A federal judge has dismissed a class action lawsuit claiming that Camel breached a contract when it ended its “Camel Cash” program in 2007 -- ruling that Camel manufacturer R.J. Reynolds was merely extending an offer and had no duty to honor customer orders.
The Camel Cash (“C-Note”) program was introduced in the fall of 1991. A typical smokers' loyalty program, Camel Cash was intended “to increase sales of Camel cigarettes by adding value to the Camel brand in order to retain then-current smokers and to attract smokers of competitive brands,” according to the complaint.
Under the program, smokers traded in Camel Cash for branded merchandise, such as jackets and lighters. Marlboro offered a comparable program -- Marlboro Miles -- which was discontinued in 2006.
Alleged breach of contract
In their suit, the plaintiffs contended that, by canceling the C-Note program, Camel “breached its contract with [the] plaintiffs and engaged in unfair business practices by failing to supply [the] plaintiffs ... with any catalogs or merchandise.” As a result, the suit said, “from October 2006 through March 31, 2007, any efforts by [the] plaintiffs ... to redeem their certificates were, and would have been, futile.”
Although Camel reserved the right to discontinue the Camel Cash program at any time, the plaintiffs maintained that, under the program, “a contractual relationship was formed which vested the plaintiffs with the right to accumulate and redeem their Camel Cash certificates.”
Importantly, the suit said that “the breach of contract alleged is not that [R.J.] Reynolds was prohibited from terminating the program, but that, during the program's duration, Reynolds had the obligation to perform through the program's termination date.”
As a result, the suit alleged, Reynolds “waived any right to terminate without notice when ... it announced by mailing a notice to program members, that the program would terminate as of March 31, 2007.”
Essentially, the plaintiffs claim Camel obligated itself to honor C-Note through the termination date, adding that Reynolds “gave notice of termination and represented that [the] plaintiffs could redeem their Camel Cash certificates for six months.”
Judge: Offer, not a contract
Judge Christina Synder, of the Central District of California, disagreed with the plaintiffs' argument and ultimately dismissed the lawsuit. Judge Snyder said that, in order for a valid contract to be formed, Camel would have to process payment for a customer's order. The most the plaintiffs had alleged, Judge Snyder said, was that Camel had invited them to place orders from its catalog. Camel was not obligated to do anything in return.
The suit was led by plaintiffs from California, New York, Texas, South Dakota, and Iowa. The complaint alleged breach of contract, promissory estoppel, and violations of several California consumer protection statutes.
