updated 12/22/2005 4:22:50 PM ET 2005-12-22T21:22:50

The California Supreme Court on Thursday overturned a $14.8 million state fine levied against the R.J. Reynolds Tobacco Co. for handing out free cigarettes at a beer fest, a biker rally and other public events.

The seven justices unanimously upheld California’s 1991 law against cigarette giveaways and ruled that the tobacco company had violated it. But the high court sent the case back to a lower court to consider whether the fine was excessive.

R.J. Reynolds, the maker of Camel and Winston cigarettes, passed out free packs — and in some cases free cartons — to nearly 15,000 adults at six California public events, including a San Jose beer festival and a motorcycle event in Del Mar.

The tobacco company said it complied with the law because minors were not allowed near the distribution areas. Moreover, it claimed it had a constitutional right to give free tobacco to adults, and said state laws regulating the promotion of cigarettes are pre-empted by federal law.

The justices, however, said the state had the right to ban free cigarettes because tobacco is a health hazard and Congress has not spoken against state laws regulating the time, place and manner in which cigarettes could be distributed.

“Distribution of cigarettes in any form, whether free of charge, sold at a discount, or sold at full retail price, creates the same health hazard, and should be equally subjected to state regulation,” Justice Joyce Kennard wrote.

“Clearly, we believed we conducted our promotions in good faith and that our conduct conformed with state law,” R.J. Reynolds spokesman David Howard said.

Tom Dresslar, a spokesman for California’s attorney general, said the entire fine should be upheld. “Good faith and RJR are mutually exclusive terms. That’s not part of their corporate culture,” Dresslar said.

At least 16 states and the District of Columbia regulate the distribution of free tobacco.

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