LORILLARD TO MAKE PAYMENT TO ANTI-SMOKING GROUP

Backs Off Threat to Withhold $28 Million

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WASHINGTON (AdAge.com) -- After threatening to withhold a $28.4 million scheduled payment to fund an anti-tobacco ad program, Lorillard Tobacco Co. reversed its decision while continuing to press its case that tobacco makers are being "vilified" in ad campaigns.

'Truth' ads
The money was owed to the American Legacy Foundation for its "Truth" anti-smoking efforts. Lorillard is suing the foundation in Delaware, alleging that some of the ads violated specific language in the Master Settlement Agreement Lorillard signed with state attorneys general. The 1998 agreement, which settled 46 state class action lawsuits against tobacco companies, prohibits the vilification of tobacco makers in ad campaigns.

Lorillard had threatened last week to

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put the money into escrow, pending the suit's resolution.

A Lorillard spokesman said the company decided to pay after it was assured that there are other mechanisms in the 1998 pact to see the company gets its money returned if the judge rules in its favor.

Joins RJR suit
Lorillard's reversal doesn't mean the tobacco giant is shrugging off its contention that anti-smoking groups such as American Legacy aren't playing by the rules. The company joined R.J. Reynolds Tobacco Co. in a suit filed last week in U.S. District Court in Sacramento that accuses the state of using its ads to attack tobacco makers rather than promote health education, as required by law. California's ads are paid for by a 25-cent per-pack cigarette tax passed in 1988 under Proposition 99. Tobacco makers pay the tax.

Tobacco companies have argued that recent anti-smoking ads suggest smokers are being manipulated by cigarette makers, and that the ads are thinly veiled propaganda intended to vilify firms and drive up jury verdicts rather than get people to stop smoking. Tobacco critics say the ads successfully motivate people to stop smoking.

'Legal climate against tobacco'
The California suit is based on documents revealed in a recent tobacco lawsuit concerning planning for the state ad program, which has been done by various agencies over the years. The suit, quoting from the documents, alleges that the state, instead of educating smokers to quit, tried to create a "social milieu and legal climate against tobacco."

The suit claims that the state's ads "portray tobacco company employees and executives as loathsome persons motivated by cynicism, greed and malevolence. They are portrayed as unashamedly evil."

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