THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Sunday, December 25, 1994 TAG: 9412230491
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY BOB ZELLER, STAFF WRITER
LENGTH: Medium: 76 lines
The stage has been set in South Boston for a David-and-Goliath legal battle over cigarette sponsorship in NASCAR racing between tobacco giant R.J. Reynolds and Bailey's cigarettes, a micro-manufacturer that distributes only in south-central Virginia.
On Sept. 18, Bailey's logos were plastered all over a Late Model Stock car, driven by short-track ace Wayne Patterson, in the Winston Select 300 at South Boston Speedway. R.J. Reynolds Tobacco Co. and NASCAR officials allegedly told car owner Steve James that the Bailey's decals had to go, or James could pack up his car and go home.
James removed or covered the offending decals, and Patterson went on to win the 300-lap event, one of the biggest Late Model car races in the area.
The response from Bailey's, however, was to file suit Nov. 28 in Halifax County Circuit Court, asking for $100,000 in punitive damages and an injunction prohibiting R.J. Reynolds and NASCAR from interfering with Bailey's sponsorship of stock cars.
The suit argues that R.J. Reynolds has no reason to keep Bailey's out of the sport, ``other than to continue its monopoly on racing and its large cigarette monopoly.''
But R.J. Reynolds believes that the exclusive sponsorship agreement it has with NASCAR is a legal and proper way to protect its multimillion-dollar investment in the sport.
Bailey's cigarettes have been around only since August. They are the cigarette industry's equivalent of a micro-brewed beer. Bailey's are so-called ``full flavor'' cigarettes, which means they have no reductions in tar or nicotine.
The brand was created by Malcolm L. and Steven A. Bailey, a father and son from Keysville, Va., who are tobacco farmers and processors. So far, distribution is limited to south-central Virginia, but the Baileys have plans to expand ``pretty much up and down the East Coast,'' Steven Bailey said.
In September, the Baileys decided to advertise their product by sponsoring a Late Model car.
``We just wanted some kind of advertising, and we thought racing was a good place to do it,'' Steven Bailey said. He said they paid several hundred dollars per race to sponsor the James-owned car.
The Bailey's logo first appeared on the car at a Saturday night race at South Boston, which Patterson drove to victory. The logo again rode on the car, with no problems or protests, at another Saturday night race at Orange County Speedway in Rougemont, N.C.
But when James, who is from Clarksville, Va., arrived at the 300-lapper Sept. 18, an R.J. Reynolds official told James his car would not be allowed to participate with the Bailey's logos, the suit alleges.
Later, NASCAR official Jerry Cook told James that he could never display Bailey's advertising at any NASCAR-sanctioned race, the suit alleges.
James is not involved in the lawsuit.
The Baileys believe they have a right to advertise in NASCAR racing.
``How can one company command such a large sport?'' Steven Bailey asked. ``We just don't think that's right. You see the Budweiser and Miller cars running together. You see the Skoal Bandit car out on the race track. There's lots of instances where you see sponsors racing against each other.
``We don't want to cause any problems for R.J. Reynolds, but they kinda took the first swing.''
Nat Walker, spokesman for R.J. Reynolds' Sports Marketing Enterprises, said he couldn't comment on the specifics of the case. But he did say: ``Our arrangement with NASCAR is an exclusivity arrangement with cigarette sponsorship. We do spend a great deal of money in motor sports, and if we don't protect that exclusivity in those sports where we spend money, it might be pointless. If we don't protect it, it's of no value.''
NASCAR declined to comment.
The next move in court is for R.J. Reynolds and NASCAR to answer the suit. They have 21 days to respond from the time they are officially served with the suit.
NASCAR was served Dec. 7, but R.J. Reynolds had not been served as of Tuesday, a court clerk said. by CNB