Eight years ago tobacco makers signed an agreement with 46 states to end their lawsuits in return for marketing curbs and $1.55 billion to finance the Legacy Foundation and its advertising. Now, Lorillard is arguing that the "Truth" campaign violates the one condition the industry imposed in the Master Settlement Agreement: that the ads wouldn't be used to fund "vilification" or personal attacks against the tobacco industry or its executives.
Lorillard is asking the Supreme Court to overturn most of a lower court decision and rule that some of Legacy's ads produced by Havas' Arnold Worldwide and Crispin Porter & Bogusky amounted to vilification, "imparting a message that tobacco companies and their employees are dishonest, greedy, callous and evil" instead of about "the addictiveness, health effects and social costs" of tobacco products as it says the agreement required. It is also arguing that although tobacco companies no longer provide additional ad money for the ad campaign, Legacy is illegally using monies tobacco makers pay it to undertake other activities to instead continue the "Truth" campaign.
Ads and Web site
The fight started over ads that included a 2001 radio spot in which listeners heard a phone call offering to sell Lorillard dog urine "because dog pee is full of urea" and urea is used in cigarettes. Also cited is an old "Truth" campaign Web site that allowed visitors to easily send "pissed off libs" e-mails (a riff off of "Madlibs") to top tobacco company executives with blank spaces that many site visitors used to insert profane expressions before sending. Lorillard also argues that more recent ads continue vilify tobacco marketers.
Lorillard's complaints about the ads -- and its threat to cease payments -- led the American Legacy Foundation to Delaware court seeking a declaratory ruling that the campaign was legal and that it can't be sued by tobacco makers. Lorillard filed its own complaint charging that the campaign was illegal. While the Delaware Court of Chancery found Legacy could be sued, it said the ad campaign doesn't constitute vilification. It also found that while the Web site's e-mails were vilification, the effects weren't significant.
Both sides are appealing part of Vice Chancellor Stephen Lamb's ruling.
Lorillard tomorrow will argue to the Supreme Court that the ruling was based on a strained and arbitrary definition of "vilification." And while it isn't asking for its money back, it wants to bar Legacy from using tobacco makers administrative payments to continue the "Truth" campaign.
Calling the case "critical" to its future, Legacy is arguing it's not subject to lawsuits from tobacco makers. Tobacco makers' only recourse, it believes, is to prove its board, which includes some state attorneys general, has been derelict in duty.
State attorneys general from 33 states and Samoa in a friend of the court brief call the "Truth" campaign "highly successful" and warn it could be seriously injured with a negative ruling. "Its effectiveness would be impaired if it were found not to be telling the truth -- whether by making untruthful statements or withholding the truth," they wrote. They asked the court not to bar messages that "truthfully criticize" the industry's "misleading" promotional practices.