Truth Comes Out Swinging

Dog urine was the last straw for Lorillard Tobacco Co.

The Greensboro, NC-based company sued anti-tobacco nonprofit American Legacy Foundation, Washington, DC, for alleged false claims in its $100 million “truth” campaign — among them a radio spot that implies Lorillard adds urea to cigarettes. (Urea occurs naturally in tobacco and in urine.)

Lorillard’s Feb. 19 suit contends the foundation violated the 1998 Master Settlement Agreement (MSA) by “engaging in a campaign of vilification against tobacco companies and employees.”

The foundation argues that it is not governed by the MSA, and filed its own suit on Feb. 13 asking the Delaware Chancery Court to rule that Lorillard has no authority to challenge its compliance. A Jan. 18 letter from Lorillard threatening legal action prompted the foundation to file its preemptive suit. No court date has been set; the campaign continues to air.

The MSA says that the $1.4 billion national public education fund (end-owed almost entirely by tobacco company payments over five years) cannot be used to commit personal attacks or vilify a company. Most of the foundation’s funding comes from that allocation. (A separate base foundation fund of $250 million over 10 years pays for its operating budget and some marketing.)

FOUNDATION SAYS The foundation argues that it is not governed by the MSA, even though it was founded and funded by the agreement. The foundation says it was “not a party to the MSA and, in fact, did not even exist when the MSA was signed.” Instead, ALF asserts that it is governed by its board of directors, six of whom are elected officials (two each from the National Association of Attorneys General, the National Governors Association, and the Conference of State Legislators) and five who are appointed by those first six.

The suit says that the foundation “should not have to operate under the specter that Lorillard or any other tobacco company can commence putative enforcement actions against [it] … anytime one of them has reached the self-interested determination that the foundation’s advertising is having a negative impact on their business and ‘vilifying’ them.”

If the foundation doesn’t get an injunction against Lorillard, it will argue that none of the “truth” campaign elements funded via the national public education fund vilify a company or individuals.

LORILLARD SAYS Lorillard’s suit charges the foundation with the “surreptitious recording of two of our employees” to make the radio ad. The company also contends that the foundation endorses the sending of “harassing and vulgar” e-mails to Lorillard employees.

“No company which manufactures a legal product should be subjected to the vilification that has been thrust upon us by the ALF,” says Lorillard vp-external affairs Steve Watson in a statement.

Lorillard is asking for only $1 in damages. “We have not filed this action … to ‘shut down’ the American Legacy Foundation or its campaign,” Watson continues. “We object to some, but not all, of the foundation’s advertising. There are many ways to communicate effectively with young people. You can be edgy; you can be different. But you cannot and should not mislead the public with false information and personal attacks.”

Lorillard, which has tried to reach an agreement with ALF since fall 2001, says it supports the foundation’s mission to educate kids and parents about the risks of smoking. The U.S. Department of Health & Human Services’ National Institute on Drug Abuse credits the “truth” campaign with helping decrease teen smoking.

Lorillard’s top brand, Newport, is the brand of choice for 23 percent of eighth-grade smokers and 19 percent of all smokers in grades eight, 10, and 12, per ALF’s suit.

“The ‘truth’ campaign has not engaged in personal attacks or vilification of Lorillard or anyone else,” says foundation president-ceo Cheryl Heaton in a statement. “The ads sometimes focus on tobacco industry actions and marketing practices — a proven strategy for reaching the young people who are most likely to smoke.”

Arnold Worldwide, Boston, and Crispin Porter + Bogusky, Miami, handle the two-year-old “truth” campaign, which includes a summer tour and grassroots events.