Lorillard to Sue Antismoking Group
The Lorillard Tobacco Company plans to sue the nation's biggest anti- smoking group today for breaching the 1998 settlement that governs the industry.
The suit will accuse the group, the American Legacy Foundation, of "engaging in a campaign of vilification against tobacco companies," Lorillard says.
The foundation was born out of the 1998 settlement and infused with $1.5 billion in payments from cigarette makers to educate the public about the risks of smoking. Lorillard contends that the foundation's advertisements have violated the agreement's restrictions against direct attacks on the tobacco companies.
"This is not about money, or backing out of the settlement, or trying to shut down the American Legacy Foundation," Steve Watson, a Lorillard spokesman, said when the company first threatened to sue last month. "It's about sticking to the agreement we signed onto."
Expecting the suit, the foundation itself filed suit last week in an effort to derail Lorillard's legal strategy.
The suits expose one of the many ambiguities in the tobacco settlement itself. The exacting document, several hundred pages long, was forged to quiet the industry's legal battles, but has nonetheless given rise to a number of lawsuits over what the agreement actually means and who has the power to enforce it.
"As you try to understand what the master settlement actually prohibits, you always discover things that are ambiguous and could be clearer," said Dennis Eckhart, a California assistant attorney general. "There are a lot of open legal questions."
California, for example, is suing the R. J. Reynolds Tobacco Company, accusing it of flouting the settlement's prohibition against advertising to underage smokers, specifically in magazines with large numbers of young readers. Arizona, California and New York have sued Reynolds over outdoor signs for its Nascar races, saying the ads stay up longer than the settlement allows.
Now Lorillard, with the lawsuit it plans to file in a North Carolina state court, is invoking the settlement once again. But it finds itself in an unusual position for a tobacco company: the role of an enforcer of the agreement.
Under the terms of the settlement, reached with the attorneys general of 46 states, the foundation is barred from conducting "any personal attack on, or vilification of" tobacco companies or their employees.
With its ubiquitous radio and TV spots, supported by an advertising budget of $350 million in the last two years, the foundation has contributed to sizable reductions in teenage smoking, according to researchers at the University of Michigan.
But since the foundation first broadcast a TV commercial portraying piles of body bags in front of Philip Morris (news/quote)'s headquarters in 2000, cigarette makers have complained that its anti-smoking campaign paints them as callous and deceitful, breaking the ground rules laid out in the settlement.
Such grumbling started building toward legal action last summer, when the foundation ran a radio spot saying that Lorillard adds urea, a chemical found in urine, to its cigarettes. Lorillard says it does not add urea to cigarettes; it says the substance appears naturally in tobacco leaves. The spot is no longer being broadcast, but it gave rise to negotiations between Lorillard and the foundation. After a few fits and starts, those talks fell apart this month.
In its suit in Delaware last week, the foundation said that its advertisements merely stated the truth and therefore did not vilify anyone. Besides, the foundation argued, tobacco companies are powerless to sue it for violating the settlement, since the organization is only a beneficiary of the agreement, not a party to it.
"We stand by our position," Patrick J. Carome, a lawyer for the foundation, said in reference to Lorillard's planned suit. "We don't believe that Lorillard has any basis under the settlement to even bring any enforcement."
Whether health advocates are subject to the same rules of enforcement as the tobacco companies may be the central legal issue. But it evades a more basic question, some attorneys general say.
"Is the truth campaign actually true?" said William H. Sorrell, the Vermont attorney general, who is chairman of the tobacco committee of the National Association of Attorneys General. "If the legacy foundation is somehow violating the settlement, we should know that. But any industry that is responsible for the deaths of more than 400,000 people a year is doing some pretty ugly things. And to point those out, is that vilification?"