6175-6: Exhibit 6: DECLARATION OF MARK F. RUTLEDGE (R. J. Reynolds Tobacco Company)

November 11, 2015 6:54 pm by Gene Borio

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EXCERPT:

It is my understanding that Reynolds agreed to the deadlines regarding implementation of the corrective statements in the June 2, 2014 Consent Order in reliance upon the parties’ agreement that implementation would be held in abeyance during the pendency of available appeals. One significant consideration in that regard was the time such appeals would provide to manage the extremely complex, lengthy, time-intensive, and costly process of implementing the corrective statements across the media ordered by the Court. Another significant consideration in that regard was that the text of the corrective statements, if approved by the appellate court(s), was known to us.

Consequently, the Plaintiffs’ current proposed revisions to the Consent Order-including, but not limited to, the revised text of the corrective statements, the elimination of a stay pending appeal-materially affects the current implementation deadlines proposed by Plaintiffs.

1. Reynolds does not know at this time, and will not know until the Court rules, what the text of the corrective statements will be. As explained in detail below, this uncertainty affects our ability to achieve the deadlines for initiating implementation proposed by Plaintiffs. Further, were the Court to alter the previous agreement to stay implementation pending appeal, the elimination of that incremental time during appellate proceedings, which Reynolds has relied upon being available to implement the corrective statements, potentially affects our ability to achieve the deadlines for initiating implementation. In addition, were the Court to enter an order in the form proposed by Plaintiffs and that order is subsequently rejected or modified by the appellate court, Reynolds would incur significant costs in terms of employee time, fees and expenses, and disruption of business operations. Many of those costs incurred before the appellate ruling would not only be lost, but also have to be incurred again when the final text of the corrective statements is determined.

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FULL TEXT:

EXHIBIT 6
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

and

TOBACCO-FREE KIDS

ACTION FUND, et al.

Plaintiff-Intervenors

v.

PHILIP MORRIS USA INC., et al.,

Defendants,

and

ITG BRANDS, LLC, et al.,

Post-Judgment Parties Regarding Remedies.

Civil Action No. 99-CV-2496 (GK)

Next scheduled court appearance: NONE

DECLARATION OF MARK F. RUTLEDGE

MARK F. RUTLEDGE, being duly sworn, deposes and says:

1. I am Director Consumer Marketing, of R.J. Reynolds Tobacco Company (”Reynolds”). Reynolds is a wholly-owned indirect subsidiary of Reynolds American Inc. Reynolds is the second largest tobacco company in the United States and manufactures about one out three cigarettes sold here. The company’s cigarette brands include Camel, Newport, Pall Mall, and Doral.

2. I have been employed by Reynolds since 1998. In my current position, among other things, I have responsibility for regulatory compliance in the marketing of Reynolds’ cigarette brands. I am knowledgeable about the marketing process and operations, Reynolds’ marketing development and operations, and allocation of marketing personnel and financial resources. I have a bachelor’s degree from Appalachian State University and a Masters of Business Administration from Wake Forest University.

3. My statements in this declaration are based upon my personal knowledge, education, training, experience, and judgment as an executive of Reynolds as well as information provided by others at my direction.

4. I have reviewed Exhibit 3, entitled “Redline comparison of the Court’s June 2, 2014 consent order against The United States’ proposed order,” to Plaintiffs’ legal brief entitled “United States’ Opening Brief in Support of United States Proposed Corrective Statements,” filed October 21, 2015. This exhibit proposes numerous revisions to the June 2, 2014 Consent Order entered by this Court, but retains the essential deadlines imposed in that order relating to the implementation of the corrective statements across the following media: newspapers, television, branded and corporate websites, and brand packaging onserts. Exhibit 3, however, eliminates the previously negotiated and ordered stay on implementation of the corrective statements pending exhaustion of appeals by Reynolds and other defendants. Ex. 3 at p. 7 (deleting definition of “Trigger date”).
5. It is my understanding that Reynolds agreed to the deadlines regarding implementation of the corrective statements in the June 2, 2014 Consent Order in reliance upon the parties’ agreement that implementation would be held in abeyance during the pendency of available appeals. One significant consideration in that regard was the time such appeals would provide to manage the extremely complex, lengthy, time-intensive, and costly process of implementing the corrective statements across the media ordered by the Court. Another significant consideration in that regard was that the text of the corrective statements, if approved by the appellate court(s), was known to us.

Consequently, the Plaintiffs’ current proposed revisions to the Consent Order-including, but not limited to, the revised text of the corrective statements, the elimination of a stay pending appeal-materially affects the current implementation deadlines proposed by Plaintiffs.

6. Reynolds does not know at this time, and will not know until the Court rules, what the text of the corrective statements will be. As explained in detail below, this uncertainty affects our ability to achieve the deadlines for initiating implementation proposed by Plaintiffs. Further, were the Court to alter the previous agreement to stay implementation pending appeal, the elimination of that incremental time during appellate proceedings, which Reynolds has relied upon being available to implement the corrective statements, potentially affects our ability to achieve the deadlines for initiating implementation. In addition, were the Court to enter an order in the form proposed by Plaintiffs and that order is subsequently rejected or modified by the appellate court, Reynolds would incur significant costs in terms of employee time, fees and expenses, and disruption of business operations. Many of those costs incurred before the appellate ruling would not only be lost, but also have to be incurred again when the final text of the corrective statements is determined.

Newspaper (Print and Online) and Television Placement of Corrective Statements

7. The work necessary to implement newspaper (print and online) and television placement of the corrective statements is significant. The work relates to development of the content to be provided to the media outlets, determination of appropriate placement on broadcast media, contracting, third-party placement approval processes, scheduling, and many other related matters. The organization and implementation of these activities will be quite time-consuming and expensive, and it will distract employees from other regular activities necessary for the conduct of business operations. Given that the text of the corrective statements that will be ordered by the Court remains unknown to Reynolds, many of these activities cannot be reasonably commenced until the Court issues an order specifying the text so that creative executions of the Court-prescribed text can be developed. Moreover, the steps described above (e.g., contracting with third-party media outlets) cannot reasonably commence until the implementation schedule is known. Further, if this effort were to begin and there were to be a subsequent determination by the appellate court that the text of the corrective statements must be revised again, the bulk of this effort will have been wasted, which means that various fixed costs already expended on the corrective statements will be lost. I would estimate that hundreds of hours of time would be expended by Reynolds employees and third-party vendors who will assist Reynolds with various aspects of planning and implementation, and that fees and costs associated with that work would be at least seven million dollars-and possibly millions more-a significant portion of which cannot be recouped. Those estimates include costs to generate content for TV and newspaper publications, to arrange for placement in those publications, and to make

media buys that cannot be readily rescheduled, particularly when it is unknown when they must be rescheduled.

8. At the point that the Court starts the implementation clock, we have as few as seven weeks to be ready to implement the corrective-statements remedy across all of our covered websites, in more than 40 print newspapers (as well as their websites), and during television programs that meet the implementation specifications. The first implementation obligation, chronologically, is print and online newspaper publication, which is the 8th Sunday after that order. And, for those newspapers that do not publish Sunday editions, publication must occur on the Friday immediately preceding the 8th Sunday. So, were this Court to issue its order on a Friday, publication would be required to occur exactly seven weeks later (the Friday preceding the 8th Sunday after the order).

Even if this Court were to issue its order on a Monday, publication would really be seven-and-one-half weeks after that. Thus, although Plaintiffs’ proposed order poses deadlines based on the eighth week after the date on which the implementation clock begins, more likely than not we will have several fewer days (and maybe even a full week less) than the stated eight-week period. This is a very short period of time, given the volume of work that must be done and the need for some aspects to be complete before the next aspect can be undertaken. Moreover, if the Court enters the order during December, owing to the numerous holidays (and long-scheduled vacations), at least a week is lost for many employees and third-party vendors who would need to be involved in the implementation process. Even if the relevant Reynolds employees and third-party vendors are available throughout the holiday season, that does not guarantee that they can reach their necessary counterparts at newspapers, television networks, agencies, etc.

9. It is worth noting that Reynolds does not currently advertise in newspapers or on television and has not done so for many years. Broadcast advertising of cigarettes was banned effective January 2, 1971. As a result, Reynolds does not have established contractual relationships with the outlets in which we are required to publish the corrective statements, nor routine procedures for preparing and executing publications in these media. Managing these media placements will thus involve tasks outside of the normal business activities of Reynolds’ employees and media agencies.

10. Additionally, for each media channel-print newspapers, online newspapers, television, and covered websites-we will need to create, edit, refine, proofread, finalize, and implement corrective-statements publications that meet the specifications unique to each media channel within that short window.

11. For print newspapers, all of the following will need to be done:

a. Reynolds or its agency will need to contact each of the newspapers specified in the Consent Order to obtain advertising rates, negotiate placement, contract, and receive the necessary specifications for advertising in their publication. If any of the newspapers is no longer in operation, or will not accept the corrective-statements publications, Reynolds will need to coordinate with the other Defendants and Plaintiffs to identify an alternative newspaper in approximately the same market.

b. Some of these newspapers, on information and belief, may need to modify the number of pages that they ordinarily run to accommodate the full-page placement specified in the Consent Order for the corrective-statement publications. This would add to the complexity and cost-for Reynolds and the newspaper-of such placements, which will also likely affect the timing of securing and finalizing the

placement. Additionally, our media agency reports that at least one daily newspaper has indicated that it may not accept placement of the corrective-statement publications because it does not run advocacy advertisements. These are merely illustrative examples of the kinds of complications that are entirely external to Reynolds’ operations and may slow implementation.

c. For those newspapers that utilize the 11.55″ x 21″ layout specified in the Consent Order, Reynolds will need to create mockups to reflect the text ordered by the Court and to create print-ready layouts that adhere to all of the requirements in the Consent Order.

d. For those newspapers that utilize a format other than the 11.55″ x 21″ layout, Reynolds will need to create print-ready layouts for the corrective statements that adhere to the requirements in the Consent Order.

e. Each corrective statement must be checked against the Court’s orders, proofread, and finalized separately for each of these print-ready layouts. This will likely require attention from Reynolds employees, in-house counsel, outside counsel, and Reynolds’ media agency.

f. Reynolds employees and/or Reynolds’ media agency must submit the print-ready layouts to each newspaper sufficiently far in advance to meet the newspapers’ requirements for review and approval. Ifthere are any issues or questions, Reynolds employees and/or Reynolds’ media agency will need to update and resubmit the print-ready layouts to the affected newspapers. Reynolds and its media agency obviously cannot control how much time the newspapers require to modify their schedules to accommodate these messages.

g. Reynolds employees and Reynolds’ media agency must create and implement a system to document compliance with the Consent Order.

12. For online newspapers, all of the following will need to be done:

a. Reynolds or its agency will need to contact each of the newspaper website departments to obtain advertising rates, negotiate placement, contract, and receive the necessary specifications for advertising on their website. Ifany of the newspaper websites is no longer in operation or will not accept the corrective statements within the specifications consistent with the principles of the Consent Order, Reynolds will need to coordinate with the other Defendants and Plaintiffs to select an alternative newspaper website in approximately the same market. Additionally, our media agency reports that at least one daily newspaper and at least one community newspaper have been entirely non-responsive to requests for website ad rates and specifications. These are merely illustrative examples of the kinds of complications that are entirely external to Reynolds’ operations and may slow implementation.

b. For each newspaper website, Reynolds’ media agency will need to determine whether the placement will be aligned horizontally or vertically.

c. For newspaper websites that will utilize the horizontal alignment specified in the Consent Order, Reynolds will need to update its mockups to reflect the text ordered by the Court and to modify those mockups into online layouts that adhere to all of the specifications in the Consent Order.

d. For all newspaper websites that will utilize the vertical alignment specified in the Consent Order, or cannot accommodate the precise specifications set

forth in the Consent Order, Reynolds will need to create online layouts for the corrective statements that are consistent with the principles of the Consent Order.

e. Reynolds and its media agency will need to prepare the corrective statements in each of the formats required by one or more newspaper websites (e.g., Flash, JavaScript, GIF), or if none of the foregoing, an acceptable format that can be accommodated.

f. Each corrective statement must be checked against the Court’s orders, proofread, and finalized separately for each of these print-ready layouts. This will likely require attention from Reynolds employees, in-house counsel, outside counsel, and Reynolds’ third-party media vendors.

g. Reynolds employees and Reynolds’ media agency must submit the print-ready layouts to each newspaper website sufficiently far in advance to meet the newspaper website’s requirements for review and approval. Ifthere are any issues or questions, Reynolds employees and vendors will need to update and resubmit the print­ ready layouts to the affected newspaper websites. Reynolds and its media agency obviously cannot control how much time the newspaper websites require to modify their schedules to accommodate these messages.

h. Reynolds employees and Reynolds’ media agency must create and implement a system to document compliance with the Consent Order.

13. For television, all of the following will need to be done:

a. Reynolds and its media agency must create television spots for each of the five corrective statements reflecting the text that will be ordered by the Court and that feature the appropriate permutations of message attribution (presumably, either

in the preamble consistent with Plaintiffs’ proposal, or at the conclusion of the statement, consistent with the Consent Order and the Manufacturers’ proposal). Reynolds and its media agency must ensure that every corrective statement is in whatever format is necessary for use by different network and/or cable channels.

b. Reynolds and its media agency must obtain ratings data for the most recent three-month period and evaluate that data to identify the “Benchmark Timeslot,” as defined in the Consent Order, and determine what, if any, time slots on networks other than ABC, CBS, and NBC, meet the Consent Order’s specifications regarding placement of the corrective statements.

c. Reynolds and its media agency must contact the specified networks on which the company must disseminate the corrective statements to obtain rate information and seek approval of the statements for broadcast. Ifany network has questions or concerns about the corrective statements, Reynolds and its media agency will need to work with that network or channel to resolve those concerns.

d. Reynolds and its media agency must negotiate and contract with the specified networks to obtain time during those timeslots or in backup timeslots. Such negotiations themselves will be impacted by numerous factors, including the length of the corrective-statement spots. In this regard, I understand that there is some uncertainty related to the revision of the corrective-statements text. The Manufacturers’ proposed text is shorter than the text ordered by the Court in 2012. As a result, the Manufacturers have proposed that, if their proposed text were adopted by the Court, each of the corrective statements could be effectively communicated in a thirty-second spot. By contrast, based upon the text ordered by the Court in 2012, the Consent Order provides for some of the

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spots to be forty-five seconds long and some to be thirty seconds long. On information and belief, the duration of the corrective statements-and of the television spots-will affect the process of scheduling the Court’s corrective statements. Ifone or more of the corrective-statements spots will run forty-five seconds, it will not fit within the thirty­ second time slot typical for most television commercials. On information and belief, scheduling spots that do not fit within the thirty-second time slot is a more complicated and time-consuming process than scheduling thirty-second spots. Reynolds and its media agency obviously cannot control how much time the media providers require to modify their schedules to accommodate these messages. Further, the fact that the final text of the corrective statements is unknown at this point exacerbates the process significantly, since it is impossible at this point to begin the planning process with any degree of confidence regarding what may be ultimately required regarding the text (or length) of these statements.

e. Reynolds must notify Plaintiffs of the timeslots that Reynolds has contracted for during the first two-weeks of the implementation period and provide appropriate substantiation that those timeslots comply with the specifications in the Consent Order. Reynolds and its media agency must subsequently implement a system to repeat this process twenty-five more times during the one year for which we must publish the corrective statements on television.

f. Reynolds and its media agency must create and implement a system to document compliance with the specifications of the Consent Order, and notification of Plaintiffs, for its television publications of the corrective statements.

Reynolds’ Covered Websites

1. For Reynolds’ websites covered by the Consent Order, all of the following will need to be done:

a. Reynolds will need to contact the various third-party vendors who design and maintain our various covered websites and tell them that they need to code the covered websites to comply with the Phase 1 obligations specified in the Consent Order.

b. For the Reynolds’ corporate and Reynolds’ document websites, Reynolds must have the relevant vendors prepare to implement onto our live websites the mockups that we have previously created, updated for any changes to the corrective­ statements text as ordered by the Court, and load changes into the computer systems that implement changes to those websites. This will require work by Reynolds employees, i n­ house counsel, outside counsel, and third-party website vendors. Since the current final text is unknown, it is impossible to commence this work until the Court issues a final order. If, on appeal, the text is modified further, all of the work (and expense) described here and below to modify these websites will be lost since it will have be repeated with the new text.

c. For Reynolds’ branded websites, Reynolds must have the relevant vendors prepare to implement the final corrective statements. Certain Reynolds brands have multiple versions of their websites. Further, for each of these branded websites, Reynolds must program changes into the computer systems that implement changes to those websites. This will require work by Reynolds employees, in-house counsel, outside counsel, and third-party website vendors. In short, there is a significant amount of work, and expense, involved, and this work is text-specific to the final corrective statements.

Since the current final text is unknown, it is impossible to commence this work until the Court issues a final order. If,on appeal, the text is modified further, all of the work (and expense) described here and below to modify these websites is lost, because it will have to be repeated to accommodate the updated text and any necessary design changes.

d. Reynolds will also need to create and implement a system to document that all covered websites are in compliance with the specifications i n the Consent Order from the time that implementation takes effect.

e. Because Reynolds’ branded websites are subject to frequent modifications, Reynolds must also work with the third-party vendors who design and maintain our branded websites to ensure that every time we update or alter the design or content of a covered website, doing so does not interfere with the specifications in the Consent Order for publication of the corrective statements on covered websites.

Corrective Statement Implementation Timing

15. To my knowledge, Reynolds’ prior agreement to the June 2, 2014 Consent Order was predicated, in part, on knowing both the text of the corrective statements prior to the “Trigger Date” and the agreement of the parties and Court that that the “Trigger Date” would not occur prior to the end of the appellate process. As explained above, Reynolds knew that even after the trial court entered an implementation order, it would have significant time-corresponding with stages of the appellate process-to plan for implementation. Now, Plaintiffs have asked the Court to abandon that agreement and order the implementation clock to start simultaneously with issuing an order setting forth the text of the corrective statements. This puts Reynolds i n a substantially worse position with respect to implementation than we were in when we agreed to the timeline set forth

in the June 2, 2014 Consent Order and jeopardizes our ability to comply with the deadlines set forth in the Consent Order.

16. All of these factors contribute to my conclusion that, were the Court to start the implementation clock simultaneously with issuing an order setting forth the text of the corrective statements, without honoring the agreement, reflected in the Consent Order, to delay implementation until the conclusion of all appeals on the corrective- statements remedy, Reynolds would incur substantial burdens, as detailed above.

17. Based on the foregoing, and on information and belief, Reynolds would incur significant costs in employee time, third-party vendor time, and actual costs measuring in the millions of dollars, were it required by the Court to implement corrective statements that were subsequently revised based upon further appellate proceedings in this matter.

I declare, under penalty of perjury, that the foregoing is true and correct. Executed on November 11, 2015, in Winston-Salem, North Carolina.

Mark F. Rutledge

Director of Consumer Marketing

R.J. Reynolds Tobacco Company

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