jhemtz@jonesday.com

Jeffrey A. Mandell (D.C. Bar No. 999791)
Stafford Rosenbaum LLP

222 West Washington Avenue, Suite 900
Madison, Wisconsin 53703

Telephone: (608) 256-0226

Fax: (608) 259-2600
jmandell@staffordlaw.com

Attorneys for Defendant R.J. Reynolds
Tobacco Company (individually, as
successor in interest to Brown & Williamson
Tobacco Corporation, and as successor to
Lorillard Tobacco Company)

/s/

Elizabeth B. McCallum (D.C. Bar No.
451361)

BAKER & HOSTETLER LLP

1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5304
Telephone: (202) 861-1500

Fax: (202) 861-1783

 

Attorneys for Post-Judgment Parties
Regarding Remedies ITG Brands, LLC,
Commonwealth Brands, Inc. and
Commonwealth-Altadis, Inc.

Exhibits
Exhibit A—Revised Style Guide for Corrective-Statement Signs (including Spanish language)

Exhibit B—Examples of Major/Minor Noncompliance

37
Exhibit A
ce] 0} }p) a eo re) ere] U) ante) 51h) 4 oe ele) 1, en a AYA te
Wh eed) ee OO) ey

JU hyd O)-472

 
Case 1:99-cy-02496-PLF Document 6507-1 Filed 07/15/22 Page 3 of 18

TABLE OF CONTENTS
3 Overview
4 POS Corrective-Statements Signs Architecture
7 POS Corrective-Statements Signs Elements / English
10 POS Corrective-Statements Signs Elements / Spanish
13 POS Corrective-Statements Signs Size Variations

15 General Rules

ee ee eee eet ei

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 4 of 18

OVERVIEW

A Federal Court Order requires “POS Corrective-Statements Signs” to be displayed with certain cigarette
merchandising sets and off-set cigarette marketing material at retail points of sale.

These guidelines explain the POS Corrective-Statements Signs’ design and display.

All POS Corrective-Statements Signs must comply with these guidelines.

|] SU Rte Ea ee a a tee |

 
oa Oh O10) 51 Oa AYA Soe PW oh) TCT Po -V ed | em U4 a

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 6 of 18

POS CORRECTIVE-STATEMENTS SIGNS ARCHITECTURE

This is the basic architecture of the POS Corrective-Statement Sign. Although the substantive statements vary in length, the containers in which they are presented
should all follow these instructions. The asterisk icon is always on the left side of the POS Corrective Statement, and the preamble is always in an aqua blue box that is
designed at 25% of the entire container. There are two versions of the preamble, The POS Corrective-Statements Signs come in two sizes - 348 and 144 square inches

- in both a rectangular and square orientation.

-. AFEDERAL COURTHAS ORDERED.
Preainbie~

es

R.J, REYNOLDS TOBACCO & PHILIP MORRIS USA TO STATE:

Ee

   

Asterisk [con

Syoeke) chelem Gal Mey MW crac tes
Substantive Statement Box . pele) yNasate-tele at, NA

POS Corrective-Statement Sign

Preamble Box

Note: All preamble boxes
have been sized at 25% of
the container's total area

Substantive Statement

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 7 of 18

POS CORRECTIVE-STATEMENTS SIGNS DESIGN / TYPOGRAPHY / COLOR PALETTE

/AFEDERAL COURT HAS ORDERED Helvetica Bold used for the preamble.
‘Rw. REYNOLDS TOBACCO &
PHILIP MORRIS USA TO STATE: ABCDEFGHIJKLMNOPQRSTUVWXYZ

mt reat Tisa Pro Bold used for the factual statements.
aaeenee = ABCDEFGHIJKLMNOPQRSTUVWXYZ
Ricrbap eceermcyeolel cat etes

Pevaetayneane ere abcdefghijklmnopqrstuvwxyz 0123456789! @#%&"*(,.:"2)
yVGDMeuita timate

revere ts Cee Tate Tisa Pro Black used for the words of a factual statement that show in heavy type.
Fda euler ti ty: A ABCDEFGHIJKLMNOPQRSTUVWKYZ
abcdefghijklmnopaqrstuvwxyz 0123456789! @#%&*(,.:"?

 

Color Palette i

s

 

= Aqua Blue Magenta Rich Black 4c
; ; . ; ; '

POS Corrective-Statements Signs use : coe cle oe
. M: 0 M: 94 M: 30
this color palette. YT ¥: 26 ¥:30
KO K:0 K:100

R119 R: 209 RO

G: 205 G50 Go

B: 214 B:119 BO

eee eer seater eed eee

 
a b= O10] 5 45d OM AY Sebo | a ed Cd bee 1) ao) ]

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 9 of 18

PREAMBLE VARIATIONS / ENGLISH

There are two versions of the preamble in English.

Preamble One / English

 

Preamble Two / English

 

 
od SSuke) trea att Cee tesco

SPPLolew ate e Me ch are

BTiite atime ete etg act tes ey
Betts] SMA CCU lah iaebattg
prem coerTeaen

IRN Sere ene C ALT STN
Cg eM eee ect ea ay
Cd cae ne eer eet Crea eee nC
Siem rcys

eee ere eee ree

aT Nee eee UCM ern ae ose ty
Carrere a ert an ens Ce eS eesti

el OS Rey he ete aS Uae tls ee

Roe UEC ert te Mee Tey

Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 10 of 18

17 POS CORRECTIVE-STATEMENTS SIGNS / ENGLISH

There are 17 versions of the POS Corrective-Statements Signs in English.

(er atte eee nee tecnica ht
CEU actu see Nees CAC ee
Ore H ORT elo Ar Te A

lahat be
PORT maples a eT
Bit Cscel Cit coal cE Se TCR SUCT STOLE TCs b Toe Co

a RR Me tu ake el eto Teme aC
CeO Ln om Uae Cee Gen tol ae
Berar oU ecco au Erase Ie esd

eu rea Aone mates
LCTsLaose Teer Vite RTeats)

MSc eee Coat er ae

Pan at nt UL eee Td
DCU act CE Ue ge CS COU
TCLs Ee Oona euareG

walel arty imce ne LU a

PN eaten trees Urs tet a eee
Werusiers cen ener eal eet ish
SES LAE a an See UTE Cn atc 9
PRE Cea [unt cea

RITE RST) Mat Rah t( sg
kEMelelew Vii ete-lete td Bit a

SINC CUES Meso e ee crash 5
tearm Can eer TEL |
CET am ea

AARC cme ml Celery
Caer Mast ee dee ose ee dar ary
SUC ido) Tea Caco LET

EY Grr ORL ovm PMN team eral Cec Reta
SIU DaTeReSy Men see a ett

Sree ar aaa tree ean

Bray etePheTeCees pete) cer CUeyacm (Lbs
Pikes eet Sal ae
PES em ye OM CS TLC

 
ed O b= 00) 515d Oa ANA SW a ee) ed bo od od od

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 12 of 18

 

There are two versions of the preamble in Spanish,

Preamble One / Spanish

 

 
17 POS CORRECTIVE-STATEMENTS SIGNS / SPANISH

There are 17 versions of the POS Corrective-Statements Signs in Spanish.

PUES ULM rece as elem we eLele)
Coe rets Tbe eT om OE te MLC

REET ru COCR LCE YS aaa
RG Sees Cree erst a cee

Pret Oe eA ee eRe Lat tae Cod

Case 1;:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 13 of 18

EUR SUC en See RET!

Pree CR TRCN rents ets eeree

Pont a een Ene CRT tea?

SAT tigen Cer Meo Cage
CCAR Wt CCUMei on eno uecratiit
DEC Ue ee Dee Ue mcg tes

 

Lait yare lect aese (eta kta
Matec erp CRs bee m (aan

pesos eS Glan

 

 
  
 
 
    
 
    

Re NSste Ne]

 

Perea roiie ta acco eis atl es
PeCnr neni Reine tos atin erst)
ETUC CRs nt rie wean Run ten tad
Perea

Reed CeCe ete Rc

 

SETS at Cri al

  

EO eur Encore

 

TS EPEC en Pe ce

ROC CMR Cer Ces nett

 

FUROR lle nn

New cla tee ve
Cw albent.bm

Breer Sau eee res eee ene Ee)
PEER Sv eee te Cee
PEST eect CPR eE OL Eat Csitart sry

TREC ee Tse gn Se

POR Che DEC tte cr te1|
Tie em Bec ee CRT sHelele)
retiree tee Otto

Parent Chie EMA RT eaoleee: Cees ite)
rare eee ee PAU se ts)
Pen cuie cs ra-Ce iets

FNCTERS Moura etree ery ei ont
VOR LY. oe eS ae eae era Co Te

Sra CA COS ere Cte aoy

CeCe Econ nceis keter kets
Penna enue Coke tenner}
Ecce enue ny

 
ek Ob O80] 5 001 HOM AA NW a) 1d PN WO) bs

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 15 of 18

POS CORRECTIVE-STATEMENTS SIGNS / SIZE VARIATIONS

The images below are representations, that show some distortion, and are not actual size. Final outputs should be printed at 100% for in-store placement. The
preamble box is designed at 25% of the container's total area.

348 SQ INCH
A FEDERAL COURT HAS ORDERED Note: All preamble boxes have been sized

Pe Rote tecaeeee-titectete tam (teteme (erat Cam
Vea Lae- td cede eyes) tee Wanvacmecsrtd Ot bed ol ee

Ad ‘REYNOLDS TOBACCO & at 25% of the container’s total area.
PHILIP MORRIS USATO STATE:

ele vemel Cae Wit a ecm CeCt er talte| CoM Cte ey
PORT Ka (e144 ce

 

Oyo ek
5 eXelo)

32" X 10,875"

yNatsetechity

ENA
Ss A 144 SQ INCH

 

AFEDERAL COURT HAS ORDERED
oy  Pbllkte Moneta
BL RerHbkbe TpeAgEO TO SINE

PHIL MORRIS USA 4 fi. TEYNGLOG TOBAGGO TD STATE:

s. COT Teaem Cure ies ee Ubi
Co Eotettimatceeacemna lems U ered Ue

PetCo Ra NEU REEL tde cele

   

18.655" X 18.655"

WU Gy tems Cae: CCL
STL e odes MSC Lotte

DU Ei Bice Clay
PUBL Ree Cate Lats 20" X 7.2"
Penta see

 

Filmy e

12" X 12"

 
©) A Yn 0

 
Case 1:99-cv-02496-PLF Document 6507-1 Filed 07/15/22 Page 17 of 18

POS CORRECTIVE-STATEMENTS SIGNS / INCORRECT USAGE

POS Corrective-Statements Signs must be printed
on (i) 1Bpt - 20pt card stock or material with similar

durability and stiffness or (li) vinyl or material with

similar durabillty and stiffness. Oh leis | + 2 or rh
Pet en Scie) AY UME U aT
ESE Sts AUER Curent (i
eoEety) :
Incorrect Usage i ha aed

1 Never change the colors
2 Never rotate the corrective container
3 Never distort the proportion

4 Never add a drop shadow

S Never add type elements CARR ES
Cenr ew et Crete
6 Never change the opacity hoch Dems ir EY ;
7 Never change the artwork to include a graphic frame.