Judge Rules Against Lorillard

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Judge Rules Against Lorillard

WILMINGTON, Del. -- A Delaware court has ruled against Lorillard Tobacco Co., refusing to dismiss a lawsuit filed against it in Delaware by the American Legacy Foundation.

Lorillard and American Legacy have been battling in various courts since the beginning of the year when the cigarette maker said it would sue the public health foundation over advertising it says vilifies its company and employees. American Legacy, in turn, sued Lorillard saying the cigarette maker had no right to sue. American Legacy says Lorillard is trying to bully it into stopping its edgy anti-smoking advertising, according to the Greensboro (N.C.) News-Record.

On Feb. 13, American Legacy asked the Delaware Court of Chancery to rule that Lorillard had no authority to sue American Legacy for violations of the Master Settlement Agreement.

The Delaware court's decision, which sided with American Legacy, was handed down by Vice Chancellor Stephen Lamb earlier this month. A Lorillard spokesman said the cigarette maker had no comment.

The crux of American Legacy's argument is that it is not beholden to the settlement agreement signed by the tobacco companies and the states. The settlement agreement created a public health fund paid for by tobacco companies. The group's goal was to reduce tobacco use. However, the agreement says the health fund cannot vilify tobacco companies or their employees. While American Legacy was created to be this fund, the settlement agreement does not directly name American Legacy.

In addition to filing the complaint in Delaware, Lorillard in February filed a lawsuit against American Legacy in the North Carolina courts. This lawsuit is not affected by the Delaware judge's decision. Lorillard had hoped that Legacy's Delaware complaint would be dismissed or stayed in favor of its North Carolina lawsuit.