(CN) – The 9th Circuit revived claims that R.J. Reynolds Tobacco Company breached a contract with its customers by canceling its popular Camel Cash rewards program in 2006.
The tobacco giant saw market share for its Camel brand nearly double during the 15-year program, which paired cigarette packs with coupons that smokers could redeem for merchandise.
But when R.J. Reynolds disbanded the program in late 2006, customers complained that they were left with “hundreds or thousands” of worthless paper, the court said.
Ten named plaintiffs in California filed a federal complaint against the company, claiming that R.J. Reynolds had breached a valid contract when it canceled the rewards program.
U.S. District Judge Christina Snyder dismissed the case in Los Angeles for failure to state a claim. The 9th Circuit partly reversed Friday, allowing the plaintiffs’ contract claims to go forward.
R.J. Reynolds had argued that the Camel Cash was an “invitation to make an offer, not an actual “offer.” The company also said that, “even if there was an offer, any contract arising from it would be too indefinite to be enforced,” according to the court.
But these claims failed to sway a three-judge panel in Pasadena.
“Here, the allegations of the complaint support the inference that the parties intended to contract,” Judge Raymond Fisher wrote for the panel. “The plaintiffs enrolled in the Camel Cash program, purchased Camel cigarettes and collected Camel Cash certificates. RJR accepted the plaintiffs’ registration forms, issued them enrollment numbers, performed under the program for 15 years and, according to internal RJR documents, treated outstanding C-Notes as a binding obligation and an outstanding financial liability. According to the documents, RJR closely monitored its exposure under the program, and even went so far as to create a financial reserve to cover that exposure – actions consistent with a legally binding commitment.”
A spokesman for R.J. Reynolds said it would be inappropriate to comment on pending litigation.